10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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, 2022

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: 001-39976

Lucira Health, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	27-2491037
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1412 62nd Street Emeryville, California 94608
(Address of principal executive offices)

Registrant’s telephone number, including area code: (510) 350-8071

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	LHDX	Nasdaq Global Select Market

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting 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 August 08, 2022, the number of shares of registrant’s common stock, par value $0.001 per share, outstanding was 40,106,495.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	6
	Condensed Balance Sheets	6
	Condensed Statements of Operations	7
	Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity	8
	Condensed Statements of Cash Flows	10
	Notes to Unaudited Condensed Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	102
Item 3.	Defaults Upon Senior Securities	102
Item 4.	Mine Safety Disclosures	102
Item 5.	Other Information	102
Item 6.	Exhibits	103
Signatures		106

Where You Can Find More Information

Investors and others should note that we announce material financial and other information using our investor relations website, press releases, U.S. Securities and Exchange Commission, or SEC, filings and public conference calls and webcasts. We also post supplemental materials on the Press Release section of our investor relations website at https://ir.lucirahealth.com/. Except as specifically noted herein, information on or accessible through our website is not, and will not be deemed to be, a part of this Quarterly Report on Form 10-Q, or Quarterly Report, or incorporated by reference into any other filings we may make with the SEC.

i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which statements involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations or financial condition; business strategy and plans; and objectives of management for future operations, including our statements regarding the benefits and timing of the roll out of new technology, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

•the extent and duration of the COVID-19 pandemic and our expectations regarding customer and user demand for our COVID-19 and influenza test kits;

•our expected future growth;

•our ability to obtain and maintain regulatory approval for our test kits, including our existing Emergency Use Authorization, or EUA, for our COVID-19 and influenza test kits;

•the size and growth potential of the markets for our test kits, including the COVID-19 and influenza diagnostic testing market, and our ability to serve those markets;

•our ability to accurately forecast demand for our test kits;

•the rate and degree of physician and market acceptance of our test kits;

•the expected future growth of our sales and marketing organization;

•coverage and reimbursement for our test kits;

•the performance of, and our reliance on, third parties in connection with the commercialization of our test kits, including Jabil Inc., or Jabil, and our single-source suppliers

•our ability to accurately forecast, and Jabil’s ability to manufacture, appropriate quantities of our COVID-19 and influenza test kits to meet commercial demand;

•regulatory developments in the United States and foreign countries;

•our research and development for any future test kits;

•the development, regulatory approval, and commercialization of competing products;

•our ability to retain and hire senior management and key personnel;

•our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act;

•our ability to develop and maintain our corporate infrastructure, including our internal controls;

•our financial performance and capital requirements; and

•our expectations regarding our ability to obtain and maintain intellectual property protection for our test kits, as well as our ability to operate our business without infringing the intellectual property rights of others.

ii

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

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

The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

You should read this Quarterly Report and the documents that we reference in our Annual Report on Form 10-K, filed with the SEC on March 31, 2022, or 2021 Annual Report, as exhibits to this Quarterly Report with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

“Lucira Health,” “Lucira,” the Lucira Health logo and our other registered or common law trade names, trademarks or service marks appearing in this Quarterly Report are our property. Trade names, trademarks and service marks of other companies appearing in this Quarterly Report are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. Solely for convenience, the trademarks and tradenames referred to in this Quarterly Report appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to these trademarks and tradenames.

iii

SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS

Our business is subject to numerous risks and uncertainties that you should consider before investing in our company. These risks are described more fully under Part I, Item 1A, “Risk Factors” in this Quarterly Report. These risks include, but are not limited to, the following:

•We have incurred losses since our inception and we anticipate that we may incur additional losses in future periods, and the net losses that we incur may fluctuate significantly from period to period, which could harm our future business prospects.

•We may need to raise additional capital to fund our existing operations, develop our platform, commercialize new products or expand our operations.

•We focused our near-term business strategy on responding to the COVID-19 pandemic, for which the diagnostic testing market is new and rapidly developing, making it difficult to evaluate our business and future prospects. Our focus on a rapidly developing and changing market could make it difficult to succeed and achieve our goals and could harm our future business prospects.

•We received EUAs from the U.S. Food and Drug Administration, or FDA, for our COVID-19 test kit. If the FDA revokes or terminates our EUAs, such as when the federally-declared COVID-19 public health emergency ends, we will be required to stop commercial distribution of our COVID-19 test kit immediately unless we can obtain FDA clearance for our COVID-19 test kit under a traditional regulatory pathway, which is lengthy and expensive, which could harm our future business prospects.

•Our near-term success is highly dependent on the successful commercialization of our COVID-19 and combination COVID-19 and influenza test kits, and they may not attain or maintain market acceptance or be successfully commercialized in jurisdictions in which such test kits are approved, which could negatively impact our business.

•We have a limited operating history, which may make it difficult to evaluate our current business and predict our future performance. If we do not successfully manage the manufacturing and distribution of our COVID-19 and combination COVID-19 and influenza test kits and development and launch of any future test kits, our financial results could be adversely affected.

•We identified a material weakness in our internal control over financial reporting and may identify material weaknesses in the future or otherwise fail to maintain proper and effective internal controls, which may impair our ability to produce accurate financial statements on a timely basis.

•We rely substantially on Jabil for the manufacturing, quality-testing, and assembly of our COVID-19 test kit and combination COVID-19 and influenza test kits. Any termination or loss of significant rights under the Manufacturing Services Agreement, dated September 10, 2020, or the Jabil MSA, with Jabil would harm our commercialization of our COVID-19 and combination COVID-19 and influenza test kits. In addition, Jabil may fail to obtain and maintain regulatory approval for its facilities, fail to provide us with sufficient quantities of our COVID-19 test kits or fail to do so at acceptable quality levels or prices.

•The diagnostic testing market, particularly with respect to COVID-19 diagnostic tests, is highly competitive, and many of our competitors are larger, better established and have greater technical and marketing capabilities and financial and other resources than we have. In addition, we expect competition with respect to testing solutions for COVID-19 to continue to increase and our success will depend on updated widespread market acceptance of our COVID-19 test kits.

•The production and widely administered use of efficacious vaccines or treatments for COVID-19 may reduce the demand for diagnostic tests and, as a result, the COVID-19 diagnostic testing market may not be sustained or substantially grow.

•If our test kits fail to achieve the degree of adoption by physicians and licensed healthcare providers, businesses, customers, consumers and international markets necessary for commercial success, our operating results and financial condition will be adversely affected, which may limit our ability to generate revenue and continue our business.

•We may be unable to obtain and maintain adequate levels of coverage and reimbursement from third-party payors for our test kits.

iv

•Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.

•Our indebtedness to Silicon Valley Bank and Hercules Capital, or, collectively, the Lenders, may limit our flexibility in operating our business and adversely affect our financial health and competitive position, and our obligations to the Lenders are secured by substantially all of our assets, excluding our intellectual property assets. If we default on these obligations, the Lenders could foreclose on our assets.

•Business disruptions have impacted and can in the future seriously harm our revenue and financial condition and increase our costs and expenses.

•Intellectual property rights do not necessarily address all potential threats, and limitations in intellectual property rights could harm our business, financial condition and results of operations.

•Concentration of ownership of our common stock among our executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions.

v

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

LUCIRA HEALTH, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

	June 30,			December 31,
	2022			2021 (1)
Assets
Current assets:
Cash and cash equivalents	$	74,957		$	105,982
Accounts receivable, net		8,723			27,245
Inventory		119,576			50,776
Other receivable		7,247			8,188
Prepaid expenses		4,449			10,274
Other current assets		5,573			3,817
Total current assets		220,525			206,282
Property and equipment, net		46,782			30,974
Operating lease right-of-use assets		18,726			2,714
Restricted cash equivalents		1,943			—
Other assets		1,060			384
Total assets	$	289,036		$	240,354
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	24,584		$	19,371
Accrued liabilities		31,160			29,162
Operating lease liabilities, current		2,185			1,609
Customer deposits		—			189
Total current liabilities		57,929			50,331
Term loan payable, net		29,213			—
Operating lease liabilities, net of current portion		16,827			1,220
Total liabilities		103,969			51,551
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred stock $0.001 par value; 10,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021		—			—
Common stock, $0.001 par value; 200,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 40,081,464 and 39,663,645 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		40			40
Additional paid-in capital		322,167			317,304
Accumulated deficit		(137,140	)		(128,541	)
Total stockholders’ equity		185,067			188,803
Total liabilities and stockholders’ equity	$	289,036		$	240,354

(1) The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

The accompanying notes are an integral part of these condensed financial statements.

6

LUCIRA HEALTH, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except share and per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Net sales	$	26,146		$	12,439		$	116,620		$	16,955
Cost of products sold		18,154			12,505			68,712			17,873
Gross profit (loss)		7,992			(66	)		47,908			(918	)
Operating expenses:
Research and development		10,753			10,117			22,948			16,399
Selling, general and administrative		18,628			6,100			32,537			12,200
Total operating expenses		29,381			16,217			55,485			28,599
Loss from operations		(21,389	)		(16,283	)		(7,577	)		(29,517	)
Other income (expense), net:
Interest income and other (expense), net		281			83			343			1
Interest expense, net		(826	)		—			(1,363	)		—
Total other income (expense), net		(545	)		83			(1,020	)		1
Loss before provision for income taxes		(21,934	)		(16,200	)		(8,597	)		(29,516	)
(Benefit from) provision for income taxes		(257	)		—			2			—
Net loss	$	(21,677	)	$	(16,200	)	$	(8,599	)	$	(29,516	)
Net loss per share of common stock,
Basic and diluted	$	(0.54	)	$	(0.42	)	$	(0.22	)	$	(0.96	)
Weighted-average number of shares used in net loss per share of common stock,
Basic and diluted		39,928,451			38,483,766			39,839,834			30,688,349

The accompanying notes are an integral part of these condensed financial statements.

7

LUCIRA HEALTH, INC.

CONDENSED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK

AND STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share data)

	Redeemable								Additional					Total
	Convertible Preferred Stock				Common Stock				Paid-In		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance as of March 31, 2022		—	$	—		39,850,088	$	40	$	320,055	$	(115,463	)	$	204,632
Issuance of common stock upon exercise of stock options		—		—		15,314		—		29		—			29
Issuance of common stock under employee stock purchase plan		—		—		—		—		—		—			—
Issuance of common stock for settlement of restricted stock units		—		—		216,062		—		—		—			—
Stock-based compensation		—		—		—		—		2,083		—			2,083
Net loss		—		—		—		—		—		(21,677	)		(21,677	)
Balance as of June 30, 2022		—	$	—		40,081,464	$	40	$	322,167	$	(137,140	)	$	185,067
	Redeemable								Additional					Total
	Convertible Preferred Stock				Common Stock				Paid-In		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance as of March 31, 2021		—	$	—		38,550,148	$	39	$	307,903	$	(77,030	)	$	230,912
Conversion of redeemable convertible preferred shares into common stock		—		—		—		—				—			—
Conversion of convertible notes into common stock		—		—		—		—				—			—
Issuance of common stock upon IPO, net of issuance costs		—		—		—		—				—			—
Issuance of common stock upon exercise of stock options		—		—		134,398		—		143		—			143
Stock-based compensation		—		—		—		—		945		—			945
Net loss		—		—		—		—		—		(16,200	)		(16,200	)
Balance as of June 30, 2021		—	$	—		38,684,546	$	39	$	308,991	$	(93,230	)	$	215,800

The accompanying notes are an integral part of these condensed financial statements.

8

LUCIRA HEALTH, INC.

CONDENSED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK

AND STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share data)

	Redeemable										Additional					Total
	Convertible Preferred Stock						Common Stock				Paid-In		Accumulated			Stockholders'
	Shares			Amount			Shares		Amount		Capital		Deficit			Equity
Balance as of December 31, 2021		—		$	—			39,663,645	$	40	$	317,304	$	(128,541	)	$	188,803
Issuance of common stock warrants in connection with the term loans		—			—			—		—		494		—			494
Issuance of common stock upon exercise of stock options		—			—			60,494		—		121		—			121
Issuance of common stock under employee stock purchase plan		—			—			77,811		—		300		—			300
Issuance of common stock for settlement of restricted stock units		—			—			279,514		—		—		—			—
Stock-based compensation		—			—			—		—		3,948		—			3,948
Net loss		—			—			—		—		—		(8,599	)		(8,599	)
Balance as of June 30, 2022		—		$	—			40,081,464	$	40	$	322,167	$	(137,140	)	$	185,067
	Redeemable										Additional					Total
	Convertible Preferred Stock						Common Stock				Paid-In		Accumulated			Stockholders'
	Shares			Amount			Shares		Amount		Capital		Deficit			Equity
Balance as of December 31, 2020		23,978,747		$	121,080			2,712,694	$	3	$	1,403	$	(63,714	)	$	(62,308	)
Conversion of redeemable convertible preferred shares into common stock		(23,978,747	)		(121,080	)		23,978,747		24		121,056		—			121,080
Conversion of convertible notes into common stock		—			—			1,470,947		2		24,980		—			24,982
Issuance of common stock upon IPO, net of issuance costs		—			—			10,350,000		10		159,889		—			159,899
Issuance of common stock upon exercise of stock options		—			—			172,158		—		190		—			190
Stock-based compensation		—			—			—		—		1,473		—			1,473
Net loss		—			—			—		—		—		(29,516	)		(29,516	)
Balance as of June 30, 2021		—		$	—			38,684,546	$	39	$	308,991	$	(93,230	)	$	215,800

The accompanying notes are an integral part of these condensed financial statements.

9

LUCIRA HEALTH, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(8,599	)	$	(29,516	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		3,424			1,473
Allowance for doubtful accounts		(55	)		259
Depreciation and amortization		3,275			882
Accretion and amortization of term loans discount		308			—
Remeasurement of derivative liabilities and convertible notes		—			281
Noncash interest expense		—			3
Noncash lease expense		171			(11	)
Changes in assets and liabilities:
Inventory		(68,276	)		(31,317	)
Accounts receivable		18,577			(3,358	)
Other receivable		941			91
Prepaid expenses and other current assets		5,825			(8,767	)
Other assets		(1,863	)		3,129
Accounts payable		362			2,678
Customer deposits		(189	)		2,916
Accrued liabilities		2,027			13,635
Net cash used in operating activities		(44,072	)		(47,622	)
Cash flows from investing activities:
Acquisition of property and equipment		(14,227	)		(8,977	)
Net cash used in investing activities		(14,227	)		(8,977	)
Cash flows from financing activities:
Proceeds for issuance of term loans, net of discount		29,570			—
Third-party issuance costs related to term loans		(740	)		—
Proceeds from issuance of common stock on IPO, net of issuance costs		—			159,899
Proceeds from exercise of stock options		87			150
Proceeds from the issuance of common stock under employee stock purchase plan		300			—
Net cash provided by financing activities		29,217			160,049
Net increase (decrease) in cash and restricted cash equivalents		(29,082	)		103,450
Cash, cash equivalents and restricted cash equivalents, beginning of period		105,982			60,550
Cash, cash equivalents and restricted cash equivalents, end of period	$	76,900		$	164,000
Reconciliation to amounts on the condensed balance sheets:
Cash and cash equivalents	$	74,957		$	161,662
Restricted cash equivalents		1,943			2,338
Total cash, cash equivalents and restricted cash equivalents	$	76,900		$	164,000
Supplemental disclosures of cash flow information
Cash paid for taxes	$	16		$	2
Cash paid for interest, net of amounts capitalized	$	771		$	—
Supplemental disclosures of noncash financing and investing activities:
Purchase of property and equipment included in accounts payable and accrued liabilities	$	4,856		$	650
Acquisition of right-of-use asset through operating lease obligation	$	16,460		$	—
Issuance of warrants in connection with term loans	$	494		$	—
Vesting of early exercise options	$	34		$	40
Stock-based compensation expense capitalized to inventory	$	913		$	260
Conversion of redeemable convertible notes payable principal and interest for common stock on IPO	$	—		$	24,982
Conversion of convertible redeemable preferred shares into common stock on IPO	$	—		$	121,080

The accompanying notes are an integral part of these condensed financial statements.

10

LUCIRA HEALTH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

(In thousands, except share and per share data)

Note 1. Organization

Description of Business

Lucira Health, Inc. (the “Company”) was incorporated under the laws of the state of Delaware on February 20, 2013 under the name DiAssess Inc. The Company changed its name to Lucira Health, Inc. in January 2020. The Company is located in Emeryville, California.

The Company is a medical technology company with a mission to bring central laboratory quality testing for infectious diseases in the home and point of care settings. The Company has developed a testing platform that produces high-complexity-laboratory-accurate molecular testing in a single-use and user-friendly test kit that is powered by two AA batteries and fits in the palm of a hand. The Company’s initial focus is within respiratory diseases, and initially for COVID-19 and influenza Types A and B indications.

On November 17, 2020, the Company received an Emergency Use Authorization (“EUA”) from the Food and Drug Administration (“FDA”) for (1) prescription at-home use with self-collected nasal swab specimens in individuals aged 14 and older who are suspected of COVID-19 by their healthcare provider and (2) use at the point-of-care (“POC”), with self-collected nasal swab specimens in individuals aged 14 and older, and in individuals aged 13 and under when the specimen is collected by a healthcare provider at the POC. People who are suspected of COVID-19 are those who are either symptomatic or are thought to have been exposed to COVID-19. On April 9, 2021, the Company received its first FDA EUA authorization for over-the-counter (“OTC”) non-prescription use among symptomatic and asymptomatic individuals aged 14 and older (with self-collection) and children aged two to 13 (with parent collection). On May 6, 2022, the Company received the Conformité Européenne Mark (“CE Mark”) for professional use for both its COVID-19 and combination COVID-19 influenza test kits, clearing them for sale and distribution in the European Union. On May 11, 2022, the Company submitted its request for EUA authorization from the FDA for prescription at-home use of its combination COVID-19 and influenza test, for those individuals with suspected COVID-19 or influenza. This request for EUA authorization from the FDA was revised and resubmitted to the FDA to include over-the-counter use of its combination test kit, in addition to authorization for prescription at-home use. On May 31, 2022, Health Canada approved our request to extend our current 12-month shelf life to 18 months for our COVID-19 test kit. On June 8, 2022, the Company received approval for full exemption by the New Zealand Ministry of Health for its LUCIRA CHECK IT COVID-19 Test Kit and its LUCIRA COVID-19 All-In-One Test Kit for self-test. On June 10, 2022, the Company submitted a revised EUA application to the FDA. On June 14, 2022, the Company received registration approval in the United Kingdom from the Medical and Healthcare Products Regulatory Agency for both its COVID-19 and combination test kit in the United Kingdom and New Zealand. On July 8, 2022, the Company submitted its de novo application to the FDA or its COVID-19 test kit.

Liquidity and Going Concern

Net loss for the six months ended June 30, 2022 was $8.6 million, comprised of net income for the three months ended March 31, 2022 of $13.1 million and net loss of $21.7 million for the three months ended June 30, 2022. Prior to the three months ended March 31, 2022, since its inception, the Company has incurred recurring losses and negative cash flows from operating activities. The Company may continue to incur additional losses in future periods and the net losses that the Company incurs may fluctuate significantly from period to period due to the seasonality of its product portfolio. As of June 30, 2022, the Company had $75.0 million in cash and cash equivalents and an accumulated deficit of $137.1 million. The Company generated net sales of $26.1 million and $116.6 million in the three and six months ended June 30, 2022, respectively. On February 4, 2022, the Company closed a debt financing of up to $80.0 million. The first tranche of $30.0 million was funded upon close. See Note 10. Term Loans.

The Company believes that cash and cash equivalents as of June 30, 2022, anticipated cash flows from operations, and available cash advances under the Term Loans, contingent upon the Company's achievement of certain revenue milestones as defined in the Loan Agreement (see Note 10. Term Loans) will be sufficient to fund its planned operations, including servicing the Term Loans, operating lease payments, and capital expenditures, for a period of at least 12 months from the date of the issuance of the accompanying condensed financial statements.

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The ability to continue as a going concern is dependent upon the Company generating revenue and profit in the future and/or upon obtaining necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company may raise additional capital through the issuance of equity securities, debt securities, or other sources of capital in order to further implement its business plan. However, if other financing is not available when needed and at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of new test kits, or curtail current operations and business plans.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information and pursuant to the instructions of the SEC on Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.

The accompanying condensed balance sheet as of June 30, 2022, the condensed statements of operations for the three and six months ended June 30, 2022 and 2021, the statements of redeemable convertible preferred stock and stockholders’ equity for the three and six months ended June 30, 2022 and 2021, and the condensed statements of cash flows for the six months ended June 30, 2022 and 2021 are unaudited. The unaudited interim condensed financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of June 30, 2022 and the results of its operations and cash flows for the six months ended June 30, 2022 and 2021. The financial data and other information disclosed in these notes as of June 30, 2022 and 2021 and for the three and six months ended June 30, 2022 and 2021 are unaudited. The results for the three and six months ended June 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period. These condensed financial statements and accompanying notes should be read in conjunction with the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on March 31, 2022.

Use of Estimates

Significant estimates and assumptions made in the accompanying financial statements include, but are not limited to recognition of stock-based compensation, incremental borrowing rate, revenue recognition, inventory valuation, sales returns, warranty reserves, allowance for doubtful accounts, accrued research and development costs, uncertain tax positions, the recoverability of its long-lived assets and the valuation of deferred tax assets. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Cash, Cash Equivalents and Restricted Cash Equivalents

The Company considers highly liquid investments purchased with a remaining maturity date upon acquisition of three months or less to be cash equivalents and are stated at cost, which approximates fair value. As of June 30, 2022 and December 31, 2021, the Company held cash and cash equivalents of $75.0 million and $106.0 million, respectively, primarily consisting of short-term, highly liquid instruments, which consists of money market accounts and high-quality debt securities issued by the U.S. government via cash sweep accounts. All cash and cash equivalents are maintained with major financial institutions. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.

As of June 30, 2022, the Company held a restricted cash equivalents balance of $1.9 million which was used to secure standby letters of credit in relation to the Company’s operating lease agreement entered into in March 2022 for a facility in Vista, California, and the lease agreement entered into in June 2022 for a facility in Berkeley, California. The cash was deposited in a money market account with maturities of three months or less, with automatic renewal. The standby letters of credit are subject to annual automatic renewal over the term of the associated lease. The restricted cash equivalents are recorded as a long-term asset on the condensed balance sheets as of June 30, 2022, due to the long-term nature of the underlying obligation.

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Fair Value Measurements

The carrying value of the Company’s cash, cash equivalents, restricted cash equivalents, accounts receivable, other receivable, prepaid expenses, other current assets, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these items. The Company has not elected to apply fair value accounting related to its Term Loans.

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:

•Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2—Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

•Level 3—Unobservable inputs that are supported by little or no market activity for the related assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Inventories Produced in Preparation for Product Launches

The Company capitalizes inventories produced in preparation for product launches sufficient to support estimated initial market demand. Typically, capitalization of such inventory begins when positive results have been obtained for the clinical trials that the Company determines are necessary to support regulatory approval, uncertainties regarding ultimate regulatory approval have been significantly reduced and the Company has determined it is probable that these capitalized costs will provide future economic benefit in excess of capitalized costs. The factors considered by the Company in evaluating these uncertainties include the receipt and analysis of positive clinical test results for the underlying product, results from meetings with the relevant regulatory authorities prior to the filing of regulatory applications, and the submission of the regulatory application. The Company closely monitors the status of each respective product within the regulatory approval process, including all relevant communication with regulatory authorities. If the Company is aware of any specific material risks or contingencies other than the normal regulatory review and approval process or if there are any specific issues identified relating to safety, efficacy, manufacturing, marketing or labeling, the related inventory would generally not be capitalized.

For inventories that are capitalized in preparation of product launch, anticipated future sales, expected approval date and shelf lives are evaluated in assessing realizability. The shelf life of a product is determined as part of the regulatory approval process; however, in evaluating whether to capitalize pre-launch inventory production costs, the Company considers the product stability data of all of the pre-approval production to date to determine whether there is adequate expected shelf life for the capitalized pre-launch production costs.

Inventories

The Company values its inventory at the lower of cost or net realizable value and determines the cost of inventory using standard costs which closely resembles the first-in, first-out method. Lower of cost or net realizable value is evaluated by considering obsolescence, excessive levels of inventory, deterioration and other factors. Inventory held as of June 30, 2022 is in the form of raw materials, work in process and finished goods.

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In order to assess the ultimate realization of inventories, the Company is required to make judgments as to future demand requirements compared to current or committed inventory levels. The Company periodically reviews its inventories for shelf life, excess or obsolescence and writes-down obsolete or otherwise unmarketable inventory to its estimated net realizable value. If the actual net realizable value is less than that estimated by the Company, or if it is determined that inventory utilization will further diminish based on estimates of demand, additional inventory write-downs may be required. Amounts written down due to unmarketable inventory are recorded in cost of revenue and a new lower-cost basis for the inventory is established.

Warranty

The Company offers a standard product warranty that its products will perform as intended upon the date of original delivery for a reasonable period of time, which typically coincides with product shelf life. The Company has the obligation, at its option, to either refund, repair or replace a defective product. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of products sold. The estimate of future warranty costs is based on historical as well as current product failure rates, service delivery costs incurred in correcting product failures, and warranty policies. The Company regularly reviews these estimates to assess the appropriateness of the Company’s recorded warranty liabilities and adjust the amounts as necessary. As of June 30, 2022 and December 31, 2021, the accrued liability for warranty returns was not significant.

Property and Equipment, Net

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between three and seven years. Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful life of the asset or the remaining term of the related lease.

Construction in progress consists of multiple projects, primarily related to new equipment to expand our manufacturing capability as our product demand grows. Construction in progress includes the cost of construction and other direct costs attributable to the construction, along with capitalized interest. Interest related to construction of assets is capitalized when the financial statement effect of capitalization is material, construction of the asset has begun, and interest is being incurred. Interest capitalization ends at the earlier of the asset being substantially complete and ready for its intended use or when interest costs are no longer being incurred.

Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the condensed balance sheets and any resulting gain or loss is reflected in other income or expense in the condensed statements of operations in the period realized.

Leases

The Company determines if an arrangement is a lease at inception and if so, determines whether the lease qualifies as operating or finance. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the condensed balance sheets. The Company did not have any finance leases as of June 30, 2022 and December 31, 2021.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. When the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the information available at commencement dates in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. Operating lease ROU assets also include any lease payments made and exclude lease incentives when paid by the Company or on the Company’s behalf. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components. The Company elected to not separate lease and non-lease components for all of its building leases. The Company also made an accounting policy election to recognize lease expense for leases with a term of 12 months or less on a straight-line basis over the lease term and not recognize ROU assets or lease liabilities for such leases.

Impairment of Long-Lived Assets

The Company’s long-lived assets are comprised principally of its property and equipment, including leasehold improvements and ROU assets.

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The Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable. The Company identifies impairments related to long-lived assets when management determines that the remaining carrying value will not be realized through future use. The Company evaluates events or circumstances, including competition in the markets where it operates, that would indicate the carrying value of assets may not be fully recoverable. If an event or circumstance is identified indicating carrying value may not be recoverable, the sum of future undiscounted cash flows is compared to the carrying value. If the carrying value exceeds the future undiscounted cash flows, the carrying value of the asset is reduced to fair value, with the difference recorded as an impairment charge. Assets are evaluated for impairment on an individual basis, which management believes is the lowest level for which there are identifiable cash flows. The Company evaluates assets for impairment by assessing if long-lived assets will be sold or otherwise disposed of significantly before the end of their previously estimated useful life as its primary indicator of potential impairment. The fair value of assets is determined as the present value of the estimated future cash flows, adjusted as necessary for market participant factors. Any required impairment loss would be recorded as a reduction in the carrying value of the related asset and a charge to operating expense. For the six months ended June 30, 2022 and 2021, the Company determined that there were no impairments of its long-lived assets.

Debt Issuance Costs, Debt Discount and Detachable Debt-Related Warrants

As described in Note 10. Term Loans, the Company entered into a term loan credit facility with Silicon Valley Bank. (“SVB”) and Hercules Capital, Inc. (“Hercules”) during the six months ended June 30, 2022. Costs incurred to issue debt are deferred and recorded as a reduction of the debt balance in the accompanying condensed balance sheets. Debt discounts related to the relative fair value of warrants issued in conjunction with the debt are also recorded as a reduction of the debt balance and accreted over the expected term of the debt to interest expense using the effective interest method.

Redeemable Convertible Preferred Stock

The Company’s shares of preferred stock were assessed at issuance for classification and redemption features requiring bifurcation. The Company’s preferred stock was not mandatorily redeemable. The Company presents as temporary equity any stock which (i) the Company undertakes to redeem at a fixed or determinable price on the fixed or determinable date or dates; (ii) is redeemable at the option of the holders, or (iii) has conditions for redemption which are not solely within the control of the Company. The Company’s preferred stock was redeemable if the Company had not been dissolved within 90 days following the occurrence of certain deemed liquidation events, which the Company determined was not solely within its control and thus had classified shares of redeemable convertible preferred stock as temporary equity until such time as the conditions were removed or lapse. The Company initially recorded redeemable convertible preferred stock at fair value, net of issuance costs.

In connection with the Company's initial public offering (“IPO”) on February 9, 2021, all outstanding shares of redeemable convertible preferred stock converted into 23,978,747 shares of common stock.

Revenue Recognition

The Company recognizes revenue under Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”), “Revenue from Contracts with Customers” when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps:

(i)identify the contract(s) with a customer;

(ii)identify the performance obligations in the contract;

(iii)determine the transaction price;

(iv)allocate the transaction price to the performance obligations in the contract; and

(v)recognize revenue when (or as) the entity satisfies a performance obligation.

Under ASC 606, the Company will recognize revenue for arrangements once the performance obligations are satisfied and control of the product has transferred to the customer. This usually occurs upon shipment to the customer, unless terms of contractual arrangements with customers state otherwise, in which case the control is transferred upon completion of delivery and/or customer acceptance of products depending on obligations written in the contract.

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Revenue is measured based on the amount of consideration that the Company expects to be entitled to, which considers both fixed and variable consideration. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal of revenue will not occur. Transaction price is impacted by variable consideration such as discounts, allowances and constraints placed on revenue due to uncertainty. The Company's performance obligations relate to contracts with a duration of less than one year. The Company elected to apply the practical expedient provided in ASC 606, therefore, the Company is not required to disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

Collection of the Company’s net revenue generally occurs within 30-45 days of billing. Contracts do not contain significant financing components based on the typical period of time between delivery of products and collection of consideration. Collections of revenue from customers in the Company’s e-commerce channel generally occurs instantaneously or within a few days as customers pay using credit cards. Some customers, particularly in certain countries outside of the United States, pay in advance of product delivery. In those instances, payment and revenue recognition typically occur in the same month, and if they do not, revenue would not be recognized.

Costs to obtain or fulfill a contract are currently expensed when incurred because the Company’s performance obligation is satisfied at a point in time. These costs are recorded as cost of products sold in the condensed statements of operations.

The Company invoices its customers upon shipment of product and records its sales upon shipment in accordance with its standard terms and conditions, unless underlying customer contracts specify otherwise. In those instances, the Company records revenue upon delivery to customers or upon customer acceptance of products when control of products is transferred to customers.

When necessary, the Company invoices and collects sales tax from its customers for sales of products. The Company has elected to exclude sales tax from the measurement of the transaction price.

Shipping and Handling Costs

Shipping and handling costs are included in cost of products sold.

Research and Development

Costs associated with research and development activities are expensed as incurred and include, but are not limited to, personnel-related expenses including stock-based compensation expense, materials, laboratory supplies, consulting costs, costs associated with setting up and conducting clinical studies and allocated overhead including rent and utilities.

The Company records accrued expenses for estimated costs of its research and development activities conducted by third-party service providers, which include clinical trial activities. The Company records the estimated costs of research and development activities based upon the estimated value of services or supplies provided but not yet invoiced and include these costs in accrued liabilities in the condensed balance sheets and within research and development expenses in the condensed statements of operations. The Company records accrued expenses for these costs based on factors such as estimates of the work completed or supplies received and in accordance with agreements established with these vendors. Any payments made in advance of services or supplies provided are recorded as prepaid assets, which are expensed as the services or supplies are received.

The Company estimates the amount of work completed through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services. Such estimates in determining the accrued balance in each reporting period are subject to management judgment. As actual costs become known, the Company adjusts its accrued estimates.

Advertising and Marketing Costs

Costs associated with advertising and marketing activities are expensed as incurred. Total advertising and marketing costs were $0.8 million and $0.9 million for the three and six months ended June 30, 2022, respectively, compared to $0.9 million and $1.3 million for the three and six months ended June 30, 2021, respectively, and are included in selling, general and administrative expenses in the accompanying condensed statements of operations.

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Stock-Based Compensation

The Company’s stock-based awards consist of stock options issued to employees and non-employees, restricted stock units issued to employees and shares of the Company’s common stock purchased by employee participants in the Employee Stock Purchase Plan. The Company measures the estimated fair value of the stock-based awards on the date of grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective awards. The Company records expense for awards with service-based vesting using the straight-line method. The Company accounts for forfeitures as they occur. The fair value of the common stock is based on the closing price of the common stock on the date of grant as reported on the Nasdaq Global Select Market.

The Company classifies stock-based compensation expense in its condensed statements of operations in the same manner in which the award recipient’s cash compensation costs are classified.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the use of a number of complex assumptions including the fair value of the common stock, expected volatility, risk-free interest rate, expected dividends, and expected term of the option.

The Company determines the expected stock volatility using a weighted-average of the historical volatility of a group of guideline companies that issued options over a similar time period, and expects to continue to do so until such time as the Company has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the simplified method for awards that qualify as “plain-vanilla” options. The expected term was estimated using the simplified method for employee stock options since the Company does not have adequate historical exercise data to estimate the expected term. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.

Provision for Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period that includes the enactment date.

The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, management would adjust the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (i) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability.

Segment Reporting

The Company has determined that the Chief Executive Officer is its Chief Operating Decision Maker. The Company’s Chief Executive Officer reviews financial information presented on an aggregate basis for the purposes of assessing the performance and making decisions on how to allocate resources. Accordingly, the Company has determined that it operates in a single operating and reportable segment, which is the business of designing, manufacturing and selling of disposable test kits.

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Recent Accounting Pronouncements

From time to time, new accounting pronouncements, or Accounting Standard Updates (“ASU”) are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

The Company is an emerging growth company (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and may take advantage of reduced reporting requirements that are otherwise applicable to public companies. Section 107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards. This means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company has the option to adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and can do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company has elected to use the extended transition period for complying with new or revised accounting standards unless the Company otherwise early adopts select standards.

Recently Adopted Accounting Standards

In August 2020, the FASB issued Accounting Standard Update (the “ASU”) No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2022. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company expects to adopt this ASU beginning January 1, 2023. The Company is evaluating the potential impact of this standard on its financial statements, but does not expect the adoption to have a material impact on the Company's financial statements.

Note 3. Net Sales

All of the Company’s net sales have been derived from sales of its test kits through its healthcare, business-to-business, international and direct-to-consumer channels. Since receiving the initial EUA in the fourth quarter of 2020, the Company marketed its test products to physicians and licensed healthcare providers through its healthcare channel in the United States. On April 9, 2021, the Company received its first FDA EUA authorization for OTC non-prescription use and expanded its marketing to include domestic testing providers, distributors, businesses within its business-to-business channel, and direct-to-consumer through its partnerships with e-commerce sales and distribution platforms.

The following table sets forth the Company’s net sales by channel:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Healthcare	$	1,587	$	235	$	8,458	$	2,622
Business-to-business		10,791		5,324		55,544		6,668
International		1,520		2,166		25,166		2,166
Direct-to-consumer		12,248		4,714		27,452		5,499
Net sales	$	26,146	$	12,439	$	116,620	$	16,955

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The following table sets forth the Company’s net sales by geographic area based on the customers’ locations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
United States	$	24,626	$	10,273	$	91,454	$	14,789
Canada		605		—		23,924		—
Rest of World		915		2,166		1,242		2,166
Net sales	$	26,146	$	12,439	$	116,620	$	16,955

Note 4. Concentration of Credit Risk and Significant Suppliers

Financial instruments that potentially subject the Company to credit risk consist principally of cash and restricted cash equivalents held by financial institutions, other receivables and account receivables. Substantially all of the Company’s cash and restricted cash equivalents are held at one financial institution that management believes is of high credit quality. Such deposits may, at times, exceed federally insured limits.

As of June 30, 2022, the following customers had outstanding accounts receivable due of 10% or greater of the Company’s total accounts receivable.

	June 30, 2022			December 31, 2021
Customer A		68	%		19	%
Customer B		—	%		12	%
Customer E		—	%		18	%

For the three and six months ended June 30, 2022 and 2021, the following customers represented 10% or more of the Company’s net sales:

	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
Customer A		—	%	—	%		14	%	—	%
Customer B		—	%	—	%		—	%	14	%
Customer C		—	%	14	%		—	%	10	%
Customer D		—	%	10	%		—	%	—	%

As of June 30, 2022, the Company had non-cancellable purchase commitments of $57.7 million, consisting primarily of $27.3 million of raw material purchase commitments, $9.4 million related to asset and equipment related to expanding the Company’s manufacturing capacity and automation, $6.7 million related to non-commercial services, $14.4 million pursuant to the manufacturing services agreement (the “Jabil MSA”), with Jabil Inc. (“Jabil”), and technical services agreement with Jabil (the “Jabil TSA”). Under the Jabil MSA, the Company is obligated to provide, on a monthly basis, a rolling 12-month forecast to Jabil as well as 12 months of historical aggregate end customer demand at the finished product level, when available, which will be used to constitute written purchase orders from the Company, and the Company is obligated to purchase the quantity of products that is required by the first four months of each forecast.

Note 5. Fair Value Measurements

The Company’s cash equivalents and restricted cash equivalents are measured at fair value on recurring basis and is classified as Level 1 input. Cash equivalents and restricted cash equivalents are a money market account that the Company opened in August 2020. The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy.

	Fair Value Measurements as of
	June 30, 2022
	Level 1		Level 2		Level 3
Assets
Cash equivalents	$	74,375	$	—	$	—
Restricted cash equivalents		1,943		—		—
Total	$	76,318	$	—	$	—

19

The Company did not have any financial instruments measured at fair value on a recurring basis as of June 30, 2022.

The change in the fair value of the derivative liabilities and convertible notes accounted for at fair value is summarized below.

	June 30, 2021
Fair value at beginning of the period	$	24,694
Initial fair value of instruments issued		—
Change in fair value of instruments and accrued interest, net		288
Extinguishment of instruments held at fair value		(24,982	)
Fair value at end of the period	$	—

In order to determine the fair value of the convertible notes issued in December 2020, (the “2020B Notes”), the Company utilized the probability-weighted expected return method (“PWERM”). The PWERM relies on a forward-looking analysis to determine the fair value. Under this method, discrete future outcomes, including an IPO and non-IPO scenarios, are weighted based on the estimated probability of each scenario. The PWERM is used when discrete future outcomes can be predicted with reasonable certainty based on a probability distribution. The fair value estimate relied upon in the PWERM scenario was based on likelihood of achieving four liquidity events, (i) an initial public offering, (ii) merger or acquisition of the Company given prevailing market conditions, (iii) change of control, (iv) maturity of the convertible notes. Estimates and assumptions impacting the fair value measurement include future value under the various conversion scenarios, discount rate, discount period, discount factor and probability of occurrence of each scenario, as best estimated by management. The estimated future value of the notes for each scenario is then discounted to present value using a discount rate. The future value was determined based on the estimated term to the event from valuation date as determined by management. The exit value in an IPO scenario was based on banker indications as well as an analysis of guideline companies that went public within the past few years that are broadly comparable to the Company. The exit value of an M&A scenario is determined by management with an estimated premium applied to the IPO value estimate. The discount rate, discount period, and probability of the occurrence of liquidity scenarios are estimates made by the management.

The convertible notes were measured at fair value upon extinguishment on February 9, 2021 in connection with the Company’s IPO.

Note 6. Inventory

Inventory consist of the following:

	June 30, 2022		December 31, 2021
Raw materials	$	65,672	$	35,923
Work in process		40,450		10,539
Finished goods		13,454		4,314
Total	$	119,576	$	50,776

Inventory as of June 30, 2022, and December 31, 2021 included $2.5 million and $0, respectively, of raw materials purchases for use in the pre-launch manufacturing campaign of its combination COVID-19 and influenza test kits. Stock-based compensation of $0.9 million and $0.3 million was capitalized into inventory for the six months ended June 30, 2022 and 2021, respectively. Capitalized stock-based compensation is recognized in cost of product sales when the related product is sold.

Note 7. Property and Equipment, Net

	June 30,			December 31,
	2022			2021
Construction in progress	$	20,804		$	3,466
Machinery and equipment		30,295			29,333
Website development costs		1,211			1,110
Furniture and fixtures		328			200
Leasehold improvements		2,256			1,702
Total, at cost		54,894			35,811
Accumulated depreciation and amortization		(8,112	)		(4,837	)
Property and equipment, net	$	46,782		$	30,974

20

Depreciation and amortization expense was $1.7 million and $3.3 million for the three and six months ended June 30, 2022, respectively, compared to $0.7 million and $0.9 million for the three and six months ended June 30, 2021, respectively. During the six months ended June 30, 2022, the Company deployed $0.7 million of assets into production from construction-in-progress, with the major portion of the remaining balance expected to be placed in service in the first half of 2023. Construction-in-progress is related to the setup of manufacturing infrastructure and the purchase of long lead time manufacturing equipment as the Company grows its manufacturing capacity and invests in semi-automation and automation. Construction-in-progress amounts recorded are not subject to depreciation as such assets are not yet available for their intended use.

The following table sets forth the Company’s long-lived assets, including right-of-use assets by geographic area:

	June 30,		December 31,
	2022		2021
United States	$	42,606	$	16,730
Dominican Republic		20,489		15,753
All other countries		2,413		1,205
Total long-lived assets	$	65,508	$	33,688

Substantially all of the Company's long-lived assets at locations outside of the United States, includes production related equipment located at certain vendor facilities.

Note 8. Other Financial Information

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consist primarily of amounts due to the Company related to product sales. It is the practice of the Company to provide for uncollectible accounts in the period the accounts are determined to be uncollectible.

The following table summarizes the activity in the allowance for doubtful accounts:

	June 30, 2022			December 31, 2021
Beginning balance	$	99		$	—
Amounts charged to costs and expenses (recoveries)		(148	)	358
Write-offs		104			(259	)
Ending balance	$	55		$	99

Other Receivables

	June 30, 2022		December 31, 2021
Other receivable	$	7,247	$	8,188

The other receivable balance as of June 30, 2022 and December 31, 2021 represents amounts due from Jabil, the manufacturer of the Company’s test kits in connection with procurement of component parts.

Prepaid Expenses

The following table summarizes the components of prepaid expenses:

	June 30, 2022		December 31, 2021
Prepaid expenses	$	1,250	$	307
Prepaid insurance		2,791		588
Prepaid inventory		408		9,379
Total	$	4,449	$	10,274

As of June 30, 2022 and December 31, 2021, prepaid inventory includes $0.4 million and $9.4 million, respectively, of advanced payments related to procurement of inventories of components to be used in assembling test kits.

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Accrued Liabilities

Accrued liabilities consist of the following:

	June 30, 2022		December 31, 2021
Professional fees	$	1,955	$	612
Accrued manufacturing and inventory purchases		14,756		17,200
Canada importation taxes		2,717		1,551
Payroll liabilities		5,426		4,466
Royalty liabilities		339		1,662
Accrued sales tax		1,787		2,215
Early exercise liability		155		189
Accrued interest		247		—
Insurance premium liability		1,744		—
Other		2,034		1,267
Total	$	31,160	$	29,162

Note 9. Leases

The Company has operating leases for corporate offices, operations and research and development facilities. These leases have remaining lease terms of 1 to 10 years. The lease of operations and research and development facilities includes costs for utilities and common area maintenance which are not included in the calculation of lease payments.

On March 15, 2022, the Company executed a lease for an 82,000 square foot facility in Vista, California. The term of the lease is 126 months with options to extend five years and includes lease incentives of an initial rent-free period. The Company is obligated to make monthly rent payments of approximately $1.3 million per year over the term of the lease. The Company took possession of the facility on April 1, 2022 to begin tenant improvements and expects completion and assumption of full occupancy by the end of June 2023. Under the terms of the operating lease, the Company has been provided tenant improvement allowances of up to $0.8 million. In conjunction with and under the terms of the operating lease agreement, the Company entered into a $1.2 million Standby Letter of Credit as guarantee of the Company’s payment of the tenant improvements and on-going rent payments over the term of the lease. The Company has accounted for the lease as an operating lease as of April 1, 2022, the commencement date under ASC Topic 842, Leases, and has recorded a right-of use asset in the amount of $8.1 million, representing the Company’s right to use the underlying asset over the lease term and an offsetting lease liability of the same amount, representing the Company’s obligation to make lease payments arising from the lease.

On June 15, 2022, the Company executed a lease for a 20,400 square foot facility in Berkeley, California. The term of the lease is 99 months with an option to extend 84 months and includes lease incentives of an initial rent-free period. The Company took possession of the facility on June 15, 2022 to begin tenant improvements and expects completion and assumption of full occupancy by March 2023. Under the terms of the operating lease, the Company has been provided tenant improvement allowances of up to $4.1 million. In conjunction with and under the terms of the operating lease agreement, the Company entered into a $0.7 million Standby Letter of Credit as guarantee of the Company’s payment of the tenant improvements and on-going rent payments over the term of the lease. The average annual rent over the term of the lease is approximately $1.8 million per year. The Company has accounted for the lease as an operating lease as of June 15, 2022, the commencement date under ASC Topic 842, Leases, and has recorded a right-of use asset in the amount of $8.6 million, representing the Company’s right to use the underlying asset over the lease term and an offsetting lease liability, representing the Company’s obligation to make lease payments arising from the lease.

Leases with an initial term of 12 months or less or those with an estimated lease liability less than a specified amount, are not recorded on the condensed balance sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease terms. Operating leases with terms greater than 12 months are included in operating lease ROU assets and operating lease liabilities in the Company’s condensed balance sheets as of June 30, 2022 and December 31, 2021. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

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Maturities of lease liabilities as of June 30, 2022, are as follows:

	Operating
	Leases
Year ending December 31:
2022	$	944
2023		2,991
2024		2,922
2025		2,899
2026		2,994
Thereafter		17,010
Total		29,760
Less: imputed interest		(10,748	)
Present value of operating lease liabilities		19,012
Less: current portion		(2,185	)
Operating lease liabilities, net of current portion	$	16,827

The Company made operating lease payments of $1.1 million and $0.2 million during the six months ended June 30, 2022 and 2021, respectively, which are included as cash flow from operating activities on the condensed statements of cash flows.

Additional information related to the Company’s leases was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease cost	$	872	$	109	$	1,324	$	218
Short-term lease cost	$	320	$	312	$	323	$	627

	June 30, 2022			December 31, 2021
Weighted-average remaining lease term (years)		8.95			1.82
Weighted-average discount rate		9.36	%		7.15	%

In March 2022, the Company executed an amendment with the lessor of two of its facility leases which included an extension of the expiration date of the original leased premise for one location and a reduction of the lease term on another location, such that the lease terms are coterminous on June 30, 2022. Upon the execution of the amendment, which was deemed to be a lease modification, the Company remeasured the lease liability and corresponding right-of-use asset as of the effective date of the amendment to reflect the extended term and recorded $0.2 million a reduction of the respective right-of-use assets and lease liabilities as of the effective date of the amendments.

Note 10. Term Loans

On February 4, 2022, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules in its capacity as administrative agent and collateral agent, and Hercules and SVB as lenders. The Loan Agreement was subsequently amended on March 17, 2022 and June 15, 2022 (the "Amended Loan Agreement").

The Amended Loan Agreement provides for up to $80.0 million in borrowing capacity (the “Term Loans”) available in four tranches. The first tranche consists of a Term Loan in an aggregate principal amount of $30.0 million, all of which was funded to the Company on the closing date. The Company intends to use the proceeds of the Term Loans for working capital and general corporate purposes.

The second tranche, not to exceed $20.0 million, is available for draw at the Company’s option beginning September 1, 2022, and on or prior to March 31, 2023, subject to the terms of the Amended Loan Agreement and the tranche two draw test, defined as the achievement by the Company of net product revenue of at least $75.0 million, measured on a trailing six-month basis as of the Company’s most recent financial statements provided to the lenders. Loan advances under tranche two will be made in increments of $5.0 million. The third tranche of up to $15.0 million will be available for draw on or prior to June 15, 2023, subject to the terms of the Amended Loan Agreement and the tranche three draw test, defined as the achievement by the Company of net product revenue of at least $250.0 million, measured on a trailing twelve-month basis as of the Company’s most recent financial statements provided to the lenders. Loan advances under the third tranche will be made in increments of $5.0 million. The fourth tranche of up to $15.0 million will be available for draw on or prior to March 15, 2024, subject to the terms and conditions of the Amended Loan Agreement and approval by the investment committees of each of the lenders.

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The Term Loans will mature on February 1, 2026 and bear interest at an annual rate the greater of 5.50% plus the prime rate (as reported in the Wall Street Journal) and 8.75%. As of June 30, 2022, the interest rate was 10.25%. For the three and six months ended June 30, 2022, the Company recorded $0.9 million and $1.4 million, respectively, of interest expense related to the Term Loans, which included $0.2 million and $0.3 million, respectively, of non-cash interest related to the amortization of the loan discount. The Term Loans are interest only, paid monthly, up to September 1, 2024, after which the interest-only period may be extended, provided there has been no event of default or a continuing event of default and the Company has submitted sufficient evidence, satisfactory to the lenders, that the Company has achieved the tranche three draw test. After the interest only period, monthly principal and interest payments are required over the remaining term of the loans to the maturity date. The Company may prepay all or a portion of the outstanding term loan advances including principal and accrued and unpaid interest, subject to a prepayment fee of 3% of the principal advance being prepaid if within 12 months of the initial advance closing date, 2% if within 24 months of the advance closing date and 1% if within 36 months of the advance closing date. An end of term charge of 5.25% of the Term Loans advanced will be due upon prepayment or repayment.

The Amended Loan Agreement contains customary events of default, representations and warranties and covenants, including financial covenants requiring the Company to maintain certain minimum cash and revenue levels upon the occurrence of specified events. As of June 30, 2022, the Company was in compliance with the financial covenants of the Amended Loan Agreement. Lenders have participation and notice rights in an amount up to $5.0 million for the future sale and issuance of the Company’s capital stock that is broadly marketed to multiple investors.

The Company has granted a senior security interest in all of the Company’s right, title, and interest in, to and under substantially all of Company’s personal property and other assets, excluding intellectual property. Notwithstanding the foregoing, the Company’s intellectual property will automatically be included within the assets securing the Term Loans to the extent necessary to permit perfection of the Lender’s security interests for rights to payment and proceeds from the sale, licensing or disposition of the Company’s intellectual property (the “Rights to Payment”) if a judicial authority holds that a security interest in the Rights to Payment requires a security interest in the underlying intellectual property.

In connection with entering into the Loan Agreement, the Company issued warrants to Hercules (the “Hercules Warrant”) and to SVB (the “SVB Warrant” and together with the Hercules Warrant, the “Warrants”). The number of shares of the Company’s common stock subject to the Hercules Warrant is equal to the quotient derived by dividing the amount equal to 1.00% times the aggregate principal amount of term loan advances made and funded under the Loan Agreement by the exercise price of $5.03 per share. The number of shares of the Company’s common stock subject to the SVB Warrant is equal to 1.00% multiplied by the aggregate amount of the term loan advances made and funded under the Loan Agreement divided by the $5.03 per share. In conjunction with the first tranche advance of $30.0 million, SVB and Hercules each hold Warrants to purchase 59,642 shares of the Company’s common stock. Each warrant is exercisable for a period of seven years from issuance at a per-share exercise price equal to $5.03. The Warrants, which met equity classification, were recognized as a component of permanent stockholders’ equity within additional paid-in-capital on the condensed balance sheets and were recorded at the issuance date using a relative fair value allocation method. The Company valued the Warrants at issuance, which resulted in a discount on the Term Loan, and allocated the proceeds from the loan proportionately to the Term Loan and to the Warrants, of which $0.5 million was allocated to the Warrants.

The Company determined the fair value of the Warrants as of February 4, 2022 using the Black-Scholes option pricing model and applying the following assumptions:

Fair value of common stock	$	5.15
Expected term (in years)		7.0
Risk-free interest rate		1.9	%
Dividend yield		—
Volatility		92.6	%

Because the Company does not have sufficient trading price history of its common stock, the volatility was based on historical trading price of a select peer group of publicly traded companies.

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In connection with entering into the Loan Agreement, the Company incurred $1.2 million of debt issuance costs, including commitment and legal fees in connection with the Loan Agreement, fees paid directly to the lenders and other direct third-party costs. Total issuance costs also include the fair value allocated to the Warrants and the end of term fee of $1.6 million, for $3.3 million of issuance costs. The Company allocated $2.7 million of the total issuance costs to the first term loan advance and recorded the issuance costs as unamortized discount, which is being amortized to non-cash interest expense over the term of the loan using the effective interest method. The remaining $0.6 million of issuance costs associated with unfunded loan advances are recorded as other assets on the condensed balance sheets and will be allocated to debt discount as the future tranche is funded. If future available tranches are not funded, these debt issuance costs will be charged to interest expense in the period. The $1.6 million end of term fee is included in the contractual cash flows and is accreted to interest expense using the effective interest method over the term of the loan.

The effective interest rate on the Term Loans, including the discount and the accretion of the final end of term payment, was 12.51% as of June 30, 2022.

Balance sheet information related to the Term Loans is as follows:

	June 30, 2022
Tranche 1 of Term Loans (1)	$	31,575
Less: Unamortized debt discount and issuance costs		(2,362	)
Carrying value of Term Loans, non-current	$	29,213

(1) Balance includes $1.6 million final end of term fee, which represents 5.25% of the principal loan advance.

The Company has not elected to apply fair value accounting to the Term Loans as the Company believes the carrying value of the Term Loans approximates fair value based on the variable coupon rate, subject to adjustments to the prime rate as published by the Wall Street Journal. The Term Loans are considered a Level 2 in the fair value measurement hierarchy.

Interest expense, net of amounts capitalized is as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
Contractual coupon	$	716		$	—	$	1,127		$	—
Amortization of debt discount and issuance costs		191			—		308			—
Total interest expense on the Term Loan		907			—		1,435			—
Other interest expense		28			—		37			—
Capitalized interest		(109	)		—		(109	)		—
Interest expense, net	$	826		$	—	$	1,363		$	—

The Annual principal payments on the Term Loans are as follows:

Year ending December 31,
2022	$	—
2023		—
2024		7,059
2025		21,176
2026		3,340
Total principal payments	$	31,575

Note 11. Convertible Notes Payable

IPO and Conversion of Convertible Notes Payable

On February 9, 2021, upon the closing of the Company’s IPO, certain then-outstanding convertible notes payable and accrued interest automatically converted into shares of common stock at a conversion price equal to 80% of the IPO price per share, which resulted in the issuance of 1,470,947 shares of common stock.

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Note 12. Capital Stock

Preferred Stock

Under its amended and restated certificate of incorporation, the Company’s Board of directors (the “Board”) may, without further action by the Company’s stockholders, fix the rights, preferences, privileges and restrictions of up to an aggregate of 10,000,000 shares of preferred stock in one or more series and authorize their issuance. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock. Any issuance of preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders would receive dividend payments and payments on liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deterring or preventing a change of control or other corporate action. No shares of preferred stock were issued or outstanding as of June 30, 2022.

Common Stock

Under its amended and restated certificate of incorporation, the Company is authorized to issue 200,000,000 shares of common stock, having a par value per share of $0.001.

Common stockholders are entitled to dividends as and when declared by the Board, subject to the rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date. Under the Loan Agreement, as amended, the Company is precluded from the payment of dividends. The holder of each share of common stock is entitled to one vote.

The Company had shares of common stock reserved for future issuance upon the exercise or conversion of the following:

	June 30,		December 31,
	2022		2021
Common stock option grants issued and outstanding under 2014 Equity Incentive Plan		3,112,459		3,245,250
Common stock reserved for issuance under the 2022 Inducement Plan		3,479,175		—
Common stock reserved for issuance under the 2021 Equity Incentive Plan		3,025,323		1,578,216
Common stock option grants issued and outstanding under the 2021 Equity Incentive Plan		836,112		467,024
Restricted common stock units issued and outstanding		3,368,100		3,387,505
Warrants to purchase common stock		119,284		—
Common stock reserved for issuance under Employee Stock Purchase Plan		1,029,014		710,189
Total common shares reserved for future issuance		14,969,467		9,388,184

Note 13. Equity Incentive Plan

In January 2021, the Board adopted the 2021 Equity Incentive Plan (the “2021 Plan”). The stockholders approved the 2021 Plan in January 2021, and it became effective upon the execution of the underwriting agreement for the IPO on February 4, 2021. Under the 2021 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards to individuals who are then employees, officers, directors or consultants of the Company. A total of 5,200,000 shares of common stock were approved to be initially reserved for issuance under the 2021 Plan. In addition, the number of shares of common stock available for issuance under the 2021 Plan will be automatically increased on the first day of each calendar year during the ten-year term of the 2021 Plan, beginning with January 1, 2022 and ending with January 1, 2031, by an amount equal to 5% of the outstanding number of shares of common stock on December 31 of the preceding calendar year or such lesser amount as determined by the Board. On January 1, 2022, the number of shares available for issuance under the 2021 Plan was automatically increased by 1,983,182 shares.

In April 2022, the Board approved the 2022 Inducement Plan, (the “Inducement Plan”) a non-stockholder approved stock plan, in order to award stock options, restricted stock units and other awards as allowed under the Inducement Plan as an inducement to potential new employees and directors of the Company. Under the Inducement Plan, 3,500,000 shares were approved and available for future issuance. As of June 30, 2022, 20,825 awards had been granted or were outstanding.

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The stock-based compensation expense for the Company’s equity incentive plans was allocated as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of products sold	$	134	$	208	$	390	$	260
Research and development		586		291		1,097		421
Selling, general and administrative		1,016		446		1,937		792
Total	$	1,736	$	945	$	3,424	$	1,473

Stock-based compensation expense excludes amounts capitalized to inventory. During the three and six months ended June 30, 2022, the Company capitalized stock-based compensation expense of $0.5 million and $0.9 million to inventory, respectively, and during the three and six months ended June 30, 2021, the Company capitalized $0.2 million and $0.3 million of stock-based compensation expense to inventory, respectively.

Total stock-based compensation expense by type of award was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Stock options	$	386	$	528	$	725	$	964
Restricted stock units		1,620		334		3,057	$	375
Employee Stock Purchase Plan		77		83		166	$	134
Total	$	2,083	$	945	$	3,948	$	1,473

Total compensation costs as of June 30, 2022 related to non-vested awards to be recognized in future periods was $23.9 million and is expected to be recognized over the weighted-average period of 2.9 years.

Stock Options

A summary of stock option activity for the six months ended June 30, 2022 is as follows:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Balance as of December 31, 2021		3,712,274		$	3.30		8.1	$	23,150
Granted		416,213		$	1.85		—		—
Exercised		(60,494	)	$	1.42		—		—
Cancelled		(119,422	)	$	7.39		—		—
Balance as of June 30, 2022		3,948,571		$	3.05		7.2	$	1,542
Options vested and expected to vest as of June 30, 2022		3,948,571		$	3.05		7.2	$	1,542
Options vested and exercisable as of June 30, 2022		1,928,654		$	2.40		6.8	$	1,132

Total options vested during the six months ended June 30, 2022 was 578,211, with an aggregate fair value of $1.2 million. The aggregate intrinsic value of options exercised was $0.3 million for the six months ended June 30, 2022. Total compensation costs as of June 30, 2022 related to option awards to be recognized in future periods was $3.3 million and is expected to be recognized over the weighted average period of 2.0 years.

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The weighted-average grant date fair value of the options granted during the six months ended June 30, 2022 and 2021 was $1.25 and $7.52 per share, respectively, as calculated using the Black-Scholes option-pricing model with the following assumptions on a weighted-average basis:

	Six Months Ended June 30,
	2022			2021
Fair value of common stock	$	1.85		$	17.00
Expected term (in years)		5.5			6.0
Risk-free interest rate		3.0	%		0.6	%
Dividend yield		—			—
Volatility		79.5	%		46.9	%

Common stock fair value—Prior to the IPO the fair value of the Company’s common stock was determined by the Board with assistance from management. The Board determined the fair value of common stock by considering independent valuation reports and a number of objective and subjective factors, including valuations of comparable companies, sales of redeemable convertible preferred stock, operating and financial performance, the lack of liquidity of the Company’s common stock and the general and industry-specific economic outlook. Following the closing of the IPO, the fair value of the Company’s common stock on the date of grant is the closing price of the common stock as reported on the Nasdaq Global Select Market.

Dividend yield of zero—The Company has not declared or paid dividends.

Risk-free interest rates—The Company applied the risk-free interest rate based on the U.S. Treasury yield for the expected term of the option.

Expected term—The Company calculated the expected term as the average of the contractual term of the option and the vesting period for its employee stock options.

Expected volatility—Since the Company does not have sufficient stock price history to estimate the expected volatility of its shares, the expected volatility is calculated based on the average volatility for a peer group in the industry in which the Company does business.

Restricted Stock Units

Restricted stock units (“RSUs”) are generally subject to a 4 year vesting period, with 25% of the shares vesting approximately one year from the vesting commencement date and quarterly thereafter over the remaining vesting term.

The Company had the following activity for RSUs for the six months ended June 30, 2022:

	Underlying Shares			Weighted- Average Grant Date Fair Value
Balance as of December 31, 2021		3,387,505		$	7.57
Granted		574,414		$	3.94
Vested		(279,514	)	$	6.59
Canceled or forfeited		(314,305	)	$	7.84
Balance as of June 30, 2022		3,368,100		$	7.00

Total compensation costs as of June 30, 2022 related to RSUs to be recognized in future periods was $20.6 million and is expected to be recognized over the weighted average period of 3.5 years.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan (the “ESPP), provides eligible employees with an opportunity to purchase common stock from the Company at a discount through accumulated payroll deductions. Under the ESPP, the Board may specify offerings but generally provides for a duration of six months, currently for which each six-month offering periods are February and August. In February 2021, the Company’s employees enrolled in the offering period (the “first offering”) to purchase a variable number of shares of its common stock under the ESPP at the purchase date.

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The purchase price is specified pursuant to each offering, but cannot, under the terms of the ESPP, be less than 85% of the lower of the fair market value per share of the Company's common stock on either the offering date or on the purchase date. The ESPP also includes a six month look-back provision for the purchase price of the stock price on the purchase date is less than the stock price on the offering date.

In January 2022, the number of shares available for issuance under the ESPP was automatically increased by 396,636 shares. As of June 30, 2022, the Company had 1,029,014 shares available for issuance under the ESPP. Pursuant to the ESPP, the Company issued 77,811 shares of common stock at a weighted average price per share of $3.86 during the six months ended June 30, 2022. Cash received from purchases under the ESPP for the six months ended June 30, 2022 was $0.3 million.

The fair value of shares to be issued under the Company’s ESPP was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions on a weighted-average basis for the six months ended June 30, 2022 and 2021:

	Six Months Ended June 30,
	2022			2021
Fair value of common stock	$	4.54		$	17.00
Expected term (in years)		0.5			0.5
Risk-free interest rate		0.1	%		0.6	%
Dividend yield		—			—
Volatility		90.5	%		46.9	%

Note 14. (Benefit from) Provision for Income Taxes

The Company recorded a benefit from income taxes of $0.3 million and provision for income taxes of $2.0 thousand for the three and six months ended June 30, 2022, respectively, which primarily consisted of state taxes. For the three and six months ended June 30, 2021, the Company’s provision for income taxes primarily consisted of state franchise taxes and were insignificant. Income taxes were accounted for under the asset and liability method. Deferred tax assets and liabilities were recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the financial statements and their respective tax bases using tax rates expected to be in effect during the years in which the basis differences reverse.

The Company believes it is more likely than not that its federal and state net deferred tax assets will not be fully realized. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of its deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. A valuation allowance is recorded for loss carryforwards and other deferred tax assets where it is more likely than not that such deferred tax assets will not be realized. Accordingly, the Company continues to maintain a valuation allowance against all of its U.S. net deferred tax assets as of June 30, 2022. The Company will continue to maintain a full valuation allowance against its net federal and state deferred tax assets until there is sufficient evidence to support recoverability of its deferred tax assets.

As of June 30, 2022, the Company had total uncertain tax benefits of $1.1 million related to R&D credits, which is recorded as a reduction of the deferred tax assets related credit carryforwards. The Company does not anticipate a material change to its unrecognized tax benefits over the next twelve months. It is the Company's policy to account for interest and penalties related to uncertain tax positions as interest expenses and selling, general and administrative expense, respectively, in its condensed statements of operations. No interest or penalty have been recorded related to the uncertain tax positions.

The Company is subject to U.S. federal and state income tax as well as to income tax in multiple state jurisdictions. In the normal course of business, the Company is subject to examination by tax authorities. As of the date of the financial statements, there are no tax examination in progress. The statute of limitations for tax years ended after December 31, 2014 is open for federal and state tax purposes.

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Note 15. Net Loss Per Share

Basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common stock outstanding during the period. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common stock equivalents of potentially diluted securities outstanding for the period determined using the treasury-stock and if-converted methods. Potentially dilutive common stock equivalents are comprised of options and restricted stock units outstanding under the Company’s stock option plan, as well as warrants outstanding to purchase shares of the Company's common stock. In each of the periods of the three and six months ended June 30, 2022 and 2021, there was no difference in the number of shares used to calculate basic and diluted shares outstanding as the inclusion of the potentially dilutive securities would be anti-dilutive.

The following table summarizes the Company’s net loss per share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Numerator
Net loss attributable to common stockholders, basic and diluted	$	(21,677	)	$	(16,200	)	$	(8,599	)	$	(29,516	)
Denominator
Weighted-average number of shares of common stock outstanding:
Basic and diluted		39,928,451			38,483,766			39,839,834			30,688,349
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.54	)	$	(0.42	)	$	(0.22	)	$	(0.96	)

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	As of June 30,
	2022		2021
Warrants to purchase common stock		119,284		-
Options to purchase common stock		3,948,571		5,107,453
Unvested restricted stock units		3,368,100		1,097,935
Total		7,435,955		6,205,388

Note 16. Commitments and Contingencies

Commitments

License Agreement with Eiken Chemical Co., Ltd.

In July 2020, the Company entered into a patent license agreement (“Eiken Agreement”), with Eiken Chemical Co., Ltd. (“Eiken”). Pursuant to the terms of the Eiken Agreement, Eiken granted the Company a royalty bearing non-transferable, non-assignable, sublicensable (to the Company’s affiliates), non-exclusive license under certain patents, which the Company refers to collectively as the Eiken Licensed Patents, relating, in part, to loop-mediated isothermal amplification, to develop, make, use, sell, offer for sale and dispose of any reagent, product, kit, device, equipment and/or system for nucleic acid-based in-vitro diagnostic tests for detection of SARS-CoV-2, which causes COVID-19, which the Company collectively refers to as the Initial Licensed Products, in the United States. The Company also has limited have-made rights with respect to the Eiken Licensed Patents.

The Company is obligated to pay a royalty in the low single-digit percentage on total net sales of all Licensed Products, that will be recorded as a cost of product sold. Royalty expense for the three and six months ended June 30, 2022 was $1.9 million and $4.4 million, respectively, and for the three and six months ended June 30, 2021 was $0.4 million and $0.5 million, respectively.

On March 8, 2022, the Company provided notice of termination of the Eiken Agreement, which became effective May 12, 2022. The Company terminated the Eiken Agreement because certain Eiken Licensed Patents have expired, all of which are locations in which the Company operates. As a result of the termination, the Company is no longer required to make any future royalty payments under the Eiken Agreement.

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Technology Services Agreement with Jabil

On September 10, 2020, the Company entered into the Jabil TSA, pursuant to which Jabil will use commercially reasonable efforts to perform certain technical services related to the development of components, assemblies and systems in relation to each project under the agreement as set forth in one or more statement of work, which may include the Company’s COVID-19 test kit and any of its future product candidates.

Manufacturing Services Agreement with Jabil

On September 10, 2020, the Company entered into the Jabil MSA, pursuant to which Jabil will manufacture, test, pack and ship certain electronic assemblies and systems in accordance with the Company’s specifications. Jabil may not subcontract any of its manufacturing services under the Jabil MSA without the Company’s prior written consent. The Company is obligated to provide, on a monthly basis, a rolling 12-month forecast to Jabil as well as 12-months of historical aggregate end customer demand at the finished product level, when available, which will be used to constitute written purchase orders from the Company, and the Company is obligated to purchase the quantity of products that is required by the first four months of each forecast. Jabil is entitled to reject any purchase orders that are not placed in accordance with the forecast.

As of June 30, 2022, the Company had $14.4 million of non-cancellable purchase commitments pursuant to the manufacturing services agreement with Jabil Inc., and technical services agreement with Jabil.

Other Commitments

As of June 30, 2022, the Company had non-cancellable purchase commitments of $43.3 million, consisting primarily of $27.3 million of raw material purchase commitments, and $9.4 million asset and equipment related to expanding its manufacturing capacity and automation, and $6.7 million related to non-commercial services.

Indemnification

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and may provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have not yet been made. To date, the Company has not been subject to any claims or required to defend any action related to its indemnification obligations.

The Company’s amended and restated certificate of incorporation contains provisions limiting the liability of directors, and its amended and restated bylaws provide that the Company will indemnify each of its directors to the fullest extent permitted under Delaware law. The Company’s amended and restated certificate of incorporation and amended and restated bylaws also provide the Board with discretion to indemnify its officers and employees when determined appropriate by the Board. In addition, the Company has entered and expects to continue to enter into agreements to indemnify its directors and executive officers.

Legal Proceedings

From time to time, the Company may become involved in legal proceedings arising out of the ordinary course of its business. Management is currently not aware of any matters that would be expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company.

Note 17. Related Parties

The Company incurred less than $0.1 million in expenses with individuals related to a former executive officer or its Board of Directors during both the three and six months ended June 30, 2022 and 2021, respectively. Additionally, the Company recorded revenues of $0.0 million and less than $0.1 million from individuals or companies related to an executive officer or its Board during the three and six months ended June 30, 2022 and 2021, respectively.

Note 18. Subsequent Events

In July 2022, the Company received from Health Canada its first regulatory approval for marketing its combination COVID-19 and influenza test kit, following which, the Company received its first order of the combination test kit in Canada. Additionally, in July 2022, the FDA approved the Company's request to extend the current 12-month shelf life to 18-months for its COVID-19 test kit.

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

The condensed financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2021 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our 2021 Annual Report. In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements are subject to risks and uncertainties, including those set forth under “Part I. Item 1A. Risk Factors” in our 2021 Annual Report, “Part II. Item 1A. Risk Factors” in this Quarterly Report, and elsewhere in this Quarterly Report, that could cause actual results to differ materially from historical results or anticipated results.

When used in this Quarterly Report, all references to "Lucira," the "company," "we," "our" and "us" refer to Lucira Health, Inc.

Overview

We are a medical technology company on a mission to bring central laboratory quality testing for infectious diseases into the home and point of care settings. We aim to have disposable, single use test kit platform replace central lab testing for accurately diagnosing infectious diseases leading to faster treatment and better disease control outcomes. We believe that society benefits from real-time and accurate disease detection in order to deploy time-sensitive therapeutic treatments for the individual and reduce spread of infection in the community. Currently, the United States relies on centralized lab testing for accurate disease detection. We believe testing labs are too geographically centralized, rely too heavily on instrumented equipment, and are expensive and difficult to access. With our polymerase chain reaction, or PCR-quality technology, we offer decentralized and accessible single-use testing for infectious diseases. Our test kits are coupled with our digital platform, LUCI PASS, which is designed to securely deliver a clinically relevant test result to users at home, healthcare providers, and to required public health authorities. We plan on developing and commercializing lab quality single-use test kits for several infectious diseases and have started by commercializing our PCR-quality COVID-19 test kits.

The COVID-19 pandemic has placed unprecedented pressure on the current U.S. healthcare system. We believe the pandemic demonstrated that the infectious disease testing infrastructure in the United States was too quickly overwhelmed to efficiently and reliably detect COVID-19 early enough to drive effective treatment and better patient outcomes. To suppress the spread of infection in the population, we believe testing should be fast, accurate, and away from other people so as to reduce potential transmission. While PCR lab testing for COVID-19 is trusted and accurate, it is slow, inconvenient and centralized. Rapid at-home antigen testing for COVID-19 is fast and decentralized but the test method has accuracy challenges, especially in the face of variants. There are widespread reports of people receiving negative test results from rapid antigen test kits only to receive a positive PCR result days later from the lab. We believe false negative results from rapid antigen testing can create a false sense of security, confuse the public, and lead to increased infection rates.

With our platform, we are reimagining current infectious disease testing through innovative test kits that are designed to deliver on-the-spot testing with PCR-quality in a single-use, portable, and easy-to-use format. Our platform is designed to produce assays that combine the accuracy and reliability of PCR tests and the accessibility and ease of use of antigen tests. Our molecular test kits are designed to be diagnostically definitive, unlike the antigen tests on the market today. Importantly, our tests also provide a platform for both symptomatic and asymptomatic individuals to easily check their COVID-19 and influenza infection status in 30 minutes or less, thus providing a testing solution that can be utilized at high scale as we begin navigating a new normal living with COVID-19 as an endemic disease, which also may be confused with influenza.

While people have tested to prevent spread of infection through isolation and hoped for recovery, we believe that moving forward, people will seek PCR-quality at-home tests to treat infection as quickly as possible. Many consumers have been introduced to home self-testing and self-collection. They have also learned that going to an office or lab is not necessary to get a diagnosis. We believe this new “test to treat” paradigm, supported by a telehealth digitally-enabled platform, will become increasingly important as COVID-19 becomes endemic. This is because new therapies for COVID-19 infection are now available contingent upon accurate and early testing. We believe our test kits can play an important role in facilitating a “test to treat” paradigm because our tests are PCR-quality and therefore able to detect infection early, which can lead to early therapy and potentially better outcomes. This is because PCR lab testing is understood to detect viral genetic material at the earliest stages of infection because it amplifies trace amounts of virus DNA. Rapid antigen tests are understood to be less sensitive because antigen tests do not amplify the virus. A person must have first produced enough antigens in their body to return a positive result, which could be up to seven days into their infectious stage and mostly past the time for an anti-viral to be effective. We believe this leads to potential delays in detection and a potential loss of trust in rapid antigen test results.

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Our first commercially available PCR-quality diagnostic test was the LUCIRA COVID-19 All-In-One Test Kit, which received EUA from the FDA for prescription use in at-home and point-of-care, or POC, settings. Our COVID-19 test kit was the first at-home self-test to receive FDA EUA authorization, and remains the only FDA EUA authorized single-use molecular test for at-home use. On April 9, 2021, we received our first FDA EUA authorization for over the counter, or OTC, non-prescription use among symptomatic and asymptomatic individuals aged 14 and older (with self-collection) and children aged 2-13 (with parent collection) and launched LUCI PASS, our digital platform designed to securely record and share verified test results via text messaging. The LUCIRA CHECK IT COVID-19 Test Kit utilizes identical components to the LUCIRA COVID-19 All-In-One Test Kit and both are referred to as test kits or COVID-19 test kits. We have since received authorization from Health Canada, PSAR approval by Singapore’s Health Sciences Authority, approval from the Taiwan Ministry of Health and Welfare for emergency use, and approved registration from Israel for our COVID-19 test kit. In the second quarter of 2022, we obtained regulatory approvals for our COVID-19 test kits in Israel, Hong Kong, New Zealand, Qatar, United Arab Emirates and the United Kingdom and submissions to the United Kingdom and Australia to further extend access to international markets. In May 2022, we submitted our request for EUA authorization from FDA for prescription use. In May 2022, Health Canada approved our request to extend our current 12-month shelf life to 18 months for our COVID-19 test kit. Also in May 2022, both our COVID-19 and combination COVID-19 and influenza test kits received CE Mark for professional use, clearing them for sale and distribution in the European Union. In July 2022, we received from Health Canada our first regulatory approval for the marketing of our combination COVID-19 and influenza test kit, followed by the receipt of our first order in Canada. Additionally, in July 2022, the FDA approved our request to extend our current 12-month shelf life to 18 months for our COVID-19 test kit. In July 2022, we submitted our de novo application to the FDA for our COVID-19 test kit.

Our PCR-quality platform is designed with a flexible assay architecture in which we can largely leverage existing components to accelerate the development of new test kits for additional indications, including other infectious diseases such as sexually transmitted infections, or STIs, and other respiratory infections.

Since inception through June 30, 2022, we generated $210.0 million of net revenue from the sales of our test kits. Prior to the closing of our IPO, we had financed our operations principally from net proceeds of approximately $137.3 million from sales of our preferred stock, issuances of convertible debt and common stock issuances. On February 9, 2021, we closed our IPO of 10,350,000 shares of common stock, including 1,350,000 shares issued pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a price to the public of $17.00 per share. The net proceeds to us from the IPO were $159.9 million, after deducting underwriting discounts and commissions of $12.3 million and offering expenses of $3.7 million.

On February 4, 2022, we entered into a Loan and Security Agreement, or the Loan Agreement, with Hercules Capital, Inc., or Hercules and Silicon Valley Bank, or SVB. The Loan Agreement was subsequently amended on March 17, 2022 and June 15, 2022 (the “Amended Loan Agreement”). The Amended Loan Agreement provides for term loans in an aggregate principal amount of up to $80.0 million available in four tranches with the first tranche for $30.0 million funded to us at closing (the “Term Loans”). The Term Loans will mature on February 1, 2026. In connection with the entry into the Amended Loan Agreement, we issued a warrant for 59,642 shares of common stock to each of Hercules and SVB. Each warrant is exercisable for a period of seven years from issuance at a per-share exercise price equal to $5.03. For a more detailed description of the Amended Loan Agreement and warrants, see Note 10 to our unaudited condensed financial statements included elsewhere in this Quarterly Report.

Prior to the three months ended March 31, 2022, we have historically incurred substantial net losses. For the six months ended June 30, 2022 and 2021 we had net loss of $8.6 million and $29.5 million, respectively. As we continue to develop and commercialize our test kits, we may incur additional losses and increases in expenses in future periods. As of June 30, 2022, we had an accumulated deficit of $137.1 million.

Since the second quarter of 2020, we have primarily devoted our resources to the research, development, manufacturing and commercialization of our COVID-19 test kit. Research and development activities related to our test kits, including the COVID-19 test kit, include clinical, regulatory and manufacturing process initiatives. During the first quarter of 2022, we initiated clinical testing of our combination COVID-19 and influenza test kits. We expect that our sales and marketing, research and development, regulatory and other expenses will continue to increase as we expand our marketing efforts to promote adoption of our COVID-19 test kit and our COVID-19 and influenza test kit, build relationships with our customers, obtain regulatory clearances or approvals for current and any future test kits, qualify manufacturing expansion, and conduct clinical trials. In addition, we expect our general and administrative expenses to continue to increase due to the additional costs associated with scaling our business operations, including personnel costs related to increased headcount for administrative, accounting, information technology, legal, human resources and compliance functions as well as facilities related costs. As a result, we will require substantial capital to fund manufacturing expansion, inventory purchases and expenses related to our operating activities, including selling, general and administrative expenses, as well as research and development.

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In 2020, we entered into several license and manufacturing and services agreements, and in 2021, we entered into several distribution agreements. For a more detailed description of our license and manufacturing, services and distributions agreements, see Part I, Item 1, “Business— Intellectual Property— License Agreement with Eiken Chemical Co., Ltd.,” and “Business—Manufacturing and Supply,” in our 2021 Annual Report and Note 2 and Note 10 to our unaudited condensed financial statements included elsewhere in this Quarterly Report.

Factors Affecting Our Business

We believe the following significant factors affect our business:

•Approval and Market Adoption of Our Test Kits. Our commercial success, including acceptance and use of our test kits, will depend upon a number of factors, some of which are beyond our control, including the receipt of regulatory approvals for additional indications of our test kit and new products and timing thereof, size of the market opportunity, demand from the public and members of the medical community for our test kits and rate of adoption of our test kits. The commercial success of our test kits will be dependent upon sales to physicians and licensed healthcare providers, businesses customers, consumers and international markets. Our ability to successfully execute on this strategy, and thereby increase our revenue, will in part drive our results of operations and impact on our business.

•Cost of Revenue. The results of our business will depend in part on our ability to establish and increase our gross margins by effectively managing our costs to produce our test kits. To better meet the market demand for decentralized diagnostic testing, a key part of our growth strategy includes expanding our current manufacturing capacity and adding automation to the manufacturing process. Our test kits have been designed for automated production. We plan to expand manufacturing to additional locations to further our manufacturing capacity and reach.

•Status of COVID-19 Pandemic. Given the unpredictable nature of the COVID-19 pandemic, the size of the COVID-19 diagnostic testing market and the timing of its development are highly uncertain. In the United States, there are currently three COVID-19 vaccines authorized for emergency use or FDA-approved. Although breakthrough cases occur with highly transmissible COVID-19 variants, the widely administered use of efficacious vaccines or new Factors affecting therapeutic treatment for COVID-19 may reduce the demand for COVID-19 diagnostic tests and, as a result, the COVID-19 diagnostic testing market may not substantially grow. However, we believe COVID-19, like influenza, will remain endemic for the foreseeable future and there will be a continued need for COVID-19 testing. We believe this is largely due to the COVID-19 pandemic resulting in hyper-sensitivity to symptoms, breakthrough cases and broader awareness of the disease. Our future success with our COVID-19 test kit is substantially dependent on the manner in which the market for COVID-19 diagnostics develops and grows.

•Seasonality. Our ability to accurately forecast demand for our test kits could be negatively affected by many factors, including seasonal demand. We anticipate that we will experience fluctuations in customer and user demand based on seasonality, which for COVID-19, remains unknown. However, for example, because influenza typically occurs in the fall and winter seasons, we expect our forecasts of inventory for these seasons to reflect a significant increase in inventory relative to our forecasts for the spring and summer seasons. Inventory levels in excess of customer and user demand may result in inventory write-downs or write-offs, which would cause our gross margin to be adversely affected.

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Operations

Results of Operations

The following tables sets forth the significant components of our results of operations for the periods presented (in thousands).

	Three Months Ended June 30,
	2022			2021			Change
Net sales	$	26,146		$	12,439		$	13,707		110	%
Cost of products sold		18,154			12,505			5,649		45	%
Gross profit (loss)		7,992			(66	)
Operating expenses:
Research and development		10,753			10,117			636		6	%
Selling, general and administrative		18,628			6,100			12,528		205	%
Total operating expenses		29,381			16,217
Loss from operations		(21,389	)		(16,283	)
Other income (expense), net:
Interest and other income, net		281			83			198		239	%
Interest expense, net		(826	)		—			(826	)	100	%
Total other income (expense), net		(545	)		83
Loss before benefit from income taxes		(21,934	)		(16,200	)		(5,734	)	35	%
Benefit from income taxes		(257	)		—
Net loss	$	(21,677	)	$	(16,200	)

	Six Months Ended June 30,
	2022			2021			Change
Net sales	$	116,620		$	16,955		$	99,665		588	%
Cost of products sold		68,712			17,873			50,839		284	%
Gross profit (loss)		47,908			(918	)
Operating expenses:
Research and development		22,948			16,399			6,549		40	%
Selling, general and administrative		32,537			12,200			20,337		167	%
Total operating expenses		55,485			28,599
Loss from operations		(7,577	)		(29,517	)
Other income (expense), net:
Interest and other income, net		343			1			342		34,200	%
Interest expense, net		(1,363	)		—			(1,363	)	100	%
Total other income (expense), net		(1,020	)		1
Loss before provision for income taxes		(8,597	)		(29,516	)		20,919		(71	%)
Provision for income taxes		2			—
Net loss	$	(8,599	)	$	(29,516	)

Net Sales

We currently derive all of our revenue from the sales of our COVID-19 test kits, which we account for in accordance with the provisions of Accounting Standards Codifications, or ASC, Topic 606, Revenue from Contracts with Customers. Product revenue is recognized upon the transfer of control of our test kits to the customer, which occurs at a point in time, typically upon shipment to the customer, unless terms of contractual arrangements with customers state otherwise in which case the control is transferred upon completion of delivery and customer acceptance of products.

Our commercial strategic objective is to deploy our COVID-19 and the combination COVID-19 and influenza test kits, where approved, to new and existing customers who will continue to require accurate and immediate diagnoses as COVID-19 moves to the endemic stage. In the future we expect their needs will evolve into a combination COVID-19 and influenza PCR-quality test. Our customers fall into four customer channels: 1) U.S. healthcare systems and providers; 2) sophisticated business and governments; 3) self-directed consumers in the home; and 4) an international channel, which includes healthcare, businesses and governments and individual consumer customers with local market needs.

The increases in revenue for the three and six months ended June 30, 2022, were primarily due to increased volume in units sold driven primarily by increased manufacturing output as demand continued to be strong.

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We experienced fluctuations in net sales as a result of changes in customer and user demand for our test kits based on prevalence of those experiencing possible COVID-19 or similar flu-like symptoms during the annual cold and flu season, which for COVID-19 remains unknown. Our revenue also fluctuated from quarter-to-quarter due to a variety of factors, including our ability to successfully expand our commercial sales function to meet anticipated customer demand, the number of businesses and healthcare providers who are aware of and use our test, the availability of reimbursement, and seasonality with our COVID-19 respiratory product.

Cost of Products Sold

Costs of products sold includes cost of raw materials and supplies for our finished test kits, direct labor, contract manufacturing fees, in-bound and internal shipping and handling costs incurred in manufacturing our test kits, royalties, allocated overhead, and depreciation expense.

Much like our revenue, we began to generate cost of products sold in December 2020, after we received an EUA from the FDA for POC and prescription-at-home use of our COVID-19 test kit. Cost of products sold increased $5.6 million and $50.8 million during the three and six months ended June 30, 2022, respectively, as compared to the corresponding periods in 2021. The increases in cost of products sold was due a higher volume in units sold.

We expect that cost of products sold will increase on an absolute basis as the number of COVID-19 test kits and combination COVID-19 and influenza test kits we sell increases. On a per unit basis, the cost of our test kit may decrease over time due to anticipated volume discounts on outsourced manufacturing costs, materials and shipping costs, and through other volume efficiencies we may gain as the number of test kits manufactured increases. We may experience fluctuations in our cost of products sold, which similar to net sales volumes, may be impacted by changes in customer and user demand for our test kits based on prevalence and seasonality, which for COVID-19 remains unknown.

Gross Profit

Gross profit increased $8.1 million and $48.8 million during the three and six months ended June 30, 2022, respectively, as compared to the corresponding periods of 2021, as a result of the increases in net sales of our COVID-19 test kit following the EUA approval received in November 2020 and efficiencies resulting from increased manufacturing output and scale.

We expect our gross profit to be affected by a variety of factors, including sales volume of our test kit, pricing pressures, the success of our cost-reduction strategies, the cost of test kit materials, manufacturing costs, and headcount. We expect our margin to increase to the extent we are successful in our ability to lower the costs associated with the production of our test kits, that includes increasing our production output in a lower cost environment and utilizing high volume manufacturing equipment in much of the production process. If these efforts are successful, we believe we will lower production costs on a per test kit basis and will be able to increase our gross margin. While our gross margin may increase, we also anticipate it will likely fluctuate from quarter to quarter.

Research and Development

Research and development expenses for the three and six months ended June 30, 2022 increased $0.6 million, or 6% and $6.5 million, or 40%, respectively, compared to the corresponding periods in 2021. These increases were primarily due to increased expenses related to continued development and clinical activities to support new products and to support manufacturing activities. For the three months ended June 30, 2022, the increase of $0.6 million was primarily driven by $2.1 million in personnel-related expenses, offset by $1.0 million decrease in facility related expenses and a $0.2 million decrease in third-party professional services. For the six months ended June 30, 2022, we supported research and development activities such as test kit development, testing, and validation of manufacturing activities related to our COVID-19 and combination COVID-19 and influenza test kits through increased personnel-related expenses of $4.2 million, third-party professional services of $1.5 million and supplies and materials of $1.1 million.

We expect that our research and development expenses will continue to increase in absolute dollars, but will vary as a percentage of revenue, as we continue to invest in development activities related to our current and future test kits and as our revenue increases as a result of sales of our COVID-19 test kits.

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Selling, General and Administrative

Selling, general and administrative expenses consist of personnel costs, including stock-based compensation expense, accounting and legal expenses, consulting costs, insurance and allocated overhead including rent, depreciation and utilities.

Selling, general and administrative expenses for the three and six months ended June 30, 2022 increased $12.5 million, or 205% and $20.3 million or 167%, respectively, as compared to the corresponding periods in 2021. The increases were primarily due to increasing personnel-related costs and third-party services to facilitate commercial activities and public company compliance. For the three months ended June 30, 2022, the $12.5 million increase from the corresponding prior year period was primarily driven by $5.3 million increase in third-party professional fees, $4.8 million increase in personnel-related expenses, and $1.4 million in sales and marketing expenses. For the six months ended June 30, 2022, we had higher headcount and personnel-related expenses of $7.8 million, professional expenses of $7.3 million for administrative and legal support costs sales and marketing expenses of $3.2 million, and $1.5 million of office related expenses.

We expect that our selling, general and administrative expenses will increase as we invest in the infrastructure of our commercial and sales organization to support the commercialization of our COVID-19 test kit. We expect our general and administrative expenses will increase in support of our expanding operations including increased headcount and related personnel costs, investments in corporate and research facilities, information technology, increased compliance related costs including accounting, audit, legal and consulting services expenses.

Other Income (Expense), Net

Interest income and other income (expense), net

Interest income consists of interest earned on our invested cash balances. We also may earn grant income for performing tasks under certain research and development agreements with governmental agencies, such as the National Institutes of Health, or NIH, in respect of work performed on STI developments. Income derived from reimbursement of direct out-of-pocket expenses, overhead allocations and fringe benefits for research costs associated with government contracts are recorded within other income (expense), net. Other income (expense), net may also include realized gains and losses related to settlement of transactions denominated in foreign currencies.

The components of interest income and other income (expense), net were not significant during both the three and six months ended June 30, 2022 and 2021.

Interest Expense, net

Interest expense, net consists of contractual interest incurred on our bank financing arrangements and the non-cash interest portions associated with the amortization of third-party debt issuance costs and discounts related to the end of term charge under the Loan Agreement and the warrants issued in relation to the Loan Agreement. Such debt issuance costs and discounts are amortized to interest expense under the effective interest method over the term of the loan. Interest expense is net of interest expense we have capitalized related to our construction in progress projects we funded during the period.

Interest expense for the three and six months ended June 30, 2022 were $0.8 million and $1.4 million, respectively, as compared to insignificant amounts for the corresponding periods in 2021, respectively. The increases in interest expense were primarily the result of contractual interest incurred on the $30.0 million Term Loans under the Amended Loan Agreement in February 2022. Interest expense also includes $0.2 million and $0.3 million, respectively, of non-cash interest expense related to the amortization of issuance costs and debt discounts. Interest expense for the three and six months ended June 30, 2022 was net of $0.1 million capitalized interest.

We may incur higher contractual interest expense as well as non-cash interest expense in the future if we take additional Term Loan advances, contingent upon us achieving the net sales milestones as defined the Amended Loan Agreement. Additionally, our contractual interest obligations may increase due to further increases in the Wall Street Journal published prime rate.

(Benefit from) Provision for Income Taxes

The benefit from income taxes of $0.3 million and the provision for income taxes of $2.0 thousand for the three and six months ended June 30, 2022, respectively, compared to the corresponding periods in 2021 were due to an decreases in taxable net income for the periods. The effective tax rate for 2022 and 2021 differed from the U.S. federal statutory rate of 21% primarily due to the utilization of net operating losses and state taxes.

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Our effective annual tax rate may increase if we generate higher federal and state pretax income or establish nexus in additional states as we continue to expand our operations and sales into additional markets.

Liquidity and Capital Resources

Based on our current planned operations, we believe that our existing cash and cash equivalents, anticipated cash flows from operations, and available cash advances under the Term Loan, contingent upon the Company's achievement of certain revenue targets, will be sufficient to meet our anticipated cash requirements for at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

Sources of Liquidity

Our primary source of operating cash is cash collected from customers related to sales of our COVID-19 test kit and sales of our combination COVID-19 and influenza test kit, where approved. We may supplement our cash operating needs by entering into additional other financing arrangements, additional public offerings of our common stock or convertible notes. There can be no assurance that such sources of cash will be readily available during times required to meet our cash operating requirements or at terms favorable to us.

We had incurred net losses since our inception until the three months ended March 31, 2022, in which we had net income of $13.1 million. For the three and six months ended June 30, 2022, we had net loss of $21.7 million and $8.6 million, respectively. We began generating product revenues in the fourth quarter of 2020, and we achieved $93.1 million of net sales of our COVID-19 test kits during 2021, followed by $26.1 million and $116.6 million of net sales of our COVID-19 test kits during the three and six months ended June 30, 2022. We may incur additional losses and increased operating expenses in future periods and there can be no assurance that we will achieve or sustain a level of revenues sufficient to offset our operating expenses. As of June 30, 2022, we had $75.0 million in cash and cash equivalents and an accumulated deficit of $137.1 million.

Loan Agreement

In February 2022, we entered into the Loan Agreement with Hercules and SVB providing for term loans in an aggregate principal amount of up to $80.0 million available in four tranches with the first tranche for $30.0 million funded to us at closing. The Loan Agreement was subsequently amended on March 17, 2022 and June 15, 2022 (the "Amended Loan Agreement"). The term loans will mature on February 1, 2026. In connection with the entry into the Amended Loan Agreement, we issued a warrant for 59,642 shares of common stock to each of Hercules and SVB. Each warrant is exercisable for a period of seven years from issuance at a per-share exercise price equal to $5.03. Subject to certain conditions as required under the Amended Loan Agreement, we may draw upon these term loans to fund our operations as needed to support our planned growth and expansion to support the expected increase in demand for our test kits. See Note 10 to our unaudited condensed financial statements included elsewhere in this Quarterly Report.

Uses of Liquidity

Our primary uses of cash are to fund our operations as we continue to grow our business. We will require a significant amount of cash to fund capital expenditures and working capital requirements as we grow our commercial infrastructure. We may continue to incur operating losses in the near term as our operating expenses will be increased to support the growth of our business. We expect that our selling, general and administrative expenses, and research and development expenses will continue to increase as we seek additional regulatory approvals and further develop test kits, increase our test kit manufacturing volume, expand our marketing efforts and increase our internal sales force to drive increased adoption of our test kits.

We may also have cash requirements related to capital expenditures to support the planned growth of our business, including investments in corporate facilities and equipment.

Lease Arrangements

The Company has operating leases for corporate offices, operations and research and development facilities. These leases have remaining lease terms of one to 10 years. The lease of operations and research and development facilities includes costs for utilities and common area maintenance which are not included in the calculation of lease payments.

In March 2022, we leased an 82,000 square foot facility in Vista, California for office, development, research and laboratory space. We took possession of the leased facility effective April 1, 2022 and expect to assume full occupancy by the end of June 2023 after completing tenant improvements. We project that our fixed commitments will include $1.2 million of annual lease payments over the term of this lease.

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In June 2022, we executed a lease for a 20,400 square foot facility in Berkeley, California to service as office and research and development space. We took possession of the facility on June 15, 2022 to begin tenant improvements and expects completion and assumption of full occupancy by March 2023. The term of the lease is 99 months, during which time we are obligated to make monthly rent payments, which are approximately $1.4 million on an annual basis.

License and Distribution Agreements

Pursuant to the Eiken Agreement we entered into in July 2020, we are obligated to make milestone payments upon the achievement of specified regulatory milestones as well as royalty payments. In April 2021, we paid the first installment of the world-wide license in the amount of $9 thousand. The second installment for the world-wide license of $9 thousand was paid in July 2021. See Part I, Item 1, “Business–Intellectual Property–License Agreement with Eiken Chemical Co., Ltd.” and Note 5 to our audited financial statements included in Part II, Item 8, of our 2021 Annual Report. On March 8, 2022, we provided notice of termination of the Eiken Agreement, which became effective May 12, 2022. We terminated the Eiken Agreement because certain Eiken Licensed Patents have expired, all of which are locations in which we operate. As a result of the termination, we are no longer required to make any future royalty payments under the Eiken Agreement.

We also enter into contracts in the normal course of business with various vendors that generally provide for contract termination following a certain notice period. These contracts do not contain any minimum purchase commitments. Payments due upon cancellation consist only of payments for services provided, expenses incurred up to the date of cancellation and de minimis termination penalties.

Non-cancellable purchase commitments

As of June 30, 2022, we had non-cancellable purchase commitments of $57.7 million, consisting primarily of $27.3 million of raw material purchase commitments, $9.4 million of asset and equipment related to expanding our manufacturing capacity and automation, $6.7 million related to non-commercial services, and $14.4 million pursuant to the manufacturing services agreement, or Jabil MSA, with Jabil Inc., or Jabil, and technical services agreement with Jabil, or Jabil TSA. Under the Jabil MSA, we are obligated to provide, on a monthly basis, a rolling 12-month forecast to Jabil as well as 12 months of historical aggregate end customer demand at the finished product level, when available, which will be used to constitute written purchase orders from us, and we are obligated to purchase the quantity of products that is required by the first four months of each forecast.

We expect that our near and longer-term liquidity requirements will continue to consist of working capital, general corporate expenses and capital expenditures associated with the growth of our business. Based on our current planned operations, we believe that our existing cash, anticipated cash flows from operations, and available cash draws from the Amended Loan Agreement (see Note 10 to our unaudited condensed financial statements included elsewhere in this Quarterly Report) will be sufficient to meet our anticipated cash requirements for at least the next 12 months. We have based our estimates as to how long we expect we will be able to fund our operations on assumptions that may prove to be wrong, and we would use our available capital resources sooner than we currently expect, in which case we would be required to obtain additional financing, which may not be available to us on acceptable terms, or at all. Furthermore, we may elect to raise additional capital on an opportunistic basis to fund operations. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We may raise additional capital through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our existing stockholders’ rights. If we raise additional capital through debt financing, which will require consent of out lenders, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, collaborations agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or test kits or grant licenses on terms that may not be favorable to us.

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Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the conflicts in Ukraine and potential resurgence related to the COVID-19 pandemic and actions taken to slow its spread, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. If we are not able to secure adequate additional funding when needed, we will need to re-evaluate our operating plan and may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, limit, suspend or curtail planned test kit development programs and commercialization efforts, cease operations entirely. Having insufficient funds may also require us to relinquish rights to technology that we would otherwise prefer to develop and market ourselves, or on less favorable terms than we would otherwise choose. The foregoing actions and circumstances could materially adversely impact our business, results of operations and future prospects.

Cash Flows

The following table summarizes our cash flows for the periods indicated (in thousands):

	Six Months Ended June 30,
	2022			2021
Net cash provided by (used in):
Operating activities	$	(44,072	)	$	(47,622	)
Investing activities		(14,227	)		(8,977	)
Financing activities		29,217			160,049
Increase (Decrease) in Cash, cash equivalents, and restricted cash equivalents	$	(29,082	)	$	103,450

Cash Flows Used in Operating Activities

Net cash used in operating activities for the six months ended June 30, 2022 was $44.1 million, consisting primarily of our net loss of $8.6 million and adjustments for non-cash charges of $7.1 million and increases our net operating assets and liabilities of $42.6 million. The non-cash charges were primarily driven by $3.4 million in stock-based compensation expense and $3.3 million in depreciation and amortization. The net cash used by changes in our net operating assets and liabilities was primarily driven by $68.3 million of inventory purchases, partially offset by an $18.6 million decrease of accounts receivable and $5.8 million decrease in prepaid expenses and other current assets. The decreases in accounts receivable was largely due to decreased net sales and timing of collections on open accounts receivable.

Net cash used in operating activities for the six months ended June 30, 2021 was $47.6 million, consisting primarily of our net loss of $29.5 million and changes in our net operating assets and liabilities of $21.0 million, partially offset by adjustments for non-cash charges of $2.9 million. The non-cash charges were primarily driven by $1.5 million in stock-based compensation expense, $0.9 million in depreciation and amortization, $0.3 million of allowance for doubtful accounts, $0.2 million in noncash lease expense and the loss incurred of $0.3 million on the remeasurement to fair value of the 2020B Notes. The net cash used by changes in our operating assets and liabilities were primarily driven by $31.3 million of inventory purchases, $8.8 million of prepaid expenses, partially offset by $19.2 million increases in accounts payable, accrued liabilities, and customer deposits. The increases in accounts payable and accrued liabilities were largely due to increased expenditures in operations, research and development and selling, general and administrative activities.

Cash Flows Used in Investing Activities

Net cash used in investing activities for the six months ended June 30, 2022 and 2021 was $14.2 million and $9.0 million, respectively, consisting of purchases of property and equipment. The increase was primarily due to investing in our manufacturing capabilities to support the commercialization of our test kits.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2022 was $29.2 million, consisting primarily of proceeds, net of issuance costs for the Term Loans payable.

Net cash provided by financing activities during the six months ended June 30, 2021 was $160.0 million, consisting primarily of proceeds from the issuance and sale of shares of our common stock as part of our IPO on February 9, 2021.

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Recently Issued and Adopted Accounting Standards

See Note 2 to our unaudited condensed financial statements included elsewhere in this Quarterly Report for more information.

Emerging Growth Company Status

The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” The JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to use this extended transition period under the JOBS Act until the earlier of the date we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our condensed financial statements may not be comparable to companies who have adopted new or revised accounting pronouncements.

We will remain an emerging growth company until the earlier of (1) (a) December 31, 2026, (b) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion or (c) the date on which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Critical Accounting Policies and Significant Management Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our condensed financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.

We evaluate our estimates and judgments, including those related to revenues, inventory valuation, accrued expenses and stock-based compensation, 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 may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis - Critical Accounting Policies and Significant Management Estimates” of our 2021 Annual Report, except for those accounting subjects discussed in Note 2 to the unaudited condensed financial statements titled Recently Adopted Accounting Standards included in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item 3.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act refers to controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.

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Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report were not effective at the reasonable assurance level, as described below.

However, our management, including our Chief Executive Officer and our Chief Financial Officer, have concluded that, notwithstanding the identified material weakness in our internal control over financial reporting, the condensed financial statements in this Quarterly Report fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

Material Weakness Identified

In connection with the audit of our financial statements as of and for the year ended December 31, 2021, we identified a material weakness in our internal control over financial reporting. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We identified a material weakness in our internal control over financial reporting related to the lack of sufficiently designed and implemented controls and procedures to ensure the accuracy of costing and valuation of inventory, appropriate classification of write-offs, and consistent reconciliation of inventory balances at various locations. This material weakness resulted in post-closing adjusting journal entries to correctly state our inventory balances as of December 31, 2021, as reported in our 2021 Annual Report. Our interim financial statements contained in our prior Quarterly Reports on Form 10-Q during the year ended December 31, 2021, were not affected by these post-closing adjusting journal entries and therefore have not been restated.

As described below, management has designed and has begun executing a remediation plan to address the material weakness and further actions are ongoing as of June 30, 2022. We have not had sufficient time to test the effectiveness of the remediation actions. As a result, the material weakness continue to be present as of June 30, 2022.

Remediation Plans for Material Weakness in Internal Control over Financial Reporting

With the oversight of senior management and our audit committee, we have begun the process of executing remediation steps, including but not limited to the following:

(i)enhanced existing controls around effective review to prevent and timely detect misstatements of inventory valuation;

(ii)designing and implementing additional controls and enhancement of documentation of procedures and policies to ensure the consistent completion of all inventory related account reconciliations, the completeness and accuracy of data used to assess the quantity and valuation of inventory and the review and verification by management; and

(iii)hiring, retaining, and training personnel with experience and expertise in inventory management, cost accounting and internal controls with the collective focus on implementing a sustainable effective internal control structure to ensure completeness, accuracy, existence and cost/valuation of inventory across all locations.

While we believe the measures described above will remediate the material weakness identified and strengthen our internal control over financial reporting, the implemented and enhanced controls would need to operate for a sufficient period of time to demonstrate that the material weakness is fully remediated. We are committed to continuing to improve our internal control processes and will continue to diligently and to vigorously review our financial reporting controls and procedures and may need to design and implement additional procedures and controls to remediate the material weakness.

Changes in Internal Control over Financial Reporting

Except for the ongoing remediation measures in connection with the material weakness described above, there were no changes in our internal controls over financial reporting during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. There are currently no material claims, actions or proceedings pending against us or our assets, the ultimate disposition of which we believe could have an adverse effect on our results of operations, financial condition or cash flows.

Item 1A. Risk Factors.

This Quarterly Report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in this Quarterly Report. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Quarterly Report.

You should carefully consider the following risk factors, together with all other information in this Quarterly Report, including our condensed financial statements and notes thereto, and in our other filings with the Securities and Exchange Commission. If any of the following risks, or other risks not presently known to us or that we currently believe to not be significant, develop into actual events, then our business, financial condition, results of operations or prospects could be materially adversely affected. If that happens, the market price of our common stock could decline, and stockholders may lose all or part of their investment.

We have marked with an asterisk (*) those risks described below that reflect substantive changes from, or additions to, the risks described in our 2021 Annual Report.

Risks Related to Our Business and Strategy

We have incurred losses since our inception and we anticipate that we may incur additional losses in future periods, and the net losses that we incur may fluctuate significantly from period to period, which could harm our future business prospects. *

We had incurred net losses since our inception. For the three and six months ended June 30, 2022, we had net loss of $21.7 million and $8.6 million, respectively, compared to a net loss of $16.2 million and $29.5 million for the three and six months ended June 30, 2021, respectively. For the three months ended March 31, 2022, we had net income of $13.1 million, representing our first quarter of net income. We may incur additional losses and increased operating expenses in future periods, and the net losses that we incur may fluctuate significantly from period to period. As of June 30, 2022, we had an accumulated deficit of $137.1 million. To date, we have financed our operations principally from sales of our COVID-19 test kit, issuance and sale of our common stock through our initial public offering, grant revenue and the issuances and sales of convertible promissory notes and preferred stock. We have devoted our resources to the research, development, manufacturing and commercialization of our COVID-19 test kit, combination COVID-19 and influenza test kit and our influenza test kit, and to research and development activities related to these test kits, including clinical, regulatory and manufacturing initiatives to obtain marketing approval. These losses have, and will continue to have, an adverse effect on our working capital, total assets and stockholders’ equity. Because of the numerous risks and uncertainties associated with our research, development, manufacturing and commercialization efforts, we are unable to predict when we will become profitable, and we may never become profitable. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our inability to achieve and then maintain profitability would make it difficult to finance our business and accomplish our strategic objectives, which would negatively affect our business, financial condition, results of operations, and cash flows.

We may need to raise additional capital to fund our existing operations, develop our platform, commercialize new products or expand our operations.*

Based on our current planned operations, we believe that our existing cash, anticipated cash flows from operations, and available cash draws from the Amended Loan Agreement will be sufficient to meet our anticipated cash requirements for at least the next 12 months. If our available cash and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements including because of failure to secure additional regulatory approvals for our test kits, lower than anticipated or non-existent demand or reimbursement levels for our test kits, or otherwise, we may seek to issue equity or convertible debt securities, enter into a credit facility or another form of third-party funding, seek other debt financing or enter into collaborations or licensing arrangements.

We may consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons, including to further scale up the manufacturing of our test kits, and if user demand warrants such increase in scale, to increase our sales and marketing efforts to drive market adoption of our test kits and address competitive developments, and to finance capital expenditures and general and administrative expenses.

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Our present and future funding requirements will depend on many factors, some of which are beyond our control, including:

•the cost and timing of additional regulatory clearances or approvals for our test kits and any future test kits;

•our ability to achieve and maintain revenue growth;

•our rate of progress in, and cost of the sales and marketing activities associated with, establishing adoption of and reimbursement for our COVID-19 test kit;

•our rate of progress in, and cost of research and development activities associated with, our COVID-19 and influenza test kit;

•the effect of competing technological and market developments, including developments in COVID-19 vaccination and therapeutics;

•the potential cost of and delays in test kit development as a result of any regulatory oversight applicable to our test kits;

•the scope, rate of progress and cost of our current and future clinical trials;

•the costs associated with any product recall that may occur;

•the costs of attaining, defending and enforcing our intellectual property rights; and

•the terms and timing of any other collaborative, licensing and other arrangements that we may establish.

Additional funding may not be available on acceptable terms, or at all. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our existing stockholders’ rights. If we raise additional capital through debt financing, which will require the consent of our lenders, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, collaborations agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or test kits or grant licenses on terms that may not be favorable to us.

In addition, our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the COVID-19 pandemic and actions taken to slow its spread, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development, manufacturing or commercialization of our COVID-19 test kit, combination COVID-19 and influenza test kit, influenza test kit, or other research and development initiatives. If this were to occur, our ability to grow and support our business and to respond to market challenges could be significantly limited, which could have a material adverse effect on our business, financial condition and results of operations.

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We have refocused our near-term business strategy on responding to the COVID-19 pandemic, for which the diagnostic testing market is new and rapidly developing, making it difficult to evaluate our business and future prospects. Our focus on a rapidly developing and changing market could make it difficult to succeed and achieve our goals and could harm our future business prospects. *

Prior to the COVID-19 pandemic, we focused our research and development efforts on developing our molecular nucleic acid amplification technology for use in our influenza test kit. However, based on our clinical trials of our influenza test kit to date, we adapted our molecular nucleic acid amplification technology to detect whether a person is shedding the SARS-CoV-2 virus that causes COVID-19. In addition, due to the duration of the COVID-19 pandemic and the overlapping symptoms of COVID-19 and influenza, we have also focused on developing our COVID-19 and influenza combination test kit. We received CE Marks for professional use for both our COVID-19 and influenza and COVID-19 molecular tests, clearing both tests for sale and distribution throughout the European Union. We submitted an EUA application to the U.S. Food and Drug Administration for prescription use of our combination COVID-19 and influenza molecular test. The market for COVID-19 and COVID-19 and influenza diagnostic testing is rapidly developing and changing, which makes it difficult to evaluate our future business prospects and, therefore, we may not be able to achieve our goals and strategy.

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We have encountered, and will continue to encounter, risks and difficulties, some of which are outside of our control, frequently experienced in rapidly developing and changing industries, including those related to:

•our ability to compete with companies that are currently in, or may in the future enter, the COVID-19 and COVID-19 and influenza diagnostic testing market, including companies with greater financial, technical and other resources than our company;

•the possibility that the FDA or similar foreign agency revokes our existing EUAs or similar foreign authorization for our test kits;

•our ability to scale manufacturing to quantities sufficient to meet demand in a timely manner, in accordance with our specifications, and in compliance with applicable regulatory requirements;

•unanticipated manufacturing delays and quality control issues;

•our ability to control costs, including our operating expenses;

•the amount and timing of operating expenses, particularly manufacturing expenses, related to the expansion of our business, operations and infrastructure;

•unanticipated delays in test kit development or test kit launches;

•positive or negative media coverage, or public, user, healthcare provider and/or physician perception, of our test kits or competing products;

•lack or perceived lack of sufficient clinical evidence supporting the accuracy or cost-effectiveness of our test kits over existing products;

•the failure of physicians to prescribe our COVID-19 and COVID-19 and influenza test kit, where approved;

•the failure of third-party payors to cover or adequately reimburse our COVID-19 test kit for prescription at-home and non-laboratory use;

•our ability to meet customer and user demand for our test kits;

•our ability to achieve or maintain a consumer-appropriate retail price;

•our ability to obtain, maintain and enforce our intellectual property rights; and

•general economic and political conditions.

Given the unpredictable nature of the COVID-19 pandemic, the potential size of the COVID-19 and COVID-19 and influenza diagnostic testing market and the timing of its development are highly uncertain. In addition, the production and widely administered use of efficacious vaccines or treatments for COVID-19 or influenza may reduce the demand for diagnostic tests and, as a result, the COVID-19 and COVID-19 and influenza diagnostic testing market may not substantially grow. Currently there are companies developing vaccines and therapeutic treatments for COVID-19, and in the United States, there are currently three COVID-19 vaccines authorized for emergency use or FDA-approved. Our future success is substantially dependent on the manner in which the market for COVID-19 and COVID-19 and influenza diagnostic testing develops and grows. If the market develops in a manner that does not facilitate demand for our test kits, or fails to develop or grow in the manner in which we expect or at all, our business, financial condition, results of operations and cash flows may be negatively affected.

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We received EUAs from the FDA for our COVID-19 test kit. If the FDA revokes or terminates our EUAs, such as when the federally-declared COVID-19 public health emergency ends, we will be required to stop commercial distribution of our COVID-19 test kit immediately unless we can obtain FDA clearance for our COVID-19 test kit under a traditional regulatory pathway, which is lengthy and expensive, which could harm our future business prospects.

Under the Federal Food, Drug, and Cosmetic Act, or the FDCA, the FDA has authority to allow certain unapproved medical products or unapproved uses of approved medical products to be used in an emergency to diagnose, treat or prevent serious or life-threatening diseases or conditions when there are no adequate, approved and available alternatives. In issuing an EUA, the FDA will consider the totality of scientific evidence available to the FDA regarding safety, efficacy and known and potential risks of such products and availability of alternatives to the emergency use products, among others. EUAs issued by the FDA specify the scope of authorization and conditions of authorization, including limitations on distribution and conditions related to product advertising and promotion. Once granted, an EUA is effective until the declaration that circumstances justifying the authorization of the emergency use is terminated or the EUA is revoked, after which the product must be approved by the FDA under a traditional pathway in order to remain on the market or to continue commercialization of the product.

On November 17, 2020, we received an EUA from the FDA for POC and prescription at-home indications for the detection of nucleic acid from SARS-CoV-2, the virus that causes COVID-19, in nasal swab samples from people who are suspected of COVID-19. On April 9, 2021, we received an EUA from the FDA for our COVID-19 test kit for OTC non-prescription use among symptomatic and asymptomatic individuals aged 14 and older (with self-collection) and children aged two to 13 (with parent collection). On June 30, 2021, we withdrew our pending EUA application with the FDA that was intended to expand our current prescription EUA for suspected symptomatic individuals to include asymptomatic individuals because we decided to refocus on an FDA 510(k) submission. Although we intend to pursue an FDA 510(k) submission for this test kit, we may be compelled to instead pursue an EUA. In the event that we need to pursue an EUA, the FDA may require additional data, including additional validation data and clinical performance data, and may not ultimately issue an authorization to expand our POC indication. Changes in FDA policies, guidance, and requirements for EUA application submission may delay FDA authorization of additional indications for our COVID-19 test kit. Further, given the high volume of EUA requests received by the FDA and other factors due to the COVID-19 pandemic, including any disruptions in the FDA’s normal operations, the FDA’s review of an amended or additional EUA application may be significantly delayed. The FDA may not grant an EUA for additional indications of our COVID-19 test kit on a timely basis or at all, which could harm our future business prospects.

The distribution and advertising conditions set forth in our existing EUAs limit our market opportunities and restrict how we can commercialize our COVID-19 test kit. For example, according to our authorized EUAs, our COVID-19 test kit must comply with certain labeling requirements, including the label that our COVID-19 test kit has not been FDA cleared or approved but has been authorized by the FDA under an EUA and that our COVID-19 test kit has been authorized only for the detection of nucleic acid from SARS-CoV-2, and not for any other viruses or pathogens. In addition, if any additional EUAs are granted for our COVID-19 test kit, the distribution and advertising conditions set forth in the EUA may limit our market opportunities or restrict how we can commercialize our COVID-19 test kit. If the FDA’s policies and guidance change unexpectedly and/or materially or if we misinterpret them, potential sales of our COVID-19 test kit could be adversely impacted. In addition, the FDA may revoke our existing or any future EUA where it is determined that the COVID-19 public health emergency no longer exists or warrants such authorization, or if new evidence becomes available that indicates that our test kit is not as safe, effective or reliable as the data provided in the applicable EUA application. We cannot predict how long an EUA will remain effective and we may not receive advance notice from the FDA regarding revocation of our EUAs. The termination or revocation of our existing EUAs for our COVID-19 test kit would cause us to cease our commercialization efforts until and if we have obtained marketing authorization from the FDA through another regulatory pathway. In addition, changing policies and regulatory requirements could require us to obtain a 510(k) or other marketing authorization from the FDA for our COVID-19 test kit, which could limit, delay or prevent commercialization of our COVID-19 test kit and could adversely impact our business, financial condition and results of operations.

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Our near-term success is highly dependent on the successful commercialization of our COVID-19 and combination COVID-19 and influenza test kits, and they may not attain or maintain market acceptance or be successfully commercialized in jurisdictions in which such test kits are approved, which could negatively impact our business.*

Our near-term prospects, including our ability to finance our company and generate revenue, as well as our future growth, is highly dependent on the successful and timely regulatory approval from the FDA and commercialization of our COVID-19 and combination COVID-19 and influenza test kits. The regulatory and commercial success of our test kits will depend on a number of factors, some of which are outside our control, including the following:

•whether we are required by the FDA or other similar regulatory authorities to conduct additional clinical trials or to modify the design of our current trials to support the approval of our test kits;

•achieving and maintaining compliance with all regulatory requirements applicable to our test kits;

•the acceptance by the medical community and others of the convenience and accuracy of our test kits and the sufficiency of clinical evidence supporting our test kits;

•the ability of our COVID-19 and combination COVID-19 and influenza test kits to accurately detect different strains of SARS-CoV-2, created by genetic mutation or otherwise, such as the five notable SARS-CoV-2 variants in the U.K., South Africa, India, Japan and Brazil, and two variants in Peru and Columbia; Omicron has been detected in multiple countries;

•our ability to obtain coverage and adequate reimbursement from third-party payors for prescription at-home use of our test kits; and

•the ability of Jabil and other third parties with whom we may contract to manufacture our COVID-19 test kit to remain in good standing with regulatory agencies and develop, validate and maintain commercially viable manufacturing processes that are compliant with applicable requirements and to manufacture sufficient quantities of our test kits to meet demand in a timely manner, in accordance with our specifications, and in compliance with applicable regulatory requirements.

Even though we have received EUAs for our COVID-19 test kit and CE Mark for our combination COVID-19 and influenza test kit, they may not gain broad market acceptance among physicians and licensed healthcare providers, businesses, customers, consumers and international markets, including physicians, healthcare payors, users and others in the medical community. The commercial success of our test kits is dependent upon physicians and licensed healthcare providers, businesses, customers, consumers and international markets adopting our test kit, which will be informed, in part, by the cost, convenience and accuracy of our test kits. The accuracy of our test kits could be impacted by novel strains of SARS-CoV-2 with genetic variations from viral mutation over time.

The Centers for Disease Control and Prevention, or CDC, and the World Health Organization, or WHO, have highlighted two notable SARS-CoV-2 Variants of Concern: Delta (also known as B.1.617.2, all sublineages) first detected in India, and Omicron (also known as B.1.1.529, all BA sublineages including BA.1, BA.1.1, BA.2, BA.3 and XE) first detected in multiple countries. Additionally, five other variants are under continued surveillance as Variants of Interest: Alpha (also known as B.1.1.7, all sublineages) first detected in the United Kingdom, Beta (also known as B.1.351, all sublineages) first detected in South Africa, Gamma (also known as P.1, all sublineages) first detected in Japan/Brazil, Lambda (also known as C.37, all sublineages) first detected in Peru, Mu (also known as B.1.621, all sublineages) first detected in Colombia. We perform routine surveillance of emerging SARS-CoV-2 strains by periodically evaluating in silico reactivity against sequence databases. These evaluations have shown that these variants are reactive to our COVID-19 test kit. Our assay targets two nonoverlapping regions of the SARS-CoV-2 genome including the N gene, therefore the detection region is unaffected by the mutations of the spike protein of SARS-CoV-2 in the variant strains.

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Moreover, our COVID-19 test kit is authorized under an EUA from the FDA for the detection of the novel coronavirus SARS-CoV-2 that causes COVID-19, regardless of the virus variant. The FDA may require us to conduct additional clinical trials or seek a new or amended EUA and our COVID-19 test kit may not be successful in detecting future variant strains, which could significantly impact the accuracy and usefulness of our test kit and materially harm our business and prospects. Similarly, our authorization from Health Canada, PSAR approval by Singapore’s Health Sciences Authority, approval from the Taiwan Ministry of Health and Welfare for emergency use, and approved registration from Israel, the United Arab Emirates, Qatar, Hong Kong, New Zealand, Australia and the United Kingdom, may also require additional clinical trials in the future similar to that of the FDA. In addition, the risk of false negative results may increase when testing patients with genetic variants of SARS-CoV-2, including the five notable SARS-CoV-2 variants.

In addition, the COVID-19 and influenza diagnostic testing market is susceptible to rapid technological developments and we may not be able to match any new technological advances, which would render our COVID-19 and combination COVID-19 and influenza test kit uncompetitive or obsolete. If we are unable to match technological improvements in competitive products or effectively respond to the needs of our customers and users, the demand for our COVID-19 and combination COVID-19 and influenza test kit could be reduced.

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Our commercial success, including acceptance and use of our COVID-19 and combination COVID-19 and influenza test kit, will depend upon a number of factors, some of which are beyond our control, including:

•the timely receipt of additional marketing authorizations and approvals from the FDA and other similar regulatory authorities;

•perceptions by the public and members of the medical community, including physicians, as to its convenience, accuracy and the sufficiency of clinical evidence supporting its performance;

•demand from the public and members of the medical community for our test kits and adoption of our test kit;

•the availability, perceived advantages, relative cost, relative convenience and relative accuracy of our test kits compared to those of our competitors;

•positive or negative media coverage of our test kits or competing products, as to its cost, convenience, accuracy and the sufficiency of clinical evidence supporting its performance;

•the effectiveness of our marketing and sales efforts, including our ability to have a sufficient number of talented sales representatives to sell our test kits;

•unanticipated delays in manufacturing, test kit development or test kit launch;

•our ability to raise additional capital on acceptable terms, or at all, if needed to support the commercialization of our test kits;

•our ability to achieve and maintain compliance with all regulatory requirements applicable to our test kits;

•our ability to obtain, maintain and enforce our intellectual property rights;

•our ability to maintain a continued supply of test kit materials that meets our quality control requirements;

•the ability of Jabil and other third parties with whom we may contract to manufacture our test kits to manufacture and supply sufficient quantities of our test kits to meet demand in a timely manner, in accordance with our specifications, and in compliance with applicable regulatory requirements;

•limitation on use or warnings required by the FDA in our COVID-19 and combination COVID-19 and influenza test kit labeling; and

•availability of, or changes in, coverage or reimbursement rates for our COVID-19 and combination COVID-19 and influenza test kit from government or other commercial or healthcare payors.

Our future success also depends upon consumers having an experience with our test kits that meets their expectations in order to increase demand for our test kits as a result of positive feedback and word-of-mouth. Consumers may be dissatisfied if their expectations of the diagnostic test and results are not met. Consumers may also be dissatisfied if they experience adverse events, such as device malfunctions, inaccurate readouts or significantly delayed responses or recalls. If our test kits do not meet the expectations of consumers, or if consumers experience adverse events, it could discourage consumers from repurchasing our test kits or referring our test kits to others. Further, dissatisfied consumers may express negative opinions through social media. Any failure to meet consumer expectations and any resulting negative publicity could harm our reputation and future sales.

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Our near-term revenue will be primarily generated from sales of our COVID-19 test kit and our COVID-19 and influenza combo test kit, and we are highly dependent on these test kits for our success.

We expect that sales of our COVID-19 test kit and our COVID-19 and influenza combo test kit will account for the substantial majority of our revenue for the foreseeable future. Our ability to execute our growth strategy and become profitable will therefore depend upon the adoption of our COVID-19 test kit and our COVID-19 and influenza test kit by consumers. We may not be able to successfully negotiate additional customer contracts in a timely manner, on terms favorable to us or at all. If we are unable to execute additional contracts and expand our customer base, we will not be able to increase our revenue which will have a material adverse impact on our business and results of operation. This risk is particularly exacerbated given our very early stage of commercial operations and limited experience with selling and commercializing our products and negotiating contracts with potential customers. We may not be successful in expanding our customer base significantly, or at all. Adoption and use of our COVID-19 test kit and our COVID-19 and influenza test kit will depend on several factors, including, but not limited to the accuracy, affordability, reliability and ease of use of our test kit as compared to existing products, and coverage and reimbursement policies with respect to our COVID-19 test kit and products that compete with our COVID-19 test kit and our COVID-19 and influenza combo test kit. Our COVID-19 test kit and our COVID-19 and influenza combo test kit may not gain market acceptance, and any failure to do so would harm our business and results of operations.

Because we expect virtually all of our revenue for the foreseeable future to be generated from sales of our COVID-19 test kit and our COVID-19 and influenza combo test kit, the failure of our COVID-19 test kit and our COVID-19 and influenza combo test kit to garner market acceptance would substantially harm our business and would adversely affect our revenue. If our COVID-19 test kit and our COVID-19 and influenza combo test kit are not as successfully commercialized as expected, we may not be able to generate sufficient revenue to become profitable. Any failure of our COVID-19 test kit and our COVID-19 and influenza combo test kit to be successfully commercialized may have a material adverse effect on our business, operating results, financial condition and cash flows, and could result in a substantial decline in the price of our common stock.

If we are unable to expand our marketing infrastructure, we may fail to increase customer adoption of our test kits to meet our forecasts.

We launched direct-to-consumer sales through our website after we received an EUA from the FDA for OTC use of our COVID-19 test kit in April 2021. Additionally, our COVID-19 test kit was made available on Amazon.com in May 2021. As a result, we have only limited experience marketing our offerings and engaging customers at our current scale. Furthermore, late in the second quarter of 2021, we temporarily halted online sales of our LUCIRA CHECK IT test kit as we prioritized distribution to our partnerships. We reactivated online ordering again via our website in October 2021. We plan to derive a meaningful portion of our revenue from consumer purchases of our test kits. Our ability to expand direct-to-consumer sales and drive broad customer adoption of our test kits is integral to our business. Our financial condition and results of operations are and will continue to be highly dependent on the ability of our marketing function to adequately promote, market, and attract customers to our test kits in a manner that complies with applicable laws and regulations.

A key element of our business strategy is the continued expansion of our marketing infrastructure and building brand awareness. As we increase our marketing efforts in connection with the expansion of our OTC test kit sales, we will need to further expand the reach of our marketing networks. Our future success will depend largely on our ability to continue to hire, train, retain, and motivate a skilled marketing workforce with significant industry-specific knowledge in various areas, including direct-to-consumer business models, e-commerce, technology, healthcare, and the regulatory restrictions related thereto, as well as the competitive landscape for our test kits.

If we are unable to expand our marketing capabilities, we may not be able to effectively attract customers. Relatedly, if any of our marketing platforms significantly increase their advertising fees, our ability to expand our marketing reach will be greatly impeded. Any such failure could adversely affect our reputation, revenue, and results of operations.

Direct-to-consumer marketing and social media efforts may expose us to additional regulatory scrutiny, including from the Federal Trade Commission, or FTC, and other consumer protection agencies and regulators.

In addition to the laws and regulations enforced by the FDA, advertising for non-restricted medical devices is subject to federal truth-in-advertising laws enforced by the FTC, as well as comparable state consumer protection laws. Our efforts to promote our prescription and OTC test kits via direct-to-consumer marketing and social media initiatives may subject us to additional scrutiny of our practices. For example, the FTC and other consumer protection agencies scrutinize all forms of advertising (whether in digital or traditional formats) for consumer-directed products and non-restricted medical devices to ensure that advertisers are not making false, misleading or unsubstantiated claims or failing to disclose material relationships between the advertiser and its products’ endorsers, among other potential issues.

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Under the Federal Trade Commission Act, or FTC Act, the FTC is empowered, among other things, to (a) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; and (c) gather and compile information and conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce. The FTC has very broad enforcement authority, and failure to abide by the substantive requirements of the FTC Act and other consumer protection laws can result in administrative or judicial penalties, including civil penalties, injunctions affecting the manner in which we would be able to market services or products in the future, or criminal prosecution. We plan to increase our advertising activities that may be subject to these federal and state truth-in-advertising laws. Any actual or perceived non-compliance with those laws could lead to an investigation by the FTC or a comparable state agency, or could lead to allegations of misleading advertising by private plaintiffs. Any such action against us would disrupt our business operations, cause damage to our reputation, and result in a material adverse effect on our business.

We have a limited operating history, which may make it difficult to evaluate our current business and predict our future performance. If we do not successfully manage the manufacturing and distribution of our COVID-19 and combination COVID-19 and influenza test kits and development and launch of any future test kits, our financial results could be adversely affected.

We are an early-stage company and have a limited operating history. We began our operations in 2013 and we commercially launched our COVID-19 test kit in the first quarter of 2021 in the United States in accordance with our POC and prescription at-home indications. Our limited commercial operating history may make it difficult to evaluate our current business and predict our future performance. Any assessment of our profitability or prediction about our future success or viability is subject to significant uncertainty. We have encountered and will continue to encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving industries. If we do not address these risks successfully, it could have a material adverse effect on our revenue, results of operations and business.

In addition, we face risks associated with launching new test kits, such as our COVID-19 test kit, including manufacturing challenges and delays and partner product recalls. If we encounter additional development or manufacturing challenges or discover errors during our product development cycle, the product launch dates of our COVID-19 test kit and any future test kits may be delayed. The expenses or losses associated with unsuccessful product development or launch activities or lack of market acceptance of our new test kits could adversely affect our business or financial condition.

We identified a material weakness in our internal control over financial reporting and may identify material weaknesses in the future or otherwise fail to maintain proper and effective internal controls, which may impair our ability to produce accurate financial statements on a timely basis.

During the preparation of our financial statements for the year ended December 31, 2021, we identified a material weakness in internal control over financial reporting related to the lack of sufficiently designed and implemented controls and procedures to ensure the accuracy of costing and valuation of inventory, appropriate classification of write-offs and consistent reconciliation of inventory balances at various locations. During this period, we did not have a sufficient complement of personnel within the accounting function adequately conducting review and analysis of certain transactions in connection with our commercialization and related to scaling of our commercial sales during the year ended December 31, 2021.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. This material weakness could result in a misstatement of account balances or disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected. Management has designed and has begun executing a remediation plan to address the material weakness and further actions are ongoing as of June 30, 2022. The process to remediate the material weakness includes, but is not limited to, the following (i) enhance existing controls around effective review to prevent and timely detect misstatements of inventory valuation; (ii) design and implement additional controls and enhancement of documentation of procedures and policies to ensure the consistent completion of all inventory related account reconciliations, the completeness and accuracy of data used to assess the quantity and valuation of inventory and the review and verification by management; and (iii) hiring, retaining and training personnel with experience and expertise in inventory management, cost accounting and internal controls with the collective focus on implementing a sustainable effective internal control structure to ensure completeness, accuracy, existence and cost/valuation of inventory across all locations.

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We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of Nasdaq. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting. Commencing with our fiscal year ended December 31, 2021, we must perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Form 10-K filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. This requires that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. Prior to our IPO, we have never been required to test our internal controls within a specified period, and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner.

We may discover additional weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements. Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements. If that were to happen, we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.

The measures we have taken to date, and actions we may take in the future, may not be sufficient to remediate the control deficiencies that led to our material weakness in our internal control over financial reporting or to prevent or avoid potential future material weaknesses. We may not have identified all material weaknesses. Moreover, our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods, which could cause the price of our common stock to decline. In addition, if we are not able to continue to meet these requirements, we may not be able to remain listed on Nasdaq.

We rely substantially on Jabil for the manufacturing, quality-testing, and assembly of our COVID-19 and combination COVID-19 and influenza test kits. Any termination or loss of significant rights under the Jabil MSA would harm our commercialization of our COVID-19 and combination COVID-19 and influenza test kits. In addition, Jabil may fail to obtain and maintain regulatory approval for its facilities, fail to provide us with sufficient quantities of our test kits or fail to do so at acceptable quality levels or prices.

We rely substantially and intend to continue to rely substantially on Jabil for the manufacturing, quality-testing, and assembly of our test kits.

Pursuant to the Jabil MSA, Jabil has agreed to manufacture, test and pack our COVID-19 and combination COVID-19 and influenza test kits in accordance with our specifications and applicable forecasts and purchase orders. We are obligated to provide, on a monthly basis, a rolling 12-month forecast to Jabil of historical aggregate end customer demand at the finished product level, which will be used to constitute written purchase orders. After the initial term of three years, the Jabil MSA renews automatically for consecutive one-year terms, subject to written notice of the intention not to renew from either party, given at least 180 days prior to the expiration of the then-current yearly term. The parties may terminate the Jabil MSA at any time upon mutual written consent, and either party may terminate the Jabil MSA upon 180 days prior written notice. Either party may also terminate the Jabil MSA upon a material breach by the other party that is not cured within 30 days after receiving written notice of the breach, or upon a bankruptcy of the other party.

Any termination or loss of rights under the Jabil MSA would harm our ability to commercialize, sell and distribute our test kits, which in turn would have a material adverse effect on our business, operating results and prospects. If we were to lose our rights under the Jabil MSA, we believe it would be difficult for us to find an alternative manufacturer. In addition, to the extent Jabil or the alternative manufacturer has not secured applicable regulatory approvals, we would have to expend significant resources to obtain regulatory approvals that may never be obtained or require several years to obtain, which could significantly delay test kit production and sales. We may be unable to raise additional capital to fund our operations during this extended time on terms acceptable to us or at all. In addition, we have in the past and may in the future experience manufacturing delays as a result of disputes with Jabil or otherwise; the supply of our test kits could be harmed as a result.

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In addition, the manufacture of medical devices is complex and requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. We may not be able to manufacture our test kits at expected prices. There may also be unforeseen occurrences that increase our costs, such as increased prices of the components of our test kits, changes to labor costs or less favorable terms with third-party suppliers or contract manufacturing partners. As a result, even if automated production lines perform as anticipated, it may not be possible to manufacture our products in a profitable manner.

Manufacturers of medical devices encounter difficulties in production, particularly in scaling up and validating initial production. These problems include difficulties with production costs and yields, quality control, quality assurance testing, operator error, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. We are currently working with Jabil to increase manufacturing production and capacity at its facility located in the Dominican Republic. We have closed our manufacturing facility in Michigan and are in the process of transferring the manufacturing equipment to another facility; however, we may not be able to execute such a plan, and such a plan may not proceed as expected. In order to achieve our near-term and long-term operational and financial plans, we need to substantially increase the manufacturing capacity to which we have access, and there is no assurance that we would be able to do so in a timely manner, or at all. If Jabil is unable to increase and achieve our required or target production capacities, we would be unable to fulfill our actual or anticipated customer demand which would negatively impact our business, financial condition and results of operations. In addition, our inability to meet the manufacturing and production requirements could cause us to lose our existing customers or lose our ability to acquire new customers which would also negatively impact our business, financial condition and results of operations. Any issues relating to the manufacture of our test kits, including with respect to scaling up and validating initial production, may occur in the future. These risks could be exacerbated by Jabil’s limited experience with our test kits and related manufacturing processes.

In addition, quarantines, shelter-in-place and similar government orders related to COVID-19 or other infectious diseases, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, could impact personnel at Jabil’s facilities upon which we rely. Further, Jabil may experience manufacturing difficulties due to resource constraints or as a result of labor disputes or unstable political environments. If Jabil were to encounter any of these difficulties, or otherwise fail to comply with its contractual obligations, our ability to commercialize our test kits would be jeopardized.

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The diagnostic testing market, particularly with respect to COVID-19 diagnostic tests, is highly competitive, and many of our competitors are larger, better established and have greater technical and marketing capabilities and financial and other resources than we have. In addition, we expect competition with respect to testing solutions for COVID-19 to continue to increase and our success will depend on updated widespread market acceptance of our COVID-19 test kit.

The diagnostic testing market, particularly with respect to COVID-19 diagnostic tests, is highly competitive and we face substantial competition based on factors such as product quality, underlying technology, analytical performance, accuracy, speed of results, convenience and ease of use, price, product enhancements, customer and user service and reputation. Industry competition is also based the following additional factors, among others:

•patent protection;

•evidence of clinical performance and support of key opinion leaders, or KOLs;

•scientific expertise;

•ability to develop and market products and processes and meet consumer demand;

•ability to obtain and maintain required regulatory approvals;

•ability to manufacture cost-effective products that meet applicable regulatory requirements;

•pricing and reimbursement levels;

•access to adequate capital; and

•ability to attract and retain qualified personnel.

In diagnostic testing, we anticipate facing competition from companies that have or are developing molecular tests (including centralized laboratory, POC and OTC tests) as well as antigen and antibody tests. We plan to continue to compete with testing solutions provided by centralized labs for COVID-19 and influenza. Large lab companies like Quest Diagnostics, Inc. and Laboratory Corporation of America have also expanded beyond centralized laboratory testing into home sample collection. We also will face competition from POC testing solutions, whether for influenza, COVID-19 or in combination. In the at-home setting, we will face continued competition from COVID-19 antigen tests because they are rapid and are already in use across the United States and internationally. We are not yet aware of any at-home influenza test, or combination COVID-19 and influenza test, whether molecular or antigen. However, we believe such tests are under development. Finally, we face competition from companies focused on developing and commercializing molecular testing in the home. These companies include Cue Health, Inc. and Detect, Inc., which have both received EUA for molecular COVID-19 testing (POC and at-home). We face potential competition from many other sources, including academic institutions, public and private research institutions and governmental agencies.

We could see a significant reduction or elimination of our commercial opportunity if our competitors develop and commercialize products that provide faster time to results, are more convenient or are less expensive than our COVID-19 test kit or any other test kits that we may develop. Our competitors also may be quicker and/or more successful than us in obtaining FDA or other regulatory approvals for their products, or in meeting consumer demand, which could harm our operations results and financial condition.

In addition, numerous companies in the United States and internationally have announced their intention to offer new products, services and technologies that could be used in substitution for our COVID-19 test kit. Many of those competitors are significantly larger, and have substantially greater financial, scientific, manufacturing and other resources, than us. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and enrolling subjects for our clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. In addition, our competitors may have or may develop products or technologies that currently or in the future will enable them to produce competitive products with greater functionality or at lower cost than ours. For example, as of February 18, 2022, 420 tests and sample collection devices were authorized by the FDA under EUAs, including EUAs for 15 antigen OTC at-home tests and 3 molecular OTC at-home tests.

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If we are unable to compete effectively, we may fail to meet our strategic objectives, and our business, financial condition and operating results could be harmed. The success or failure, or perceived success or failure, of other companies may adversely impact our ability to obtain any future funding, or harm our business, financial condition and reputation.

We expect competition to continue to increase as other established and emerging companies enter the market, as customer requirements evolve, and as new products, services and technologies are introduced. For example, Abbott introduced a mobile phone application to allow people to display the results of their COVID-19 test obtained through a healthcare provider when entering facilities requiring proof of testing. Moreover, the entrance of new competitors is being encouraged by governmental authorities, which are offering significant funding to support development of testing solutions for COVID-19. Some of our existing or new competitors may have strong relationships with current and potential customers, including governmental authorities, and, as a result, may be able to respond more quickly to new or changing regulatory requirements, new or emerging technologies, and changes in customer and user requirements. Our test kits may not compete favorably, and we may not be successful in the face of increasing competition from new products and technologies introduced by our existing competitors or new companies entering our markets. Any failure to compete effectively could harm our business, financial condition and operating results.

The production and widely administered use of efficacious vaccines or treatments for COVID-19 may reduce the demand for diagnostic tests and, as a result, the COVID-19 diagnostic testing market may not be sustained or substantially grow.

Currently, there are companies marketing and developing vaccines and therapeutic treatments for COVID-19. From December 2020 through February 2021, the FDA issued EUAs for three COVID-19 vaccines, which are currently being administered in the United States, the U.K. and other countries, and in August 2021 the FDA granted full approval to Pfizer’s vaccine and in January 2022 gave full approval to the Moderna vaccine. If current or future vaccines are widely distributed and compliantly administered, or if new therapeutic treatments are identified and become widely used, then our testing opportunities and market interest may lessen or disappear. Our future success is substantially dependent on the manner in which the market for COVID-19 diagnostic testing grows. If the market fails to grow in the manner in which we expect or at all, our business, financial condition, results of operations and cash flows may be negatively affected.

We rely on a limited number of suppliers or, in many cases, a single supplier, for test kit materials and may not be able to find replacements or immediately transition to alternative suppliers, which could have a material adverse effect on our business, financial condition and results of operations.

We have sourced and will continue to source test kit components, molds, reagents and other test kit materials from a limited number of suppliers or, in many cases, a single supplier. For example, our molds and many of our reagents are sole-sourced. In addition, we rely solely on Promega Corporation and New England BioLabs, Inc. for the supply of our current enzymes and primers. We intend to put in place framework agreements with certain of our single-source suppliers, including Promega Corporation and New England BioLabs, Inc., under which these third-party contract suppliers will generally provide us with necessary quantities of such materials based on our development and commercial needs. However, we may be unsuccessful in putting in place such framework agreements on acceptable terms or at all, or in otherwise protecting against potential supply disruptions. Our failure to maintain a continued supply of these test kit materials would adversely impact our business, financial condition and results of operations.

Because we rely on third-party suppliers, we do not control the manufacture of the components of our test kits, including whether such components will meet our quality control requirements, nor the compliance of our suppliers with applicable legal and regulatory requirements. For example, on October 8, 2021, we announced the recent recall by Copan Italia SPA of its FLOQSwabs, a component of our COVID-19 test kits identified on the label as “3 Swab,” that we distributed from April 22, 2021 through September 22, 2021. In many cases, our suppliers are not contractually required to supply these components to the quality or performance standards that we require. If the supply of components we receive does not meet our quality control or performance standards, we may not be able to use the components, or if we use them not knowing that they are of inadequate quality, which occasionally occurs with respect to certain reagents, our tests may not work properly or at all, or they may provide erroneous results, and we may be subject to significant delays caused by interruption in production or manufacturing, to lost revenue from such interruption or from spoiled tests, or to the effects of negative perception related to defective test kits.

In the event that any adverse developments occur with our suppliers, in particular for those products that are sole-sourced, or if any of our suppliers modifies any of the components they supply to us, our ability to supply our test kits may be temporarily or permanently interrupted. Obtaining substitute components could be difficult, time and resource-consuming and costly or it could require us to re-design or re-validate our test kits. Our failure to maintain a continued supply of components that meets our quality control requirements for any reason, including changes to or termination of our agreements or inability to renew our agreements with these parties or enter into new agreements with other suppliers, particularly in the case of sole suppliers, could result in the loss of access to important materials of our test kits and impact our test performance or affect our ability to supply fully functional test kits in a timely manner or at all, which could impair, delay or suspend our commercialization activities.

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Moreover, in the event that we transition to a new supplier from any of our sole suppliers, doing so could be time-consuming and expensive, may result in interruptions in our ability to supply our test kits to the market, could affect the performance of our test kits or could require that we re-validate our processes and our other test kits using replacement equipment and supplies, which could hinder the adoption of our test kits, resulting in increased costs and negative customer and/or user perception. Any of these occurrences could have a material adverse effect on our business, financial condition and results of operations.

In addition, quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact personnel at our suppliers upon which we rely, or the availability or cost of materials, which could disrupt the supply chain for our test kits. Any delay or interruption in the supply of our test kit materials could delay or suspend the commercialization of our test kits and increase the costs of manufacturing our test kits, which could have a material adverse effect on our business, financial condition and results of operations.

We may be subject to an order from federal or state governments, including pursuant to the Defense Production Act of 1950, as amended, or the DPA, to distribute our COVID-19 test kit directly to the government or as directed by the government, which could adversely affect our business, financial condition and results of operations.

The DPA is a federal statute that confers upon the President of the United States a broad set of authorities to influence domestic industry in the interest of national defense. “National defense” can include emergency and disaster response and, since the start of the current COVID-19 crisis, the President of the United States has used this authority more than 30 times to address the public health crisis. Through the DPA, the executive branch has struck agreements with multiple companies to accelerate COVID-19 countermeasures, like producing N95 protective masks, testing swabs, and vaccine development, and, in September 2020, used the DPA to acquire POC diagnostic testing instruments from two of our potential competitors for placement in nursing homes, and to require one of our potential competitors to prioritize government orders over others. The government may similarly apply the DPA, or another law or program, to our existing or potential new contracts to acquire our COVID-19 test kits or to direct us to distribute our products in a particular manner, and we may be likewise required to prioritize distribution to certain government agencies or other recipients, or to allocate inventory, supplies or facilities for government or government-directed use. The DPA provides that orders pursuant to the statute must “meet regularly established terms of sale or payment” and further provides that no person “shall be held liable for damages or penalties for any act or failure to act resulting directly or indirectly from compliance with a rule, regulation, or order” under the DPA. However, compliance with the DPA could potentially cause business disruption, interfere with our commercial sales and marketing efforts, and depending on the demand, could even prevent or delay our ability to sell our products commercially, or may have other implications that significantly affect our commercialization and development efforts and general ability to conduct our business operations as planned. For example, government directed use of our products under such a program may result in our test kits not being placed in settings where they will be used often for additional tests following the COVID-19 pandemic which would adversely affect our long-term commercial plan. In addition, such government requirements may adversely affect our regular operations and financial results, result in differential treatment of customers and/or adversely affect our reputation and customer relationships. It is also possible that the recent change in the administration could impact the manner in which the government uses the DPA and its other authorities, and result in additional or different risk to us.

The results of our earlier research and development and clinical trials for our influenza test kit may not be replicable in an influenza test kit or in a combination COVID-19 and influenza test kit and may not be sufficient to support the authorization of an influenza test kit or a combination COVID-19 and influenza test kit in all regions we apply for.

Since inception, we have primarily focused on the research and development of our influenza test kit. We conducted two clinical trials in 2018 and 2019 for our influenza test kit in Santiago, Chile, and the United States. The clinical trial conducted in the United States served as the basis for our dual 510(k) and Clinical Laboratory Improvements Amendment, or CLIA, waiver submission for our influenza test kit in the second half of 2019. This clinical trial was conducted across the 2018 and 2019 influenza season and included a comparator. This clinical trial showed similarly strong assay performance as the initial Chile clinical trial, but we failed to meet required endpoints as a result of two main issues. First, the comparator did not detect influenza A virus as well as our assay did, which negatively and artificially lowered our influenza A virus specificity to 92% in the clinical trial. When applying discrepant resolution, our influenza A virus specificity improved to 97%. The impact of running this clinical trial with a single comparator and the comparator not correctly identifying at least 35 specimens as true positives impeded us from being able to provide the necessary clinical data with the level of specificity required by the FDA without additional clinical testing. The second issue related to a higher than anticipated rate of invalids, at nearly 10%. Root cause analysis showed greater than half of invalids to be related to prototype manufacturing quality issues, and importantly, not related to fundamental assay performance. We believe these issues have since been resolved and the assay’s invalid rate is now less than 5%. In January 2020, we received an additional information letter from the FDA discussing this clinical trial and the resulting comparator issues, high rate of invalids and exclusion of samples. As a result, we withdrew our dual 510(k) and CLIA waiver submission for our influenza assay and shifted our focus to the COVID-19 pandemic.

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Based on our clinical trials of our influenza test kit to date, we believe our molecular nucleic acid amplification technology is adaptable to detecting whether a person is shedding the influenza A or B viruses that cause influenza. However, the results of our earlier research and development and clinical trials for our influenza test kit may not be replicable in a combination COVID-19 and influenza test kit or sufficient to support the approval of a combination COVID-19 and influenza test kit. Additional clinical trials on the combination COVID-19 and influenza test kit will be required for FDA submission. In addition, the FDA may weigh the results of our prior clinical trials related to our influenza test kit and the issues raised in its January 2020 additional information letter more heavily than anticipated, potentially hindering our future FDA approval of our influenza test kit. We are uncertain as to whether the combined COVID-19 and influenza clinical trials will be successful, and the future trials may not replicate the results of prior clinical trials and pre-clinical studies.

If our test kits fail to achieve the degree of adoption by physicians and licensed healthcare providers, business customers, domestic and international distributors and consumers necessary for commercial success, our operating results and financial condition will be adversely affected, which may prevent or limit our ability to generate revenue and continue our business.

Even if our test kits receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians and licensed healthcare providers, business customers, domestic and international distributors and consumers. The commercial success of our test kits will depend significantly on sufficient coverage and reimbursement by third-party payors, the broad adoption and use of our test kits by physicians and, for OTC use, ultimate users, for authorized or approved indications. We are aware that other companies are seeking to develop alternative diagnostic products for COVID-19 and influenza, any of which could impact the demand for our COVID-19 test kit, combination COVID-19 and influenza test kit and our influenza test kit, respectively.

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The degree and rate of adoption by physicians, licensed healthcare providers, business customers, domestic and international distributors and consumers of any of our test kits, and initially our COVID-19 test kit, depend on a number of factors, some of which are beyond our control, including:

•the accuracy, affordability and ease of use of our test kits as compared to existing diagnostic products;

•consumer adoption of our combination of LAMP and proprietary colorimetric detection chemistry;

•lack or perceived lack of sufficient clinical evidence supporting the accuracy and performance of our test kits;

•physician and patient willingness to adopt our test kits to treat COVID-19 and influenza over diagnostic products and brands with which patients and physicians may have more familiarity or recognition or additional approved uses;

•any perceived burdens imposed on consumers, physicians or patients with respect to public health reporting obligations for certain infectious diseases such as COVID-19;

•overcoming any biases consumers, physicians or patients may have toward the accuracy and ease of use of existing diagnostic test kits and successful marketing efforts;

•the cost of our test kits in relation to alternative diagnostic products, and in the OTC setting, if authorized, patient willingness to pay for our test kits;

•consumer and patient satisfaction with the accuracy and ease of use of our test kits and overall user experience;

•changes in pricing and promotional efforts by competitors;

•coverage and reimbursement policies with respect to our test kits and products that compete with our test kits;

•patient demand for POC and OTC diagnostic testing;

•the revenue and profitability that our test kits may offer a physician as compared to alternative diagnostic tests;

•the effectiveness of our sales, marketing and distribution efforts; and

•adverse publicity about our test kits, competitive products, or the industry as a whole, or favorable publicity about competitive products.

Further, outbreaks of highly contagious diseases, like COVID-19 and influenza, require immediate, mass population testing; however, we believe the traditional testing infrastructure within the United States is not designed to support mass population testing at high-complexity labs or at the POC. Accordingly, the ease of integration of our test kits into a physician’s practice may not be as evident as we anticipate.

In addition, our test kits utilize our combination of LAMP and proprietary colorimetric detection chemistry. Customers may prefer to use diagnostic tests with alternative technologies, such as PCR, or even antigen or antibody diagnostic tests. If our test kits fail to achieve the degree of physician and customer adoption necessary for commercial success, our operating results and financial condition will be adversely affected, which may prevent or limit our ability to generate revenue and continue our business.

If we do not have the brand awareness of consumers or the support of physicians or KOLs, it may be difficult to drive adoption of our test kits, which could limit our revenue growth and our ability to achieve profitability.

Building on our usability studies and EUA indications, we plan to leverage our clinical work to publish key research and articles as a way to increase brand awareness and drive adoption among users, healthcare providers, physicians and KOLs. If physicians and KOLs in particular determine that our test kits are not accurate or easy to use and bill for, or that alternative diagnostic tests are more accurate or easier to use and bill for, we may see lower demand for our test kits, and face difficulty establishing our test kits as an integral component of the applicable standard of testing, which would limit our revenue growth and our ability to achieve profitability. If our test kits do not receive sufficient favorable exposure in peer-reviewed publications, the rate of physician adoption of our test kits and positive reimbursement coverage determinations for our test kits could be negatively affected.

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The initial use of our test kits requires users to follow instructions, and not adhering to instructions may lead to negative outcomes, which could harm our business.

The successful use of our test kits depends on a user following the test instructions. Any user, whether it be a healthcare provider or patient at home, could experience difficulty performing a test using our test kits if they fail to follow the instructions, or otherwise misuse the test. If physicians or other users utilize our test kits incorrectly, or without adhering to our instructions, their test result outcomes may not be consistent with the outcomes achieved in our clinical trials. This could harm our ability to achieve the degree of physician and customer adoption necessary for commercial success, or cause negative publicity and word-of-mouth as a result of our test kits not meeting user expectations and accordingly, our operating results and financial condition could be adversely affected, which may prevent or limit our ability to generate revenue and continue our business.

We may be unable to obtain and maintain adequate levels of coverage and reimbursement from third-party payors for our test kits.*

Our market success is dependent upon government and commercial third-party payors providing coverage and adequate reimbursement for our test kits. Under the EUA authorized for the POC setting, our COVID-19 test kit is eligible for reimbursement as a molecular POC test. However, coverage criteria and reimbursement rates for clinical laboratory tests are subject to adjustment by payors, and current reimbursement rates could be reduced, or coverage criteria restricted in the future, which could adversely affect the market for our COVID-19 test kit. In addition, pursuant to guidance issued by the Biden administration, beginning January 15, 2022, health plans are required to provide coverage for at-home COVID-19 testing in the United States during the public health emergency without imposing any cost-sharing requirements (including deductibles, copayments, and coinsurance), prior authorization, or other medical management requirements. However, the guidance is subject to change. We believe the majority of the consumers will pay cash to begin with and eventually with the support of telehealth and our digital solution, we plan to incorporate billing to insurance providers.

On April 4, 2022, the Biden administration announced that all Medicare Part B beneficiaries, including those enrolled in a Medicare Advantage plan, will have access to FDA approved, authorized, or cleared over-the-counter COVID-19 tests at no cost during the COVID-19 public health emergency. Medicare Part A beneficiaries are not included in this initiative. Third-party payors may require additional clinical or other data in order to cover our test kit in certain settings.

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Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.

Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results. These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to:

•the level of demand for any approved test kits, which may vary significantly;

•the timing and cost of, and level of investment in, research, development, manufacturing, regulatory approval and commercialization activities relating to our test kits, which may change from time to time;

•the size, seasonality and customer mix of the COVID-19 and influenza diagnostic testing market;

•sales and marketing efforts and expenses;

• the rate at which we grow our sales force and the speed at which newly hired salespeople become effective;

•changes in the productivity of our sales force;

•positive or negative coverage in the media or clinical publications of our test kits, competitive products or the current status and severity of COVID-19 and influenza;

•the cost of manufacturing our test kits, which may vary depending on the quantity of production and the terms of our arrangements with Jabil and our suppliers;

•the introduction of new test kits or enhancements or technologies by us or others in the diagnostic testing industry;

•pricing pressures;

•coverage and reimbursement policies with respect to our test kits and products that compete with our test kits;

•expenditures that we may incur to acquire, develop or commercialize test kits for additional indications, if any;

•the degree of competition in our industry and any change in the competitive landscape of our industry;

•changes in governmental regulations or in the status of our regulatory approvals or applications;

•future accounting pronouncements or changes in our accounting policies; and

•general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.

The cumulative effects of factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or operating results fall below the expectations of analysts or investors or below any guidance we may provide, or if the guidance we provide is below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide.

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We may not be able to achieve or maintain satisfactory pricing and margins for our test kits, which could harm our business and results of operations.

Manufacturers of diagnostic tests have a history of price competition, and we may not be able to achieve satisfactory prices for our test kits. Our POC pricing is at a modest premium to other POC tests and we may not be able to achieve or maintain a consumer-appropriate retail price for OTC use. The pricing of our test kits could be impacted by several factors, including pressure to improve margins as a result of competitive or customer pricing pressure or a limit or decline in the amount that third-party payors reimburse our customers, which could make it difficult for customers to adopt our test kits. If we are forced to lower the price we may charge for our test kits, our gross margins will decrease, which will harm our ability to invest in and grow our business. If we are unable to maintain our prices, or if our costs increase and we are unable to offset such increase with an increase in our prices, not purchase our tests in significant volumes or at all, especially in the OTC market, or otherwise in the absence of reimbursement, and our margins could erode. We may be subject to significant pricing pressure, which could harm our business and results of operations.

Our results of operations will be harmed if we are unable to accurately forecast and meet customer and user demand for our test kits and manage our inventory.

To ensure adequate supply, we must forecast inventory needs and manufacture our test kits based on our estimates of future demand. For example, pursuant to the Jabil MSA, we are obligated to provide, on a monthly basis, a rolling 12-month forecast to Jabil of historical aggregate end customer demand at the finished product level, which will be used to constitute written purchase orders. Our ability to accurately forecast demand for our test kits could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer and user demand for our test kits or for products of our competitors, our failure to accurately forecast market acceptance of new products, unanticipated changes in general market conditions, including the production and distribution of an efficacious vaccine or treatment for COVID-19, seasonal demands, or regulatory matters and weakening of economic conditions or user confidence in future economic conditions. In addition, we may experience fluctuations in customer and user demand based on seasonality, which for COVID-19, remains unknown. However, for example, because influenza typically occurs in the fall and winter seasons, we expect our forecasts of inventory for these seasons to reflect a significant increase in inventory relative to our forecasts for the spring and summer seasons. If this expectation does not materialize, our inventory forecasts may be inaccurate, resulting in shortages or excesses of inventory. Inventory levels in excess of customer and user demand may result in inventory write-downs or write-offs, which would cause our gross margin to be adversely affected and could impair the strength of our brand.

Conversely, if we underestimate customer and user demand for our test kits, our manufacturing partner, Jabil, may not be able to deliver test kits that meet our requirements. Demand has exceeded supply for our COVID-19 test kits, and late in the second quarter of 2021, we temporarily halted online sales of our LUCIRA CHECK IT test kit as we prioritized distribution to our partnerships, which could result in damage to our reputation and customer relationships. We reactivated online ordering again via our website in October 2021. In addition, if we experience a significant increase in demand, additional supplies of raw materials or additional manufacturing capacity may not be available when required on terms that are acceptable to us, or at all, or suppliers may not be able to allocate sufficient capacity in order to meet our increased requirements, which will negatively affect our business, financial condition and results of operations. We rely substantially on Jabil to manufacture our test kits initially at manufacturing facilities located in Michigan and in the Dominican Republic, however we have closed our manufacturing facility in Michigan and are in the process of transferring the manufacturing equipment to another facility. If Jabil is unable to increase and achieve our required or target production capacities, we would be unable fulfill our actual or anticipated customer demand which would negatively impact our business, financial condition and results of operations. In addition, our inability to meet the manufacturing and production requirements could cause us to lose our existing customers or lose our ability to acquire new customers which would also negatively impact our business, financial condition and results of operations.

We will seek to maintain sufficient levels of inventory in order to protect ourselves from supply interruptions. As a result, we are subject to the risk that a portion of our inventory will become obsolete or expire, which could have a material adverse effect on our earnings and cash flows due to the resulting costs associated with the inventory impairment charges and costs required to replace such inventory.

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If we are not successful in leveraging our platform to discover, develop and commercialize additional test kits, our ability to expand our business and achieve our strategic objectives would be impaired.

While the global COVID-19 pandemic remains our current and primary focus, we believe our flexible platform enables us to launch different test kits for other infectious diseases. Capitalizing on the flexibility of our platform is a key pillar to our strategy, which we believe will enable us to focus on other test kits, including influenza. We plan to conduct additional research and development activities to explore the potential of our platform to be used in additional indications, including other infectious diseases such as STIs and respiratory syncytial virus, but we may not be successful in developing such additional indications in a timely manner or at all. Moreover, identifying new test kits requires substantial technical, financial and human resources, whether or not any test kits are ultimately developed or commercialized, which may divert management’s attention away from our core business. We may pursue what we believe is a promising opportunity to leverage our platform only to discover that certain of our risk or resource allocation decisions were incorrect or insufficient, or that certain test kits or our platform in general has risks that were previously unknown or underappreciated. Our strategy of pursuing the value of our platform over a long time horizon and across a broad array of respiratory pathogens may not be effective. In the event material decisions with respect to our strategy turn out to be incorrect or sub-optimal, we may experience a material adverse impact on our business and ability to fund our operations and we may never realize what we believe is the potential of our platform. The success of any new test kits or enhancements to our platform will depend on several factors, some of which are outside of our control, including our ability to:

•assemble sufficient resources to acquire or discover additional test kits or enhancements;

•properly identify and anticipate physician and patient needs;

•develop and introduce new test kits and enhancements in a timely manner;

•demonstrate, if required, the accuracy and usability of new test kits and enhancements with data from pre-clinical studies and clinical trials;

•obtain the necessary regulatory clearances or approvals for expanded indications, new test kits or enhancements;

•be fully FDA-compliant with marketing of new devices or modified products;

•produce new test kits in commercial quantities at an acceptable cost; and

•provide adequate training to potential users of our test kits and provide adequate updated training to potential users of test kits that contain enhancements or alterations.

If we are unable to develop or improve test kits, applications or features due to constraints, such as insufficient cash resources, high employee turnover, inability to hire personnel with sufficient technical skills or a lack of other research and development resources, we may not be able to maintain our competitive position compared to other companies. Furthermore, many of our competitors devote a considerably greater amount of funds to their research and development programs than we do, and those that do not may be acquired by larger companies that would allocate greater resources to research and development programs. Our failure or inability to devote adequate research and development resources or compete effectively with the research and development programs of our competitors could harm our business.

In addition, we may choose to focus our efforts and resources on potential test kits or indications that ultimately prove to be unsuccessful, or to license or purchase a marketed product that does not meet our financial expectations. As a result, we may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of opportunities with other potential products or other diseases that may later prove to have greater commercial potential, or relinquish valuable rights to such potential products through collaboration, licensing or other royalty arrangements in cases in which it would have been advantageous for us to retain sole development and commercialization rights, which could adversely impact our business, financial condition and results of operations.

If our test kits do not perform as expected, our operating results, reputation and business will suffer.

Our success depends on our ability to provide reliable test kits that enable high quality diagnostic testing with high accuracy, ease of use, and short turnaround times. The accuracy and reproducibility we have demonstrated to date in our clinical trials, particularly with respect to our COVID-19 test kit, may not continue or be indicative of actual future performance.

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Our test kits use a number of complex and sophisticated biochemical and bioinformatics processes, many of which are highly sensitive to external factors, including human error. An operational, technological, user or other failure in one of these complex processes or fluctuations in external variables may result in sensitivity or specificity rates that are lower than we anticipate or result in longer than expected turnaround times. If our test kits do not perform, or are perceived to not have performed, as expected or favorably in comparison to competitive products, our operating results, reputation, and business will suffer, and we may also be subject to legal claims arising from product limitations, errors, or inaccuracies. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

Operational, technical, user and other difficulties may adversely affect test performance, harm our reputation, impact the commercial attractiveness of our test kits and increase our costs or divert our resources, including management’s time and attention, from other projects and priorities. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

If we cannot provide quality technical and customer and user support, we could lose customers and our business and prospects will suffer.

The introduction of our test kits into our customers’ existing workflows, and in the OTC context, our users’ homes, and ongoing customer and user support can be complex. Accordingly, we need trained technical and customer and user support personnel. Hiring technical and customer and user support personnel is very competitive in our industry due to the limited number of people available with the necessary scientific and technical backgrounds and ability to understand our platform at a technical level. To effectively support potential new customers and ultimately users, we will need to substantially develop a technical and customer and user support staff. If we are unable to attract, train or retain the number of qualified technical and customer and user support personnel that our business needs, our business and prospects will suffer.

If we are unable to successfully expand our sales and marketing to match our growth, our business may be adversely affected.

Our future sales will depend in large part on our ability to develop, and substantially expand, our sales force and to increase the scope of our marketing efforts. We plan to take a measured approach to expand and optimize our sales infrastructure to grow our customer base and our business. Identifying and recruiting qualified personnel and training them in the use of our test kits, applicable federal and state laws and regulations and our internal policies and procedures, requires significant time, expense and attention. In addition, our EUA applications with respect to our COVID-19 test kit specify the scope and conditions of authorization, including limitations on distribution and conditions related to product advertising and promotion. It can take significant time before our sales representatives are fully trained and productive. Our business may be harmed if our efforts to expand do not generate a corresponding increase in revenue or result in a decrease in our operating margin. In particular, if we are unable to hire, develop and retain talented sales personnel or if new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, we may not be able to realize the expected benefits of this investment or increase our revenue.

We plan to dedicate significant financial and other resources to our marketing programs, which may require us to incur significant upfront costs. Our business and gross margins would be harmed if our marketing efforts and expenditures do not generate a corresponding increase in revenue.

In addition, we believe that developing and maintaining awareness of our brand in a cost-effective manner is critical to achieving broad acceptance of our test kits and attracting new customers. Brand promotion activities may not generate customer awareness or increase revenue and, even if they do, any increase in revenue may not offset the costs and expenses we incur in building our brand. If we fail to successfully promote, maintain and protect our brand, we may fail to attract or retain the customers necessary to realize a sufficient return on our brand-building efforts, or to achieve the widespread brand awareness that is critical for broad customer adoption of our test kits.

We are highly dependent on our senior management team and key personnel and our business could be harmed if we are unable to attract and retain personnel necessary for our success.

We are highly dependent on our senior management team and key personnel. Our success will depend on our ability to retain senior management and to attract and retain qualified personnel in the future, including sales and marketing professionals and other highly skilled personnel and to integrate current and additional personnel in all departments. The loss of members of our senior management, sales and marketing professionals and scientists as well as contract employees could result in delays in product development and harm our business. If we are not successful in attracting and retaining highly qualified personnel, it would have a negative impact on our business, financial condition and results of operations.

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Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms, or at all. To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have issued, and will in the future issue, stock options that vest over time. The value to employees of stock options that vest over time may be significantly affected by movements in our stock price that are beyond our control, and may at any time be insufficient to counteract more lucrative offers from other companies. Despite our efforts to retain valuable employees, members of our management and development teams may terminate their employment with us on short notice. Our employment arrangements with our employees provide for at-will employment, which means that any of our employees could leave our employment at any time, with or without notice. We also do not maintain “key man” insurance policies on the lives of these people or the lives of any of our other employees.

Many of the other medical device and diagnostic companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached legal obligations, resulting in a diversion of our time and resources and, potentially, damages. They may also provide more diverse opportunities and better chances for career advancement. Some of these characteristics are more appealing to high quality candidates than what we can offer. If we are unable to continue to attract and retain high quality personnel, the rate and success at which we can discover, develop and commercialize our test kits will be limited.

In addition, job candidates and existing employees often consider the value of the stock awards they receive in connection with their employment. If the perceived benefits of our stock awards decline, either because we are a public company or for other reasons, it may harm our ability to recruit and retain highly skilled employees. Many of our employees have become or will soon become vested in a substantial amount of our common stock or a number of common stock options. Our employees may be more likely to leave us if the shares they own have significantly appreciated in value relative to the original purchase prices of the shares, or if the exercise prices of the options that they hold are significantly below the market price of our common stock, particularly after the expiration of the lock-up agreements described herein. Our future success also depends on our ability to continue to attract and retain additional executive officers and other key employees. If we fail to attract new personnel or fail to retain and motivate our current personnel, it will negatively affect our business, financial condition and results of operations.

We have increased the size of our organization and expect to further increase it in the future, and we may experience difficulties in managing this growth. If we are unable to manage the anticipated growth of our business, our future revenue and operating results may be harmed.*

As of June 30, 2022, we had 219 full-time employees and 106 contractors. As our sales and marketing strategies develop, we expect to need additional managerial, operational, sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members of management, including:

•identifying, recruiting, integrating, maintaining and motivating additional employees;

•managing our internal development efforts effectively, while complying with our contractual obligations to contractors and other third parties; and

•improving our operational, financial and management controls, reporting systems and procedures.

Since our inception, we have experienced growth and anticipate further growth in our business operations. This future growth could strain our organizational, administrative and operational infrastructure, including quality control, operational, finance, customer service and sales organization management. We expect to continue to increase our headcount and to hire more specialized personnel in the future as we grow our business. We will need to continue to hire, train and manage additional qualified scientists, laboratory personnel, customer service personnel, and sales and marketing staff and improve and maintain our platform to properly manage our growth. Rapid expansion in personnel could mean that less experienced people develop, market and sell our test kits, which could result in inefficiencies and unanticipated costs, reduced quality and disruptions to our operations. If our new hires perform poorly, if we are unsuccessful in hiring, training, managing and integrating these new employees or if we are not successful in retaining our existing employees, our business may be harmed. We may not be able to maintain the quality or expected turnaround times of our test kits, or satisfy customer demand as it grows. Our ability to manage our growth properly will require us to continue to improve our operational, financial and management controls, as well as our reporting systems and procedures. The time and resources required to implement these new systems and procedures is uncertain, and failure to complete this in a timely, efficient and effective manner could adversely affect our operations. In addition, as a result of being a public company, we are obligated to develop and maintain effective internal control over financial reporting and any failure to maintain the adequacy of these internal controls may negatively impact investor confidence in our company and, as a result, the value of our common stock.

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Our indebtedness to the Lenders may limit our flexibility in operating our business and adversely affect our financial health and competitive position, and our obligations to the Lenders are secured by substantially all of our assets, excluding our intellectual property assets. If we default on these obligations, the Lenders could foreclose on our assets.

In February 2022, we entered into the Loan Agreement providing for term loans in an aggregate amount of up to $80.0 million available in four tranches, or the Term Loans, with the Lenders. The Term Loans will mature on February 1, 2026. As of June 30, 2022, we had $30.0 million outstanding under the Loan Agreement and $50.0 million of principal commitment available for withdrawal through March 15, 2024, subject to the satisfaction of certain conditions required under the Loan Agreement. The Loan Agreement was subsequently amended on March 17, 2022 and June 15, 2022 (the “Amended Loan Agreement”).

All obligations under the Term Loans are secured by a first priority lien on substantially all of our assets, excluding intellectual property assets. We have agreed with the Lenders not to encumber our intellectual property assets or enter into any other agreements not to encumber our intellectual property assets with other third parties, with some limited exceptions set forth in the Amended Loan Agreement. Notwithstanding the foregoing, our intellectual property shall automatically be included within the assets securing the Term Loans to the extent necessary to permit perfection of the Lender’s security interests for rights to payment and proceeds from the sale, licensing or disposition of our intellectual property, or the Rights to Payment, if a judicial authority holds that a security interest in the Rights to Payment requires a security interest in the underlying intellectual property. As a result, if we default on any of our obligations under the Amended Loan Agreement, the Lenders could foreclose on their security interest and liquidate some or all of the collateral, which would harm our business, financial condition, and results of operations and could require us to reduce or cease operations.

In order to service this indebtedness and any additional indebtedness we may incur in the future, we need to generate cash from our operating activities. Our ability to generate cash is subject, in part, to our ability to successfully execute our business strategy, as well as general economic, financial, competitive, regulatory, and other factors beyond our control. Our business may not be able to generate sufficient cash flow from operations, and future borrowings or other financings may not be available to us in an amount sufficient to enable us to service our indebtedness and fund our other liquidity needs. To the extent we are required to use cash from operations or the proceeds of any future financing to service our indebtedness instead of funding working capital, capital expenditures or other general corporate purposes, we will be less able to plan for, or react to, changes in our business, industry, and in the economy generally. This could place us at a competitive disadvantage compared to our competitors that have less indebtedness.

The Amended Loan Agreement contains certain covenants that limit our ability to engage in certain transactions that may be in our long-term best interest, including entering into a change in control transaction. The Amended Loan Agreement also contains certain covenants that limit our ability to obtain additional debt financing, including incurring debt from third parties not permitted under the Amended Loan Agreement, declaring or paying cash dividends, or incurring liens or encumbrances on our property. While we have not previously breached and are currently in compliance with the covenants contained in the Amended Loan Agreement, we may breach these covenants in the future. Our ability to comply with these covenants may be affected by events and factors beyond our control. In the event that we breach one or more covenants, the Lenders may choose to declare an event of default and require that we immediately repay all amounts outstanding under the Amended Loan Agreement, terminate any commitment to extend further credit and foreclose on the collateral. In addition, if an event of default occurs under the Amended Loan Agreement, the Lenders may, among other things, accelerate the Term Loans or do any acts it considers necessary or reasonable to protect its security interest in the collateral under the Term Loans. Events of default include the occurrence of a material adverse change in our business, operations, or condition (financial or otherwise). The occurrence of any of these events could have a material adverse effect on our business, financial condition, and results of operations.

For a more detailed description of the terms of the Amended Loan Agreement, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Loan Agreement” and Note 10 to our unaudited condensed financial statements, each included elsewhere in this Quarterly Report.

The sizes of the markets for our test kits may be smaller than we estimate.

Our estimates of the annual addressable markets for our COVID-19 test kit, combination COVID-19 and influenza test kit and our influenza test kits are based on a number of internal and third-party estimates. For example, our estimates for the COVID-19 diagnostic testing market include, but are not limited to, estimates relating to the number of times per week healthcare workers would be tested, the time period for which tests may be required, administered or sought, as well as the assumed rate at which such test kit will be reimbursed, or the assumed prices at which we can sell our COVID-19 test kit for. In addition, our estimates for the influenza diagnostic testing market are based on a derivative of the CDC’s estimate of symptomatic influenza cases for prior influenza seasons. While we believe our assumptions and the data underlying our estimates are reasonable, we have not independently verified the accuracy of the third-party data on which we have based our assumptions and estimates, and these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, including as a result of factors outside

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our control, thereby reducing the predictive accuracy of these underlying factors. If the actual number of customers who would benefit from our test kits, the price at which we can sell test kits or the annual addressable market for our test kits is smaller than we have estimated, it may impair our sales growth and have an adverse impact on our business, financial condition and results of operations.

Interim, topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose interim, topline, or preliminary data from our clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the interim, topline, or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated, and thus are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Interim, topline and preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, such data should be viewed with caution until the final data are available. Adverse differences between preliminary, interim or topline data and final data could significantly harm our business prospects.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability, or commercialization of the particular product candidate or product and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular test kit or our business. If the interim, topline or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our test kits and any future test kits may be harmed, which could harm our business, operating results, prospects or financial condition.

In addition, even if our clinical trials are successfully completed, their results may not support our future product claims and the FDA may not agree with our conclusions regarding these results. The clinical trial process may fail to demonstrate that our test kits are safe and effective for the proposed indicated uses, which could cause us to abandon a test kit and may delay development of others. Any delay or termination of our clinical trials will delay the filing of our product submissions and, ultimately, our ability to commercialize our test kits and generate revenue.

Deficiencies in the components of our test kits could result in field actions, recalls, substantial costs and write-downs and could harm our reputation, business and financial results.

Our test kits are subject to various regulatory guidelines and involve complex technologies. The FDA and similar foreign regulatory authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture that could affect patient safety. Manufacturers may, under their own initiative, conduct a product notification or recall to inform physicians of changes to instructions for use or if a deficiency in a device is found or suspected.

Identified quality problems, such as failure of critical components, including batteries and light-emitting diode, or LED, lights, or the failure of third parties to supply us with sufficient conforming quantities of these components, could impact the availability of our test kits in the marketplace or lead to adverse clinical events that could cause us to amend, repeat or terminate clinical trials. In addition, test kit improvements, redundancies or failure to sell a test kit before its expiration date could result in scrapping or expensive rework of test kits, and our business, financial condition or results of operations could suffer. Test kit complaints, quality issues and necessary corrective and preventative actions could result in communications to customers or patients, field actions, the scrapping, rework, recall or replacement of test kits, substantial costs and write-offs, and harm to our business reputation and financial results. Further, these activities could adversely affect our reputation with those in the medical community, as well as our distributor customers and end-users, which could materially adversely affect our earnings, results and financial viability.

For example, on October 8, 2021, we announced the recent recall by Copan Italia SPA of its FLOQSwabs, a component of our COVID-19 test kits identified on the label as “3 Swab,” that we distributed from April 22, 2021 through September 22, 2021. As a result, any identified quality issue can both harm our business reputation and result in substantial costs and write-offs, which in either case could materially harm our business and financial results.

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If we were to be sued for product liability, we could face substantial liabilities that exceed our resources.

The marketing, sale and use of our test kits, could lead to the filing of product liability claims where someone may allege that our test kits identified inaccurate or incomplete information or otherwise failed to perform as designed. We may also be subject to liability for errors in, a misunderstanding of or inappropriate reliance upon, the information we provide in the ordinary course of our business activities. In addition, we may be subject to product liability claims resulting from misuse or off-label use of our test kits. See the risk factor “—The misuse or off-label use of our test kits may harm our reputation or the image of our test kits in the marketplace, or result in injuries that lead to product liability suits, which could be costly to our business. Moreover, we could be subject to FDA sanctions if we are deemed to have engaged in off-label promotion.” A product liability claim could result in substantial damages and be costly and time-consuming for us to defend. If we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities and reputational harm. In addition, regardless of merit or eventual outcome, product liability claims may result in:

•costs of litigation;

•distraction of management’s attention from our primary business;

•the inability to commercialize our test kits or new products;

•decreased demand for our test kits;

•damage to our business reputation;

•product recalls or withdrawals from the market;

•withdrawal of clinical trial participants;

•substantial monetary awards to patients or other claimants;

•loss of sales; or

•termination of existing agreements by our partners and potential partners failing to partner with us.

We maintain product liability insurance, but this insurance may not fully protect us from the financial impact of defending against product liability claims. Any product liability claim brought against us, with or without merit, could increase our insurance rates or prevent us from securing insurance coverage in the future.

While we may attempt to manage our product liability exposure by proactively recalling or withdrawing from the market any defective products, any recall or market withdrawal of our test kits may delay the supply of those test kits to our customers and users and may impact our reputation. We may not be successful in initiating appropriate market recall or market withdrawal efforts that may be required in the future and these efforts may not have the intended effect of preventing product malfunctions and the accompanying product liability that may result. Such recalls and withdrawals may also be used by our competitors to harm our reputation for safety or be perceived by patients as a safety risk when considering the use of our test kits, either of which could negatively affect our business, financial condition and results of operations.

Litigation and other legal proceedings may harm our business.

We have been, and may become, involved in legal proceedings relating to patent and other intellectual property matters, product liability claims, employee claims, tort or contract claims, federal or state regulatory investigations, securities class actions and other legal proceedings or investigations, which could have a negative impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business. Litigation is inherently unpredictable and can result in excessive or unanticipated verdicts and/or injunctive relief that affect how we operate our business. We could incur judgments or enter into settlements of claims for monetary damages or for agreements to change the way we operate our business, or both. There may be an increase in the scope of these matters or there may be additional lawsuits, claims, proceedings or investigations in the future, which could harm our business, financial condition and results of operations. Adverse publicity about regulatory or legal action against us could damage our reputation and brand image, undermine our customers’ confidence and reduce long-term demand for our test kits, even if the regulatory or legal action is unfounded or not material to our operations.

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Business disruptions have impacted and can in the future seriously harm our revenue and financial condition and increase our costs and expenses.

Our operations (including our clinical trials) could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and pandemics, including the COVID-19 pandemic, geopolitical tensions and conflicts worldwide, and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured. Our ability to obtain components for and maintain inventory of our test kits could be disrupted if our operations or the operations of suppliers or manufacturers were affected by a man-made or natural disaster or other business interruption. In addition, our corporate headquarters is located in Emeryville, California, near major earthquake faults and fire zones, and the ultimate impact on us for being located near earthquake faults and fire zones and being consolidated in a certain geographical area is unknown. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses.

We rely substantially on Jabil to manufacture our COVID-19 and combination COVID-19 and influenza test kits initially at manufacturing facilities located in in the Dominican Republic. Should Jabil’s current or future manufacturing facilities be significantly damaged or destroyed by natural or man-made disasters, such as earthquakes, fires or other events, or should events such as political unrest unfold, it could take months to relocate or rebuild, during which time our manufacturing would cease or be delayed and our test kits may be unavailable. Additionally, our third-party manufacturer’s ability to manufacture our test kits has been and could be disrupted by pandemics including the COVID-19 pandemic. COVID-19 or other business disruptions could impact us or our third-party manufacturer in the future, which could seriously harm our revenue and financial condition and increase our costs and expenses. Moreover, the use of a new facility or new manufacturing, quality control, or environmental control equipment or systems generally requires FDA review and approval. Because of the time required to authorize manufacturing in a new facility under FDA and non-U.S. regulatory requirements, we may not be able to resume production on a timely basis even if we are able to replace production capacity in the event we lose manufacturing capacity. The inability to perform our manufacturing activities, combined with our limited inventory of materials and components and manufactured products, may cause us to be unable to meet customer demand, physicians and other users to discontinue using our test kits, or harm our reputation, and we may be unable to reestablish relationships with such customers and users in the future. Consequently, a catastrophic event or business interruption at Jabil’s current or future manufacturing facilities could harm our business, financial condition and results of operations.

If we or our third-party collaborators, including Jabil, experience significant disruptions in performing their services for us, our business may be harmed.

We and our third-party collaborators, including Jabil, depend on information technology systems for the efficient functioning of our business, including the manufacture, distribution and maintenance of our test kits, as well as for accounting, data storage, compliance, purchasing and inventory management. Additionally, in the ordinary course of business, we and our service providers process personal data and other sensitive information, and we may share sensitive information with relevant third parties. Our and our third-party collaborator’s information technology systems may be subject to malicious code (such as viruses and works), phishing attacks, supply chain attacks, denial of service attacks (such as credential stuffing) ransomware or other malware, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, damage or interruption from fires or other natural disasters, hardware failures, telecommunication failures and user errors, among other malfunctions and other cyber-attacks. We and our third-party collaborators could be subject to an unintentional event that involves a third-party gaining unauthorized access to our systems, which could disrupt our operations, corrupt our data or result in release of our confidential information. Additionally, theft of our intellectual property or proprietary business information could require substantial expenditures to remedy. Future acquisitions could also expose us to additional cybersecurity risks and vulnerabilities from any newly acquired information technology infrastructure. Although the aggregate impact on our operations and financial condition has not been material to date, we may have been the target of events of this nature and expect them to continue as cybersecurity threats have been rapidly evolving in sophistication and becoming more prevalent in the industry. These threats come from a variety of sources. Threat actors, personnel (such as through theft or misuse), sophisticated nation-states, and nation-state-supported actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including cyber-attacks that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.

Any of the aforementioned or similar threats could cause a security incident and result in unauthorized access or damage to our or our customers’ data, as well as disablement, encryption, misuse, disclosure, modification, destruction, or loss of such data. Technological interruptions could also disrupt operations, including the ability to timely ship and track product orders, project inventory requirements, manage supply chain and otherwise adequately service our customers or disrupt our customers’ ability use our test kits. In addition, we will rely heavily on providers of transport services for reliable and secure point-to-point transport of test kits to our customers and users and for tracking of these shipments. Should a carrier encounter delivery performance issues such as loss,

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damage or destruction of any systems, it would be costly to replace such systems in a timely manner and such occurrences may damage our reputation and lead to decreased demand for our test kits and increased cost and expense to our business. In addition, any significant increase in shipping rates could adversely affect our operating margins and results of operations. Similarly, strikes, severe weather, natural disasters or other service interruptions affecting delivery services we use would adversely affect our ability to process orders for test kits on a timely basis.

We may spend significant resources to endeavor to protect against, detect and/or mitigate security threats, and applicable laws or other obligations may require us to implement certain security measures. While we and our third-party partners have implemented security measures designed to protect against these threats, there can be no assurance that these measures will be effective. In the event we or our third-party collaborators experience significant disruptions, we may be unable to repair such systems in an efficient and timely manner. Accordingly, such events may disrupt or reduce the efficiency of our entire operation and harm our business, financial condition and results of operations. Currently, we carry business interruption coverage to mitigate certain potential losses but this insurance is limited in amount, and we cannot be certain that such potential losses will not exceed our policy limits, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims. There can also be no assurance that the limitations of liability in our contracts would protect us from liabilities or damages if we fail to comply with applicable obligations related to information security. If we, or a third party upon whom we rely, experience a security incident, or are perceived to have experienced a security incident, it may result in: government enforcement actions (e.g., investigations, fines, penalties, audits, or inspections); additional reporting requirements and/or oversight; bans on processing personal data; orders to destroy or not use personal data; class action litigation; indemnity obligations; negative publicity and reputational harm; diversion of funds; interruptions in operations and availability of data; and financial loss. Security incidents and attending consequences may cause some customers to stop using our products, deter new customers for using our products, and negatively impact our ability to grow and operate our business.

In addition, the COVID-19 pandemic has generally increased the risk of cybersecurity intrusions. For example, there has been an increase in phishing and spam emails as well as social engineering attempts from “hackers” hoping to use the recent COVID-19 pandemic to their advantage. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate or unauthorized access to or disclosure or use of confidential, proprietary, or other sensitive information, we could incur liability and suffer reputational harm.

Unfavorable global economic conditions could adversely affect our business, financial condition and results of operations.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including inflation and supply disruption. A domestic or global financial crisis can cause extreme volatility and disruptions in the capital and credit markets. Recent events, like the COVID-19 pandemic, Russia’s military intervention in Ukraine, or the global sanctions imposed by countries against Russia that followed, could result in a severe or prolonged economic downturn and pose a variety of risks to our business, including significant volatility in the price and availability of certain commodities and energy resources, political and social instability, changes in consumer or purchaser preferences, an increase in cyberattacks and espionage, our inability to purchase necessary raw materials or other supplies on acceptable terms, if at all, and our inability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could strain our suppliers, possibly resulting in supply disruption, or cause delays in payments for our services by third-party payors or our collaborators. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current political and economic climate and financial market conditions could adversely impact our business.

We may acquire other businesses or form other joint ventures or make investments in other companies or technologies that could negatively affect our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.

Although we currently have no agreements or commitments to complete any such transactions and are not involved in negotiations to do so, we may pursue acquisitions of businesses and assets in the future. We also may pursue strategic alliances and additional joint ventures that leverage our platform and industry experience to expand our offerings or distribution. We have no experience with acquiring other companies and limited experience with forming strategic partnerships. We may not be able to find suitable partners or acquisition candidates, and we may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent liabilities. Any future acquisitions also could result in the incurrence of debt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a material adverse effect on our financial condition, results of operations and cash flows. In addition, any pursuit of an acquisition and any potential integration of an acquired company also may disrupt ongoing operations and divert management attention and resources that we would otherwise focus on developing our existing business. We may experience losses related to investments in other companies, which could have a material negative effect on our

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results of operations and financial condition. We may not realize the anticipated benefits of any acquisition, technology license, strategic alliance or joint venture.

Our ability to use our net operating losses, or NOLs, and certain tax credits to offset future taxable income may be subject to certain limitations.*

As of December 31, 2021, we had federal and state NOL carryforwards of approximately $115.6 million and $56.2 million, respectively. The federal NOLs include $11.0 million that may be used to offset up to 100% of future taxable income and the federal and state NOLs will begin to expire in the calendar year 2034, unless previously utilized. The NOL carryforwards subject to expiration could expire unused and be unavailable to offset future income tax liabilities.

Under the Tax Cuts and Jobs Act, or the Tax Act, as modified by the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, federal NOLs incurred in taxable years beginning after December 31, 2017 and in future taxable years may be carried forward indefinitely. There is variation in how states will respond to the Tax Act and CARES Act. In addition, for state income tax purposes, there may be periods during which the use of NOLs is suspended or otherwise limited, such as recent California legislation limiting the usability of NOLs for tax years beginning in 2020 and before 2022. As mandated by the Tax Act, the research and experimentation expenditures incurred in the current years are required to be capitalized and amortized starting in 2022. The capitalization of research and experimentation expenditures may result in additional cash taxes.

Separately, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited. We determined that an ownership change occurred on October 9, 2015, but that all federal NOL carryforwards can be utilized prior to the expiration. As of August 7, 2020, we experienced an ownership change, which resulted in limitations in our ability to utilize federal research and development credits of $1.5 million and state NOLs of $23.9 million. In addition, we may in the future experience ownership changes, as a result of other changes in our stock ownership (some of which are not in our control). For these reasons, our ability to utilize our NOL carryforwards and other tax attributes to reduce future tax liabilities may be limited.

Risks Related to Government Regulation and Our Industry

We received EUAs for our COVID-19 test kit. The FDA may not timely grant any additional or amended EUAs, if at all. For our existing EUAs and any new or amended EUA, the FDA may revoke any EUA where it is determined that the underlying health emergency no longer exists or warrants such authorization, which would adversely impact our ability to market our test in the United States.

The FDA has the authority to grant an EUA to allow unapproved medical products to be used in an emergency to diagnose, treat or prevent serious or life-threatening diseases or conditions when there are no adequate, approved and available alternatives. The speed at which companies and institutions are acting to create and test medical products for COVID-19 is unusually rapid, and evolving or changing plans or priorities within the FDA, including changes based on new knowledge of COVID-19 and how the disease affects the human body, may significantly affect the regulatory timelines for our COVID-19 test kit. Results from our continued development and planned clinical trials may raise new questions and require us to redesign proposed clinical trials with minimal lead time.

On November 17, 2020, we received an EUA from the FDA for our COVID-19 test kit for (1) prescription at-home use with self-collected nasal swab specimens in individuals aged 14 and older who are suspected of COVID-19 by their healthcare provider and (2) use at the POC with self-collected nasal swab specimens in individuals aged 14 and older, and in individuals aged 13 and under when the specimen is collected by a healthcare provider at the POC. All prescribing healthcare providers will be required to report test results to relevant public health authorities in accordance with local, state, and federal requirements, using appropriate LOINC and SNOMED codes, as defined by the Laboratory In Vitro Diagnostics, or LIVD, Test Code Mapping for SARS-CoV-2 Tests provided by the CDC. On April 9, 2021, we received an EUA from the FDA for our COVID-19 test kit for OTC non-prescription use among symptomatic and asymptomatic individuals aged 14 and older (with self-collection) and children aged two to 13 (with parent collection).

Because the FDA may revoke an EUA where it is determined that the underlying health emergency no longer exists or warrants such authorization, we cannot predict how long our EUAs will remain in place. Such revocation could materially adversely impact our business in a variety of ways, including if our COVID-19 test kit is not yet approved by the FDA under a traditional approval pathway and if we and Jabil have invested in the supply chain to provide our COVID-19 test kit under an EUA, and would require us to obtain a 510(k) or other marketing authorization from the FDA. If the FDA revokes our existing EUAs prior to us having received regulatory

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approval to commercialize our COVID-19 test kit through a traditional approval pathway, we would be required to cease our commercialization efforts, which would substantially and negatively impact our business.

Our business and sale of our test kits are subject to extensive regulatory requirements, including compliance with labelling, manufacturing and reporting controls. If our existing EUAs for our COVID-19 test kit are revoked or withdrawn, we will need to utilize other pathways to obtain marketing authorization. Our influenza test kit also will require marketing authorization from the FDA. If we fail or are unable to timely obtain the necessary EUA, 510(k) clearances, de-novo authorizations, or premarket approval, or PMA, approvals for new products or for the use of our test kits for additional indications, our ability to generate revenue could be materially harmed.

Our test kits are classified as medical devices and are subject to extensive regulation in the United States by the FDA and other federal, state and local authorities and by similar regulatory authorities in overseas jurisdictions. Government regulation of medical devices is meant to assure their safety and effectiveness, and includes regulation of, among other things:

•design, development and manufacturing;

•testing, labeling, including directions for use, processes, controls, quality assurance, packaging, storage, distribution, installation and servicing;

•pre-clinical studies and clinical trials;

•establishment registration and listing;

•test kit safety and effectiveness;

•marketing, sales and distribution;

•recordkeeping procedures;

•advertising and promotion;

•premarket authorization (510(k), PMA, de-novo, EUA);

•corrections and removals and recalls;

•post-market surveillance, including reporting of deaths or serious injuries, and malfunctions that, if they were to recur, would be likely to cause or contribute to a death or serious injury; and

•product import and export.

In the United States, before we can market a new medical device, or a new use of, or claim for, an existing product, we must first receive either 510(k) clearance, PMA approval or approval of a de-novo application from the FDA, unless an exemption applies. The FDA also has authority to issue EUAs in times of crises such as pandemics (declaration of emergencies).

In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally on the market, known as a “predicate” device. Substantial equivalence means that with respect to the proposed device being compared to the predicate device, the proposed device has the same intended use as the predicate device and the proposed device has the same technological characteristics as the predicate device, or has different technological characteristics but that the proposed device is as safe and effective as the predicate device and does not raise different questions of safety and effectiveness. Clinical data are sometimes required to support substantial equivalence.

In the PMA approval process, the FDA requires an applicant to demonstrate the safety and effectiveness of the device based, in part, on extensive data, including, but not limited to, technical, pre-clinical study, clinical trial, manufacturing and labeling data. The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices and also novel devices that remain in Class III. Products that are approved from a PMA application generally need FDA approval of a PMA supplement before they can be modified. Similarly, some modifications made to products cleared through a 510(k) may require a new 510(k) clearance.

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Another pathway, known as de-novo down-classification also can be used for lower risk devices for which there is no existing product code or predicate device. The Food and Drug Administration Modernization Act of 1997 established the de-novo down-classification procedure as a new route to market for low to moderate risk medical devices that automatically require a PMA due to the absence of a predicate device. This procedure allows a manufacturer whose novel device automatically requires a PMA to request down-classification of its medical device (to allow clearance through the 510(k) pathway) on the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA application. Manufacturers can request de-novo down-classification directly without first submitting a 510(k) premarket notification to the FDA and receiving a “not substantially equivalent” determination. Under this pathway, the FDA is required to classify the device within 120 days following receipt of the de-novo application. If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. In addition, the FDA may reject the reclassification petition if it identifies a legally marketed predicate device that would be appropriate for a 510(k) or determines that the device is not low to moderate risk or that general controls would be inadequate to control the risks and special controls cannot be developed.

The FDA has the authority to grant an EUA to allow unapproved medical products to be used in an emergency to diagnose, treat or prevent serious or life-threatening diseases or conditions when there are no adequate, approved and available alternatives.

Each of these processes can be expensive and lengthy, and with respect to a PMA, can entail significant user fees, unless exempt. The FDA’s 510(k) clearance process usually takes from three to six months, but may take significantly longer. The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or longer, from the time the application is submitted to the FDA until an approval is obtained. The process of obtaining 510(k) clearances or PMA approvals to market a medical device can be costly and time consuming, and we may not be able to obtain these clearances or approvals on a timely basis, if at all.

In the United States, outside of the context of the EUA application process, our test kits will likely need to obtain clearance through the 510(k) premarket notification process. If the FDA requires us to go through a lengthier, more rigorous process for future products or modifications to existing products than expected, our product introductions or modifications could be delayed or cancelled, which could cause our sales to decline. In addition, the FDA may determine that future products will require the more costly, lengthy and uncertain PMA process. Although we do not currently market any devices under a PMA, the FDA may demand that we obtain a PMA prior to marketing certain of our future products. Further, even with respect to those future products where a PMA is not required, we may not be able to obtain the 510(k) clearances with respect to those products. The FDA can delay, limit or deny 510(k) clearance or PMA approval of a device for many reasons, including:

•we may not be able to demonstrate to the FDA’s satisfaction that our test kits are safe and effective for their intended uses;

•the data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required;

•the manufacturing process or facilities we use or contract to use may not meet applicable requirements; and

•disruptions at the FDA caused by funding shortages or global health concerns, including the COVID-19 pandemic.

The FDA may refuse our requests for 510(k) clearance, de-novo or PMA of new products, new intended uses or modifications to existing products.

From time to time, legislation is drafted and introduced in the United States that could significantly change the statutory provisions governing any regulatory approval or clearance that we receive in the United States. In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our test kits under development or impact our ability to modify our currently approved or cleared test kits on a timely basis.

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Modifications to our test kits may require new regulatory clearances or approvals or may require us to recall or cease marketing our test kits until clearances or approvals are obtained.

Once our test kits are initially cleared or approved, modifications to our test kits may require new regulatory approvals or clearances, including additional EUAs, 510(k) clearances or PMA approvals, or require us to recall or cease marketing the modified devices until these clearances or approvals are obtained. The FDA requires device manufacturers to initially make and document a determination of whether or not a modification requires a new approval, supplement or clearance. A manufacturer may determine that a modification could not significantly affect safety or efficacy and does not represent a major change in its intended use, so that no new 510(k) clearance is necessary. However, the FDA can review a manufacturer’s decision and may disagree. The FDA may also on its own initiative determine that a new clearance or approval is required. We may make modifications to our test kits in the future. For example, we may explore the development of a software component to our test kits, which may require new clearances or approvals from the FDA. If the FDA requires new clearances or approvals for the modifications, we may be required to recall and to stop marketing our test kits, as approved and as modified, which could require us to redesign our test kits and harm our operating results. In these circumstances, we may be subject to significant enforcement actions.

If a manufacturer determines that a modification to an FDA 510(k)-cleared device could significantly affect its safety or efficacy, or would constitute a major change in its intended use, then the manufacturer must file for a new 510(k) clearance or possibly a PMA application. Where we determine that modifications to our test kits require a new 510(k) clearance or PMA, we may not be able to obtain those additional clearances or approvals for the modifications or additional indications in a timely manner, or at all. Obtaining clearances and approvals can be a time consuming process, and delays in obtaining required future clearances or approvals would adversely affect our ability to introduce new or enhanced test kits in a timely manner, which in turn would harm our future growth.

If we or our contract manufacturers fail to comply with the FDA’s Quality System Regulations, or QSR, our manufacturing operations could be interrupted and our test kit sales and operating results could suffer.

Although full compliance may not be required under an EUA, we will be required to comply with the FDA’s QSR, which covers the methods used in, and the facilities and controls used for, the design, testing, manufacture, quality assurance, labeling, packaging, sterilization, storage and shipping of our test kits. The FDA enforces the QSR through periodic announced and unannounced inspections of manufacturing facilities. The failure by us or one of our current or future manufacturers or suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory authorities, or the failure to timely and adequately respond to any adverse inspectional observations, could result in, among other things, any of the following enforcement actions:

•untitled letters, warning letters, injunctions, civil penalties and criminal fines;

•customer notifications or repair, replacement, refunds, recall, detention or seizure of our test kits;

•operating restrictions or partial suspension or total shutdown of production;

•refusing or delaying our requests for approval of a PMA or 510(k) clearance of new products, modified products or new indications of cleared products;

•withdrawing PMA approvals or reclassifying devices that have 510(k) clearances;

•refusal to grant export certificates for our test kits; or

•criminal prosecution.

Any of these actions could impair our ability to produce our test kits in a cost-effective and timely manner to meet our customers’ demands once approved for marketing. Furthermore, our key suppliers may not currently be or may not continue to be in compliance with all applicable regulatory requirements, which could result in our failure to produce our test kits on a timely basis and in the required quantities, if at all.

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Our test kits are and will continue to be, subject to extensive regulation and compliance obligations, which are costly and time-consuming, and such regulation may cause unanticipated delays or prevent the receipt of the required approvals to commercialize our test kits.

The manufacture, labeling, advertising, promotion, record-keeping, post-market surveillance and marketing of medical devices are subject to extensive regulation and review by the FDA, Health Canada, Singapore’s Health Sciences Authority and numerous other governmental authorities in the United States as well as foreign countries where we may sell our test kits. Even after we have obtained EUA authorization, 510(k) clearance or PMA approval to market a product, we have ongoing responsibilities under FDA and other regulations. The FDA and other national governmental authorities have broad enforcement powers. The regulations to which we are subject are complex and have become more stringent over time. Regulatory changes could result in restrictions on our ability to continue or expand our operations, higher than anticipated costs or lower than anticipated sales. Our failure to comply with applicable regulatory requirements could result in enforcement actions such as:

•civil penalties;

•delays on or denials of pending requests for 510(k) clearance or PMA approval;

•recalls or seizures;

•withdrawals or suspensions of current PMA approvals or reclassification of 510(k) cleared devices, resulting in prohibitions on sales of our test kits, if approved;

•warning letters or untitled letters;

•operating restrictions, including a partial or total shutdown of production on our test kits for any indication;

•refusal to issue export approvals or certifications;

•obtaining injunctions preventing us from manufacturing or distributing our products;

•commencing criminal prosecutions; and

•total prohibitions on our sales.

The incurrence or commencement of any such action would harm our reputation and cause sales of our test kits to suffer and may prevent us from generating revenue.

In order to facilitate the rapid and thorough public health response to the COVID-19 pandemic, the CARES Act requires every laboratory that performs or analyzes a test that is intended to detect SARS-CoV-2 or to diagnose a possible case of COVID-19 to report the results from each such test to the Secretary of the U.S. Department of Health and Human Services, or HHS. The CARES Act also authorized the HHS Secretary to identify the form and manner, as well as the timing and frequency, of such reporting. Based on subsequent guidance issued by the HHS on June 4, 2020, all laboratories, including testing locations operating as temporary overflow or remote locations for a laboratory, and other facilities or locations performing testing at POC or with at-home specimen collection related to SARS-CoV-2, will report data for all testing completed, for each individual tested, within 24 hours of results being known or determined, on a daily basis to the appropriate state or local public health department based on the individual’s residence.

Since we will offer prescription at-home, we expect to assist the prescribing providers in reporting test results. In a prescription at-home setting, the patients will be expected to report their respective results back to the prescribing health care providers who will be responsible for reporting the results to the appropriate public health authorities. We expect to provide two methods to facilitate such reporting, including through an on-package photo guide that would allow users to upload results to secure physician portals and through web-based test results registration reporting. We believe these processes would fulfill our reporting obligations. Additionally, we believe that these methods are secure and in compliance with applicable health information privacy laws, such as HIPAA. If governmental authorities conclude that our reporting processes do not comply with applicable law, we or the prescribing physician may be subject to penalties and other damages.

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If our test kits cause or contribute to patient injuries or otherwise malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.

Under the FDA medical device reporting regulations, medical device manufacturers are required to report to the FDA information that a device may have caused or contributed to a patient death or serious injury or has or may have malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of the device or one of our similar devices were to recur. If we fail to report these events to the FDA within the required timeframes, or at all, the FDA could take enforcement action against us. Any such adverse event involving our test kits also could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results.

Our test kits or any component thereof may be subject to product recalls in the future. A recall of our test kits, either voluntarily or at the direction of the FDA or another governmental authority, or the discovery of serious safety issues with our test kits, could have a significant adverse impact on us.

The FDA has the authority to require the recall of commercialized products that are subject to FDA regulation. Manufacturers may, under their own initiative, recall a product if any deficiency is found. For example, On October 8, 2021, we issued a press release commenting on the recent recall by Copan Italia SPA of its FLOQSwabs, a component of our COVID-19 test kits identified on the label as “3 Swab,” that we distributed from April 22, 2021 through September 22, 2021. For reportable corrections and removals, companies are required to make additional periodic submissions to the FDA after initiating the recall, and often engage with the FDA on their recall strategy prior to initiating the recall. A government-mandated or voluntary recall by us or one of our distributors could occur as a result of an unacceptable health risk, component failures, failures in laboratory processes, malfunctions, manufacturing errors, design or labeling defects, or other deficiencies and issues. Recalls of any of our test kits would divert managerial and financial resources and adversely affect our business, results of operations, financial condition and reputation. We may also be subject to liability claims, be required to bear other costs or take other actions that may negatively impact our future sales and our ability to generate profits. Companies are also required to maintain certain records of corrections and removals, even if these do not require reporting to the FDA. We may initiate voluntary recalls involving our test kits. A recall announcement by us could harm our reputation with customers and negatively affect our business, financial condition, and results of operations. In addition, the FDA or other agency could take enforcement action for failing to report the recalls when they were conducted.

If we initiate a recall, including a correction or removal, for one of our test kits, issue a safety alert, or undertake a field action or recall to reduce a health risk, this could lead to increased scrutiny by the FDA, other governmental and regulatory enforcement bodies, and our customers regarding the quality and safety of our test kits, and to negative publicity, including FDA alerts, press releases, or administrative or judicial actions. Furthermore, the submission of these reports could be used against us by competitors and cause customers to delay purchase decisions or cancel orders, which would harm our reputation.

The misuse or off-label use of our test kits may harm our reputation or the image of our test kits in the marketplace, or result in injuries that lead to product liability suits, which could be costly to our business. Moreover, we could be subject to FDA sanctions if we are deemed to have engaged in off-label promotion.

Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition on the promotion of a medical device for an indication that has not been approved or cleared by the FDA, referred to as an off-label use. The FDA does not restrict or regulate a physician’s use of a medical device within the practice of medicine, and we cannot prevent a physician from using our test kits for an off-label use. If the FDA determines that our promotional materials constitute the unlawful promotion of an off-label use, it could subject us to regulatory or enforcement actions, including revocation of our existing EUAs, additional civil money penalties, criminal fines and penalties, and exclusion from participation in federal health programs, among others. For example, in connection with our existing EUAs, our COVID-19 test kit must comply with certain labeling requirements, including the label that our COVID-19 test kit has not been FDA cleared or approved but has been authorized by the FDA under an EUA and that our COVID-19 test kit has been authorized only for the detection of nucleic acid from SARS-CoV-2, and not for any other viruses or pathogens. Other federal, state or foreign governmental authorities might also take action if they consider our promotion or training materials to constitute promotion of an off-label use, which could result in significant fines or penalties under other statutory authorities. In that event, our reputation could be damaged and the use of our test kits in the marketplace could be impaired.

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Furthermore, the use of our test kits for indications other than those that have been approved or cleared by the FDA may lead to performance issues or produce erroneous results, which could harm our reputation in the marketplace among physicians and patients and increase the risk of product liability. Product liability claims are expensive to defend and could divert our management’s attention from our primary business and result in substantial damage awards against us. Any of these events could harm our business, results of operations and financial condition.

Clinical trials necessary to support a future test kit submission will be expensive and may require the enrollment of large numbers of subjects, and suitable subjects may be difficult to identify and recruit. Delays or failures in our clinical trials will prevent us from commercializing any modified or new test kits and will adversely affect our business, operating results and prospects.

Initiating and completing clinical trials necessary to support a future EUA, 510(k), PMA, or de novo submission, will be time consuming and expensive and the outcome uncertain. Moreover, the results of early clinical trials are not necessarily predictive of future results, and any test kit we advance into clinical trials may not have favorable results in later clinical trials.

Conducting successful clinical trials will require the enrollment of large numbers of subjects, and suitable subjects may be difficult to identify and recruit. Subject enrollment in clinical trials and completion of subject participation depends on many factors, including the nature of the trial protocol, the attractiveness of, or the discomforts and risks associated with, the indication of the underlying test kit, the availability of appropriate clinical trial investigators, support staff, and proximity of subjects to clinical sites and able to comply with the eligibility and exclusion criteria for participation in the clinical trial and subject compliance. In addition, subjects may not participate in our clinical trials if they choose to participate in contemporaneous clinical trials of competitive products.

In addition, our clinical trials may in the future be affected by the COVID-19 pandemic. For example, the COVID-19 pandemic may impact subject enrollment. In particular, some sites may pause enrollment to focus on, and direct resources to, COVID-19, while at other sites, subjects may choose not to enroll or continue participating in the clinical trial as a result of the pandemic. As a result, potential subjects in our clinical trials may choose to not enroll, not participate in follow-up clinical visits, or drop out of the trial as a precaution against contracting COVID-19. Further, some subjects may not be able or willing to comply with clinical trial protocols if quarantines impede subject movement or interrupt healthcare services. We are unable to predict with confidence the duration of any such potential subject enrollment delays and difficulties, whether related to COVID-19 or otherwise. Delays in subject enrollment or failure of subjects to continue to participate in a clinical trial may cause an increase in costs and delays in the approval and attempted commercialization of our test kits or result in the failure of the clinical trial.

Development of sufficient and appropriate clinical protocols to demonstrate safety and efficacy are required and we may not adequately develop such protocols to support clearance and approval. Further, the FDA may require us to submit data on a greater number of subjects than we originally anticipated and/or for a longer follow-up period or change the data collection requirements or data analysis applicable to our clinical trials. In addition, despite considerable time and expense invested in our clinical trials, the FDA may not consider our data adequate for approval. Such increased costs and delays or failures could adversely affect our business, operating results and prospects.

If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or expected, we may not be able to obtain regulatory approval for or commercialize our test kits.

We do not have the ability to independently conduct our pre-clinical studies and clinical trials for our test kits and we must rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories to conduct such trials. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, our test kits on a timely basis, if at all, and our business, operating results and prospects may be adversely affected. Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control.

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Our collection, use, storage, disclosure, transfer and other processing of personal information, could give rise to significant costs, liabilities and other risks, including as a result of investigations, inquiries, litigation, fines, legislative and regulatory action and negative press about our data privacy and security practices, which may harm our business, financial conditions, results of operations and prospects.

In the course of our operations, we collect, use, store, disclose, transfer and otherwise process an increasing volume of personal information, including from our employees and third parties with whom we conduct business. The collection, use, storage, disclosure, transfer and other processing of personal information is increasingly subject to a wide array of federal, state and foreign laws and regulations regarding data privacy and security, that are intended to protect the privacy of personal information that is collected, used, stored, disclosed, transferred and otherwise processed in or from the governing jurisdiction. As we seek to expand our business, we are, and may increasingly become, subject to various laws, regulations and standards, as well as contractual obligations, relating to data privacy and security in the jurisdictions in which we operate. When conducting clinical trials, we face risks associated with collecting trial participants’ data, especially health data, in a manner consistent with applicable laws and regulations, such as FDA human subject protection regulations.

In many cases, these laws and regulations apply not only to third-party transactions, but also to transfers of information between or among us, any affiliates and other parties with whom we conduct business. These laws, regulations and standards may be interpreted and applied differently over time and from jurisdiction to jurisdiction, and it is possible that they will be interpreted and applied in ways that may harm our business, financial condition and results of operations. The regulatory framework for data privacy and security worldwide is continuously evolving and developing and, as a result, interpretation and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future.

We are subject to diverse laws and regulations relating to data privacy and security. In the United States, various federal and state regulators have adopted, or are considering adopting, laws and regulations concerning personal information and data security, including the Health Insurance Portability and Accountability Act of 1996, or HIPAA. Additionally, the CCPA, which increases privacy rights for California residents and imposes obligations on companies that process their personal information, came into effect on January 1, 2020. Among other things, the CCPA imposes several obligations on covered businesses, including requiring specific disclosures related to a business’s collection, use, and sharing of personal data, new operational practices, and requirements to respond to requests from California residents related to their personal data. The CCPA contains significant potential penalties for noncompliance (up to $7,500 per violation). In addition, it is anticipated that the California Privacy Rights Act of 2020, or CPRA, effective January 1, 2023, will expand the CCPA in certain critical ways, including by establishing a new California Privacy Protection Agency to implement and enforce the new law. Other states have enacted data privacy laws. For example, Virginia recently passed its Consumer Data Protection Act, and Colorado recently passed the Colorado Privacy Act, both of which differ from the CPRA and become effective in 2023. In Canada, where we operate, we are also/may be subject to the Personal Data Protection and Electronic Documents Act, or PIPEDA, and various related provincial laws. All of these evolving compliance and operational requirements impose significant costs that are likely to increase over time, may require us to modify our data processing practices and policies, divert resources from other initiatives and projects, and could restrict the way products and services involving data are offered, all of which may harm our business, financial condition and results of operations.

In addition to government regulation, privacy advocates and industry groups have and may in the future propose self-regulatory standards from time to time. For example, we are also/may be subject to PCI DSS, a multifaceted security standard designed to protect payment card data as mandated by payment card industry entities. We may also rely on vendors to process payment card data, who may be subject to PCI DSS. These and other industry standards may legally or contractually apply to us, or we may elect to comply with such standards. We expect that there will continue to be new proposed laws, regulations, standards, and other obligations concerning data privacy and security, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. We make public statements about our use and disclosure of personal information through our privacy policies, information provided on our website and press statements. Although we endeavor to comply with our public statements and documentation, we may at times fail to do so or be alleged to have failed to do so. The publication of our privacy policies and other statements that provide promises and assurances about data privacy and security can subject us to potential government or legal action if they are found to be deceptive, unfair or misrepresentative of our actual practices. Any concerns about our data privacy and security practices, even if unfounded, could damage the reputation of our business and harm our business, financial condition and results of operations.

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Complying with these numerous, complex and often changing obligations is expensive and difficult. Because the interpretation and application of laws, regulations, standards and other obligations relating to data privacy and security are still uncertain, it is possible that these laws, regulations, standards and other obligations may be interpreted and applied in a manner that is inconsistent with our data processing practices and policies or the features of our test kits. Preparing for and attempting to comply with these obligations requires significant resources and, potentially, changes to our technologies, systems, and practices and those of any third parties that process personal data on our behalf. Any failure or perceived failure by us or our service providers to comply with our posted privacy policies or with any applicable federal, state or similar foreign laws, regulations, standards, certifications or orders relating to data privacy, security or consumer protection, or any compromise of security that results in the theft, unauthorized access, acquisition, use, disclosure, or misappropriation of personal information or other user data, could result in significant fines or penalties, negative publicity or proceedings or litigation by governmental agencies or consumers, including class action privacy litigation in certain jurisdictions, which would subject us to significant awards, penalties or judgments, one or all of which could require us to change our business practices or increase our costs and could materially and adversely affect our business, financial condition and results of operations. In addition, if our practices are not consistent, or viewed as not consistent, with data privacy and security requirements, including changes in laws, regulations and standards or new interpretations or applications of existing laws, regulations and standards, we may also become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, criminal or civil sanctions, all of which may harm our business, financial condition and results of operations. Additionally, any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers, collaborators, or partners; interruption or stoppage in clinical trials; inability to process personal data or operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or revision or restructuring our operations.

If we fail to comply with U.S. federal and state fraud and abuse and other healthcare laws and regulations, including those relating to kickbacks and false claims, we could face substantial penalties and our business operations and financial condition could be harmed.

Healthcare providers and third-party payors play a primary role in the distribution, recommendation, ordering and purchasing of any medical device for which we have or obtain marketing clearance or approval. Through our arrangements with healthcare professionals and customers, we are exposed to broadly applicable anti-fraud and abuse, anti-kickback, false claims and other healthcare laws and regulations that may constrain our business, our arrangements and relationships with customers, and how we market, sell and distribute our marketed medical devices. We have a compliance program, code of conduct and associated policies and procedures, but it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent noncompliance may not be effective in protecting us from governmental investigations for failure to comply with applicable fraud and abuse or other healthcare laws and regulations.

In the United States, we are subject to various state and federal anti-fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute and federal civil False Claims Act, or the FCA. There are similar laws in other countries. Our relationships with physicians, other health care professionals and hospitals are subject to scrutiny under these laws.

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The laws that may affect our ability to operate include, among others:

•the Anti-Kickback Statute, which prohibits, among other things, knowingly and willingly soliciting, offering, receiving or paying remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of a person, or the purchase, order or recommendation of, items or services for which payment may be made, in whole or in part, under a federal healthcare program such as the Medicare and Medicaid programs. The term “remuneration” has been broadly interpreted to include anything of value, and the government can establish a violation of the Anti-Kickback Statute without proving that a person or entity had actual knowledge of the law or a specific intent to violate. In addition, the government may assert that a claim, including items or services resulting from a violation of the Anti-Kickback Statute, constitutes a false or fraudulent claim for purposes of the FCA. There are a number of statutory exceptions and regulatory safe harbors protecting certain business arrangements from prosecution under the Anti-Kickback Statute; however, those exceptions and safe harbors are drawn narrowly, and there may be limited or no exception or safe harbor for many common business activities. Certain common business activities including, certain reimbursement support programs, educational and research grants or charitable donations, and practices that involve remuneration to those who prescribe, purchase or recommend medical devices, including discounts, providing items or services for free or engaging such people as consultants, advisors or speakers, may be subject to scrutiny if they do not fit squarely within any available exception or safe harbor and would be subject to a facts and circumstances analysis to determine compliance with the Anti-Kickback Statute. Our business may not in all cases meet all of the criteria for statutory exception or regulatory safe harbor protection from anti-kickback liability;

•the FCA, which prohibits, among other things, persons or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds and knowingly making, using or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease or conceal an obligation to pay money to the federal government. A claim including items or services resulting from a violation of the Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA. Actions under the FCA may be brought by the government or as a qui tam action by a private person in the name of the government. These people, sometimes known as “relators” or, more commonly, as “whistleblowers,” may share in any monetary recovery. Many medical device manufacturers have been investigated and have reached substantial financial settlements with the federal government under the FCA for a variety of alleged improper activities, including causing false claims to be submitted as a result of the marketing of their products for unapproved and thus non-reimbursable uses and interactions with prescribers and other customers, including those that may have affected their billing or coding practices and submission of claims to the federal government. FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory monetary penalties for each false or fraudulent claim or statement. Because of the potential for large monetary exposure, healthcare and medical device companies often resolve allegations without admissions of liability for significant and material amounts to avoid the uncertainty of treble damages and per claim penalties that may be awarded in litigation proceedings. Settlements may require companies to enter into corporate integrity agreements with the government, which may impose substantial costs on companies to ensure compliance. Medical device manufacturers and other healthcare companies also are subject to other federal false claims laws, including, among others, federal criminal healthcare fraud and false statement statutes that extend to non-government health benefit programs;

•HIPAA, which imposes criminal and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, or knowingly and willfully falsifying, concealing or covering up a material fact or making a materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the federal healthcare Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;

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•HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, and their implementing regulations, also impose obligations, including mandatory contractual terms, on covered entities subject to the rule, such as health plans, healthcare clearinghouses and certain healthcare providers, as well as their business associates and their covered subcontractors that perform certain services for them or on their behalf involving the use or disclosure of individually identifiable health information with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

•various state laws govern the privacy and security of personal information, including the California Consumer Protection Act, or CCPA, which became effective January 1, 2020, and gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used by requiring covered companies to provide new disclosures to California consumers (as that term is broadly defined) and provide such consumers new ways to opt-out of certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches;

•the federal Physician Payments Sunshine Act, implemented as Open Payments, requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually, with certain exceptions to CMS, information related to payments or other “transfers of value” made to physicians, as defined by such law, other healthcare providers (such as physicians assistants and nurse practitioners), and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members; and

•analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require medical device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state beneficiary inducement laws, which are state laws that require medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

State and federal regulatory and enforcement agencies continue to actively investigate violations of healthcare laws and regulations, and the U.S. Congress continues to strengthen the arsenal of enforcement tools. Most recently, the Bipartisan Budget Act of 2018, or the BBA, increased the criminal and civil penalties that can be imposed for violating certain federal health care laws, including the Anti-Kickback Statute. Enforcement agencies also continue to pursue novel theories of liability under these laws. In particular, government agencies have increased regulatory scrutiny and enforcement activity with respect to manufacturer reimbursement support activities and patient support programs, including bringing criminal charges or civil enforcement actions under the Anti-Kickback Statute, FCA and HIPAA’s healthcare fraud and privacy provisions.

Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available under such laws, it is possible that some of our business activities, including certain sales and marketing practices of our test kits, and financial arrangements with physicians, other healthcare providers, and other customers, could be subject to challenge under one or more such laws. If an arrangement were deemed to violate the Anti-Kickback Statute, it may also subject us to violations under other fraud and abuse laws such as the federal civil FCA and civil monetary penalties laws. Moreover, such arrangements could be found to violate comparable state fraud and abuse laws.

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Achieving and sustaining compliance with applicable federal and state anti-fraud and abuse laws may prove costly. If we or our employees are found to have violated any of the above laws we may be subjected to substantial criminal, civil and administrative penalties, including imprisonment, exclusion from participation in federal healthcare programs, such as Medicare and Medicaid, and significant fines, monetary penalties, forfeiture, disgorgement and damages, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results. Any action or investigation against us for the violation of these healthcare fraud and abuse laws, even if successfully defended, could result in significant legal expenses and could divert our management’s attention from the operation of our business. Companies settling FCA, Anti-Kickback Statute or civil monetary penalties law cases also may enter into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General, or the OIG, in order to avoid exclusion from participation (such as loss of coverage for their products) in federal healthcare programs such as Medicare and Medicaid. Corporate Integrity Agreements typically impose substantial costs on companies to ensure compliance. Defending against any such actions can be costly, time-consuming and may require significant personnel resources, and may harm our business, financial condition and results of operations.

In addition, the medical device industry’s relationship with physicians is under increasing scrutiny by the OIG, the U.S. Department of Justice, or the DOJ, the state attorney generals and other foreign and domestic government agencies. Our failure to comply with requirements governing the industry’s relationships with physicians or an investigation into our compliance by the OIG, the DOJ, state attorney generals and other government agencies, could harm our business, financial condition and results of operations.

Our employees, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could harm our business, financial condition and results of operations.

We are exposed to the risk that our employees, independent contractors, consultants, commercial partners, distributors and vendors may engage in fraudulent or illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or disclosure of unauthorized activities to us that violates: (1) the laws of the FDA and other similar regulatory bodies, including those laws requiring the reporting of true, complete and accurate information to such regulators, (2) manufacturing standards, (3) healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws, or (4) laws that require the true, complete and accurate reporting of financial information or data. These laws may impact, among other things, future sales, marketing and education programs. In particular, the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commissions, certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials.

In connection with our recent initial public offering, we adopted a code of business conduct and ethics that applies to our directors, officers and employees, but it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent these activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could result in the imposition of significant fines or other sanctions, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, disgorgement, imprisonment, additional integrity reporting and oversight obligations, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings and curtailment of operations, any of which could adversely affect our ability to operate our business and our results of operations. Whether or not we are successful in defending against any such actions or investigations, we could incur substantial costs, including legal fees and reputational harm, and divert the attention of management in defending ourselves against any of these claims or investigations, which could harm our business, financial condition and results of operations.

Healthcare reform initiatives and other administrative and legislative proposals may harm our business, financial condition, results of operations and cash flows in our key markets. *

There have been and continue to be proposals by the federal government, state governments, regulators and third-party payors to control or manage the increased costs of healthcare and, more generally, to reform the U.S. healthcare system. Certain of these proposals could limit the prices we are able to charge for our test kits or the coverage and reimbursement available for our test kits and could limit the acceptance and availability of our test kits. The adoption of proposals to control costs could harm our business, financial condition and results of operations.

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Since the start of the COVID-19 pandemic, Congress has passed several bills addressing coverage and payment for COVID-19 diagnostic tests and related services, including mandates for coverage and payment of certain tests. Further federal legislative action to address the ongoing pandemic is expected. Future legislation may change current laws to adversely affect coverage and reimbursement of our test kits, which could harm our business.

For example, in the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, together, the Affordable Care Act or the ACA, was a sweeping measure that expanded healthcare coverage within the United States, primarily through the imposition of health insurance mandates on employers and people, the provision of subsidies to eligible people enrolled in plans offered on the health insurance exchanges and the expansion of the Medicaid program.

There have been executive, judicial and Congressional challenges to certain aspects of the ACA. For example, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA. While Congress has not passed comprehensive repeal legislation, several bills affecting the implementation of certain taxes under the ACA have been signed into law. The Tax Act includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain people who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” In addition, the Further Consolidated Appropriations Act of 2020 permanently eliminates, effective January 1, 2020, the ACA-mandated medical device tax and the “Cadillac” tax on high-cost employer-sponsored health coverage and, effective January 1, 2021, also eliminates the annual fee imposed on certain health insurance providers based on market share. On June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Thus, the ACA will remain in effect in its current form. Further, prior to the U.S. Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is possible that the ACA will be subject to judicial or Congressional challenges in the future. It is unclear how such challenges and the healthcare reform measures of the Biden administration will affect the ACA and our business.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, includes reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute will remain in effect through 2030 unless additional Congressional action is taken, with the exception of a temporary suspension of the 2% cut in Medicare payments from May 1, 2020 through March 30, 2022. Under current legislation, the actual reduction in Medicare payments will vary from 1% beginning April 1 through June 30, 2022 and up to 3% in the final fiscal year of this sequester. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Further, Congress is considering additional health reform measures. Future federal or state legislative or administrative changes may harm our business and financial results, and we cannot predict how future healthcare reform measures will affect our business.

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There likely will continue to be legislative and regulatory proposals at the federal and state levels directed at containing or lowering the cost of healthcare. We cannot predict the initiatives that may be adopted in the future or their full impact. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may harm:

•our ability to set a price that we believe is fair for our test kits, once approved;

•our ability to generate revenue and achieve or maintain profitability; and

•the availability of capital.

Various new healthcare reform proposals are emerging at the federal and state level, and additional legislative measures to address the COVID-19 pandemic are expected. For example, beginning January 15, 2022, pursuant to guidance issued by the Biden administration, health plans are required to provide coverage for at-home COVID-19 testing during the public health emergency without imposing any cost-sharing requirements (including deductibles, copayments, and coinsurance), prior authorization, or other medical management requirements. In addition, on April 4, 2022, the Biden administration announced that all Medicare Part B beneficiaries, including those enrolled in a Medicare Advantage plan, will have access to FDA approved, authorized, or cleared over-the-counter COVID-19 tests at no cost during the COVID-19 public health emergency. Medicare Part A beneficiaries are not included in this initiative. Any new federal and state healthcare initiatives that may be adopted could limit the amounts that federal and state governments will pay for healthcare products and services, and could harm our business, financial condition and results of operations.

Our operations involve hazardous materials and we and third parties with whom we contract must comply with environmental laws and regulations, which can be expensive and restrict how we do business, and could expose us to liability if our use of such hazardous materials causes injury.

Our manufacturing processes currently require the controlled use of potentially harmful chemicals. We cannot eliminate the risk of accidental contamination or injury to contracted employees from offshore or third parties from the use, storage, handling or disposal of these materials. In the event of contamination or injury, we could be held liable for any resulting damages, and any liability could exceed our resources or any applicable insurance coverage we may have. Additionally, we are subject to, on an ongoing basis, laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. The cost of compliance with these laws and regulations may become significant and could negatively impact our reputation, financial condition, results of operations and cash flows. In the event of an accident or if we otherwise fail to comply with applicable regulations, we could lose our permits or approvals or be held liable for damages or penalized with fines.

In addition, because our test kit contains electronic components and batteries which are purchased from third-party vendors, we may be required under rules promulgated by the SEC governing disclosure of the use of “conflict minerals” (tin, tungsten, tantalum and gold) to determine whether those minerals are necessary to the functionality or production of our test kits and, if so, conduct a country of origin inquiry with respect to all such minerals. If any such minerals may have originated in the Democratic Republic of the Congo, or DRC, or any of its adjoining countries, or covered countries, then we must conduct diligence on the source and chain of custody of those conflict minerals to determine if they originated in one of the covered countries and, if so, whether they financed or benefited armed groups in the covered countries. Disclosures relating to the products that may contain conflict minerals, the country of origin of those minerals and whether they are “DRC conflict free” must be provided in a Form SD (and accompanying conflict minerals report, if required, to disclose the diligence undertaken by us in sourcing the minerals and our conclusions relating to such diligence). If we are required to submit a conflict minerals report, that report must be audited by an independent auditor pursuant to existing government auditing standards. Compliance with this disclosure rule may be very time-consuming for our management and personnel (as well as time-consuming for our suppliers) and could involve the expenditure of significant amounts of money by us and them. Disclosures mandated by this rule, which can be perceived by the market to be “negative,” may cause customers to refuse to purchase our test kits. The cost of compliance with the rule could adversely affect our results of operations.

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Risks Related to Our Intellectual Property

If we are unable to obtain and maintain patent or other intellectual property protection for any test kits we develop or for our platform, or if the scope of the patent and other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize test kits and platform similar or identical to ours, and our ability to successfully commercialize any test kits we may develop, and our platform, may be harmed.

As with other medical device companies, our success depends in large part on our ability to obtain, maintain and solidify a proprietary position for our current and any future test kits, which will depend upon our success in obtaining effective patent protection in the United States and other countries that cover, and other intellectual property with respect to, such test kits, their manufacturing processes and their intended methods of use and enforcing those patent claims once granted as well as our other intellectual property. In some cases, we may not be able to obtain issued patent claims or other intellectual property covering our technologies which are sufficient to prevent third parties, such as our competitors, from utilizing our platform. Any failure to obtain or maintain patent and other intellectual property protection with respect to our current and any future test kits or other aspects of our business could harm our business, financial condition and results of operations.

Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions, obtain, maintain and enforce our intellectual property rights and, more generally, could affect the value of our intellectual property or narrow the scope of our patents. Additionally, we cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors or other third parties.

The patent prosecution process is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output in time to obtain patent protection. Although we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, suppliers, consultants, advisors and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek and obtain patent protection. In addition, our ability to obtain and maintain valid and enforceable patents depends in part on whether the differences between our inventions and the prior art allow our inventions to be patentable over the prior art. Furthermore, the publication of discoveries in scientific literature often lags behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to file for patent protection of such inventions.

Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from or license to third parties and are therefore reliant on our licensors or licensees, and may be reliant on future licensors or licensees, to protect certain of our intellectual property used in our business. If our licensors or licensees fail to adequately protect this intellectual property or if we do not have exclusivity for the marketing of our test kits, whether because our licensors do not grant us exclusivity or they do not enforce the intellectual property against our competitors, our ability to commercialize products could suffer.

Therefore, these and any of our patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. Defects of form in the preparation or filing of our patents or patent applications may exist, or may arise in the future, for example, with respect to proper priority claims, inventorship and the like, although we are unaware of any such defects that we believe are of importance. If we or any current or future licensors or licensees fail to establish, maintain, protect or enforce such patents and other intellectual property rights, such rights may be reduced or eliminated. If any current or future licensors or licensees are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised. If there are material defects in the form, preparation or prosecution of our patents or patent applications, such patents or applications may be invalid and/or unenforceable. Any of these outcomes could impair our ability to prevent competition from third parties, which may materially harm our business.

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The strength of patent rights generally, and particularly the patent position of medical device companies, involves complex legal and scientific questions and can be uncertain, and has been the subject of much litigation in recent years. This uncertainty includes changes to the patent laws through either legislative action to changes to statutory patent law or court action that may reinterpret existing law or rules in ways affecting the scope or validity of issued patents or the chances that patent applications will result in issued claims and the scope of any such claims. Our current or future patent applications may fail to result in issued patents in the United States or foreign countries with claims that cover our current and any future test kits. Even if patents do successfully issue from our patent applications, third parties may challenge the validity, enforceability or scope of such patents, which may result in such patents being narrowed, invalidated or held unenforceable. Any successful challenge to our patents could deprive us of exclusive rights necessary for the successful commercialization of our current and any future test kits, which may harm our business. Furthermore, even if they are unchallenged, our patents may not adequately protect our current and any future test kits, provide exclusivity for such test kits or prevent others from designing around our claims. If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical technology and test kits would be adversely affected. If the breadth or strength of protection provided by the patents we hold or pursue with respect to our current and any future test kits is challenged, it could dissuade companies from collaborating with us to develop, or threaten our ability to commercialize, our current and any future test kits.

Patents have a limited lifespan. In the United States, the natural expiration of a utility patent is generally 20 years after its effective filing date and the natural expiration of a design patent is generally 14 years after its issue date, unless the filing date occurred on or after May 13, 2015, in which case the natural expiration of a design patent is generally 15 years after its issue date. However, the actual protection afforded by a patent varies from country to country, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent. Various extensions may be available; however, the life of a patent, and the protection it affords, is limited. Without patent protection for our current and any future test kits and services, we may be open to competition, which may harm our business prospects. Further, if we encounter delays in our development efforts, the period of time during which we could market our current and any future test kits and services under patent protection would be reduced and, given the amount of time required for the development, testing and regulatory review of planned or future test kits, patents protecting our current and any future test kits might expire before or shortly after such test kits are commercialized. For information regarding the expiration dates of patents in our patent portfolio, see Part I, Item 1 “Business—Intellectual Property” in our 2021 Annual Report. As our patents expire, the scope of our patent protection will be reduced, which may reduce or eliminate any competitive advantage afforded by our patent portfolio. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing test kits similar or identical to ours.

Moreover, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if patent applications we license or own, currently or in the future, issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us, or otherwise provide us with any competitive advantage. Any patents that we own now or in the future may be challenged, narrowed, circumvented or invalidated by third parties. Consequently, we do not know whether our current and any future test kits or other technologies will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies or test kits in a non-infringing manner which could harm our business, financial condition and results of operations.

Some of our patents and patent applications may in the future be jointly-owned with third parties. If we are unable to obtain an exclusive license to any such third-party joint-owners’ interest in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing test kits and technology. In addition, we may need the cooperation of any such joint-owners of our patents in order to enforce such patents against third parties, and such cooperation may not be provided to us. Any of the foregoing could harm our business, financial condition and results of operations.

Additionally, we may find it necessary or prudent to acquire or obtain licenses from third-party intellectual property holders. However, we may be unable to acquire or secure such licenses to any intellectual property rights from third parties that we identify as necessary for our current and any future test kits. The acquisition or licensing of third-party intellectual property rights is a competitive area, and our competitors may pursue strategies to acquire or license third-party intellectual property rights that we may consider attractive or necessary. Our competitors may have a competitive advantage over us due to their size, capital resources and greater development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to acquire or license third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment or at all. If we are unable to successfully obtain rights to required third-party intellectual property rights or maintain the existing intellectual property rights we have, we may have to abandon development of the relevant test kits, which could harm our business, financial condition and results of operations.

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We are dependent on patents and other intellectual property licensed from others and may become dependent on other patents or other intellectual property licensed from others in the future. If we lose our licenses for intellectual property that is important to our business, we may not be able to continue developing or selling our test kits.

We have obtained licenses that give us rights to third-party intellectual property that is necessary or useful to our business. The license agreements covering our test kits impose various obligations on us. One or more of our licensors may allege that we have breached our license agreement with them, and accordingly seek to terminate our license. If we materially breach the obligations in our license agreements, the licensor typically has the right to terminate the license and we may not be able to market products that were covered by the license, which could adversely affect our competitive business position and harm our business prospects. In addition, any claims brought against us by our licensors could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations.

Patents covering our current, and any future test kits, or our technologies could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad, which could harm our business, financial condition and results of operations.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the United States and internationally and may not provide us with adequate proprietary protection or competitive advantage against competitors with similar products. We may be subject to a third-party preissuance submission of prior art to the U.S. Patent and Trademark Office, or the USPTO, or become involved in opposition, derivation, revocation, reexamination, post-grant and inter partes review, or IPR, or interference proceedings or other similar proceedings challenging our patent rights. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate or render unenforceable, such patent rights, allow third parties to commercialize our platform or our current and any future test kits and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize test kits without infringing third-party patent rights. Moreover, we may have to participate in post-grant challenge proceedings, such as oppositions in a foreign patent office, that challenge features of patentability with respect to our patents and patent applications. Such challenges may result in loss of patent rights, in loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, which could limit our ability to stop others from using or commercializing similar or identical technology and test kits, or limit the duration of the patent protection of our current and any future test kits or technologies. Such proceedings also may result in substantial cost and require significant time from our management, even if the eventual outcome is favorable to us.

In addition, if we initiate legal proceedings against a third-party to enforce a patent covering our current and any future test kits, the defendant could counterclaim that such patent is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or made a misleading statement during prosecution. Defenses of these types of claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. Third parties may also raise claims challenging the validity or enforceability of our patents before administrative bodies in the United States or abroad, even outside the context of litigation, including through re-examination, post-grant review, IPR, derivation proceedings and equivalent proceedings in foreign jurisdictions (such as opposition proceedings). Such proceedings could result in the revocation of, cancellation of or amendment to our patents in such a way that they no longer cover our current and any future test kits or technologies. The outcome for any particular patent following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant or other third-party were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our current and any future test kits and technology. Such a loss of patent protection would harm our business, financial condition and results of operations.

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We rely substantially on our trademarks and trade names. If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be harmed.

We rely substantially upon trademarks to build and maintain the integrity of our brand. Our registered and unregistered trademarks or trade names may be challenged, infringed, circumvented, declared generic or determined to be violating or infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we rely upon to build name recognition among potential partners and customers in our markets of interest. At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion and asserting claims against such third parties may be prohibitively expensive. In addition, there could be potential trade name or trademark infringement or dilution claims brought by owners of other trademarks against us. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names or other intellectual property may be ineffective, could result in substantial costs and diversion of resources and could harm our business, financial condition and results of operations.

The medical device industry is characterized by intellectual property litigation and in the future could become subject to, litigation that could be costly, result in the diversion of management’s time and efforts, require us to pay damages or prevent us from marketing our existing or future test kits.

Litigation regarding patents, trademarks, trade secrets, and other intellectual property rights is prevalent in the medical device and diagnostic sectors and companies in these sectors have used intellectual property litigation to gain a competitive advantage. Our commercial success depends in part upon our ability and that of our contract manufacturers and suppliers to manufacture, market, and sell our planned test kits, and to use our proprietary technologies without infringing, misappropriating or otherwise violating the proprietary rights or intellectual property of third parties. Because we have not conducted a formal freedom to operate analysis for patents related to our test kits, we may not be aware of issued patents that a third-party might assert are infringed by our current or any future test kits, which could materially impair our ability to commercialize our current or any future test kits. Even if we diligently search third-party patents for potential infringement by our current or any future test kits, we may not successfully find patents that our current or any future test kits may infringe. If we are unable to secure and maintain freedom to operate, others could preclude us from commercializing our current or future test kits. We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our current and any future test kits and technology, whether or not we are actually infringing, misappropriating or otherwise violating the rights of third parties. Additional third parties may assert infringement claims against us based on existing or future intellectual property rights, regardless of merit. If we are found to infringe a third-party’s intellectual property rights, we could be required to obtain a license from such third-party to continue developing and marketing our current and any future test kits and technology. We may also elect to enter into such a license to settle pending or threatened litigation. However, we may not be able to obtain any required license on commercially reasonable terms, or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us, and could require us to pay significant royalties and other fees. We could be forced, including by court order, to cease commercializing the infringing technology or test kits. In addition, we could be found liable for monetary damages, which may be significant. If we are found to have willfully infringed a third-party patent, we could be required to pay treble damages and attorneys’ fees. A finding of infringement could prevent us from commercializing our planned test kits in commercially important territories, or force us to cease some of our business operations, which could harm our business. Many of our employees were previously employed at, and many of our current advisors and consultants are employed by, universities or other biotechnology, medical device or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, advisors and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we, or these employees, have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. These and other claims that we have misappropriated the confidential information or trade secrets of third parties can have a similar negative impact on our business to the infringement claims discussed above.

Even if we are successful in defending against intellectual property claims, litigation or other legal proceedings relating to such claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial negative impact on the price of our common shares. Such litigation or proceedings could substantially increase our operating losses and reduce our resources available for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of litigation or other intellectual property related proceedings could harm our business, financial condition and results of operations.

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Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition and results of operations may be harmed.

Obtaining and maintaining our intellectual property, including patent, protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government agencies, and our intellectual property, including patent, protection could be reduced or eliminated for non-compliance with these requirements.

Obtaining and maintaining our intellectual property, including patent, protection depends on compliance with various procedural measures, document submissions, fee payments and other requirements imposed by government agencies, and our intellectual property, including patent, protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other government fees on intellectual property registrations and applications will be due to be paid to the applicable government agencies, including with respect to patents and patent applications the USPTO and similar agencies outside of the United States, over the lifetime of our intellectual property registrations and applications, including our patents and patent applications. The various applicable government agencies, including with respect to patents and patent applications the USPTO and similar agencies outside of the United States, require compliance with several procedural, documentary, fee payment and other similar provisions during the application process. In some cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however, in which non-compliance can result in the abandonment or lapse of the intellectual property registration or application, resulting in a partial or complete loss of intellectual property rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of an intellectual property registration or application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In such an event, potential competitors might be able to enter the market with similar or identical test kits or technology, which could harm our business, financial condition and results of operations.

We have limited foreign intellectual property rights and may not be able to protect our intellectual property and proprietary rights throughout the world, which could harm our business, financial condition and results of operations.

We have limited intellectual property rights outside the United States. Filing, prosecuting and defending patents or trademarks on our current and any future test kits in all countries throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Consequently, we may not be able to prevent third parties from practicing our inventions or utilizing our trademarks in all countries outside the United States, or from selling or importing test kits made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own test kits and, further, may export otherwise infringing test kits to territories where we have patent protection but enforcement is not as strong as that in the United States. These test kits may compete with our current and any future test kits, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing test kits in violation of our intellectual property and proprietary rights generally. Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

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Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our current and any future test kits.

Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. Assuming that other requirements for patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith America Invents Act, or the America Invents Act, enacted in September 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third-party was the first to invent the claimed invention. A third-party that files a patent application in the USPTO after March 2013, but before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by such third-party. This will require us to be cognizant of the time from invention to filing of a patent application. Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we were the first to file any patent application related to our current and any future test kits.

The America Invents Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, IPR and derivation proceedings.

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. federal courts necessary to invalidate a patent claim, a third-party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third-party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third-party as a defendant in a district court action. Therefore, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. In addition, future actions by the U.S. Congress, the federal courts and the USPTO could cause the laws and regulations governing patents to change in unpredictable ways. Any of the foregoing could harm our business, financial condition and results of operations.

In addition, recent U.S. Supreme Court rulings have made and will likely continue to make changes in how the patent laws of the United States are interpreted. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the validity and enforceability of patents, once obtained. Depending on future actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. We cannot predict how this and future decisions by the courts, the U.S. Congress or the USPTO may impact the value of our patents. Any similar adverse changes in the patent laws of other jurisdictions could also harm our business, financial condition, results of operations and prospects.

We may be subject to claims challenging the ownership or inventorship of our patents and other intellectual property and, if unsuccessful in any of these proceedings, we may be required to obtain licenses from third parties, which may not be available on commercially reasonable terms, or at all, or to cease the development, manufacture and commercialization of one or more of our current and any future test kits.

We may be subject to claims that current or former employees, collaborators or other third parties have an interest in our patents, trade secrets or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of employees, consultants or others who are involved in developing our current and any future test kits. Litigation may be necessary to defend against these and other claims challenging inventorship of our patents, trade secrets or other intellectual property. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our current and any future test kits. If we were to lose exclusive ownership of such intellectual property, other owners may be able to license their rights to other third parties, including our competitors. We also may be required to obtain and maintain licenses from third parties, including parties involved in any such disputes. Such licenses may not be available on commercially reasonable terms, or at all, or may be non-exclusive. If we are unable to obtain and maintain such licenses, we may need to cease the development, manufacture and commercialization of one or more of our current and any future test kits. The loss of exclusivity or the narrowing of our patent claims could limit our ability to stop others from using or commercializing similar or identical technology and test kits. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Any of the foregoing could harm our business, financial condition and results of operations.

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Third-party claims of intellectual property infringement, misappropriation or other violation against us or our collaborators may prevent or delay the sale and marketing of our current and any future test kits.

The medical device industry is highly competitive and dynamic. Due to the focused research and development that is taking place by several companies, including us and our competitors, in this field, the intellectual property landscape is in flux, and it may remain uncertain in the future. As such, we could become subject to significant intellectual property-related litigation and proceedings relating to our or third-party intellectual property and proprietary rights.

Our commercial success depends in part on our and any potential future collaborators’ ability to develop, manufacture, market and sell any test kits that we may develop and use our proprietary technologies without infringing, misappropriating or otherwise violating the patents and other intellectual property or proprietary rights of third parties. It is uncertain whether the issuance of any third-party patent would require us or any potential collaborators to alter our development or commercial strategies, obtain licenses or cease certain activities. The medical device industry is characterized by extensive litigation regarding patents and other intellectual property rights, as well as administrative proceedings for challenging patents, including interference, inter partes or post-grant review, derivation and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions.

Third parties, including our competitors, may currently have patents or obtain patents in the future and claim that the manufacture, use or sale of our current and any future test kits infringes upon these patents. We have not conducted an extensive search of patents issued or assigned to other parties, including our competitors, and no assurance can be given that patents containing claims covering our current and any future test kits, parts of our current and any future test kits, technology or methods do not exist, have not been filed or could not be filed or issued. In addition, because patent applications can take many years to issue and because publication schedules for pending applications vary by jurisdiction, there may be applications now pending of which we are unaware and which may result in issued patents which our current or future test kits infringe. Also, because the claims of published patent applications can change between publication and patent grant, there may be published patent applications that may ultimately issue with claims that we infringe. As the number of competitors in our market grows and the number of patents issued in this area increases, the possibility of patent infringement claims against us escalates.

In the event that any third-party claims that we infringe their patents or that we are otherwise employing their proprietary technology without authorization and initiates litigation against us, even if we believe such claims are without merit, there is no assurance that a court would find in our favor on questions of infringement, validity, enforceability or priority. A court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed by our current and any future test kits, which could harm our ability to commercialize any test kit we may develop and any other technologies covered by the asserted third-party patents. In order to successfully challenge the validity of any such U.S. patent in federal court, we would need to overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. If we are found to infringe third-party intellectual property rights, including patents, and we are unsuccessful in demonstrating that such patents or other intellectual property rights are invalid or unenforceable, such third parties may be able to block our ability to commercialize the applicable test kits or technology unless we obtain a license under the applicable patents, or until such patents expire or are finally determined to be held invalid or unenforceable. Such a license may not be available on commercially reasonable terms, or at all. Even if we are able to obtain a license, the license would likely obligate us to pay significant license fees and/or royalties, and the rights granted to us might be non-exclusive, which could result in our competitors gaining access to the same technology. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, we may be unable to commercialize our current and any future test kits, or such commercialization efforts may be significantly delayed, which could in turn significantly harm our business.

Defense of infringement claims, regardless of their merit or outcome, would involve substantial litigation expense and would be a substantial diversion of management and other employee resources from our business, and may impact our reputation. In the event of a successful claim of infringement against us, we may be enjoined from further developing or commercializing the infringing test kits and/or have to pay substantial damages for use of the asserted intellectual property, including treble damages and attorneys’ fees were we found to willfully infringe such intellectual property. Claims that we have misappropriated the confidential information or trade secrets of third parties could harm our business, financial condition and results of operations. We also might have to redesign our infringing test kits or technologies, which may be impossible or require substantial time and monetary expenditure.

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Engaging in litigation to defend against third-party infringement claims is very expensive, particularly for a company of our size, and time-consuming. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial negative impact on our common stock price. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of litigation or administrative proceedings more effectively than we can because of greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings against us could impair our ability to compete in the marketplace. The occurrence of any of the foregoing could harm our business, financial condition and results of operations.

We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive, time-consuming and unsuccessful.

Competitors may infringe our patents, or the patents of any future licensing partners, or we may be required to defend against claims of infringement. In addition, our patents or the patents of any such licensing partners also may become involved in inventorship, priority or validity disputes. To counter or defend against such claims can be expensive and time-consuming. In an infringement proceeding, a court may decide that our patent is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover such technology. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our management and other personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial negative impact on our common stock price. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could harm our ability to compete in the marketplace. Any of the foregoing could harm our business, financial condition and results of operations.

We may be subject to claims that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property. Such claims could harm our business, financial condition and results of operations.

As is common in the medical device industry, our employees, consultants and advisors may be currently or previously employed or engaged at universities or other medical device or healthcare companies, including our competitors and potential competitors. Although we try to ensure that our employees, consultants and advisors do not use the proprietary information or know-how of others in their work for us, we may in the future become subject to claims that we or these people have, inadvertently or otherwise, used or disclosed intellectual property, including trade secrets or other proprietary information, of their current or former employer. Also, we may in the future be subject to claims that these people are violating non-compete agreements with their former employers. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could harm our business, financial condition and results of operations. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Such claims could harm our business, financial condition and results of operations.

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Intellectual property rights do not necessarily address all potential threats, and limitations in intellectual property rights could harm our business, financial condition and results of operations.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example:

•others may be able to make test kits that are similar to our current and any future test kits or utilize similar technology but that are not covered by the claims of our patents or that incorporate certain technology in our current and any future test kits that is in the public domain;

•we, or our current and future licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions;

•we, or our current and future licensors or collaborators, may fail to meet our obligations to the U.S. government regarding any future patents and patent applications funded by U.S. government grants, leading to the loss or unenforceability of patent rights;

•others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

•it is possible that our current or future pending patent applications will not lead to issued patents;

•it is possible that there are prior public disclosures that could invalidate our patents, or parts of our patents;

•it is possible that there are unpublished applications or patent applications maintained in secrecy that may later issue with claims covering our current and any future test kits or technology similar to ours;

•it is possible that our patents or patent applications omit people that should be listed as inventors or include people that should not be listed as inventors, which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable;

•issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties;

•the claims of our patents or patent applications, if and when issued, may not cover our current and any future test kits or technologies;

•the laws of foreign countries may not protect our proprietary rights or the rights of future licensors or collaborators to the same extent as the laws of the United States;

•the inventors of our patents or patent applications may become involved with competitors, develop test kits or processes that design around our patents, or become hostile to us or the patents or patent applications on which they are named as inventors;

•our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive test kits for sale in our major commercial markets;

•we have engaged in scientific collaborations in the past and will continue to do so in the future and our collaborators may develop adjacent or competing test kits that are outside the scope of our patents;

•we may not develop additional proprietary technologies that are patentable;

•the patents of others may harm our business; or

•we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third-party may subsequently file a patent covering such intellectual property.

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Any of the foregoing could harm our business, financial condition and results of operations.

Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed. If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to seeking patent protection for our current and any future test kits, we also rely upon unpatented trade secrets, know-how and continuing technological innovation to develop and maintain a competitive position, especially where we do not believe patent protection is appropriate or obtainable. Trade secrets and know-how can be difficult to protect. We seek to protect such proprietary information, in part, through non-disclosure and confidentiality agreements with our employees, collaborators, contractors, advisors, consultants and other third parties and invention assignment agreements with our employees. We also have agreements with our consultants that require them to assign to us any inventions created as a result of their working with us. The confidentiality agreements are designed to protect our proprietary information and, in the case of agreements or clauses containing invention assignment, to grant us ownership of technologies that are developed through a relationship with employees or third parties.

We cannot guarantee that we have entered into such agreements with each party that has or may have had access to our trade secrets or proprietary information. Additionally, despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third-party, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to, or independently developed by, a competitor or other third-party, our competitive position would be materially and adversely harmed. Furthermore, we expect these trade secrets, know-how and proprietary information to over time be disseminated within the industry through independent development, the publication of journal articles describing the methodology and the movement of personnel from academic to industry scientific positions.

We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these people, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known, or be independently discovered by, competitors. To the extent that our employees, consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions, which could harm our business, financial condition and results of operations.

If our third-party manufacturing partner, Jabil, does not respect our intellectual property and trade secrets and produce competitive test kits using our designs or intellectual property, our business, financial condition and results of operations would be harmed.

We conduct most of our manufacturing activities through Jabil at its Dominican Republic facilities. Although the Jabil MSA generally precludes Jabil from misusing our intellectual property and trade secrets, or using our designs to manufacture test kits for our competitors, we may be unsuccessful in monitoring and enforcing our intellectual property rights and may find counterfeit goods in the market being sold as our current and any future test kits or test kits similar to ours produced for our competitors using our intellectual property. Although we take steps to stop counterfeits, we may not be successful and network operators who purchase these counterfeit goods may experience product defects or failures, harming our reputation and brand and causing us to lose future sales. Any of the foregoing could harm our business, financial condition and results of operations.

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Risks Related to Ownership of Our Common Stock

Our stock price may be volatile, and the value of our common stock may decline.*

The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including limited trading volume. For example, from February 8, 2021 to August 12, 2022, our stock price ranged from a high of $37.00 to a low of $1.44. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Quarterly Report, these factors including:

•the receipt of additional or amended EUAs from the FDA for our COVID-19 test kit and the timing thereof;

•our ability to obtain and maintain regulatory approvals for our test kits;

•changes in laws or regulations applicable to our test kits;

•adverse developments concerning Jabil, or any of our third-party collaborators and suppliers, including our sole-source suppliers;

•our inability to obtain adequate product supply for any approved test kit or inability to do so at acceptable prices;

•our ability to reliably manufacture and distribute our test kits;

•the degree and rate of physician and market adoption of any of our test kits, and initially our COVID-19 test kit;

•announcements by us or our competitors of significant business developments, diagnostic technologies, acquisitions, or new offerings;

•our ability to withdraw additional funds, or to repay amounts outstanding, under the Amended Loan Agreement;

•negative publicity associated with issues related to our test kits;

•changes in the anticipated future size and growth rate of the COVID-19 and influenza diagnostic testing markets as a result of widely administered use of efficacious vaccines or other treatments;

•the development of new vaccines and treatments for COVID-19 or the announcement of impending approval of such new vaccines or treatments;

•the loss or termination of any rights under the Jabil MSA;

•our inability to establish collaborations, if needed;

•future sales of our common stock or other securities, by us or our stockholders;

•changes in senior management or key personnel;

•the trading volume of our common stock;

•performance or news releases by other companies in our industry including about adverse developments related to safety, effectiveness, accuracy and usability of their products, reputational concerns, reimbursement coverage, regulatory compliance, and product recalls;

•general economic, regulatory and market conditions, including economic recessions or slowdowns;

•actual or anticipated fluctuations in our financial condition and results of operations, including as a result of anticipated or unanticipated demand based on seasonal factors;

•variance in our financial performance from expectations of securities analysts or investors;

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•changes in our projected operating and financial results;

•developments or disputes concerning our intellectual property or other proprietary rights;

•significant lawsuits, including patent or stockholder litigation;

•general political and economic conditions, including the COVID-19 pandemic; and

•other events or factors, many of which are beyond our control.

Broad market and industry fluctuations, as well as general economic, pandemic, political, regulatory, and market conditions, may negatively impact the market price of our common stock. In addition, given the relatively small public float of shares of our common stock on the Nasdaq Global Select Market, or Nasdaq, the trading market for our shares may be subject to increased volatility. In the past, securities class action litigation has often been brought against companies that have experienced volatility or following a decline in the market price of its securities. This risk is especially relevant for us, because medical device companies have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

Substantial future sales and issuances of our common stock could cause the market price of our common stock to decline.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of our common stock.

In addition, certain of our stockholders have registration rights that would require us to register shares owned by them for public sale in the United States. We have also filed a registration statement to register shares reserved for future issuance under our equity compensation plans. As a result, subject to the satisfaction of applicable exercise periods and applicable volume and restrictions that apply to affiliates, the shares issued upon exercise of outstanding stock options or upon settlement of outstanding restricted stock unit awards are available for immediate resale in the United States in the open market.

Sales of our shares could also impair our ability to raise capital through the sale of additional equity securities in the future and at a price we deem appropriate. These sales could also have an adverse effect on the trading price of our common stock.

Concentration of ownership of our common stock among our executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions.

Our executive officers, directors and current beneficial owners of 5% or more of our common stock beneficially own a significant percentage of our outstanding common stock. These stockholders, acting together, will be able to significantly influence all matters requiring stockholder approval, including the election and removal of directors and any merger or other significant corporate transactions. The interests of this group of stockholders may not coincide with the interests of other stockholders.

We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

We have never declared or paid any cash dividends on our capital stock, and we do not intend to pay any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors. In addition, pursuant to the Amended Loan Agreement, we are prohibited from declaring or paying cash dividends, and future debt instruments may materially restrict our ability to pay dividends on our common stock. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

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We are an emerging growth company and a smaller reporting company and our compliance with the reduced reporting and disclosure requirements applicable to emerging growth companies and smaller reporting companies could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including the auditor attestation requirements of Section 404 reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved and extended adoption period for accounting pronouncements.

We are also a “smaller reporting company,” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Investors may find our common stock less attractive as a result of our reliance on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

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Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control which could limit the market price of our common stock and may prevent or frustrate attempts by our stockholders to replace or remove our current management.

Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent a change of control of our company or changes in our board of directors that our stockholders might consider favorable. Some of these provisions include:

•a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time;

•a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders;

•a requirement that special meetings of stockholders be called only by the chairman of the board of directors, the chief executive officer, the president, or by a majority of the total number of authorized directors;

•advance notice requirements for stockholder proposals and nominations for election to our board of directors;

•a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors;

•a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our certificate of incorporation; and

•the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporate Law, which may prohibit certain business antitakeover provisions and other provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for stockholders or potential acquirors to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer, or proxy contest involving our company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common stock to decline.

Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (1) any derivative action or proceeding brought on our behalf, (2) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, or other employees to us or our stockholders, (3) any action or proceeding asserting a claim against us or any of our current or former directors, officers, or other employees, arising out of or pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, (4) any action or proceeding to interpret, apply, enforce, or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws, (5) any action or proceeding as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware, and (6) any action asserting a claim against us or any of our directors, officers, or other employees governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.

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These provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation and our amended and restated bylaws will further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions. In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation and our amended and restated bylaws. This may require significant additional costs associated with resolving such action in other jurisdictions and the provisions may not be enforced by a court in those other jurisdictions.

These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees and may discourage these types of lawsuits. Furthermore, the enforceability of similar choice of forum provisions in other companies’ certificates of incorporation or bylaws has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable. If a court were to find either exclusive forum provision contained in our amended and restated certificate of incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving such action in other jurisdictions, all of which could seriously harm our business.

General Risk Factors

We have incurred and may continue to incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

As a public company, we have incurred and will continue to incur significant legal, accounting, and other expenses that we did not incur as a private company. We expect such expenses to further increase after we are no longer an emerging growth company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations impose various requirements on public companies. Furthermore, the senior members of our management team do not have significant experience with operating a public company. As a result, our management and other personnel will have to devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. Accordingly, we may continue to incur operating losses for the foreseeable future and we may not achieve profitability in the future and that, if we do become profitable, we may not sustain profitability. Our failure to achieve and sustain profitability in the future will make it more difficult to finance our business and accomplish our strategic objectives, which would have a material adverse effect on our business, financial condition and results of operations and cause the market price of our common stock to decline. In addition, failure of our test kits to significantly penetrate the target markets would negatively affect our business, financial condition and results of operations.

As a result of being a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our common stock.

We are required, pursuant to Section 404 of the Sarbanes–Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting in our first annual report required to be filed with the SEC following the date we are no longer an emerging growth company if we are not a non-accelerated filer at such time.

If we fail to remediate our existing material weakness or identify future material weaknesses in our internal control over financial reporting, or if our independent registered public accounting firm determines we have additional material weakness in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure to remedy any material weakness or significant deficiency in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets. See the risk factor titled “We identified a material weakness in our internal control over financial reporting and may identify material weaknesses in the future or otherwise fail to maintain proper and effective internal controls, which may impair our ability to produce accurate financial statements on a timely basis.”

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If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.

The preparation of our financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in our condensed financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. For example, in connection with the revenue accounting standard, Accounting Standards Codification, or ASC, Topic 606, management makes judgments and assumptions based on our interpretation of the new standard. The revenue standard is principle-based and interpretation of those principles may vary from company to company based on their unique circumstances. It is possible that interpretation, industry practice and guidance may evolve as we apply the standard. If our assumptions underlying our estimates and judgments relating to our critical accounting policies change or if actual circumstances differ from our assumptions, estimates or judgments, our operating results may be adversely affected and could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.

Changes in tax law and regulations may have a material adverse effect on our business, financial condition and results of operations.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by the Internal Revenue Service, the U.S. Treasury Department and other governmental bodies. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock. In recent years, many such changes have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our business, financial condition, results of operations, and cash flow. For example, proposals have recently been made in Congress (which have not yet been enacted) to make certain tax law changes affecting corporations. We urge investors to consult with their legal and tax advisers regarding the implication of potential changes in tax laws on an investment in our common stock.

Our failure to meet Nasdaq’s continued listing requirements could result in a delisting of our common stock.

If we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our common stock. Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. 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, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with the listing requirements of Nasdaq.

We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws and anti-money laundering laws and regulations. Compliance with these legal standards could impair our ability to compete in domestic and international markets. We can face criminal liability and other serious consequences for violations, which can harm our business.

We are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls, and anti-corruption and anti-money laundering laws and regulations, including the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, and other state and national anti-bribery and anti-money laundering laws in the countries in which we conduct or may in the future conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors and other third-party collaborators from authorizing, promising, offering, providing, soliciting or receiving, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. We may engage third parties outside of the United States to sell our test kits internationally once we enter a commercialization phase, and/or to obtain necessary permits, licenses, patent registrations and other regulatory approvals. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other organizations. We can be held liable for the corrupt or other illegal activities of our employees, agents, contractors and other third-party collaborators, even if we do not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences.

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We are subject to numerous laws and regulations related to anti-bribery and anti-corruption laws, such as the FCPA, in which violations of these laws could result in substantial penalties and prosecution.

For any operations outside the United States, we are similarly subject to various heavily-enforced anti-bribery and anti-corruption laws, such as the FCPA and similar laws around the world. These laws generally prohibit U.S. companies and their employees and intermediaries from offering, promising, authorizing or making improper payments to foreign government officials for the purpose of obtaining or retaining business or gaining any advantage. We face significant risks if we, which includes our third-party business partners and intermediaries, fail to comply with the FCPA or other anti-corruption and anti-bribery laws. In many foreign countries, particularly in countries with developing economies, it may be a local custom that businesses engage in practices that are prohibited by the FCPA or other applicable laws and regulations. To that end, our internal control policies and procedures and employee training and compliance programs designed to deter prohibited practices ultimately may not be effective in preventing our employees, contractors, business partners, intermediaries or agents from violating or circumventing our policies and/or the law.

Responding to any enforcement action or related investigation may result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees. Any violation of the FCPA or other applicable anti-bribery, anti-corruption or anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from U.S. government contracts, which could harm our business, financial condition and results of operations.

We could be subject to securities class action litigation.

In the past, securities class action litigation has often been brought against companies following a decline in the market price of its securities. This risk is especially relevant for us because medical device companies have experienced significant stock price volatility in recent years, and our stock price has been volatile since our initial public offering. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

If securities or industry analysts publish unfavorable or inaccurate research about our business, our common stock price and trading volume could decline.

Our stock price and trading volume will be heavily influenced by the way analysts and investors interpret our financial information and other disclosures. If securities or industry analysts delay publishing reports about our business or publish negative reports about our business, regardless of accuracy, our common stock price and trading volume could decline.

The trading market for our common stock depends, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. We expect that only a limited number of analysts will cover our company following our initial public offering. If the number of analysts that cover us declines, demand for our common stock could decrease and our common stock price and trading volume may decline. Even if our common stock is actively covered by analysts, we do not have any control over the analysts or the measures that analysts or investors may rely upon to forecast our future results. Over-reliance by analysts or investors on any particular metric to forecast our future results may result in forecasts that differ significantly from our own.

Regardless of accuracy, unfavorable interpretations of our financial information and other public disclosures could have a negative impact on our stock price. If our financial performance fails to meet analyst estimates, for any of the reasons discussed above or otherwise, or one or more of the analysts who cover us downgrade our common stock or change their opinion of our common stock, our stock price would likely decline.

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

Recent Sales of Unregistered Equity Securities

None.

Issuer Purchases of Equity Securities

None.

Use of Proceeds From Registered Securities

On February 9, 2021, we sold 10,350,000 shares of our common stock in connection with our IPO, including 1,350,000 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares, at public offering price of $17.00 per share for an aggregate offering price of approximately $175.9 million. The offer and sale of all the shares in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-252164) that was declared effective by the SEC on February 4, 2021.

There has been no material change in the use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b)(4) on February 8, 2021.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

103

		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	File No.	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation of Lucira Health, Inc.	8-K	001-39976	3.1	February 9, 2021
3.2	Amended and Restated Bylaws of Lucira Health, Inc.	8-K	001-39976	3.2	February 9, 2021
4.1	Form of common stock certificate.	S-1/A	333-252164	4.1	February 1, 2021
4.2 ¥	Amended and Restated Investor Rights Agreement, dated August 7, 2020, by and among Lucira Health, Inc. and the investors listed on Schedule A thereto.	S-1	333-252164	4.2	January 15, 2021
4.3	Warrant to Purchase Stock, dated February 4, 2022, by and between the Registrant and Silicon Valley Bank.	10-K	001-39976	4.4	March 31, 2022
4.4	Warrant Agreement, dated February 4, 2022, by and between the Registrant and Hercules Capital, Inc.	10-K	001-39976	4.5	March 31, 2022
10.1*	Second Amendment to Loan and Security Agreement, dated June 15, 2022, by and between the Registrant, Hercules Capital Inc. and Silicon Valley Bank
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*#	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*#	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document)
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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_______________________

* Filed herewith.

# The certifications furnished in Exhibits 32.1 and 32.2 hereto are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Lucira Health, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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SIGNATURES

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

	LUCIRA HEALTH, INC.
Date: August 15, 2022	By:	/s/ Erik T. Engelson
		Erik T. Engelson
		President and Chief Executive Officer (Principal Executive Officer)
Date: August 15, 2022	By:	/s/ Daniel George
		Daniel George Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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EX-10.1

EXHIBIT 10.1

SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of June 15, 2022 (the “Amendment Effective Date”), is entered into by and among LUCIRA HEALTH, INC., a Delaware corporation, and each of its Subsidiaries joined hereafter from time to time pursuant to Section 7.13 of the Loan and Security Agreement (hereinafter collectively referred to as the “Borrower”), HERCULES CAPITAL, INC., a Maryland corporation (“Hercules”), Silicon Valley Bank, a California corporation, and the several banks and other financial institutions or entities from time to time parties to this Agreement (each, a “Lender”, and collectively, referred to as the “Lenders”), and Hercules , in its capacity as administrative agent and collateral agent for itself and the Lender (in such capacity, together with its successors and assigns in such capacity, “Agent”).

The Borrower, the Lenders and Agent are parties to a Loan and Security Agreement dated as of February 4, 2022 (as amended, restated or modified from time to time, the “Loan and Security Agreement”). The Borrower has requested that Agent and Lenders agree to certain amendments to the Loan and Security Agreement. Agent and Lenders have agreed to such request, subject to the terms and conditions hereof.

Accordingly, the parties hereto agree as follows:

SECTION 1 Definitions; Interpretation.

(a)Terms Defined in Loan and Security Agreement. All capitalized terms used in this Amendment (including in the recitals hereof) and not otherwise defined herein shall have the meanings assigned to them in the Loan and Security Agreement.

(b)Interpretation. The rules of interpretation set forth in Section 1.3 of the Loan and Security Agreement shall be applicable to this Amendment and are incorporated herein by this reference.

SECTION 2 Amendments to the Loan and Security Agreement.

(a)The Loan and Security Agreement shall be amended as follows effective as of the Amendment Effective Date:

(i)The definition of “Bank Services Cap” as set forth in Section 1.1 is hereby amended and restated in its entirety as follows:

“Bank Services Cap” means Two Million Five Hundred and Fifty Thousand Dollars ($2,550,000).

(ii)Clause (vii) of the definition “Permitted Indebtedness” is hereby amended and restated in its entirety as follows:

“(vii) reimbursement obligations in connection with letters of credit that are secured by Cash and issued on behalf of the Borrower or a Subsidiary thereof in an amount not to exceed One Million Nine Hundred and Fifty Thousand Dollars ($1,950,000) at any time outstanding,”

(iii)Clause (xiv) of the definition “Permitted Liens” is hereby amended and restated in its entirety as follows:

(xiv) (A) Liens on Cash securing obligations permitted under clause (vii) of the definition of Permitted Indebtedness and (B) security deposits in connection with real property leases, the combination of (A) and (B) in an aggregate amount not to exceed Two Million Nine Hundred and Fifty Thousand Dollars ($2,950,000) at any time;”

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(b)References Within Loan and Security Agreement. Each reference in the Loan and Security Agreement to “this Agreement” and the words “hereof,” “herein,” “hereunder,” or words of like import, shall mean and be a reference to the Loan and Security Agreement as amended by this Amendment.

SECTION 3 Conditions of Effectiveness. The effectiveness of Section 2 of this Amendment shall be subject to the satisfaction of each of the following conditions precedent:

(a)This Amendment. Agent shall have received this Amendment, executed by Agent, the Lenders and Borrower.

(b)Representations and Warranties; No Default. On the Amendment Effective Date, after giving effect to the amendment of the Loan and Security Agreement contemplated hereby:

(i)The representations and warranties contained in Section 5 of the Loan and Security Agreement shall be true and correct on and as of the Amendment Effective Date as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, after giving effect in all cases to any standard(s) of materiality contained in the Agreement as to such representations and warranties; and

(ii)There exist no Events of Default or events that with the passage of time would result in an Event of Default.

SECTION 4 Representations and Warranties. To induce Agent and Lender to enter into this Amendment, Borrower hereby confirms, as of the date hereof, (a) that the representations and warranties made by it in Section 5 of the Loan and Security Agreement and in the other Loan Documents are true and correct in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; (b) that there has not been and there does not exist a Material Adverse Effect; and (c) that the information included in the Perfection Certificate delivered to Agent on the Closing Date remains true and correct in all material respects. For the purposes of this Section 4, (i) each reference in Section 5 of the Loan and Security Agreement to “this Agreement,” and the words “hereof,” “herein,” “hereunder,” or words of like import in such Section, shall mean and be a reference to the Loan and Security Agreement as amended by this Amendment, and (ii) any representations and warranties which relate solely to an earlier date shall not be deemed confirmed and restated as of the date hereof (provided that such representations and warranties shall be true, correct and complete as of such earlier date).

SECTION 5 Miscellaneous.

(a)Loan Documents Otherwise Not Affected; Reaffirmation. Except as expressly amended pursuant hereto or referenced herein, the Loan and Security Agreement and the other Loan Documents shall remain unchanged and in full force and effect and are hereby ratified and confirmed in all respects. The Lenders’ and Agent’s execution and delivery of, or acceptance of, this Amendment shall not be deemed to create a course of dealing or otherwise create any express or implied duty by any of them to provide any other or further amendments, consents or waivers in the future. Borrower hereby reaffirms the grant of security under Section 3.1 of the Loan and Security Agreement, subject to the provisions set forth in Section 3.2 of the Loan and Security Agreement, and hereby reaffirms that such grant of security in the Collateral secures all Secured Obligations under the Loan and Security Agreement and the other Loan Documents.

(b)Conditions. For purposes of determining compliance with the conditions specified in Section 3, each Lender that has signed this Amendment shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless Agent shall have received notice from such Lender prior to the Amendment Effective Date specifying its objection thereto.

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(c)Release. Borrower hereby fully, finally and forever acquits, quitclaims, releases and discharges Agent and Lenders and their respective officers, directors, employees, agents, successors and assigns of and from any and all obligations, claims, liabilities, damages, demands, debts, liens, deficiencies or cause or causes of action to, of or for the benefit (whether directly or indirectly) of Borrower, at law or in equity, known or unknown, contingent or otherwise, whether asserted or unasserted, whether now known or hereafter discovered, whether statutory, in contract or in tort, as well as any other kind or character of action now held, owned or possessed (whether directly or indirectly) by Borrower on account of, arising out of, related to or concerning, whether directly or indirectly, proximately or remotely (i) the negotiation, review, preparation or documentation of the Loan Documents or any other documents or agreements executed in connection therewith, (ii) the administration of the Loan Documents, (iii) the enforcement, protection or preservation of Agent’s and Lenders’ rights under the Loan Documents, or any other documents or agreements executed in connection therewith, (iv) the negotiation, review, preparation and documentation of this Amendment or any other documents or agreements executed in connection herewith, and/or (v) any action or inaction by Agent or Lender in connection with any such documents, instruments and agreements.

Borrower acknowledges having read and understood and hereby waives the benefits of Section 1542 of the California Civil Code, which provides as follows (and hereby waives the benefits of any similar law of the state that may be applicable):

“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”

Borrower acknowledges that the foregoing provisions of this Section 5(c) are intended to be a general release with respect to the matters described therein. Borrower does hereby expressly acknowledge and agree that the waivers and releases contained in this Amendment shall not be construed as an admission of and/or the existence of any claims of Borrower against Agent or Lender. Borrower does hereby acknowledge and agree that the value to Borrower of this Amendment and of the covenants and agreements on the part of Lender contained in this Amendment substantially and materially exceeds any and all value of any kind or nature whatsoever of any claims or liabilities waived or released by Borrower hereunder.

(d)No Reliance. Each Borrower hereby acknowledges and confirms to Agent and the Lender that such Borrower is executing this Amendment on the basis of its own investigation and for its own reasons without reliance upon any agreement, representation, understanding or communication by or on behalf of any other Person.

(e)Costs and Expenses. Each Borrower agrees to pay to Agent on the Amendment Effective Date the out-of-pocket costs and expenses of Agent and the Lenders party hereto, and the fees and disbursements of counsel to Agent and the Lenders party hereto (including allocated costs of internal counsel), in connection with the negotiation, preparation, execution and delivery of this Amendment and any other documents to be delivered in connection herewith on the Amendment Effective Date or after such date.

(f)Binding Effect. This Amendment binds and is for the benefit of the successors and permitted assigns of each party.

(g)Governing Law. This Amendment and the other Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

(h)Complete Agreement; Amendments. This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements with respect to such subject matter. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.

(i)Severability of Provisions. Each provision of this Amendment is severable from every other provision in determining the enforceability of any provision.

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(j)Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Amendment. Delivery of an executed counterpart of a signature page of this Amendment by facsimile, portable document format (.pdf) or other electronic transmission will be as effective as delivery of a manually executed counterpart hereof.

(k)Loan Documents. This Amendment shall constitute a Loan Document.

[Balance of Page Intentionally Left Blank; Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment, as of the date first above written.

BORROWER
LUCIRA HEALTH, INC..
Signature:	/s/ Dan George
Print Name: Dan George
Title: Chief Financial Officer
AGENT
HERCULES CAPITAL, INC>
Signature:	/s/ Zhuo Huang
Print Name: Zhuo Huang
Title: Associate General Counsel
LENDER
HERCULES CAPITAL, INC.
Signature:	/s/ Zhuo Haung
Print Name: Zhuo Huang
Title: Associate General Counsel
SILICON VALLEY BANK
Signature:	/s/ Kristina Peralta
Print Name: Kristina Peralta
Title: Vice President

4

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Erik T. Engelson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Lucira Health, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Intentionally Omitted

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.    

Date: August 15, 2022	By:	/s/ Erik T. Engelson
		Erik T. Engelson
		President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel George, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Lucira Health, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Intentionally Omitted

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.    

Date: August 15, 2022	By:	/s/ Daniel George
		Daniel George Chief Financial Officer and Treasurer Principal Financial and Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lucira Health, Inc. (the “Company”) on Form 10-Q for the three and six months ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.    

Date: August 15, 2022	By:	/s/ Erik T. Engelson
		Erik T. Engelson
		President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lucira Health, Inc. (the “Company”) on Form 10-Q for the three and six months ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.  

Date: August 15, 2022	By:	/s/ Daniel George
		Daniel George Chief Financial Officer and Treasurer Principal Financial and Accounting Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2022	Aug. 08, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Entity Registrant Name	Lucira Health, Inc.
Entity Interactive Data Current	Yes
Entity Central Index Key	0001652724
Entity Tax Identification Number	27-2491037
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity File Number	001-39976
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Small Business	true
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1412 62nd Street
Entity Address, City or Town	Emeryville
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94608
City Area Code	510
Local Phone Number	350-8071
Trading Symbol	LHDX
Title of 12(b) Security	Common Stock, par value $0.001 per share
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		40,106,495

XML

CONDENSED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands		Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents		$ 74,957	$ 105,982	[1]
Accounts receivable, net		8,723	27,245	[1]
Inventory		119,576	50,776	[1]
Other receivable		7,247	8,188	[1]
Prepaid expenses		4,449	10,274	[1]
Other current assets		5,573	3,817	[1]
Total current assets		220,525	206,282	[1]
Property and equipment, net		46,782	30,974	[1]
Operating lease right-of-use assets		18,726	2,714	[1]
Restricted cash equivalents		1,943
Other assets		1,060	384	[1]
Total assets		289,036	240,354	[1]
Current liabilities:
Accounts payable		24,584	19,371	[1]
Accrued liabilities		31,160	29,162	[1]
Operating lease liabilities, current		2,185	1,609	[1]
Customer deposits	[1]		189
Total current liabilities		57,929	50,331	[1]
Term loan payable, net		29,213
Operating lease liabilities, net of current portion		16,827	1,220	[1]
Total liabilities		103,969	51,551	[1]
Commitments and contingencies (Note 16)				[1]
Stockholders’ equity:
Preferred stock $0.001 par value; 10,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021				[1]
Common stock, $0.001 par value; 200,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 40,081,464 and 39,663,645 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		40	40	[1]
Additional paid-in capital		322,167	317,304	[1]
Accumulated deficit		(137,140)	(128,541)	[1]
Total stockholders’ equity		185,067	188,803	[1]
Total liabilities and stockholders’ equity		$ 289,036	$ 240,354	[1]

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

XML

CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021	[1]
Statement of Financial Position [Abstract]
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock shares authorized	10,000,000	10,000,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Common stock par value	$ 0.001	$ 0.001
Common stock shares authorized	200,000,000	200,000,000
Common stock shares issued	40,081,464	39,663,645
Common stock shares outstanding	40,081,464	39,663,645

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

XML

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Net sales	$ 26,146,000	$ 12,439,000	$ 116,620,000	$ 16,955,000
Cost of products sold	18,154,000	12,505,000	68,712,000	17,873,000
Gross profit (loss)	7,992,000	(66,000)	47,908,000	(918,000)
Operating expenses:
Research and development	10,753,000	10,117,000	22,948,000	16,399,000
Selling, general and administrative	18,628,000	6,100,000	32,537,000	12,200,000
Total operating expenses	29,381,000	16,217,000	55,485,000	28,599,000
Loss from operations	(21,389,000)	(16,283,000)	(7,577,000)	(29,517,000)
Other income (expense), net:
Interest income and other (expense), net	281,000	83,000	343,000	1,000
Interest expense, net	(826,000)		(1,363,000)
Total other income (expense), net	(545,000)	83,000	(1,020,000)	1,000
Loss before provision for income taxes	(21,934,000)	(16,200,000)	(8,597,000)	(29,516,000)
(Benefit from) provision for income taxes	(257,000)		2,000.0
Net loss	$ (21,677,000)	$ (16,200,000)	$ (8,599,000)	$ (29,516,000)
Net loss per share of common stock,
Basic	$ (0.54)	$ (0.42)	$ (0.22)	$ (0.96)
Diluted	$ (0.54)	$ (0.42)	$ (0.22)	$ (0.96)
Weighted-average number of shares used in net loss per share of common stock,
Basic	39,928,451	38,483,766	39,839,834	30,688,349
Diluted	39,928,451	38,483,766	39,839,834	30,688,349

XML

CONDENSED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total		Redeemable Convertible Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Beginning balance at Dec. 31, 2020	$ (62,308)			$ 3	$ 1,403	$ (63,714)
Beginning balance, shares at Dec. 31, 2020			23,978,747
Beginning balance at Dec. 31, 2020			$ 121,080
Beginning balance, Shares at Dec. 31, 2020				2,712,694
Conversion of redeemable convertible preferred shares into common stock	121,080			$ 24	121,056
Conversion of redeemable convertible preferred shares into common stock, shares			(23,978,747)
Conversion of redeemable convertible preferred shares into common stock			$ (121,080)
Conversion of redeemable convertible preferred shares into common stock, shares				23,978,747
Conversion of convertible notes into common stock	24,982			$ 2	24,980
Conversion of convertible notes into common stock, shares				1,470,947
Issuance of common stock upon IPO, net of issuance costs	159,899			$ 10	159,889
Issuance of common stock upon IPO, net of issuance costs, shares				10,350,000
Issuance of common stock upon exercise of stock options	190				190
Issuance of common stock upon exercise of stock options, shares				172,158
Stock-based compensation	1,473				1,473
Net loss	(29,516)					(29,516)
Ending balance at Jun. 30, 2021	215,800			$ 39	308,991	(93,230)
Ending balance, Shares at Jun. 30, 2021				38,684,546
Beginning balance at Mar. 31, 2021	230,912			$ 39	307,903	(77,030)
Beginning balance, Shares at Mar. 31, 2021				38,550,148
Issuance of common stock upon exercise of stock options	143				143
Issuance of common stock upon exercise of stock options, shares				134,398
Stock-based compensation	945				945
Net loss	(16,200)					(16,200)
Ending balance at Jun. 30, 2021	215,800			$ 39	308,991	(93,230)
Ending balance, Shares at Jun. 30, 2021				38,684,546
Beginning balance at Dec. 31, 2021	188,803	[1]		$ 40	317,304	(128,541)
Beginning balance, Shares at Dec. 31, 2021				39,663,645
Net loss	13,100
Ending balance at Mar. 31, 2022	204,632			$ 40	320,055	(115,463)
Ending balance, Shares at Mar. 31, 2022				39,850,088
Beginning balance at Dec. 31, 2021	188,803	[1]		$ 40	317,304	(128,541)
Beginning balance, Shares at Dec. 31, 2021				39,663,645
Issuance of common stock warrants in connection with the term loan	494				494
Issuance of common stock upon exercise of stock options	$ 121				121
Issuance of common stock upon exercise of stock options, shares	60,494			60,494
Issuance of common stock under employee stock purchase plan	$ 300				300
Issuance of common stock under employee stock purchase plan, shares				77,811
Issuance of common stock for settlement of restricted stock units, Shares				279,514
Stock-based compensation	3,948				3,948
Net loss	(8,599)					(8,599)
Ending balance at Jun. 30, 2022	185,067			$ 40	322,167	(137,140)
Ending balance, Shares at Jun. 30, 2022				40,081,464
Beginning balance at Mar. 31, 2022	204,632			$ 40	320,055	(115,463)
Beginning balance, Shares at Mar. 31, 2022				39,850,088
Issuance of common stock upon exercise of stock options	29				29
Issuance of common stock upon exercise of stock options, shares				15,314
Issuance of common stock for settlement of restricted stock units, Shares				216,062
Stock-based compensation	2,083				2,083
Net loss	(21,677)					(21,677)
Ending balance at Jun. 30, 2022	$ 185,067			$ 40	$ 322,167	$ (137,140)
Ending balance, Shares at Jun. 30, 2022				40,081,464

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

XML

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net loss	$ (8,599)	$ (29,516)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	3,424	1,473
Allowance for doubtful accounts	(55)	259
Depreciation and amortization	3,275	882
Accretion and amortization of term loans discount	308
Remeasurement of derivative liabilities and convertible notes		281
Noncash interest expense		3
Noncash lease expense	171	(11)
Changes in assets and liabilities:
Inventory	(68,276)	(31,317)
Accounts receivable	18,577	(3,358)
Other receivable	941	91
Prepaid expenses and other current assets	5,825	(8,767)
Other assets	(1,863)	3,129
Accounts payable	362	2,678
Customer deposits	(189)	2,916
Accrued liabilities	2,027	13,635
Net cash used in operating activities	(44,072)	(47,622)
Cash flows from investing activities:
Acquisition of property and equipment	(14,227)	(8,977)
Net cash used in investing activities	(14,227)	(8,977)
Cash flows from financing activities:
Proceeds for issuance of term loans, net of discount	29,570
Third-party issuance costs related to term loans	(740)
Proceeds from issuance of common stock on IPO, net of issuance costs		159,899
Proceeds from exercise of stock options	87	150
Proceeds from the issuance of common stock under employee stock purchase plan	300
Net cash provided by financing activities	29,217	160,049
Net increase (decrease) in cash and restricted cash equivalents	(29,082)	103,450
Cash, cash equivalents and restricted cash equivalents, beginning of period	105,982	60,550
Cash, cash equivalents and restricted cash equivalents, end of period	76,900	164,000
Reconciliation to amounts on the condensed balance sheets:
Cash and cash equivalents	74,957	161,662
Restricted cash equivalents	1,943	2,338
Total cash, cash equivalents and restricted cash equivalents	76,900	164,000
Supplemental disclosures of cash flow information
Cash paid for taxes	16	2
Cash paid for interest, net of amounts capitalized	771
Supplemental disclosures of noncash financing and investing activities:
Purchase of property and equipment included in accounts payable and accrued liabilities	4,856	650
Acquisition of right-of-use asset through operating lease obligation	16,460
Issuance of warrants in connection with term loan	494
Vesting of early exercise options	34	40
Stock-based compensation expense capitalized to inventory	$ 913	260
Conversion of redeemable convertible notes payable principal and interest for common stock on IPO		24,982
Conversion of convertible redeemable preferred shares into common stock on IPO		$ 121,080

XML

Organization

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Note 1. Organization

Description of Business

Lucira Health, Inc. (the “Company”) was incorporated under the laws of the state of Delaware on February 20, 2013 under the name DiAssess Inc. The Company changed its name to Lucira Health, Inc. in January 2020. The Company is located in Emeryville, California.

The Company is a medical technology company with a mission to bring central laboratory quality testing for infectious diseases in the home and point of care settings. The Company has developed a testing platform that produces high-complexity-laboratory-accurate molecular testing in a single-use and user-friendly test kit that is powered by two AA batteries and fits in the palm of a hand. The Company’s initial focus is within respiratory diseases, and initially for COVID-19 and influenza Types A and B indications.

On November 17, 2020, the Company received an Emergency Use Authorization (“EUA”) from the Food and Drug Administration (“FDA”) for (1) prescription at-home use with self-collected nasal swab specimens in individuals aged 14 and older who are suspected of COVID-19 by their healthcare provider and (2) use at the point-of-care (“POC”), with self-collected nasal swab specimens in individuals aged 14 and older, and in individuals aged 13 and under when the specimen is collected by a healthcare provider at the POC. People who are suspected of COVID-19 are those who are either symptomatic or are thought to have been exposed to COVID-19. On April 9, 2021, the Company received its first FDA EUA authorization for over-the-counter (“OTC”) non-prescription use among symptomatic and asymptomatic individuals aged 14 and older (with self-collection) and children aged two to 13 (with parent collection). On May 6, 2022, the Company received the Conformité Européenne Mark (“CE Mark”) for professional use for both its COVID-19 and combination COVID-19 influenza test kits, clearing them for sale and distribution in the European Union. On May 11, 2022, the Company submitted its request for EUA authorization from the FDA for prescription at-home use of its combination COVID-19 and influenza test, for those individuals with suspected COVID-19 or influenza. This request for EUA authorization from the FDA was revised and resubmitted to the FDA to include over-the-counter use of its combination test kit, in addition to authorization for prescription at-home use. On May 31, 2022, Health Canada approved our request to extend our current 12-month shelf life to 18 months for our COVID-19 test kit. On June 8, 2022, the Company received approval for full exemption by the New Zealand Ministry of Health for its LUCIRA CHECK IT COVID-19 Test Kit and its LUCIRA COVID-19 All-In-One Test Kit for self-test. On June 10, 2022, the Company submitted a revised EUA application to the FDA. On June 14, 2022, the Company received registration approval in the United Kingdom from the Medical and Healthcare Products Regulatory Agency for both its COVID-19 and combination test kit in the United Kingdom and New Zealand. On July 8, 2022, the Company submitted its de novo application to the FDA or its COVID-19 test kit.

Liquidity and Going Concern

Net loss for the six months ended June 30, 2022 was $8.6 million, comprised of net income for the three months ended March 31, 2022 of $13.1 million and net loss of $21.7 million for the three months ended June 30, 2022. Prior to the three months ended March 31, 2022, since its inception, the Company has incurred recurring losses and negative cash flows from operating activities. The Company may continue to incur additional losses in future periods and the net losses that the Company incurs may fluctuate significantly from period to period due to the seasonality of its product portfolio. As of June 30, 2022, the Company had $75.0 million in cash and cash equivalents and an accumulated deficit of $137.1 million. The Company generated net sales of $26.1 million and $116.6 million in the three and six months ended June 30, 2022, respectively. On February 4, 2022, the Company closed a debt financing of up to $80.0 million. The first tranche of $30.0 million was funded upon close. See Note 10. Term Loans.

The Company believes that cash and cash equivalents as of June 30, 2022, anticipated cash flows from operations, and available cash advances under the Term Loans, contingent upon the Company's achievement of certain revenue milestones as defined in the Loan Agreement (see Note 10. Term Loans) will be sufficient to fund its planned operations, including servicing the Term Loans, operating lease payments, and capital expenditures, for a period of at least 12 months from the date of the issuance of the accompanying condensed financial statements.

The ability to continue as a going concern is dependent upon the Company generating revenue and profit in the future and/or upon obtaining necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company may raise additional capital through the issuance of equity securities, debt securities, or other sources of capital in order to further implement its business plan. However, if other financing is not available when needed and at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of new test kits, or curtail current operations and business plans.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information and pursuant to the instructions of the SEC on Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.

The accompanying condensed balance sheet as of June 30, 2022, the condensed statements of operations for the three and six months ended June 30, 2022 and 2021, the statements of redeemable convertible preferred stock and stockholders’ equity for the three and six months ended June 30, 2022 and 2021, and the condensed statements of cash flows for the six months ended June 30, 2022 and 2021 are unaudited. The unaudited interim condensed financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of June 30, 2022 and the results of its operations and cash flows for the six months ended June 30, 2022 and 2021. The financial data and other information disclosed in these notes as of June 30, 2022 and 2021 and for the three and six months ended June 30, 2022 and 2021 are unaudited. The results for the three and six months ended June 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period. These condensed financial statements and accompanying notes should be read in conjunction with the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on March 31, 2022.

Use of Estimates

Significant estimates and assumptions made in the accompanying financial statements include, but are not limited to recognition of stock-based compensation, incremental borrowing rate, revenue recognition, inventory valuation, sales returns, warranty reserves, allowance for doubtful accounts, accrued research and development costs, uncertain tax positions, the recoverability of its long-lived assets and the valuation of deferred tax assets. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Cash, Cash Equivalents and Restricted Cash Equivalents

The Company considers highly liquid investments purchased with a remaining maturity date upon acquisition of three months or less to be cash equivalents and are stated at cost, which approximates fair value. As of June 30, 2022 and December 31, 2021, the Company held cash and cash equivalents of $75.0 million and $106.0 million, respectively, primarily consisting of short-term, highly liquid instruments, which consists of money market accounts and high-quality debt securities issued by the U.S. government via cash sweep accounts. All cash and cash equivalents are maintained with major financial institutions. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.

As of June 30, 2022, the Company held a restricted cash equivalents balance of $1.9 million which was used to secure standby letters of credit in relation to the Company’s operating lease agreement entered into in March 2022 for a facility in Vista, California, and the lease agreement entered into in June 2022 for a facility in Berkeley, California. The cash was deposited in a money market account with maturities of three months or less, with automatic renewal. The standby letters of credit are subject to annual automatic renewal over the term of the associated lease. The restricted cash equivalents are recorded as a long-term asset on the condensed balance sheets as of June 30, 2022, due to the long-term nature of the underlying obligation.

Fair Value Measurements

The carrying value of the Company’s cash, cash equivalents, restricted cash equivalents, accounts receivable, other receivable, prepaid expenses, other current assets, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these items. The Company has not elected to apply fair value accounting related to its Term Loans.

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:

•Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2—Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

•Level 3—Unobservable inputs that are supported by little or no market activity for the related assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Inventories Produced in Preparation for Product Launches

The Company capitalizes inventories produced in preparation for product launches sufficient to support estimated initial market demand. Typically, capitalization of such inventory begins when positive results have been obtained for the clinical trials that the Company determines are necessary to support regulatory approval, uncertainties regarding ultimate regulatory approval have been significantly reduced and the Company has determined it is probable that these capitalized costs will provide future economic benefit in excess of capitalized costs. The factors considered by the Company in evaluating these uncertainties include the receipt and analysis of positive clinical test results for the underlying product, results from meetings with the relevant regulatory authorities prior to the filing of regulatory applications, and the submission of the regulatory application. The Company closely monitors the status of each respective product within the regulatory approval process, including all relevant communication with regulatory authorities. If the Company is aware of any specific material risks or contingencies other than the normal regulatory review and approval process or if there are any specific issues identified relating to safety, efficacy, manufacturing, marketing or labeling, the related inventory would generally not be capitalized.

For inventories that are capitalized in preparation of product launch, anticipated future sales, expected approval date and shelf lives are evaluated in assessing realizability. The shelf life of a product is determined as part of the regulatory approval process; however, in evaluating whether to capitalize pre-launch inventory production costs, the Company considers the product stability data of all of the pre-approval production to date to determine whether there is adequate expected shelf life for the capitalized pre-launch production costs.

Inventories

The Company values its inventory at the lower of cost or net realizable value and determines the cost of inventory using standard costs which closely resembles the first-in, first-out method. Lower of cost or net realizable value is evaluated by considering obsolescence, excessive levels of inventory, deterioration and other factors. Inventory held as of June 30, 2022 is in the form of raw materials, work in process and finished goods.

In order to assess the ultimate realization of inventories, the Company is required to make judgments as to future demand requirements compared to current or committed inventory levels. The Company periodically reviews its inventories for shelf life, excess or obsolescence and writes-down obsolete or otherwise unmarketable inventory to its estimated net realizable value. If the actual net realizable value is less than that estimated by the Company, or if it is determined that inventory utilization will further diminish based on estimates of demand, additional inventory write-downs may be required. Amounts written down due to unmarketable inventory are recorded in cost of revenue and a new lower-cost basis for the inventory is established.

Warranty

The Company offers a standard product warranty that its products will perform as intended upon the date of original delivery for a reasonable period of time, which typically coincides with product shelf life. The Company has the obligation, at its option, to either refund, repair or replace a defective product. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of products sold. The estimate of future warranty costs is based on historical as well as current product failure rates, service delivery costs incurred in correcting product failures, and warranty policies. The Company regularly reviews these estimates to assess the appropriateness of the Company’s recorded warranty liabilities and adjust the amounts as necessary. As of June 30, 2022 and December 31, 2021, the accrued liability for warranty returns was not significant.

Property and Equipment, Net

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between three and seven years. Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful life of the asset or the remaining term of the related lease.

Construction in progress consists of multiple projects, primarily related to new equipment to expand our manufacturing capability as our product demand grows. Construction in progress includes the cost of construction and other direct costs attributable to the construction, along with capitalized interest. Interest related to construction of assets is capitalized when the financial statement effect of capitalization is material, construction of the asset has begun, and interest is being incurred. Interest capitalization ends at the earlier of the asset being substantially complete and ready for its intended use or when interest costs are no longer being incurred.

Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the condensed balance sheets and any resulting gain or loss is reflected in other income or expense in the condensed statements of operations in the period realized.

Leases

The Company determines if an arrangement is a lease at inception and if so, determines whether the lease qualifies as operating or finance. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the condensed balance sheets. The Company did not have any finance leases as of June 30, 2022 and December 31, 2021.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. When the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the information available at commencement dates in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. Operating lease ROU assets also include any lease payments made and exclude lease incentives when paid by the Company or on the Company’s behalf. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components. The Company elected to not separate lease and non-lease components for all of its building leases. The Company also made an accounting policy election to recognize lease expense for leases with a term of 12 months or less on a straight-line basis over the lease term and not recognize ROU assets or lease liabilities for such leases.

Impairment of Long-Lived Assets

The Company’s long-lived assets are comprised principally of its property and equipment, including leasehold improvements and ROU assets.

The Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable. The Company identifies impairments related to long-lived assets when management determines that the remaining carrying value will not be realized through future use. The Company evaluates events or circumstances, including competition in the markets where it operates, that would indicate the carrying value of assets may not be fully recoverable. If an event or circumstance is identified indicating carrying value may not be recoverable, the sum of future undiscounted cash flows is compared to the carrying value. If the carrying value exceeds the future undiscounted cash flows, the carrying value of the asset is reduced to fair value, with the difference recorded as an impairment charge. Assets are evaluated for impairment on an individual basis, which management believes is the lowest level for which there are identifiable cash flows. The Company evaluates assets for impairment by assessing if long-lived assets will be sold or otherwise disposed of significantly before the end of their previously estimated useful life as its primary indicator of potential impairment. The fair value of assets is determined as the present value of the estimated future cash flows, adjusted as necessary for market participant factors. Any required impairment loss would be recorded as a reduction in the carrying value of the related asset and a charge to operating expense. For the six months ended June 30, 2022 and 2021, the Company determined that there were no impairments of its long-lived assets.

Debt Issuance Costs, Debt Discount and Detachable Debt-Related Warrants

As described in Note 10. Term Loans, the Company entered into a term loan credit facility with Silicon Valley Bank. (“SVB”) and Hercules Capital, Inc. (“Hercules”) during the six months ended June 30, 2022. Costs incurred to issue debt are deferred and recorded as a reduction of the debt balance in the accompanying condensed balance sheets. Debt discounts related to the relative fair value of warrants issued in conjunction with the debt are also recorded as a reduction of the debt balance and accreted over the expected term of the debt to interest expense using the effective interest method.

Redeemable Convertible Preferred Stock

The Company’s shares of preferred stock were assessed at issuance for classification and redemption features requiring bifurcation. The Company’s preferred stock was not mandatorily redeemable. The Company presents as temporary equity any stock which (i) the Company undertakes to redeem at a fixed or determinable price on the fixed or determinable date or dates; (ii) is redeemable at the option of the holders, or (iii) has conditions for redemption which are not solely within the control of the Company. The Company’s preferred stock was redeemable if the Company had not been dissolved within 90 days following the occurrence of certain deemed liquidation events, which the Company determined was not solely within its control and thus had classified shares of redeemable convertible preferred stock as temporary equity until such time as the conditions were removed or lapse. The Company initially recorded redeemable convertible preferred stock at fair value, net of issuance costs.

In connection with the Company's initial public offering (“IPO”) on February 9, 2021, all outstanding shares of redeemable convertible preferred stock converted into 23,978,747 shares of common stock.

Revenue Recognition

The Company recognizes revenue under Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”), “Revenue from Contracts with Customers” when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps:

(i)identify the contract(s) with a customer;

(ii)identify the performance obligations in the contract;

(iii)determine the transaction price;

(iv)allocate the transaction price to the performance obligations in the contract; and

(v)recognize revenue when (or as) the entity satisfies a performance obligation.

Under ASC 606, the Company will recognize revenue for arrangements once the performance obligations are satisfied and control of the product has transferred to the customer. This usually occurs upon shipment to the customer, unless terms of contractual arrangements with customers state otherwise, in which case the control is transferred upon completion of delivery and/or customer acceptance of products depending on obligations written in the contract.

Revenue is measured based on the amount of consideration that the Company expects to be entitled to, which considers both fixed and variable consideration. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal of revenue will not occur. Transaction price is impacted by variable consideration such as discounts, allowances and constraints placed on revenue due to uncertainty. The Company's performance obligations relate to contracts with a duration of less than one year. The Company elected to apply the practical expedient provided in ASC 606, therefore, the Company is not required to disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

Collection of the Company’s net revenue generally occurs within 30-45 days of billing. Contracts do not contain significant financing components based on the typical period of time between delivery of products and collection of consideration. Collections of revenue from customers in the Company’s e-commerce channel generally occurs instantaneously or within a few days as customers pay using credit cards. Some customers, particularly in certain countries outside of the United States, pay in advance of product delivery. In those instances, payment and revenue recognition typically occur in the same month, and if they do not, revenue would not be recognized.

Costs to obtain or fulfill a contract are currently expensed when incurred because the Company’s performance obligation is satisfied at a point in time. These costs are recorded as cost of products sold in the condensed statements of operations.

The Company invoices its customers upon shipment of product and records its sales upon shipment in accordance with its standard terms and conditions, unless underlying customer contracts specify otherwise. In those instances, the Company records revenue upon delivery to customers or upon customer acceptance of products when control of products is transferred to customers.

When necessary, the Company invoices and collects sales tax from its customers for sales of products. The Company has elected to exclude sales tax from the measurement of the transaction price.

Shipping and Handling Costs

Shipping and handling costs are included in cost of products sold.

Research and Development

Costs associated with research and development activities are expensed as incurred and include, but are not limited to, personnel-related expenses including stock-based compensation expense, materials, laboratory supplies, consulting costs, costs associated with setting up and conducting clinical studies and allocated overhead including rent and utilities.

The Company records accrued expenses for estimated costs of its research and development activities conducted by third-party service providers, which include clinical trial activities. The Company records the estimated costs of research and development activities based upon the estimated value of services or supplies provided but not yet invoiced and include these costs in accrued liabilities in the condensed balance sheets and within research and development expenses in the condensed statements of operations. The Company records accrued expenses for these costs based on factors such as estimates of the work completed or supplies received and in accordance with agreements established with these vendors. Any payments made in advance of services or supplies provided are recorded as prepaid assets, which are expensed as the services or supplies are received.

The Company estimates the amount of work completed through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services. Such estimates in determining the accrued balance in each reporting period are subject to management judgment. As actual costs become known, the Company adjusts its accrued estimates.

Advertising and Marketing Costs

Costs associated with advertising and marketing activities are expensed as incurred. Total advertising and marketing costs were $0.8 million and $0.9 million for the three and six months ended June 30, 2022, respectively, compared to $0.9 million and $1.3 million for the three and six months ended June 30, 2021, respectively, and are included in selling, general and administrative expenses in the accompanying condensed statements of operations.

Stock-Based Compensation

The Company’s stock-based awards consist of stock options issued to employees and non-employees, restricted stock units issued to employees and shares of the Company’s common stock purchased by employee participants in the Employee Stock Purchase Plan. The Company measures the estimated fair value of the stock-based awards on the date of grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective awards. The Company records expense for awards with service-based vesting using the straight-line method. The Company accounts for forfeitures as they occur. The fair value of the common stock is based on the closing price of the common stock on the date of grant as reported on the Nasdaq Global Select Market.

The Company classifies stock-based compensation expense in its condensed statements of operations in the same manner in which the award recipient’s cash compensation costs are classified.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the use of a number of complex assumptions including the fair value of the common stock, expected volatility, risk-free interest rate, expected dividends, and expected term of the option.

The Company determines the expected stock volatility using a weighted-average of the historical volatility of a group of guideline companies that issued options over a similar time period, and expects to continue to do so until such time as the Company has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the simplified method for awards that qualify as “plain-vanilla” options. The expected term was estimated using the simplified method for employee stock options since the Company does not have adequate historical exercise data to estimate the expected term. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.

Provision for Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period that includes the enactment date.

The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, management would adjust the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (i) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability.

Segment Reporting

The Company has determined that the Chief Executive Officer is its Chief Operating Decision Maker. The Company’s Chief Executive Officer reviews financial information presented on an aggregate basis for the purposes of assessing the performance and making decisions on how to allocate resources. Accordingly, the Company has determined that it operates in a single operating and reportable segment, which is the business of designing, manufacturing and selling of disposable test kits.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements, or Accounting Standard Updates (“ASU”) are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

The Company is an emerging growth company (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and may take advantage of reduced reporting requirements that are otherwise applicable to public companies. Section 107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards. This means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company has the option to adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and can do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company has elected to use the extended transition period for complying with new or revised accounting standards unless the Company otherwise early adopts select standards.

Recently Adopted Accounting Standards

In August 2020, the FASB issued Accounting Standard Update (the “ASU”) No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2022. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company expects to adopt this ASU beginning January 1, 2023. The Company is evaluating the potential impact of this standard on its financial statements, but does not expect the adoption to have a material impact on the Company's financial statements.

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Net Sales

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Net Sales

Note 3. Net Sales

All of the Company’s net sales have been derived from sales of its test kits through its healthcare, business-to-business, international and direct-to-consumer channels. Since receiving the initial EUA in the fourth quarter of 2020, the Company marketed its test products to physicians and licensed healthcare providers through its healthcare channel in the United States. On April 9, 2021, the Company received its first FDA EUA authorization for OTC non-prescription use and expanded its marketing to include domestic testing providers, distributors, businesses within its business-to-business channel, and direct-to-consumer through its partnerships with e-commerce sales and distribution platforms.

The following table sets forth the Company’s net sales by channel:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Healthcare	$	1,587	$	235	$	8,458	$	2,622
Business-to-business		10,791		5,324		55,544		6,668
International		1,520		2,166		25,166		2,166
Direct-to-consumer		12,248		4,714		27,452		5,499
Net sales	$	26,146	$	12,439	$	116,620	$	16,955

The following table sets forth the Company’s net sales by geographic area based on the customers’ locations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
United States	$	24,626	$	10,273	$	91,454	$	14,789
Canada		605		—		23,924		—
Rest of World		915		2,166		1,242		2,166
Net sales	$	26,146	$	12,439	$	116,620	$	16,955

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Concentration of Credit Risk and Significant Suppliers

6 Months Ended

Jun. 30, 2022

Risks and Uncertainties [Abstract]

Concentration of Credit Risk and Significant Suppliers

Note 4. Concentration of Credit Risk and Significant Suppliers

Financial instruments that potentially subject the Company to credit risk consist principally of cash and restricted cash equivalents held by financial institutions, other receivables and account receivables. Substantially all of the Company’s cash and restricted cash equivalents are held at one financial institution that management believes is of high credit quality. Such deposits may, at times, exceed federally insured limits.

As of June 30, 2022, the following customers had outstanding accounts receivable due of 10% or greater of the Company’s total accounts receivable.

	June 30, 2022			December 31, 2021
Customer A		68	%		19	%
Customer B		—	%		12	%
Customer E		—	%		18	%

For the three and six months ended June 30, 2022 and 2021, the following customers represented 10% or more of the Company’s net sales:

	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
Customer A		—	%	—	%		14	%	—	%
Customer B		—	%	—	%		—	%	14	%
Customer C		—	%	14	%		—	%	10	%
Customer D		—	%	10	%		—	%	—	%

As of June 30, 2022, the Company had non-cancellable purchase commitments of $57.7 million, consisting primarily of $27.3 million of raw material purchase commitments, $9.4 million related to asset and equipment related to expanding the Company’s manufacturing capacity and automation, $6.7 million related to non-commercial services, $14.4 million pursuant to the manufacturing services agreement (the “Jabil MSA”), with Jabil Inc. (“Jabil”), and technical services agreement with Jabil (the “Jabil TSA”). Under the Jabil MSA, the Company is obligated to provide, on a monthly basis, a rolling 12-month forecast to Jabil as well as 12 months of historical aggregate end customer demand at the finished product level, when available, which will be used to constitute written purchase orders from the Company, and the Company is obligated to purchase the quantity of products that is required by the first four months of each forecast.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 5. Fair Value Measurements

The Company’s cash equivalents and restricted cash equivalents are measured at fair value on recurring basis and is classified as Level 1 input. Cash equivalents and restricted cash equivalents are a money market account that the Company opened in August 2020. The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy.

	Fair Value Measurements as of
	June 30, 2022
	Level 1		Level 2		Level 3
Assets
Cash equivalents	$	74,375	$	—	$	—
Restricted cash equivalents		1,943		—		—
Total	$	76,318	$	—	$	—

The Company did not have any financial instruments measured at fair value on a recurring basis as of June 30, 2022.

The change in the fair value of the derivative liabilities and convertible notes accounted for at fair value is summarized below.

	June 30, 2021
Fair value at beginning of the period	$	24,694
Initial fair value of instruments issued		—
Change in fair value of instruments and accrued interest, net		288
Extinguishment of instruments held at fair value		(24,982	)
Fair value at end of the period	$	—

In order to determine the fair value of the convertible notes issued in December 2020, (the “2020B Notes”), the Company utilized the probability-weighted expected return method (“PWERM”). The PWERM relies on a forward-looking analysis to determine the fair value. Under this method, discrete future outcomes, including an IPO and non-IPO scenarios, are weighted based on the estimated probability of each scenario. The PWERM is used when discrete future outcomes can be predicted with reasonable certainty based on a probability distribution. The fair value estimate relied upon in the PWERM scenario was based on likelihood of achieving four liquidity events, (i) an initial public offering, (ii) merger or acquisition of the Company given prevailing market conditions, (iii) change of control, (iv) maturity of the convertible notes. Estimates and assumptions impacting the fair value measurement include future value under the various conversion scenarios, discount rate, discount period, discount factor and probability of occurrence of each scenario, as best estimated by management. The estimated future value of the notes for each scenario is then discounted to present value using a discount rate. The future value was determined based on the estimated term to the event from valuation date as determined by management. The exit value in an IPO scenario was based on banker indications as well as an analysis of guideline companies that went public within the past few years that are broadly comparable to the Company. The exit value of an M&A scenario is determined by management with an estimated premium applied to the IPO value estimate. The discount rate, discount period, and probability of the occurrence of liquidity scenarios are estimates made by the management.

The convertible notes were measured at fair value upon extinguishment on February 9, 2021 in connection with the Company’s IPO.

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Inventory

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Inventory

Note 6. Inventory

Inventory consist of the following:

	June 30, 2022		December 31, 2021
Raw materials	$	65,672	$	35,923
Work in process		40,450		10,539
Finished goods		13,454		4,314
Total	$	119,576	$	50,776

Inventory as of June 30, 2022, and December 31, 2021 included $2.5 million and $0, respectively, of raw materials purchases for use in the pre-launch manufacturing campaign of its combination COVID-19 and influenza test kits. Stock-based compensation of $0.9 million and $0.3 million was capitalized into inventory for the six months ended June 30, 2022 and 2021, respectively. Capitalized stock-based compensation is recognized in cost of product sales when the related product is sold.

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Property and Equipment, Net

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Note 7. Property and Equipment, Net

	June 30,			December 31,
	2022			2021
Construction in progress	$	20,804		$	3,466
Machinery and equipment		30,295			29,333
Website development costs		1,211			1,110
Furniture and fixtures		328			200
Leasehold improvements		2,256			1,702
Total, at cost		54,894			35,811
Accumulated depreciation and amortization		(8,112	)		(4,837	)
Property and equipment, net	$	46,782		$	30,974

Depreciation and amortization expense was $1.7 million and $3.3 million for the three and six months ended June 30, 2022, respectively, compared to $0.7 million and $0.9 million for the three and six months ended June 30, 2021, respectively. During the six months ended June 30, 2022, the Company deployed $0.7 million of assets into production from construction-in-progress, with the major portion of the remaining balance expected to be placed in service in the first half of 2023. Construction-in-progress is related to the setup of manufacturing infrastructure and the purchase of long lead time manufacturing equipment as the Company grows its manufacturing capacity and invests in semi-automation and automation. Construction-in-progress amounts recorded are not subject to depreciation as such assets are not yet available for their intended use.

The following table sets forth the Company’s long-lived assets, including right-of-use assets by geographic area:

	June 30,		December 31,
	2022		2021
United States	$	42,606	$	16,730
Dominican Republic		20,489		15,753
All other countries		2,413		1,205
Total long-lived assets	$	65,508	$	33,688

Substantially all of the Company's long-lived assets at locations outside of the United States, includes production related equipment located at certain vendor facilities.

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Other Financial Information

6 Months Ended

Jun. 30, 2022

Other Financial Information [Abstract]

Other Financial Information

Note 8. Other Financial Information

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consist primarily of amounts due to the Company related to product sales. It is the practice of the Company to provide for uncollectible accounts in the period the accounts are determined to be uncollectible.

The following table summarizes the activity in the allowance for doubtful accounts:

	June 30, 2022			December 31, 2021
Beginning balance	$	99		$	—
Amounts charged to costs and expenses (recoveries)		(148	)	358
Write-offs		104			(259	)
Ending balance	$	55		$	99

Other Receivables

	June 30, 2022		December 31, 2021
Other receivable	$	7,247	$	8,188

The other receivable balance as of June 30, 2022 and December 31, 2021 represents amounts due from Jabil, the manufacturer of the Company’s test kits in connection with procurement of component parts.

Prepaid Expenses

The following table summarizes the components of prepaid expenses:

	June 30, 2022		December 31, 2021
Prepaid expenses	$	1,250	$	307
Prepaid insurance		2,791		588
Prepaid inventory		408		9,379
Total	$	4,449	$	10,274

As of June 30, 2022 and December 31, 2021, prepaid inventory includes $0.4 million and $9.4 million, respectively, of advanced payments related to procurement of inventories of components to be used in assembling test kits.

Accrued Liabilities

Accrued liabilities consist of the following:

	June 30, 2022		December 31, 2021
Professional fees	$	1,955	$	612
Accrued manufacturing and inventory purchases		14,756		17,200
Canada importation taxes		2,717		1,551
Payroll liabilities		5,426		4,466
Royalty liabilities		339		1,662
Accrued sales tax		1,787		2,215
Early exercise liability		155		189
Accrued interest		247		—
Insurance premium liability		1,744		—
Other		2,034		1,267
Total	$	31,160	$	29,162

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Leases

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

Note 9. Leases

The Company has operating leases for corporate offices, operations and research and development facilities. These leases have remaining lease terms of 1 to 10 years. The lease of operations and research and development facilities includes costs for utilities and common area maintenance which are not included in the calculation of lease payments.

On March 15, 2022, the Company executed a lease for an 82,000 square foot facility in Vista, California. The term of the lease is 126 months with options to extend five years and includes lease incentives of an initial rent-free period. The Company is obligated to make monthly rent payments of approximately $1.3 million per year over the term of the lease. The Company took possession of the facility on April 1, 2022 to begin tenant improvements and expects completion and assumption of full occupancy by the end of June 2023. Under the terms of the operating lease, the Company has been provided tenant improvement allowances of up to $0.8 million. In conjunction with and under the terms of the operating lease agreement, the Company entered into a $1.2 million Standby Letter of Credit as guarantee of the Company’s payment of the tenant improvements and on-going rent payments over the term of the lease. The Company has accounted for the lease as an operating lease as of April 1, 2022, the commencement date under ASC Topic 842, Leases, and has recorded a right-of use asset in the amount of $8.1 million, representing the Company’s right to use the underlying asset over the lease term and an offsetting lease liability of the same amount, representing the Company’s obligation to make lease payments arising from the lease.

On June 15, 2022, the Company executed a lease for a 20,400 square foot facility in Berkeley, California. The term of the lease is 99 months with an option to extend 84 months and includes lease incentives of an initial rent-free period. The Company took possession of the facility on June 15, 2022 to begin tenant improvements and expects completion and assumption of full occupancy by March 2023. Under the terms of the operating lease, the Company has been provided tenant improvement allowances of up to $4.1 million. In conjunction with and under the terms of the operating lease agreement, the Company entered into a $0.7 million Standby Letter of Credit as guarantee of the Company’s payment of the tenant improvements and on-going rent payments over the term of the lease. The average annual rent over the term of the lease is approximately $1.8 million per year. The Company has accounted for the lease as an operating lease as of June 15, 2022, the commencement date under ASC Topic 842, Leases, and has recorded a right-of use asset in the amount of $8.6 million, representing the Company’s right to use the underlying asset over the lease term and an offsetting lease liability, representing the Company’s obligation to make lease payments arising from the lease.

Leases with an initial term of 12 months or less or those with an estimated lease liability less than a specified amount, are not recorded on the condensed balance sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease terms. Operating leases with terms greater than 12 months are included in operating lease ROU assets and operating lease liabilities in the Company’s condensed balance sheets as of June 30, 2022 and December 31, 2021. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Maturities of lease liabilities as of June 30, 2022, are as follows:

	Operating
	Leases
Year ending December 31:
2022	$	944
2023		2,991
2024		2,922
2025		2,899
2026		2,994
Thereafter		17,010
Total		29,760
Less: imputed interest		(10,748	)
Present value of operating lease liabilities		19,012
Less: current portion		(2,185	)
Operating lease liabilities, net of current portion	$	16,827

The Company made operating lease payments of $1.1 million and $0.2 million during the six months ended June 30, 2022 and 2021, respectively, which are included as cash flow from operating activities on the condensed statements of cash flows.

Additional information related to the Company’s leases was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease cost	$	872	$	109	$	1,324	$	218
Short-term lease cost	$	320	$	312	$	323	$	627

	June 30, 2022			December 31, 2021
Weighted-average remaining lease term (years)		8.95			1.82
Weighted-average discount rate		9.36	%		7.15	%

In March 2022, the Company executed an amendment with the lessor of two of its facility leases which included an extension of the expiration date of the original leased premise for one location and a reduction of the lease term on another location, such that the lease terms are coterminous on June 30, 2022. Upon the execution of the amendment, which was deemed to be a lease modification, the Company remeasured the lease liability and corresponding right-of-use asset as of the effective date of the amendment to reflect the extended term and recorded $0.2 million a reduction of the respective right-of-use assets and lease liabilities as of the effective date of the amendments.

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Term Loans

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Term Loans

Note 10. Term Loans

On February 4, 2022, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules in its capacity as administrative agent and collateral agent, and Hercules and SVB as lenders. The Loan Agreement was subsequently amended on March 17, 2022 and June 15, 2022 (the "Amended Loan Agreement").

The Amended Loan Agreement provides for up to $80.0 million in borrowing capacity (the “Term Loans”) available in four tranches. The first tranche consists of a Term Loan in an aggregate principal amount of $30.0 million, all of which was funded to the Company on the closing date. The Company intends to use the proceeds of the Term Loans for working capital and general corporate purposes.

The second tranche, not to exceed $20.0 million, is available for draw at the Company’s option beginning September 1, 2022, and on or prior to March 31, 2023, subject to the terms of the Amended Loan Agreement and the tranche two draw test, defined as the achievement by the Company of net product revenue of at least $75.0 million, measured on a trailing six-month basis as of the Company’s most recent financial statements provided to the lenders. Loan advances under tranche two will be made in increments of $5.0 million. The third tranche of up to $15.0 million will be available for draw on or prior to June 15, 2023, subject to the terms of the Amended Loan Agreement and the tranche three draw test, defined as the achievement by the Company of net product revenue of at least $250.0 million, measured on a trailing twelve-month basis as of the Company’s most recent financial statements provided to the lenders. Loan advances under the third tranche will be made in increments of $5.0 million. The fourth tranche of up to $15.0 million will be available for draw on or prior to March 15, 2024, subject to the terms and conditions of the Amended Loan Agreement and approval by the investment committees of each of the lenders.

The Term Loans will mature on February 1, 2026 and bear interest at an annual rate the greater of 5.50% plus the prime rate (as reported in the Wall Street Journal) and 8.75%. As of June 30, 2022, the interest rate was 10.25%. For the three and six months ended June 30, 2022, the Company recorded $0.9 million and $1.4 million, respectively, of interest expense related to the Term Loans, which included $0.2 million and $0.3 million, respectively, of non-cash interest related to the amortization of the loan discount. The Term Loans are interest only, paid monthly, up to September 1, 2024, after which the interest-only period may be extended, provided there has been no event of default or a continuing event of default and the Company has submitted sufficient evidence, satisfactory to the lenders, that the Company has achieved the tranche three draw test. After the interest only period, monthly principal and interest payments are required over the remaining term of the loans to the maturity date. The Company may prepay all or a portion of the outstanding term loan advances including principal and accrued and unpaid interest, subject to a prepayment fee of 3% of the principal advance being prepaid if within 12 months of the initial advance closing date, 2% if within 24 months of the advance closing date and 1% if within 36 months of the advance closing date. An end of term charge of 5.25% of the Term Loans advanced will be due upon prepayment or repayment.

The Amended Loan Agreement contains customary events of default, representations and warranties and covenants, including financial covenants requiring the Company to maintain certain minimum cash and revenue levels upon the occurrence of specified events. As of June 30, 2022, the Company was in compliance with the financial covenants of the Amended Loan Agreement. Lenders have participation and notice rights in an amount up to $5.0 million for the future sale and issuance of the Company’s capital stock that is broadly marketed to multiple investors.

The Company has granted a senior security interest in all of the Company’s right, title, and interest in, to and under substantially all of Company’s personal property and other assets, excluding intellectual property. Notwithstanding the foregoing, the Company’s intellectual property will automatically be included within the assets securing the Term Loans to the extent necessary to permit perfection of the Lender’s security interests for rights to payment and proceeds from the sale, licensing or disposition of the Company’s intellectual property (the “Rights to Payment”) if a judicial authority holds that a security interest in the Rights to Payment requires a security interest in the underlying intellectual property.

In connection with entering into the Loan Agreement, the Company issued warrants to Hercules (the “Hercules Warrant”) and to SVB (the “SVB Warrant” and together with the Hercules Warrant, the “Warrants”). The number of shares of the Company’s common stock subject to the Hercules Warrant is equal to the quotient derived by dividing the amount equal to 1.00% times the aggregate principal amount of term loan advances made and funded under the Loan Agreement by the exercise price of $5.03 per share. The number of shares of the Company’s common stock subject to the SVB Warrant is equal to 1.00% multiplied by the aggregate amount of the term loan advances made and funded under the Loan Agreement divided by the $5.03 per share. In conjunction with the first tranche advance of $30.0 million, SVB and Hercules each hold Warrants to purchase 59,642 shares of the Company’s common stock. Each warrant is exercisable for a period of seven years from issuance at a per-share exercise price equal to $5.03. The Warrants, which met equity classification, were recognized as a component of permanent stockholders’ equity within additional paid-in-capital on the condensed balance sheets and were recorded at the issuance date using a relative fair value allocation method. The Company valued the Warrants at issuance, which resulted in a discount on the Term Loan, and allocated the proceeds from the loan proportionately to the Term Loan and to the Warrants, of which $0.5 million was allocated to the Warrants.

The Company determined the fair value of the Warrants as of February 4, 2022 using the Black-Scholes option pricing model and applying the following assumptions:

Fair value of common stock	$	5.15
Expected term (in years)		7.0
Risk-free interest rate		1.9	%
Dividend yield		—
Volatility		92.6	%

Because the Company does not have sufficient trading price history of its common stock, the volatility was based on historical trading price of a select peer group of publicly traded companies.

In connection with entering into the Loan Agreement, the Company incurred $1.2 million of debt issuance costs, including commitment and legal fees in connection with the Loan Agreement, fees paid directly to the lenders and other direct third-party costs. Total issuance costs also include the fair value allocated to the Warrants and the end of term fee of $1.6 million, for $3.3 million of issuance costs. The Company allocated $2.7 million of the total issuance costs to the first term loan advance and recorded the issuance costs as unamortized discount, which is being amortized to non-cash interest expense over the term of the loan using the effective interest method. The remaining $0.6 million of issuance costs associated with unfunded loan advances are recorded as other assets on the condensed balance sheets and will be allocated to debt discount as the future tranche is funded. If future available tranches are not funded, these debt issuance costs will be charged to interest expense in the period. The $1.6 million end of term fee is included in the contractual cash flows and is accreted to interest expense using the effective interest method over the term of the loan.

The effective interest rate on the Term Loans, including the discount and the accretion of the final end of term payment, was 12.51% as of June 30, 2022.

Balance sheet information related to the Term Loans is as follows:

	June 30, 2022
Tranche 1 of Term Loans (1)	$	31,575
Less: Unamortized debt discount and issuance costs		(2,362	)
Carrying value of Term Loans, non-current	$	29,213

(1) Balance includes $1.6 million final end of term fee, which represents 5.25% of the principal loan advance.

The Company has not elected to apply fair value accounting to the Term Loans as the Company believes the carrying value of the Term Loans approximates fair value based on the variable coupon rate, subject to adjustments to the prime rate as published by the Wall Street Journal. The Term Loans are considered a Level 2 in the fair value measurement hierarchy.

Interest expense, net of amounts capitalized is as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
Contractual coupon	$	716		$	—	$	1,127		$	—
Amortization of debt discount and issuance costs		191			—		308			—
Total interest expense on the Term Loan		907			—		1,435			—
Other interest expense		28			—		37			—
Capitalized interest		(109	)		—		(109	)		—
Interest expense, net	$	826		$	—	$	1,363		$	—

The Annual principal payments on the Term Loans are as follows:

Year ending December 31,
2022	$	—
2023		—
2024		7,059
2025		21,176
2026		3,340
Total principal payments	$	31,575

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Convertible Notes Payable

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Convertible Notes Payable

Note 11. Convertible Notes Payable

IPO and Conversion of Convertible Notes Payable

On February 9, 2021, upon the closing of the Company’s IPO, certain then-outstanding convertible notes payable and accrued interest automatically converted into shares of common stock at a conversion price equal to 80% of the IPO price per share, which resulted in the issuance of 1,470,947 shares of common stock.

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Capital Stock

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Capital Stock

Note 12. Capital Stock

Preferred Stock

Under its amended and restated certificate of incorporation, the Company’s Board of directors (the “Board”) may, without further action by the Company’s stockholders, fix the rights, preferences, privileges and restrictions of up to an aggregate of 10,000,000 shares of preferred stock in one or more series and authorize their issuance. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock. Any issuance of preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders would receive dividend payments and payments on liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deterring or preventing a change of control or other corporate action. No shares of preferred stock were issued or outstanding as of June 30, 2022.

Common Stock

Under its amended and restated certificate of incorporation, the Company is authorized to issue 200,000,000 shares of common stock, having a par value per share of $0.001.

Common stockholders are entitled to dividends as and when declared by the Board, subject to the rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date. Under the Loan Agreement, as amended, the Company is precluded from the payment of dividends. The holder of each share of common stock is entitled to one vote.

The Company had shares of common stock reserved for future issuance upon the exercise or conversion of the following:

	June 30,		December 31,
	2022		2021
Common stock option grants issued and outstanding under 2014 Equity Incentive Plan		3,112,459		3,245,250
Common stock reserved for issuance under the 2022 Inducement Plan		3,479,175		—
Common stock reserved for issuance under the 2021 Equity Incentive Plan		3,025,323		1,578,216
Common stock option grants issued and outstanding under the 2021 Equity Incentive Plan		836,112		467,024
Restricted common stock units issued and outstanding		3,368,100		3,387,505
Warrants to purchase common stock		119,284		—
Common stock reserved for issuance under Employee Stock Purchase Plan		1,029,014		710,189
Total common shares reserved for future issuance		14,969,467		9,388,184

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Equity Incentive Plan

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Equity Incentive Plan

Note 13. Equity Incentive Plan

In January 2021, the Board adopted the 2021 Equity Incentive Plan (the “2021 Plan”). The stockholders approved the 2021 Plan in January 2021, and it became effective upon the execution of the underwriting agreement for the IPO on February 4, 2021. Under the 2021 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards to individuals who are then employees, officers, directors or consultants of the Company. A total of 5,200,000 shares of common stock were approved to be initially reserved for issuance under the 2021 Plan. In addition, the number of shares of common stock available for issuance under the 2021 Plan will be automatically increased on the first day of each calendar year during the ten-year term of the 2021 Plan, beginning with January 1, 2022 and ending with January 1, 2031, by an amount equal to 5% of the outstanding number of shares of common stock on December 31 of the preceding calendar year or such lesser amount as determined by the Board. On January 1, 2022, the number of shares available for issuance under the 2021 Plan was automatically increased by 1,983,182 shares.

In April 2022, the Board approved the 2022 Inducement Plan, (the “Inducement Plan”) a non-stockholder approved stock plan, in order to award stock options, restricted stock units and other awards as allowed under the Inducement Plan as an inducement to potential new employees and directors of the Company. Under the Inducement Plan, 3,500,000 shares were approved and available for future issuance. As of June 30, 2022, 20,825 awards had been granted or were outstanding.

The stock-based compensation expense for the Company’s equity incentive plans was allocated as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of products sold	$	134	$	208	$	390	$	260
Research and development		586		291		1,097		421
Selling, general and administrative		1,016		446		1,937		792
Total	$	1,736	$	945	$	3,424	$	1,473

Stock-based compensation expense excludes amounts capitalized to inventory. During the three and six months ended June 30, 2022, the Company capitalized stock-based compensation expense of $0.5 million and $0.9 million to inventory, respectively, and during the three and six months ended June 30, 2021, the Company capitalized $0.2 million and $0.3 million of stock-based compensation expense to inventory, respectively.

Total stock-based compensation expense by type of award was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Stock options	$	386	$	528	$	725	$	964
Restricted stock units		1,620		334		3,057	$	375
Employee Stock Purchase Plan		77		83		166	$	134
Total	$	2,083	$	945	$	3,948	$	1,473

Total compensation costs as of June 30, 2022 related to non-vested awards to be recognized in future periods was $23.9 million and is expected to be recognized over the weighted-average period of 2.9 years.

Stock Options

A summary of stock option activity for the six months ended June 30, 2022 is as follows:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Balance as of December 31, 2021		3,712,274		$	3.30		8.1	$	23,150
Granted		416,213		$	1.85		—		—
Exercised		(60,494	)	$	1.42		—		—
Cancelled		(119,422	)	$	7.39		—		—
Balance as of June 30, 2022		3,948,571		$	3.05		7.2	$	1,542
Options vested and expected to vest as of June 30, 2022		3,948,571		$	3.05		7.2	$	1,542
Options vested and exercisable as of June 30, 2022		1,928,654		$	2.40		6.8	$	1,132

Total options vested during the six months ended June 30, 2022 was 578,211, with an aggregate fair value of $1.2 million. The aggregate intrinsic value of options exercised was $0.3 million for the six months ended June 30, 2022. Total compensation costs as of June 30, 2022 related to option awards to be recognized in future periods was $3.3 million and is expected to be recognized over the weighted average period of 2.0 years.

The weighted-average grant date fair value of the options granted during the six months ended June 30, 2022 and 2021 was $1.25 and $7.52 per share, respectively, as calculated using the Black-Scholes option-pricing model with the following assumptions on a weighted-average basis:

	Six Months Ended June 30,
	2022			2021
Fair value of common stock	$	1.85		$	17.00
Expected term (in years)		5.5			6.0
Risk-free interest rate		3.0	%		0.6	%
Dividend yield		—			—
Volatility		79.5	%		46.9	%

Common stock fair value—Prior to the IPO the fair value of the Company’s common stock was determined by the Board with assistance from management. The Board determined the fair value of common stock by considering independent valuation reports and a number of objective and subjective factors, including valuations of comparable companies, sales of redeemable convertible preferred stock, operating and financial performance, the lack of liquidity of the Company’s common stock and the general and industry-specific economic outlook. Following the closing of the IPO, the fair value of the Company’s common stock on the date of grant is the closing price of the common stock as reported on the Nasdaq Global Select Market.

Dividend yield of zero—The Company has not declared or paid dividends.

Risk-free interest rates—The Company applied the risk-free interest rate based on the U.S. Treasury yield for the expected term of the option.

Expected term—The Company calculated the expected term as the average of the contractual term of the option and the vesting period for its employee stock options.

Expected volatility—Since the Company does not have sufficient stock price history to estimate the expected volatility of its shares, the expected volatility is calculated based on the average volatility for a peer group in the industry in which the Company does business.

Restricted Stock Units

Restricted stock units (“RSUs”) are generally subject to a 4 year vesting period, with 25% of the shares vesting approximately one year from the vesting commencement date and quarterly thereafter over the remaining vesting term.

The Company had the following activity for RSUs for the six months ended June 30, 2022:

	Underlying Shares			Weighted- Average Grant Date Fair Value
Balance as of December 31, 2021		3,387,505		$	7.57
Granted		574,414		$	3.94
Vested		(279,514	)	$	6.59
Canceled or forfeited		(314,305	)	$	7.84
Balance as of June 30, 2022		3,368,100		$	7.00

Total compensation costs as of June 30, 2022 related to RSUs to be recognized in future periods was $20.6 million and is expected to be recognized over the weighted average period of 3.5 years.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan (the “ESPP), provides eligible employees with an opportunity to purchase common stock from the Company at a discount through accumulated payroll deductions. Under the ESPP, the Board may specify offerings but generally provides for a duration of six months, currently for which each six-month offering periods are February and August. In February 2021, the Company’s employees enrolled in the offering period (the “first offering”) to purchase a variable number of shares of its common stock under the ESPP at the purchase date.

The purchase price is specified pursuant to each offering, but cannot, under the terms of the ESPP, be less than 85% of the lower of the fair market value per share of the Company's common stock on either the offering date or on the purchase date. The ESPP also includes a six month look-back provision for the purchase price of the stock price on the purchase date is less than the stock price on the offering date.

In January 2022, the number of shares available for issuance under the ESPP was automatically increased by 396,636 shares. As of June 30, 2022, the Company had 1,029,014 shares available for issuance under the ESPP. Pursuant to the ESPP, the Company issued 77,811 shares of common stock at a weighted average price per share of $3.86 during the six months ended June 30, 2022. Cash received from purchases under the ESPP for the six months ended June 30, 2022 was $0.3 million.

The fair value of shares to be issued under the Company’s ESPP was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions on a weighted-average basis for the six months ended June 30, 2022 and 2021:

	Six Months Ended June 30,
	2022			2021
Fair value of common stock	$	4.54		$	17.00
Expected term (in years)		0.5			0.5
Risk-free interest rate		0.1	%		0.6	%
Dividend yield		—			—
Volatility		90.5	%		46.9	%

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(Benefit from) Provision for Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

(Benefit from) Provision for Income Taxes

Note 14. (Benefit from) Provision for Income Taxes

The Company recorded a benefit from income taxes of $0.3 million and provision for income taxes of $2.0 thousand for the three and six months ended June 30, 2022, respectively, which primarily consisted of state taxes. For the three and six months ended June 30, 2021, the Company’s provision for income taxes primarily consisted of state franchise taxes and were insignificant. Income taxes were accounted for under the asset and liability method. Deferred tax assets and liabilities were recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the financial statements and their respective tax bases using tax rates expected to be in effect during the years in which the basis differences reverse.

The Company believes it is more likely than not that its federal and state net deferred tax assets will not be fully realized. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of its deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. A valuation allowance is recorded for loss carryforwards and other deferred tax assets where it is more likely than not that such deferred tax assets will not be realized. Accordingly, the Company continues to maintain a valuation allowance against all of its U.S. net deferred tax assets as of June 30, 2022. The Company will continue to maintain a full valuation allowance against its net federal and state deferred tax assets until there is sufficient evidence to support recoverability of its deferred tax assets.

As of June 30, 2022, the Company had total uncertain tax benefits of $1.1 million related to R&D credits, which is recorded as a reduction of the deferred tax assets related credit carryforwards. The Company does not anticipate a material change to its unrecognized tax benefits over the next twelve months. It is the Company's policy to account for interest and penalties related to uncertain tax positions as interest expenses and selling, general and administrative expense, respectively, in its condensed statements of operations. No interest or penalty have been recorded related to the uncertain tax positions.

The Company is subject to U.S. federal and state income tax as well as to income tax in multiple state jurisdictions. In the normal course of business, the Company is subject to examination by tax authorities. As of the date of the financial statements, there are no tax examination in progress. The statute of limitations for tax years ended after December 31, 2014 is open for federal and state tax purposes.

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Net Loss Per Share

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Net Loss Per Share

Note 15. Net Loss Per Share

Basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common stock outstanding during the period. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of common stock equivalents of potentially diluted securities outstanding for the period determined using the treasury-stock and if-converted methods. Potentially dilutive common stock equivalents are comprised of options and restricted stock units outstanding under the Company’s stock option plan, as well as warrants outstanding to purchase shares of the Company's common stock. In each of the periods of the three and six months ended June 30, 2022 and 2021, there was no difference in the number of shares used to calculate basic and diluted shares outstanding as the inclusion of the potentially dilutive securities would be anti-dilutive.

The following table summarizes the Company’s net loss per share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Numerator
Net loss attributable to common stockholders, basic and diluted	$	(21,677	)	$	(16,200	)	$	(8,599	)	$	(29,516	)
Denominator
Weighted-average number of shares of common stock outstanding:
Basic and diluted		39,928,451			38,483,766			39,839,834			30,688,349
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.54	)	$	(0.42	)	$	(0.22	)	$	(0.96	)

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	As of June 30,
	2022		2021
Warrants to purchase common stock		119,284		-
Options to purchase common stock		3,948,571		5,107,453
Unvested restricted stock units		3,368,100		1,097,935
Total		7,435,955		6,205,388

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 16. Commitments and Contingencies

Commitments

License Agreement with Eiken Chemical Co., Ltd.

In July 2020, the Company entered into a patent license agreement (“Eiken Agreement”), with Eiken Chemical Co., Ltd. (“Eiken”). Pursuant to the terms of the Eiken Agreement, Eiken granted the Company a royalty bearing non-transferable, non-assignable, sublicensable (to the Company’s affiliates), non-exclusive license under certain patents, which the Company refers to collectively as the Eiken Licensed Patents, relating, in part, to loop-mediated isothermal amplification, to develop, make, use, sell, offer for sale and dispose of any reagent, product, kit, device, equipment and/or system for nucleic acid-based in-vitro diagnostic tests for detection of SARS-CoV-2, which causes COVID-19, which the Company collectively refers to as the Initial Licensed Products, in the United States. The Company also has limited have-made rights with respect to the Eiken Licensed Patents.

The Company is obligated to pay a royalty in the low single-digit percentage on total net sales of all Licensed Products, that will be recorded as a cost of product sold. Royalty expense for the three and six months ended June 30, 2022 was $1.9 million and $4.4 million, respectively, and for the three and six months ended June 30, 2021 was $0.4 million and $0.5 million, respectively.

On March 8, 2022, the Company provided notice of termination of the Eiken Agreement, which became effective May 12, 2022. The Company terminated the Eiken Agreement because certain Eiken Licensed Patents have expired, all of which are locations in which the Company operates. As a result of the termination, the Company is no longer required to make any future royalty payments under the Eiken Agreement.

Technology Services Agreement with Jabil

On September 10, 2020, the Company entered into the Jabil TSA, pursuant to which Jabil will use commercially reasonable efforts to perform certain technical services related to the development of components, assemblies and systems in relation to each project under the agreement as set forth in one or more statement of work, which may include the Company’s COVID-19 test kit and any of its future product candidates.

Manufacturing Services Agreement with Jabil

On September 10, 2020, the Company entered into the Jabil MSA, pursuant to which Jabil will manufacture, test, pack and ship certain electronic assemblies and systems in accordance with the Company’s specifications. Jabil may not subcontract any of its manufacturing services under the Jabil MSA without the Company’s prior written consent. The Company is obligated to provide, on a monthly basis, a rolling 12-month forecast to Jabil as well as 12-months of historical aggregate end customer demand at the finished product level, when available, which will be used to constitute written purchase orders from the Company, and the Company is obligated to purchase the quantity of products that is required by the first four months of each forecast. Jabil is entitled to reject any purchase orders that are not placed in accordance with the forecast.

As of June 30, 2022, the Company had $14.4 million of non-cancellable purchase commitments pursuant to the manufacturing services agreement with Jabil Inc., and technical services agreement with Jabil.

Other Commitments

As of June 30, 2022, the Company had non-cancellable purchase commitments of $43.3 million, consisting primarily of $27.3 million of raw material purchase commitments, and $9.4 million asset and equipment related to expanding its manufacturing capacity and automation, and $6.7 million related to non-commercial services.

Indemnification

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and may provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have not yet been made. To date, the Company has not been subject to any claims or required to defend any action related to its indemnification obligations.

The Company’s amended and restated certificate of incorporation contains provisions limiting the liability of directors, and its amended and restated bylaws provide that the Company will indemnify each of its directors to the fullest extent permitted under Delaware law. The Company’s amended and restated certificate of incorporation and amended and restated bylaws also provide the Board with discretion to indemnify its officers and employees when determined appropriate by the Board. In addition, the Company has entered and expects to continue to enter into agreements to indemnify its directors and executive officers.

Legal Proceedings

From time to time, the Company may become involved in legal proceedings arising out of the ordinary course of its business. Management is currently not aware of any matters that would be expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company.

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Related Parties

6 Months Ended

Jun. 30, 2022

Related Party Transactions [Abstract]

Related Parties

Note 17. Related Parties

The Company incurred less than $0.1 million in expenses with individuals related to a former executive officer or its Board of Directors during both the three and six months ended June 30, 2022 and 2021, respectively. Additionally, the Company recorded revenues of $0.0 million and less than $0.1 million from individuals or companies related to an executive officer or its Board during the three and six months ended June 30, 2022 and 2021, respectively.

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Subsequent Events

6 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

Note 18. Subsequent Events

In July 2022, the Company received from Health Canada its first regulatory approval for marketing its combination COVID-19 and influenza test kit, following which, the Company received its first order of the combination test kit in Canada. Additionally, in July 2022, the FDA approved the Company's request to extend the current 12-month shelf life to 18-months for its COVID-19 test kit.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information and pursuant to the instructions of the SEC on Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.

The accompanying condensed balance sheet as of June 30, 2022, the condensed statements of operations for the three and six months ended June 30, 2022 and 2021, the statements of redeemable convertible preferred stock and stockholders’ equity for the three and six months ended June 30, 2022 and 2021, and the condensed statements of cash flows for the six months ended June 30, 2022 and 2021 are unaudited. The unaudited interim condensed financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of June 30, 2022 and the results of its operations and cash flows for the six months ended June 30, 2022 and 2021. The financial data and other information disclosed in these notes as of June 30, 2022 and 2021 and for the three and six months ended June 30, 2022 and 2021 are unaudited. The results for the three and six months ended June 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period. These condensed financial statements and accompanying notes should be read in conjunction with the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on March 31, 2022.

Use of Estimates

Use of Estimates

Significant estimates and assumptions made in the accompanying financial statements include, but are not limited to recognition of stock-based compensation, incremental borrowing rate, revenue recognition, inventory valuation, sales returns, warranty reserves, allowance for doubtful accounts, accrued research and development costs, uncertain tax positions, the recoverability of its long-lived assets and the valuation of deferred tax assets. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Cash, Cash Equivalents and Restricted Cash Equivalents

Cash, Cash Equivalents and Restricted Cash Equivalents

The Company considers highly liquid investments purchased with a remaining maturity date upon acquisition of three months or less to be cash equivalents and are stated at cost, which approximates fair value. As of June 30, 2022 and December 31, 2021, the Company held cash and cash equivalents of $75.0 million and $106.0 million, respectively, primarily consisting of short-term, highly liquid instruments, which consists of money market accounts and high-quality debt securities issued by the U.S. government via cash sweep accounts. All cash and cash equivalents are maintained with major financial institutions. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.

As of June 30, 2022, the Company held a restricted cash equivalents balance of $1.9 million which was used to secure standby letters of credit in relation to the Company’s operating lease agreement entered into in March 2022 for a facility in Vista, California, and the lease agreement entered into in June 2022 for a facility in Berkeley, California. The cash was deposited in a money market account with maturities of three months or less, with automatic renewal. The standby letters of credit are subject to annual automatic renewal over the term of the associated lease. The restricted cash equivalents are recorded as a long-term asset on the condensed balance sheets as of June 30, 2022, due to the long-term nature of the underlying obligation.

Fair Value Measurements

Fair Value Measurements

The carrying value of the Company’s cash, cash equivalents, restricted cash equivalents, accounts receivable, other receivable, prepaid expenses, other current assets, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these items. The Company has not elected to apply fair value accounting related to its Term Loans.

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:

•Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2—Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

•Level 3—Unobservable inputs that are supported by little or no market activity for the related assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Inventories Produced in Preparation for Product Launches

Inventories Produced in Preparation for Product Launches

The Company capitalizes inventories produced in preparation for product launches sufficient to support estimated initial market demand. Typically, capitalization of such inventory begins when positive results have been obtained for the clinical trials that the Company determines are necessary to support regulatory approval, uncertainties regarding ultimate regulatory approval have been significantly reduced and the Company has determined it is probable that these capitalized costs will provide future economic benefit in excess of capitalized costs. The factors considered by the Company in evaluating these uncertainties include the receipt and analysis of positive clinical test results for the underlying product, results from meetings with the relevant regulatory authorities prior to the filing of regulatory applications, and the submission of the regulatory application. The Company closely monitors the status of each respective product within the regulatory approval process, including all relevant communication with regulatory authorities. If the Company is aware of any specific material risks or contingencies other than the normal regulatory review and approval process or if there are any specific issues identified relating to safety, efficacy, manufacturing, marketing or labeling, the related inventory would generally not be capitalized.

For inventories that are capitalized in preparation of product launch, anticipated future sales, expected approval date and shelf lives are evaluated in assessing realizability. The shelf life of a product is determined as part of the regulatory approval process; however, in evaluating whether to capitalize pre-launch inventory production costs, the Company considers the product stability data of all of the pre-approval production to date to determine whether there is adequate expected shelf life for the capitalized pre-launch production costs.

Inventories

Inventories

The Company values its inventory at the lower of cost or net realizable value and determines the cost of inventory using standard costs which closely resembles the first-in, first-out method. Lower of cost or net realizable value is evaluated by considering obsolescence, excessive levels of inventory, deterioration and other factors. Inventory held as of June 30, 2022 is in the form of raw materials, work in process and finished goods.

In order to assess the ultimate realization of inventories, the Company is required to make judgments as to future demand requirements compared to current or committed inventory levels. The Company periodically reviews its inventories for shelf life, excess or obsolescence and writes-down obsolete or otherwise unmarketable inventory to its estimated net realizable value. If the actual net realizable value is less than that estimated by the Company, or if it is determined that inventory utilization will further diminish based on estimates of demand, additional inventory write-downs may be required. Amounts written down due to unmarketable inventory are recorded in cost of revenue and a new lower-cost basis for the inventory is established.

Warranty

Warranty

The Company offers a standard product warranty that its products will perform as intended upon the date of original delivery for a reasonable period of time, which typically coincides with product shelf life. The Company has the obligation, at its option, to either refund, repair or replace a defective product. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of products sold. The estimate of future warranty costs is based on historical as well as current product failure rates, service delivery costs incurred in correcting product failures, and warranty policies. The Company regularly reviews these estimates to assess the appropriateness of the Company’s recorded warranty liabilities and adjust the amounts as necessary. As of June 30, 2022 and December 31, 2021, the accrued liability for warranty returns was not significant.

Property and Equipment, Net

Property and Equipment, Net

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between three and seven years. Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful life of the asset or the remaining term of the related lease.

Construction in progress consists of multiple projects, primarily related to new equipment to expand our manufacturing capability as our product demand grows. Construction in progress includes the cost of construction and other direct costs attributable to the construction, along with capitalized interest. Interest related to construction of assets is capitalized when the financial statement effect of capitalization is material, construction of the asset has begun, and interest is being incurred. Interest capitalization ends at the earlier of the asset being substantially complete and ready for its intended use or when interest costs are no longer being incurred.

Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the condensed balance sheets and any resulting gain or loss is reflected in other income or expense in the condensed statements of operations in the period realized.

Leases

Leases

The Company determines if an arrangement is a lease at inception and if so, determines whether the lease qualifies as operating or finance. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the condensed balance sheets. The Company did not have any finance leases as of June 30, 2022 and December 31, 2021.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. When the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the information available at commencement dates in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. Operating lease ROU assets also include any lease payments made and exclude lease incentives when paid by the Company or on the Company’s behalf. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components. The Company elected to not separate lease and non-lease components for all of its building leases. The Company also made an accounting policy election to recognize lease expense for leases with a term of 12 months or less on a straight-line basis over the lease term and not recognize ROU assets or lease liabilities for such leases.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company’s long-lived assets are comprised principally of its property and equipment, including leasehold improvements and ROU assets.

The Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable. The Company identifies impairments related to long-lived assets when management determines that the remaining carrying value will not be realized through future use. The Company evaluates events or circumstances, including competition in the markets where it operates, that would indicate the carrying value of assets may not be fully recoverable. If an event or circumstance is identified indicating carrying value may not be recoverable, the sum of future undiscounted cash flows is compared to the carrying value. If the carrying value exceeds the future undiscounted cash flows, the carrying value of the asset is reduced to fair value, with the difference recorded as an impairment charge. Assets are evaluated for impairment on an individual basis, which management believes is the lowest level for which there are identifiable cash flows. The Company evaluates assets for impairment by assessing if long-lived assets will be sold or otherwise disposed of significantly before the end of their previously estimated useful life as its primary indicator of potential impairment. The fair value of assets is determined as the present value of the estimated future cash flows, adjusted as necessary for market participant factors. Any required impairment loss would be recorded as a reduction in the carrying value of the related asset and a charge to operating expense. For the six months ended June 30, 2022 and 2021, the Company determined that there were no impairments of its long-lived assets.

Debt Issuance Costs, Debt Discount and Detachable Debt-Related Warrants

Debt Issuance Costs, Debt Discount and Detachable Debt-Related Warrants

As described in Note 10. Term Loans, the Company entered into a term loan credit facility with Silicon Valley Bank. (“SVB”) and Hercules Capital, Inc. (“Hercules”) during the six months ended June 30, 2022. Costs incurred to issue debt are deferred and recorded as a reduction of the debt balance in the accompanying condensed balance sheets. Debt discounts related to the relative fair value of warrants issued in conjunction with the debt are also recorded as a reduction of the debt balance and accreted over the expected term of the debt to interest expense using the effective interest method.

Redeemable Convertible Preferred Stock

Redeemable Convertible Preferred Stock

The Company’s shares of preferred stock were assessed at issuance for classification and redemption features requiring bifurcation. The Company’s preferred stock was not mandatorily redeemable. The Company presents as temporary equity any stock which (i) the Company undertakes to redeem at a fixed or determinable price on the fixed or determinable date or dates; (ii) is redeemable at the option of the holders, or (iii) has conditions for redemption which are not solely within the control of the Company. The Company’s preferred stock was redeemable if the Company had not been dissolved within 90 days following the occurrence of certain deemed liquidation events, which the Company determined was not solely within its control and thus had classified shares of redeemable convertible preferred stock as temporary equity until such time as the conditions were removed or lapse. The Company initially recorded redeemable convertible preferred stock at fair value, net of issuance costs.

In connection with the Company's initial public offering (“IPO”) on February 9, 2021, all outstanding shares of redeemable convertible preferred stock converted into 23,978,747 shares of common stock.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue under Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”), “Revenue from Contracts with Customers” when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps:

(i)identify the contract(s) with a customer;

(ii)identify the performance obligations in the contract;

(iii)determine the transaction price;

(iv)allocate the transaction price to the performance obligations in the contract; and

(v)recognize revenue when (or as) the entity satisfies a performance obligation.

Under ASC 606, the Company will recognize revenue for arrangements once the performance obligations are satisfied and control of the product has transferred to the customer. This usually occurs upon shipment to the customer, unless terms of contractual arrangements with customers state otherwise, in which case the control is transferred upon completion of delivery and/or customer acceptance of products depending on obligations written in the contract.

Revenue is measured based on the amount of consideration that the Company expects to be entitled to, which considers both fixed and variable consideration. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal of revenue will not occur. Transaction price is impacted by variable consideration such as discounts, allowances and constraints placed on revenue due to uncertainty. The Company's performance obligations relate to contracts with a duration of less than one year. The Company elected to apply the practical expedient provided in ASC 606, therefore, the Company is not required to disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period.

Collection of the Company’s net revenue generally occurs within 30-45 days of billing. Contracts do not contain significant financing components based on the typical period of time between delivery of products and collection of consideration. Collections of revenue from customers in the Company’s e-commerce channel generally occurs instantaneously or within a few days as customers pay using credit cards. Some customers, particularly in certain countries outside of the United States, pay in advance of product delivery. In those instances, payment and revenue recognition typically occur in the same month, and if they do not, revenue would not be recognized.

Costs to obtain or fulfill a contract are currently expensed when incurred because the Company’s performance obligation is satisfied at a point in time. These costs are recorded as cost of products sold in the condensed statements of operations.

The Company invoices its customers upon shipment of product and records its sales upon shipment in accordance with its standard terms and conditions, unless underlying customer contracts specify otherwise. In those instances, the Company records revenue upon delivery to customers or upon customer acceptance of products when control of products is transferred to customers.

When necessary, the Company invoices and collects sales tax from its customers for sales of products. The Company has elected to exclude sales tax from the measurement of the transaction price.

Shipping and Handling Costs

Shipping and Handling Costs

Shipping and handling costs are included in cost of products sold.

Research and Development

Research and Development

Costs associated with research and development activities are expensed as incurred and include, but are not limited to, personnel-related expenses including stock-based compensation expense, materials, laboratory supplies, consulting costs, costs associated with setting up and conducting clinical studies and allocated overhead including rent and utilities.

The Company records accrued expenses for estimated costs of its research and development activities conducted by third-party service providers, which include clinical trial activities. The Company records the estimated costs of research and development activities based upon the estimated value of services or supplies provided but not yet invoiced and include these costs in accrued liabilities in the condensed balance sheets and within research and development expenses in the condensed statements of operations. The Company records accrued expenses for these costs based on factors such as estimates of the work completed or supplies received and in accordance with agreements established with these vendors. Any payments made in advance of services or supplies provided are recorded as prepaid assets, which are expensed as the services or supplies are received.

The Company estimates the amount of work completed through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services. Such estimates in determining the accrued balance in each reporting period are subject to management judgment. As actual costs become known, the Company adjusts its accrued estimates.

Advertising and Marketing Costs

Advertising and Marketing Costs

Costs associated with advertising and marketing activities are expensed as incurred. Total advertising and marketing costs were $0.8 million and $0.9 million for the three and six months ended June 30, 2022, respectively, compared to $0.9 million and $1.3 million for the three and six months ended June 30, 2021, respectively, and are included in selling, general and administrative expenses in the accompanying condensed statements of operations.

Stock-Based Compensation

Stock-Based Compensation

The Company’s stock-based awards consist of stock options issued to employees and non-employees, restricted stock units issued to employees and shares of the Company’s common stock purchased by employee participants in the Employee Stock Purchase Plan. The Company measures the estimated fair value of the stock-based awards on the date of grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective awards. The Company records expense for awards with service-based vesting using the straight-line method. The Company accounts for forfeitures as they occur. The fair value of the common stock is based on the closing price of the common stock on the date of grant as reported on the Nasdaq Global Select Market.

The Company classifies stock-based compensation expense in its condensed statements of operations in the same manner in which the award recipient’s cash compensation costs are classified.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the use of a number of complex assumptions including the fair value of the common stock, expected volatility, risk-free interest rate, expected dividends, and expected term of the option.

The Company determines the expected stock volatility using a weighted-average of the historical volatility of a group of guideline companies that issued options over a similar time period, and expects to continue to do so until such time as the Company has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the simplified method for awards that qualify as “plain-vanilla” options. The expected term was estimated using the simplified method for employee stock options since the Company does not have adequate historical exercise data to estimate the expected term. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.

Provision for Income Taxes

Provision for Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period that includes the enactment date.

The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, management would adjust the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (i) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability.

Segment Reporting

Segment Reporting

The Company has determined that the Chief Executive Officer is its Chief Operating Decision Maker. The Company’s Chief Executive Officer reviews financial information presented on an aggregate basis for the purposes of assessing the performance and making decisions on how to allocate resources. Accordingly, the Company has determined that it operates in a single operating and reportable segment, which is the business of designing, manufacturing and selling of disposable test kits.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

From time to time, new accounting pronouncements, or Accounting Standard Updates (“ASU”) are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

The Company is an emerging growth company (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and may take advantage of reduced reporting requirements that are otherwise applicable to public companies. Section 107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards. This means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company has the option to adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and can do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. The Company has elected to use the extended transition period for complying with new or revised accounting standards unless the Company otherwise early adopts select standards.

Recently Adopted Accounting Standards

In August 2020, the FASB issued Accounting Standard Update (the “ASU”) No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The Company early adopted the ASU on January 1, 2022. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company expects to adopt this ASU beginning January 1, 2023. The Company is evaluating the potential impact of this standard on its financial statements, but does not expect the adoption to have a material impact on the Company's financial statements.

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Net Sales (Tables)

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Summary of Net Sales by Channel and Geographic Area Based on Customers' Locations

The following table sets forth the Company’s net sales by channel:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Healthcare	$	1,587	$	235	$	8,458	$	2,622
Business-to-business		10,791		5,324		55,544		6,668
International		1,520		2,166		25,166		2,166
Direct-to-consumer		12,248		4,714		27,452		5,499
Net sales	$	26,146	$	12,439	$	116,620	$	16,955

The following table sets forth the Company’s net sales by geographic area based on the customers’ locations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
United States	$	24,626	$	10,273	$	91,454	$	14,789
Canada		605		—		23,924		—
Rest of World		915		2,166		1,242		2,166
Net sales	$	26,146	$	12,439	$	116,620	$	16,955

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Concentration of Credit Risk and Significant Suppliers (Tables)

6 Months Ended

Jun. 30, 2022

Risks and Uncertainties [Abstract]

Schedules of Concentration of Risk, by Risk Factor

As of June 30, 2022, the following customers had outstanding accounts receivable due of 10% or greater of the Company’s total accounts receivable.

	June 30, 2022			December 31, 2021
Customer A		68	%		19	%
Customer B		—	%		12	%
Customer E		—	%		18	%

For the three and six months ended June 30, 2022 and 2021, the following customers represented 10% or more of the Company’s net sales:

	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
Customer A		—	%	—	%		14	%	—	%
Customer B		—	%	—	%		—	%	14	%
Customer C		—	%	14	%		—	%	10	%
Customer D		—	%	10	%		—	%	—	%

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy.

	Fair Value Measurements as of
	June 30, 2022
	Level 1		Level 2		Level 3
Assets
Cash equivalents	$	74,375	$	—	$	—
Restricted cash equivalents		1,943		—		—
Total	$	76,318	$	—	$	—

Schedule of Change in Fair Value of Derivative Liabilities and Convertible Notes

The change in the fair value of the derivative liabilities and convertible notes accounted for at fair value is summarized below.

	June 30, 2021
Fair value at beginning of the period	$	24,694
Initial fair value of instruments issued		—
Change in fair value of instruments and accrued interest, net		288
Extinguishment of instruments held at fair value		(24,982	)
Fair value at end of the period	$	—

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Inventory (Tables)

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory consist of the following:

	June 30, 2022		December 31, 2021
Raw materials	$	65,672	$	35,923
Work in process		40,450		10,539
Finished goods		13,454		4,314
Total	$	119,576	$	50,776

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Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, Net

	June 30,			December 31,
	2022			2021
Construction in progress	$	20,804		$	3,466
Machinery and equipment		30,295			29,333
Website development costs		1,211			1,110
Furniture and fixtures		328			200
Leasehold improvements		2,256			1,702
Total, at cost		54,894			35,811
Accumulated depreciation and amortization		(8,112	)		(4,837	)
Property and equipment, net	$	46,782		$	30,974

Schedule of Long-Lived Assets Including Right-of-Use Assets by Geographic Area

The following table sets forth the Company’s long-lived assets, including right-of-use assets by geographic area:

	June 30,		December 31,
	2022		2021
United States	$	42,606	$	16,730
Dominican Republic		20,489		15,753
All other countries		2,413		1,205
Total long-lived assets	$	65,508	$	33,688

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Other Financial Information (Tables)

6 Months Ended

Jun. 30, 2022

Other Financial Information [Abstract]

Summary of Activity in Allowance for Doubtful Accounts

The following table summarizes the activity in the allowance for doubtful accounts:

	June 30, 2022			December 31, 2021
Beginning balance	$	99		$	—
Amounts charged to costs and expenses (recoveries)		(148	)	358
Write-offs		104			(259	)
Ending balance	$	55		$	99

Schedule of Other Receivables

Other Receivables

	June 30, 2022		December 31, 2021
Other receivable	$	7,247	$	8,188

Schedule of Prepaid Expenses

The following table summarizes the components of prepaid expenses:

	June 30, 2022		December 31, 2021
Prepaid expenses	$	1,250	$	307
Prepaid insurance		2,791		588
Prepaid inventory		408		9,379
Total	$	4,449	$	10,274

Schedule of Accrued Liabilities

Accrued liabilities consist of the following:

	June 30, 2022		December 31, 2021
Professional fees	$	1,955	$	612
Accrued manufacturing and inventory purchases		14,756		17,200
Canada importation taxes		2,717		1,551
Payroll liabilities		5,426		4,466
Royalty liabilities		339		1,662
Accrued sales tax		1,787		2,215
Early exercise liability		155		189
Accrued interest		247		—
Insurance premium liability		1,744		—
Other		2,034		1,267
Total	$	31,160	$	29,162

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Leases (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Schedule of Maturities of Lease Liabilities

Maturities of lease liabilities as of June 30, 2022, are as follows:

	Operating
	Leases
Year ending December 31:
2022	$	944
2023		2,991
2024		2,922
2025		2,899
2026		2,994
Thereafter		17,010
Total		29,760
Less: imputed interest		(10,748	)
Present value of operating lease liabilities		19,012
Less: current portion		(2,185	)
Operating lease liabilities, net of current portion	$	16,827

Summary of Additional Information Related to Leases

Additional information related to the Company’s leases was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease cost	$	872	$	109	$	1,324	$	218
Short-term lease cost	$	320	$	312	$	323	$	627

	June 30, 2022			December 31, 2021
Weighted-average remaining lease term (years)		8.95			1.82
Weighted-average discount rate		9.36	%		7.15	%

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Term Loans (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Summary of Assumptions Used to Estimate Fair Value of Warrants

The Company determined the fair value of the Warrants as of February 4, 2022 using the Black-Scholes option pricing model and applying the following assumptions:

Fair value of common stock	$	5.15
Expected term (in years)		7.0
Risk-free interest rate		1.9	%
Dividend yield		—
Volatility		92.6	%

The weighted-average grant date fair value of the options granted during the six months ended June 30, 2022 and 2021 was $1.25 and $7.52 per share, respectively, as calculated using the Black-Scholes option-pricing model with the following assumptions on a weighted-average basis:

	Six Months Ended June 30,
	2022			2021
Fair value of common stock	$	1.85		$	17.00
Expected term (in years)		5.5			6.0
Risk-free interest rate		3.0	%		0.6	%
Dividend yield		—			—
Volatility		79.5	%		46.9	%

Schedule of Balance Sheet Information Related to Term Loans

Balance sheet information related to the Term Loans is as follows:

	June 30, 2022
Tranche 1 of Term Loans (1)	$	31,575
Less: Unamortized debt discount and issuance costs		(2,362	)
Carrying value of Term Loans, non-current	$	29,213

(1) Balance includes $1.6 million final end of term fee, which represents 5.25% of the principal loan advance.

Schedule of Interest Expense, Net of Amounts Capitalized

Interest expense, net of amounts capitalized is as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
Contractual coupon	$	716		$	—	$	1,127		$	—
Amortization of debt discount and issuance costs		191			—		308			—
Total interest expense on the Term Loan		907			—		1,435			—
Other interest expense		28			—		37			—
Capitalized interest		(109	)		—		(109	)		—
Interest expense, net	$	826		$	—	$	1,363		$	—

Schedule of Annual Principal Payments

The Annual principal payments on the Term Loans are as follows:

Year ending December 31,
2022	$	—
2023		—
2024		7,059
2025		21,176
2026		3,340
Total principal payments	$	31,575

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Capital Stock (Tables)

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Summary of Shares of Common Stock Reserved for Future Issuance

The Company had shares of common stock reserved for future issuance upon the exercise or conversion of the following:

	June 30,		December 31,
	2022		2021
Common stock option grants issued and outstanding under 2014 Equity Incentive Plan		3,112,459		3,245,250
Common stock reserved for issuance under the 2022 Inducement Plan		3,479,175		—
Common stock reserved for issuance under the 2021 Equity Incentive Plan		3,025,323		1,578,216
Common stock option grants issued and outstanding under the 2021 Equity Incentive Plan		836,112		467,024
Restricted common stock units issued and outstanding		3,368,100		3,387,505
Warrants to purchase common stock		119,284		—
Common stock reserved for issuance under Employee Stock Purchase Plan		1,029,014		710,189
Total common shares reserved for future issuance		14,969,467		9,388,184

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Equity Incentive Plan (Tables)

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Summary of Stock-based Compensation Expense for Equity Incentive Plans

The stock-based compensation expense for the Company’s equity incentive plans was allocated as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of products sold	$	134	$	208	$	390	$	260
Research and development		586		291		1,097		421
Selling, general and administrative		1,016		446		1,937		792
Total	$	1,736	$	945	$	3,424	$	1,473

Stock-based compensation expense excludes amounts capitalized to inventory. During the three and six months ended June 30, 2022, the Company capitalized stock-based compensation expense of $0.5 million and $0.9 million to inventory, respectively, and during the three and six months ended June 30, 2021, the Company capitalized $0.2 million and $0.3 million of stock-based compensation expense to inventory, respectively.

Total stock-based compensation expense by type of award was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Stock options	$	386	$	528	$	725	$	964
Restricted stock units		1,620		334		3,057	$	375
Employee Stock Purchase Plan		77		83		166	$	134
Total	$	2,083	$	945	$	3,948	$	1,473

Summary of Stock Option Activity

A summary of stock option activity for the six months ended June 30, 2022 is as follows:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Balance as of December 31, 2021		3,712,274		$	3.30		8.1	$	23,150
Granted		416,213		$	1.85		—		—
Exercised		(60,494	)	$	1.42		—		—
Cancelled		(119,422	)	$	7.39		—		—
Balance as of June 30, 2022		3,948,571		$	3.05		7.2	$	1,542
Options vested and expected to vest as of June 30, 2022		3,948,571		$	3.05		7.2	$	1,542
Options vested and exercisable as of June 30, 2022		1,928,654		$	2.40		6.8	$	1,132

Summary of Assumptions Used to Estimate Fair Value of Warrants

The Company determined the fair value of the Warrants as of February 4, 2022 using the Black-Scholes option pricing model and applying the following assumptions:

Fair value of common stock	$	5.15
Expected term (in years)		7.0
Risk-free interest rate		1.9	%
Dividend yield		—
Volatility		92.6	%

The weighted-average grant date fair value of the options granted during the six months ended June 30, 2022 and 2021 was $1.25 and $7.52 per share, respectively, as calculated using the Black-Scholes option-pricing model with the following assumptions on a weighted-average basis:

	Six Months Ended June 30,
	2022			2021
Fair value of common stock	$	1.85		$	17.00
Expected term (in years)		5.5			6.0
Risk-free interest rate		3.0	%		0.6	%
Dividend yield		—			—
Volatility		79.5	%		46.9	%

Summary of Restricted Stock Units Activity

The Company had the following activity for RSUs for the six months ended June 30, 2022:

	Underlying Shares			Weighted- Average Grant Date Fair Value
Balance as of December 31, 2021		3,387,505		$	7.57
Granted		574,414		$	3.94
Vested		(279,514	)	$	6.59
Canceled or forfeited		(314,305	)	$	7.84
Balance as of June 30, 2022		3,368,100		$	7.00

Summary of Assumptions Used to Estimate Fair Value of Employee Stock Purchase Plans

The fair value of shares to be issued under the Company’s ESPP was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions on a weighted-average basis for the six months ended June 30, 2022 and 2021:

	Six Months Ended June 30,
	2022			2021
Fair value of common stock	$	4.54		$	17.00
Expected term (in years)		0.5			0.5
Risk-free interest rate		0.1	%		0.6	%
Dividend yield		—			—
Volatility		90.5	%		46.9	%

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Summary of Net Loss Per Share

The following table summarizes the Company’s net loss per share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Numerator
Net loss attributable to common stockholders, basic and diluted	$	(21,677	)	$	(16,200	)	$	(8,599	)	$	(29,516	)
Denominator
Weighted-average number of shares of common stock outstanding:
Basic and diluted		39,928,451			38,483,766			39,839,834			30,688,349
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.54	)	$	(0.42	)	$	(0.22	)	$	(0.96	)

Schedule of Potentially Dilutive Securities Not Included in Calculation of Diluted Net Loss Per Share

Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

	As of June 30,
	2022		2021
Warrants to purchase common stock		119,284		-
Options to purchase common stock		3,948,571		5,107,453
Unvested restricted stock units		3,368,100		1,097,935
Total		7,435,955		6,205,388

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Organization - Additional Information (Details) - USD ($) $ in Thousands			3 Months Ended			6 Months Ended
	May 31, 2022	May 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Feb. 04, 2022	Dec. 31, 2021	[1]
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Entity incorporation, date of incorporation						Feb. 20, 2013
Shelf life of COVID-19 test kit						12 months
Net income (loss)			$ (21,677)	$ 13,100	$ (16,200)	$ (8,599)	$ (29,516)
Cash and cash equivalents			74,957		$ 161,662	74,957	$ 161,662		$ 105,982
Accumulated deficit			(137,140)			(137,140)			$ (128,541)
Net sales			$ 26,100			$ 116,600
First Tranche
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Debt instrument principal amount								$ 30,000
Health Canada
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Shelf life of COVID-19 test kit	18 months	12 months
Maximum
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Debt finance costs								$ 80,000

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

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Summary of Significant Accounting Policies - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) Segment	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)		Feb. 09, 2021 shares
Significant Accounting Policies [Line Items]
Cash and cash equivalents	$ 74,957,000	$ 161,662,000	$ 74,957,000	$ 161,662,000	$ 105,982,000	[1]
Restricted cash equivalents balance	1,943,000	2,338,000	$ 1,943,000	2,338,000
Operating lease existence of option to extend [true false]			true
Operating lease option to extend			options to extend
Redeemable convertible preferred stock redemption period after occurrence of certain liquidation events			90 days
Impairments of long-lived assets			$ 0	0
Allowance for doubtful accounts receivable, current	$ 55,000		$ 55,000		$ 99,000
Expected dividend yield			0.00%
Number of operating segments | Segment			1
Number of reportable segments | Segment			1
ASU 2020-06
Significant Accounting Policies [Line Items]
Change in accounting principle, accounting standards update, adopted	true		true
Change in accounting principle, accounting standards update, early adoption	true		true
Change in accounting principle, accounting standards update, adoption date	Jan. 01, 2022		Jan. 01, 2022
Change in accounting principle, accounting standards update, immaterial effect	true		true
Selling, General and Administrative Expenses
Significant Accounting Policies [Line Items]
Advertising and marketing costs	$ 800,000	$ 900,000	$ 900,000	$ 1,300,000
Common Stock | Redeemable Convertible Preferred Stock | IPO
Significant Accounting Policies [Line Items]
Convertible preferred stock converted into common stock | shares							23,978,747
Minimum
Significant Accounting Policies [Line Items]
Property and equipment estimated useful lives			3 years
Net revenues collection period			30 days
Maximum
Significant Accounting Policies [Line Items]
Property and equipment estimated useful lives			7 years
Performance obligation expected period	1 year		1 year
Net revenues collection period			45 days

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

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Net Sales - Summary of Net Sales by Channel (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Disaggregation Of Revenue [Line Items]
Net sales	$ 26,146	$ 12,439	$ 116,620	$ 16,955
Healthcare
Disaggregation Of Revenue [Line Items]
Net sales	1,587	235	8,458	2,622
Business-to-Business
Disaggregation Of Revenue [Line Items]
Net sales	10,791	5,324	55,544	6,668
International
Disaggregation Of Revenue [Line Items]
Net sales	1,520	2,166	25,166	2,166
Direct-to-Consumer (E-Commerce)
Disaggregation Of Revenue [Line Items]
Net sales	$ 12,248	$ 4,714	$ 27,452	$ 5,499

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Net Sales - Summary of Net Sales by Geographic Area Based on Customers' Locations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Disaggregation Of Revenue [Line Items]
Net sales	$ 26,146	$ 12,439	$ 116,620	$ 16,955
United States
Disaggregation Of Revenue [Line Items]
Net sales	24,626	10,273	91,454	14,789
Canada
Disaggregation Of Revenue [Line Items]
Net sales	605		23,924
Rest of World
Disaggregation Of Revenue [Line Items]
Net sales	$ 915	$ 2,166	$ 1,242	$ 2,166

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Concentration of Credit Risk and Significant Suppliers - Additional Information (Details) $ in Millions	6 Months Ended
	Jun. 30, 2022 USD ($)
Concentration Risk [Line Items]
Non-cancellable purchase commitments	$ 57.7
Forecast rolling period	12 months
Each forecast required period	4 months
Raw Material Purchase Commitments
Concentration Risk [Line Items]
Non-cancellable purchase commitments	$ 27.3
Asset & Equipment Related to Expanding Manufacturing Capacity & Automation
Concentration Risk [Line Items]
Non-cancellable purchase commitments	9.4
Non-commercial Services
Concentration Risk [Line Items]
Non-cancellable purchase commitments	6.7
Manufacturing Services Agreement
Concentration Risk [Line Items]
Non-cancellable purchase commitments	$ 14.4

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Concentration of Credit Risk and Significant Suppliers - Schedules of Concentration of Risk, Accounts Receivable (Details) - Credit Concentration Risk - Accounts Receivable	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Customer A
Concentration Risk [Line Items]
Concentration risk percentage	68.00%	19.00%
Customer B
Concentration Risk [Line Items]
Concentration risk percentage		12.00%
Customer E
Concentration Risk [Line Items]
Concentration risk percentage		18.00%

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Concentration of Credit Risk and Significant Suppliers - Schedules of Concentration of Risk, Net Sales (Details) - Customer Concentration Risk - Net Sales	3 Months Ended	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Customer A
Concentration Risk [Line Items]
Concentration risk percentage		14.00%
Customer B
Concentration Risk [Line Items]
Concentration risk percentage			14.00%
Customer C
Concentration Risk [Line Items]
Concentration risk percentage	14.00%		10.00%
Customer D
Concentration Risk [Line Items]
Concentration risk percentage	10.00%

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Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value, Recurring - Level 1 $ in Thousands	Jun. 30, 2022 USD ($)
Assets
Cash equivalents	$ 74,375
Restricted cash equivalents	1,943
Total assets, fair value	$ 76,318

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Fair Value Measurements - Schedule of Change in Fair Value of Derivative Liabilities and Convertible Notes (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2021 USD ($)
Fair Value Disclosures [Abstract]
Fair value at beginning of the period	$ 24,694
Change in fair value of instruments and accrued interest, net	288
Extinguishment of instruments held at fair value	$ (24,982)

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Inventory - Schedule of Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 65,672	$ 35,923
Work in process	40,450	10,539
Finished goods	13,454	4,314
Total	$ 119,576	$ 50,776	[1]

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

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Inventory - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials purchases for use in the pre-launch manufacturing campaign	$ 2.5		$ 2.5		$ 0.0
Stock-based compensation capitalized into inventory	$ 0.5	$ 0.2	$ 0.9	$ 0.3

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Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Property Plant And Equipment [Line Items]
Construction in progress	$ 54,894	$ 35,811
Accumulated depreciation and amortization	(8,112)	(4,837)
Property and equipment, net	46,782	30,974	[1]
Construction In Progress
Property Plant And Equipment [Line Items]
Construction in progress	20,804	3,466
Machinery And Equipment
Property Plant And Equipment [Line Items]
Construction in progress	30,295	29,333
Website Development Costs
Property Plant And Equipment [Line Items]
Construction in progress	1,211	1,110
Furniture And Fixtures
Property Plant And Equipment [Line Items]
Construction in progress	328	200
Leasehold Improvements
Property Plant And Equipment [Line Items]
Construction in progress	$ 2,256	$ 1,702

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

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Property and Equipment, Net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Property, Plant and Equipment [Abstract]
Depreciation and amortization	$ 1,700	$ 700	$ 3,275	$ 882
Deployed of assets into production from construction-in-progress			$ 700

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Property and Equipment, Net - Schedule of Long-Lived Assets Including Right-of-Use Assets by Geographic Area (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Revenues From External Customers And Long Lived Assets [Line Items]
Total long-lived assets	$ 65,508	$ 33,688
United States
Revenues From External Customers And Long Lived Assets [Line Items]
Total long-lived assets	42,606	16,730
Dominican Republic
Revenues From External Customers And Long Lived Assets [Line Items]
Total long-lived assets	20,489	15,753
All Other Countries
Revenues From External Customers And Long Lived Assets [Line Items]
Total long-lived assets	$ 2,413	$ 1,205

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Other Financial Information - Summary of Activity in Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Other Financial Information [Abstract]
Beginning balance	$ 99
Amounts charged to costs and expenses (recoveries)	(148)	$ 358
Write-offs	104	(259)
Ending balance	$ 55	$ 99

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Other Financial Information - Schedule of Other Receivables (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Other Financial Information [Abstract]
Other receivable	$ 7,247	$ 8,188	[1]

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

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Other Financial Information - Schedule of Prepaid Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Other Financial Information [Abstract]
Prepaid expenses	$ 1,250	$ 307
Prepaid insurance	2,791	588
Prepaid inventory	408	9,379
Total	$ 4,449	$ 10,274	[1]

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

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Other Financial Information - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Other Financial Information [Abstract]
Advanced payments related to procurement of inventories of components	$ 0.4	$ 9.4

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Other Financial Information - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Other Financial Information [Abstract]
Professional fees	$ 1,955	$ 612
Accrued manufacturing and inventory purchases	14,756	17,200
Canada importation taxes	2,717	1,551
Payroll liabilities	5,426	4,466
Royalty liabilities	339	1,662
Accrued sales tax	1,787	2,215
Early exercise liability	155	189
Accrued interest	247
Insurance premium liability	1,744
Other	2,034	1,267
Total	$ 31,160	$ 29,162	[1]

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

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Leases - Additional Information (Details) $ in Thousands			1 Months Ended	6 Months Ended
	Jun. 15, 2022 USD ($) ft²	Mar. 15, 2022 USD ($) ft²	Mar. 31, 2022 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)	[1]
Lessee Lease Description [Line Items]
Operating lease option to extend				options to extend
Operating lease existence of option to extend [true false]				true
Operating lease payments				$ 1,100	$ 200
Proceeds from letter of credit	$ 700	$ 1,200
Operating lease right-of-use assets	8,600	8,100		18,726		$ 2,714
Offsetting lease liability	$ 8,600	$ 8,100		$ 19,012
Lessor facility leases amendment description			In March 2022, the Company executed an amendment with the lessor of two of its facility leases which included an extension of the expiration date of the original leased premise for one location and a reduction of the lease term on another location, such that the lease terms are coterminous on June 30, 2022. Upon the execution of the amendment, which was deemed to be a lease modification, the Company remeasured the lease liability and corresponding right-of-use asset as of the effective date of the amendment to reflect the extended term and recorded $0.2 million a reduction of the respective right-of-use assets and lease liabilities as of the effective date of the amendments.
Facility lease reduction of right-of-use assets			$ 200
Facility lease reduction of lease liabilities			$ 200
California
Lessee Lease Description [Line Items]
Operating lease option to extend	option to extend	options to extend
Operating lease, lease term	99 months	126 months
Operating lease, renewal term	84 months	5 years
Area of lease facility | ft²	20,400	82,000
Operating lease existence of option to extend [true false]	true	true
Operating lease payments	$ 1,800	$ 1,300
Minimum
Lessee Lease Description [Line Items]
Operating lease remaining lease term				1 year
Maximum
Lessee Lease Description [Line Items]
Operating lease remaining lease term				10 years
Operating lease tenant improvement allowance	$ 4,100	$ 800

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

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Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Jun. 15, 2022	Mar. 15, 2022	Dec. 31, 2021	[1]
Leases [Abstract]
2022	$ 944
2023	2,991
2024	2,922
2025	2,899
2026	2,994
Thereafter	17,010
Total	29,760
Less: imputed interest	(10,748)
Present value of operating lease liabilities	19,012	$ 8,600	$ 8,100
Less: current portion	(2,185)			$ (1,609)
Operating lease liabilities, net of current portion	$ 16,827			$ 1,220

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

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Leases - Summary of Additional Information Related to Leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Leases [Abstract]
Operating lease cost	$ 872	$ 109	$ 1,324	$ 218
Short-term lease cost	$ 320	$ 312	$ 323	$ 627
Weighted-average remaining lease term (years)	8 years 11 months 12 days		8 years 11 months 12 days		1 year 9 months 25 days
Weighted-average discount rate	9.36%		9.36%		7.15%

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Term Loans - Additional Information (Details) - USD ($)			3 Months Ended	6 Months Ended
	Jun. 15, 2022	Feb. 04, 2022	Jun. 30, 2022	Jun. 30, 2022
Warrant
Debt Instrument [Line Items]
Percentage aggregate principal amount of term loan advances		1.00%
Warrant, exercise price per share		$ 5.03
Warrants advance		$ 30,000,000.0
Warrants to purchase		59,642
Warrants and rights outstanding, term		7 years
Warrants and rights outstanding		$ 500,000
Payment of debt issuance costs		1,200,000
Fair value allocated to warrants and end of term fee		1,600,000
Debt issuance costs		3,300,000
End of term fee		1,600,000
Maximum
Debt Instrument [Line Items]
Debt instrument future sale and issuance of capital stock	$ 5,000,000.0
Debt issuance costs		80,000,000.0
Term Loans
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 80,000,000.0
Debt instrument, maturity date	Feb. 01, 2026
Stated interest rate	8.75%		10.25%	10.25%
Interest expense			$ 900,000	$ 1,400,000
Non-cash interest of amortization of loan discount			$ 200,000	$ 300,000
Debt instrument term loan prepayment percentage	5.25%
Effective interest rate			12.51%	12.51%
Term Loans | Within 12 Months of the Initial Advance Closing Date
Debt Instrument [Line Items]
Debt instrument term loan prepayment percentage	3.00%
Term Loans | Within 24 Months of the Initial Advance Closing Date
Debt Instrument [Line Items]
Debt instrument term loan prepayment percentage	2.00%
Term Loans | Within 36 Months of the Initial Advance Closing Date
Debt Instrument [Line Items]
Debt instrument term loan prepayment percentage	1.00%
Term Loans | Prime Rate
Debt Instrument [Line Items]
Interest rate	5.50%
First Tranche
Debt Instrument [Line Items]
Debt instrument principal amount	$ 30,000,000.0
Second Tranche
Debt Instrument [Line Items]
Maximum borrowing capacity	20,000,000.0
Minimum net product revenue threshold for loan advances	75,000,000.0
Loan advances incremental amount	5,000,000.0
Third Tranche
Debt Instrument [Line Items]
Maximum borrowing capacity	15,000,000.0
Minimum net product revenue threshold for loan advances	250,000,000.0
Loan advances incremental amount	5,000,000.0
Fourth Tranche
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 15,000,000.0
First Term Loan Advance | Warrant
Debt Instrument [Line Items]
Debt issuance costs		2,700,000
Unfunded Loan Advances | Warrant
Debt Instrument [Line Items]
Debt issuance costs		$ 600,000

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Term Loans - Summary of Assumptions Used to Estimate Fair Value of Warrants (Details) - $ / shares		6 Months Ended
	Feb. 04, 2022	Jun. 30, 2022
Debt Instrument [Line Items]
Expected dividend yield		0.00%
Warrant
Debt Instrument [Line Items]
Fair value of common stock	$ 5.15
Expected term (in years)	7 years
Risk-free interest rate	1.90%
Volatility	92.60%

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Term Loans - Schedule of Balance Sheet Information Related to Term Loans (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Debt Instrument [Line Items]
Carrying value of Term Loans, non-current	$ 29,213
Tranche 1
Debt Instrument [Line Items]
Tranche 1 of Term Loans	31,575
Term Loans
Debt Instrument [Line Items]
Less: Unamortized debt discount and issuance costs	(2,362)
Carrying value of Term Loans, non-current	$ 29,213

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Term Loans - Schedule of Balance Sheet Information Related to Term Loans (Parenthetical) (Details) - Term Loans $ in Millions	6 Months Ended
	Jun. 30, 2022 USD ($)
Debt Instrument [Line Items]
Debt Instrument final term fee	$ 1.6
Debt instrument principal loan advance percentage	5.25%

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Term Loans - Schedule of Interest Expense, Net of Amounts Capitalized (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022
Debt Instruments [Abstract]
Contractual coupon	$ 716	$ 1,127
Amortization of debt discount and issuance costs	191	308
Total interest expense on the Term Loan	907	1,435
Other interest expense	28	37
Capitalized interest	(109)	(109)
Interest expense, net	$ 826	$ 1,363

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Term Loans - Schedule of Annual Principal Payments (Details) - Term Loans $ in Thousands	Jun. 30, 2022 USD ($)
Debt Instrument [Line Items]
2024	$ 7,059
2025	21,176
2026	3,340
Total principal payments	$ 31,575

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Convertible Notes Payable - Additional Information (Details) - shares		6 Months Ended
	Feb. 09, 2021	Jun. 30, 2021
Common Stock
Debt Instrument [Line Items]
Issuance of common stock		10,350,000
2020B Notes | IPO
Debt Instrument [Line Items]
Percentage of price paid for securities sold from conversion	80.00%
2020B Notes | Common Stock
Debt Instrument [Line Items]
Issuance of common stock	1,470,947

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Capital Stock - Preferred Stock - Additional Information (Details) - shares	Jun. 30, 2022	Dec. 31, 2021	[1]	Feb. 09, 2021
Class Of Stock [Line Items]
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Preferred Stock
Class Of Stock [Line Items]
Preferred stock, shares authorized				10,000,000
Preferred stock shares issued	0
Preferred stock shares outstanding	0

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

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Capital Stock - Common Stock - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021	[1]	Feb. 09, 2021
Equity [Abstract]
Common stock, shares authorized	200,000,000	200,000,000		200,000,000
Common stock, par value per share	$ 0.001	$ 0.001		$ 0.001
Dividends declared	$ 0
Common stock, voting rights	Under the Loan Agreement, as amended, the Company is precluded from the payment of dividends. The holder of each share of common stock is entitled to one vote.

[1] The balance sheet as of December 31, 2021 is derived from the audited financial statements as of that date

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Capital Stock - Summary of Shares of Common Stock Reserved for Future Issuance (Details) - shares	Jun. 30, 2022	Dec. 31, 2021
Class Of Stock [Line Items]
Total common shares reserved for future issuance	14,969,467	9,388,184
Common Stock Option Grants Issued and Outstanding under 2014 Equity Incentive Plan
Class Of Stock [Line Items]
Total common shares reserved for future issuance	3,112,459	3,245,250
Common Stock Reserved For Issuance Under 2022 Inducement Plan
Class Of Stock [Line Items]
Total common shares reserved for future issuance	3,479,175
Common Stock Reserved for Issuance under 2021 Equity Incentive Plan
Class Of Stock [Line Items]
Total common shares reserved for future issuance	3,025,323	1,578,216
Common Stock Option Grants Issued and Outstanding under 2021 Equity Incentive Plan
Class Of Stock [Line Items]
Total common shares reserved for future issuance	836,112	467,024
Restricted Common Stock Units Issued and Outstanding
Class Of Stock [Line Items]
Total common shares reserved for future issuance	3,368,100	3,387,505
Common Stock Reserved for Issuance under Employee Stock Purchase Plan
Class Of Stock [Line Items]
Total common shares reserved for future issuance	1,029,014	710,189
Warrants to Purchase Common Stock
Class Of Stock [Line Items]
Total common shares reserved for future issuance	119,284

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Equity Incentive Plan - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended		6 Months Ended
	Jan. 31, 2022	Jan. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Apr. 30, 2022	Jan. 01, 2022	Dec. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares approved			14,969,467		14,969,467				9,388,184
Awards granted or outstanding					416,213
Compensation cost to be recognized related to non-vested awards			$ 23,900		$ 23,900
Compensation cost to be recognized related to non-vested awards over weighted average period					2 years 10 months 24 days
Options vested number of shares					578,211
Options vested in period fair value					$ 1,200
Aggregate intrinsic value of options exercised					300
Proceeds from the issuance of common stock under employee stock purchase plan					300
Stock-based compensation capitalized into inventory			$ 500	$ 200	$ 900	$ 300
Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares available for issuance			1,029,014		1,029,014
Weighted average grant date fair value					$ 3.86
Maximum percentage of purchase price is specified pursuant to each offering					85.00%
Number of shares available for issuance increased	396,636
Number of shares issued					77,811
Proceeds from the issuance of common stock under employee stock purchase plan					$ 300
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Compensation cost to be recognized related to non-vested awards over weighted average period					2 years
Compensation cost to be recognized related to awards			$ 3,300		$ 3,300
Weighted average grant date fair value					$ 1.25	$ 7.52
Restricted Stock Units (RSUs) | Vesting in One-year Cliff
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Compensation cost to be recognized related to non-vested awards			$ 20,600		$ 20,600
Compensation cost to be recognized related to non-vested awards over weighted average period					3 years 6 months
Award vesting period					4 years
Award vesting rights,percentage					25.00%
2021 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares approved		5,200,000
Share-based compensation arrangement increase in shares available for issuance period		10 years
Percentage of increase in common stock available for issuance amount equal to outstanding number of shares of common stock		5.00%
Number of shares available for issuance								1,983,182
2022 Inducement Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares available for issuance							3,500,000
Awards granted or outstanding					20,825

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Equity Incentive Plan - Summary of Stock-based Compensation Expense for Equity Incentive Plans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 1,736	$ 945	$ 3,424	$ 1,473
Stock-based compensation expense, net of capitalized amounts	2,083	945	3,948	1,473
Cost of Products Sold
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	134	208	390	260
Research and Development Grants
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	586	291	1,097	421
Selling, General and Administrative Expenses
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	1,016	446	1,937	792
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense, net of capitalized amounts	386	528	725	964
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense, net of capitalized amounts	1,620	334	3,057	375
Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense, net of capitalized amounts	$ 77	$ 83	$ 166	$ 134

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Equity Incentive Plan - Summary of Stock Option Activity (Details) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022 USD ($) $ / shares shares	Dec. 31, 2021 USD ($) $ / shares shares
Share-Based Payment Arrangement [Abstract]
Number of Options, Beginning Balance | shares	3,712,274
Number of Options, Granted | shares	416,213
Number of Options, Exercised | shares	(60,494)
Number of Options, Cancelled | shares	(119,422)
Number of Options, Ending Balance | shares	3,948,571	3,712,274
Number of Options vested and expected to vest as of June 30, 2022 | shares	3,948,571
Number of Options vested and exercisable as of June 30, 2022 | shares	1,928,654
Weighted-Average Exercise Price, Beginning Balance | $ / shares	$ 3.30
Weighted-Average Exercise Price, Granted | $ / shares	1.85
Weighted-Average Exercise Price, Exercised | $ / shares	1.42
Weighted-Average Exercise Price, Cancelled | $ / shares	7.39
Weighted-Average Exercise Price, Ending Balance | $ / shares	3.05	$ 3.30
Weighted-Average Exercise Price, Options vested and expected to vest as of June 30, 2022 | $ / shares	3.05
Weighted-Average Exercise Price, Options vested and exercisable as of June 30, 2022 | $ / shares	$ 2.40
Weighted-Average Remaining Contractual Term, Balance	7 years 2 months 12 days	8 years 1 month 6 days
Weighted-Average Remaining Contractual Term, Options vested and expected to vest as of June 30, 2022	7 years 2 months 12 days
Weighted-Average Remaining Contractual Term, Options vested and exercisable as of June 30, 2022	6 years 9 months 18 days
Aggregate Intrinsic Value, Beginning Balance | $	$ 23,150
Aggregate Intrinsic Value, Exercised | $	300
Aggregate Intrinsic Value, Ending Balance | $	1,542	$ 23,150
Aggregate Intrinsic Value, Options vested and expected to vest as of June 30, 2022 | $	1,542
Aggregate Intrinsic Value, Options vested and exercisable as of June 30, 2022 | $	$ 1,132

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Equity Incentive Plan - Summary of Assumptions Used to Estimate Fair Value of Stock Options (Details) - $ / shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected dividend yield	0.00%
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Fair value of common stock	$ 1.85	$ 17.00
Expected term (in years)	5 years 6 months	6 years
Risk-free interest rate	3.00%	0.60%
Volatility	79.50%	46.90%

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Equity Incentive Plan - Summary of Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs)	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Underlying Shares, Beginning Balance | shares	3,387,505
Underlying Shares, Granted | shares	574,414
Underlying Shares, Vested | shares	(279,514)
Underlying Shares, Canceled or forfeited | shares	(314,305)
Underlying Shares, Ending Balance | shares	3,368,100
Weighted-Average Grant Date Fair Value, Beginning Balance | $ / shares	$ 7.57
Weighted-Average Grant Date Fair Value, Granted | $ / shares	3.94
Weighted-Average Grant Date Fair Value, Vested | $ / shares	6.59
Weighted-Average Grant Date Fair Value, Canceled and forfeited | $ / shares	7.84
Weighted-Average Grant Date Fair Value, Ending Balance | $ / shares	$ 7.00

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Equity Incentive Plan - Summary of Assumptions Used to Estimate Fair Value of Employee Stock Purchase Plans (Details) - $ / shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected dividend yield	0.00%
Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Fair value of common stock	$ 4.54	$ 17.00
Expected term (in years)	6 months	6 months
Risk-free interest rate	0.10%	0.60%
Volatility	90.50%	46.90%

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(Benefit from) Provision for Income Taxes - Additional Information (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)
Income Tax Disclosure [Abstract]
(Benefit from) provision for income taxes	$ (257,000)	$ 2,000.0
Uncertain tax benefit, related to R&D credits	$ 1,100,000	1,100,000
Interest or penalties related to uncertain tax positions		$ 0

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Net Loss Per Share - Summary of Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Numerator
Net loss attributable to common stockholders, basic and diluted	$ (21,677)	$ 13,100	$ (16,200)	$ (8,599)	$ (29,516)
Weighted-average number of shares of common stock outstanding:
Basic	39,928,451		38,483,766	39,839,834	30,688,349
Diluted	39,928,451		38,483,766	39,839,834	30,688,349
Net loss per share attributable to common stockholders:
Basic	$ (0.54)		$ (0.42)	$ (0.22)	$ (0.96)
Diluted	$ (0.54)		$ (0.42)	$ (0.22)	$ (0.96)

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Net Loss Per Share - Schedule of Potentially Dilutive Securities Not Included in Calculation of Diluted Net Loss Per Share (Details) - shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potentially dilutive securities	7,435,955	6,205,388
Warrants to Purchase Common Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potentially dilutive securities	119,284
Stock Options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potentially dilutive securities	3,948,571	5,107,453
Unvested Restricted Stock Units
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potentially dilutive securities	3,368,100	1,097,935

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Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Commitments And Contingencies Disclosure [Line Items]
Non-cancellable purchase commitments	$ 57.7		$ 57.7
Non-cancellable Purchase Commitments excluding Jabil MSA
Commitments And Contingencies Disclosure [Line Items]
Non-cancellable purchase commitments	43.3		43.3
Eiken Agreement | Cost of Products Sold
Commitments And Contingencies Disclosure [Line Items]
Royalty expense	1.9	$ 0.4	4.4	$ 0.5
Manufacturing Services Agreement
Commitments And Contingencies Disclosure [Line Items]
Outstanding non-cancellable purchase commitment			14.4
Non-cancellable purchase commitments	14.4		14.4
Raw Material Purchase Commitments
Commitments And Contingencies Disclosure [Line Items]
Non-cancellable purchase commitments	27.3		27.3
Raw Material Purchase Commitments | Non-cancellable Purchase Commitments excluding Jabil MSA
Commitments And Contingencies Disclosure [Line Items]
Non-cancellable purchase commitments	27.3		27.3
Asset And Equipment Related To Manufacturing Capacity And Automation | Non-cancellable Purchase Commitments excluding Jabil MSA
Commitments And Contingencies Disclosure [Line Items]
Non-cancellable purchase commitments	9.4		9.4
Non-commercial Services
Commitments And Contingencies Disclosure [Line Items]
Non-cancellable purchase commitments	6.7		6.7
Non-commercial Services | Non-cancellable Purchase Commitments excluding Jabil MSA
Commitments And Contingencies Disclosure [Line Items]
Non-cancellable purchase commitments	$ 6.7		$ 6.7

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Related Parties - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Related Party Transaction [Line Items]
Revenue recorded related party transaction	$ 0.0	$ 0.0	$ 0.0	$ 0.0
Maximum
Related Party Transaction [Line Items]
Related party transaction consulting expenses	100,000	100,000	100,000	100,000
Revenue recorded related party transaction	$ 100,000	$ 100,000	$ 100,000	$ 100,000

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Subsequent Events - Additional Information (Details)	1 Months Ended	6 Months Ended
	Jul. 31, 2022	Jun. 30, 2022
Subsequent Event [Line Items]
Shelf life of COVID-19 test kit		12 months
Subsequent Event
Subsequent Event [Line Items]
Shelf life of COVID-19 test kit	18 months