Summary of Significant Accounting Policies	9 Months Ended
Sep. 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 unaudited condensed balance sheet as of September 30, 2022, the unaudited condensed statements of operations for the three and nine months ended September 30, 2022 and 2021, the statements of redeemable convertible preferred stock and stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, and the unaudited condensed statements of cash flows for the nine months ended September 30, 2022 and 2021 are unaudited. The unaudited interim unaudited 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 September 30, 2022 and the results of its operations and cash flows for the nine months ended September 30, 2022 and 2021. The financial data and other information disclosed in these notes as of September 30, 2022 and 2021 and for the three and nine months ended September 30, 2022 and 2021 are unaudited. The results for the three and nine months ended September 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 unaudited 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. Risks and Uncertainties The Company’s 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 the Company is not able to secure adequate additional funding when needed, the Company will need to re-evaluate its 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, and cease operations entirely. Having insufficient funds may also require the Company to relinquish rights to technology that it would otherwise prefer to develop and market itself, or on less favorable terms than the Company would otherwise choose. The foregoing actions and circumstances could materially adversely impact the Company's business, results of operations and future prospects. 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. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. The impact of these reclassifications did not have an impact to the current assets and liabilities, the statements of operations or net operating cash flows. 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 September 30, 2022 and December 31, 2021, the Company held cash and cash equivalents of $39.8 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 September 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 unaudited condensed balance sheets as of September 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, remaining shelf life, excessive levels of inventory, deterioration, salvage value and other factors. Inventory held as of September 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. See Note 6 Inventory. 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, costs incurred for replacement materials 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 September 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 unaudited condensed balance sheets and any resulting gain or loss is reflected in other income or expense in the unaudited condensed statements of operations in the period realized. Website Development Costs Website development costs are recorded at cost and amortized on a straight-line basis over their estimated useful lives. Website development costs consist of capitalized software costs incurred in the development of the Lucira Connect website and the Company's e-commerce platform and web based tools (the "websites"). The Company determined that costs incurred during the website development stage of its website development programs that are directly related to the actual development of the respective software application are capitalized, while costs incurred in the preliminary project and post implementation stages are expensed as incurred. Additionally, indirect costs related to the software development during the website development stages are expensed as incurred. As the websites are constantly updated to the next version once they have reached technological feasibility, the Company separates costs on a reasonable basis between maintenance and upgrades that extend the functionality and useful life of the websites. The maintenance costs are expensed as incurred. The Company has concluded that given the rapid changes in technology, the internally developed website software has a useful life of three years and is amortized on a straight-line basis. Amortization expense related to the websites is recorded in cost of products sold in the accompanying unaudited condensed statements of operations. 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 unaudited condensed balance sheets. The Company did not have any finance leases as of September 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 nine months ended September 30, 2022, the Company determined that there were no impairments of its long-lived assets. For the three and nine months ended September 30, 2021, a $1.6 million impairment of long-lived assets was recorded. See additional discussion in Note 7. Property and Equipment, Net. 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 nine months ended September 30, 2022. Costs incurred to issue debt are deferred and recorded as a reduction of the debt balance in the accompanying unaudited 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 (the “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. Costs to obtain or fulfill a contract are expensed when incurred because the Company’s performance obligation is satisfied at a point in time. Costs to obtain a contract, commissions, are included in selling, general and administrative expenses and costs to fulfill a contract are included in cost of products sold in the unaudited 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 unaudited condensed balance sheets and within research and development expenses in the unaudited 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 $1.1 million and $1.9 million for the three and nine months ended September 30, 2022, respectively, compared to less than $0.1 million and $1.3 million for the three and nine months ended September 30, 2021, respectively, and are included in selling, general and administrative expenses in the accompanying unaudited 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 ESPP. 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 unaudited 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 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 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.

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 unaudited condensed balance sheet as of September 30, 2022, the unaudited condensed statements of operations for the three and nine months ended September 30, 2022 and 2021, the statements of redeemable convertible preferred stock and stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, and the unaudited condensed statements of cash flows for the nine months ended September 30, 2022 and 2021 are unaudited. The unaudited interim unaudited 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 September 30, 2022 and the results of its operations and cash flows for the nine months ended September 30, 2022 and 2021. The financial data and other information disclosed in these notes as of September 30, 2022 and 2021 and for the three and nine months ended September 30, 2022 and 2021 are unaudited. The results for the three and nine months ended September 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 unaudited 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.

Risks and Uncertainties

The Company’s 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 the Company is not able to secure adequate additional funding when needed, the Company will need to re-evaluate its 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, and cease operations entirely. Having insufficient funds may also require the Company to relinquish rights to technology that it would otherwise prefer to develop and market itself, or on less favorable terms than the Company would otherwise choose. The foregoing actions and circumstances could materially adversely impact the Company's business, results of operations and future prospects.

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 September 30, 2022 and December 31, 2021, the Company held cash and cash equivalents of $39.8 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 September 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 unaudited condensed balance sheets as of September 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:

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

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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

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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, remaining shelf life, excessive levels of inventory, deterioration, salvage value and other factors. Inventory held as of September 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. See Note 6 Inventory.

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, costs incurred for replacement materials 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 September 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 unaudited condensed balance sheets and any resulting gain or loss is reflected in other income or expense in the unaudited condensed statements of operations in the period realized.

Website Development Costs

Website development costs are recorded at cost and amortized on a straight-line basis over their estimated useful lives. Website development costs consist of capitalized software costs incurred in the development of the Lucira Connect website and the Company's e-commerce platform and web based tools (the "websites"). The Company determined that costs incurred during the website development stage of its website development programs that are directly related to the actual development of the respective software application are capitalized, while costs incurred in the preliminary project and post implementation stages are expensed as incurred. Additionally, indirect costs related to the software development during the website development stages are expensed as incurred. As the websites are constantly updated to the next version once they have reached technological feasibility, the Company separates costs on a reasonable basis between maintenance and upgrades that extend the functionality and useful life of the websites. The maintenance

costs are expensed as incurred. The Company has concluded that given the rapid changes in technology, the internally developed website software has a useful life of three years and is amortized on a straight-line basis. Amortization expense related to the websites is recorded in cost of products sold in the accompanying unaudited condensed statements of operations.

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 unaudited condensed balance sheets. The Company did not have any finance leases as of September 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 nine months ended September 30, 2022, the Company determined that there were no impairments of its long-lived assets. For the three and nine months ended September 30, 2021, a $1.6 million impairment of long-lived assets was recorded. See additional discussion in Note 7. Property and Equipment, Net.

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 (the “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.

Costs to obtain or fulfill a contract are expensed when incurred because the Company’s performance obligation is satisfied at a point in time. Costs to obtain a contract, commissions, are included in selling, general and administrative expenses and costs to fulfill a contract are included in cost of products sold in the unaudited 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.

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 unaudited condensed balance sheets and within research and development expenses in the unaudited 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.

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 ESPP. 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 unaudited 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.

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 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 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.