TKNO 10-K & 10-Q changes, risk factors and insider trading

We have incurred operating losses in the past, may incur operating losses in the future and may never achieve or maintain profitability. For the years ending December 31, 20242025 and 2023,2024, we incurred net losses of $26.7$17.3 million and $36.8$26.7 million, respectively. We have incurred and will continue to incur costs in connection with legal, accounting, and other administrative expenses related to operating as a public company and we expect that our operating expenses will increase modestly with the growth of our business. Since our inception, we have financed our operations primarily through revenue from our products, the sale of our equity securities (including through our June 2021 IPO, September 2023 registered direct offering and private placements, as well as our July 2024 private placements),securities, and debt. While our revenue has generally grown over the last several years, including 20242025 compared to 2023,2024, it decreased in 2023 compared to 2022. If our revenue declines or fails to grow at a rate sufficient to offset our operating expenses, we will not be able to achieve and maintain profitability in future periods. We may never be able to generate sufficient revenue to achieve or maintain profitability, and our more recent growth and historical profitability should not be considered predictive of our future performance.

changes in capital market investment in or governmental and academic funding of, or capital market investment in, life sciences research and development or changes that impact the budgets,budgets and budget cycles of our customers;

demand from our largest customers, which accounts for a significant percentage of our sales and orders,customers may not meet our expectations regarding volume and price in any given time period;

the volumevolume, pricing, and mix of the products and services we sell or changes in the production or sales costs related to our offerings;

We have invested a significant amount of capital in our new and legacy manufacturing facilities. Our efforts to scale our manufacturing capabilities in these facilities could be disruptive and adversely affect our results of operations and financial condition. We may not realize some or all of the anticipated benefits of this investment in the time frame anticipated, or at all.

We have invested a significant amount of capital in our new and legacy manufacturing facilities in both equipment and infrastructure to substantially increase the effective manufacturing capacity at our facilities, improve operating efficiency through the use of automation, and reduce delivery time for our custom Lab Essentials and Clinical Solutions products. Our efforts to scale our manufacturing capabilities could be disruptive to our operations, divert the attention of management, and require additional investments. Our ability to increase our manufacturing capacity is dependent upon a number of uncertainties inherent in all new manufacturing operations, including but not limited to ongoing compliance with regulatory requirements and the pace of bringing production equipment and processes online with the capability to manufacture high-quality products at scale. If we experience any problems or delays in meeting our projected timelines for expansion of operating capacity or efficiency, if the actual production capacity yielded by our recent expansion efforts does not meet our projections, or if additional investment is needed, our business, financial condition, results of operations, cash flows, and prospects may suffer.

The success of our business depends primarily on the number and size of purchases from these customers. Research and development spending by our customers and the availability of government and academic research funding of, or capital markets investment in, life sciences research and development can fluctuate due to changes in available resources, mergers of pharmaceutical and biotechnology companies, spending priorities, general economic conditions and institutional and governmental budgetary policies. Changes in capital markets investment in or governmental and academic funding of, or capital markets investment in, life sciences research and development, or overall reductions in healthcare spending, could negatively impact us or our customers and, consequently, our sales to them. A substantial majority of our sales are made on a purchase order basis, which permits our customers to cancel, change, or delay their product purchase commitments with little or no notice to us and often without penalty to them. Changes in the number of orders received and filled can cause fluctuations in our quarterly revenue and earnings.

Our future success depends on our ability to maintain these relationships, to increase our penetration among these existing customers and to establish new relationships. We engage in conversations with other companies and institutions regarding potential commercial opportunities on an ongoing basis, which can be time consuming.time-consuming. There is no assurance that any of these conversations will result in a commercial agreement, or if an agreement is reached, that the resulting relationship will be successful. Speculation in the industry about our existing or potential commercial relationships can be a catalyst for adverse speculation about us, our products, and our capabilities, which can adversely affect our reputation and our business. In addition, if our customers order our products but fail to pay on time or at all, our liquidity, financial condition, results of operations, cash flows, and prospects could be materially and adversely affected.

Although we believe that we have stable relationships with our existing suppliers, we cannot ensure that we will be able to secure a stable supply of raw materials going forward. Our suppliers may not be able to keep up with our pace of growth or may reduce or cease their supply of raw materials to us at any time. While we may identify other suppliers, raw materials we purchase from those replacement suppliers may require us to alter our production operations or perform extensive validations, which may be time consumingtime-consuming and expensive. In addition, we cannot assure you that our suppliers have obtained and will be able to obtain or maintain all licenses, permits, and approvals necessary for their operations or comply with all applicable laws and regulations, and the failure to do so by them may lead to interruption in their business operations, which in turn may result in shortages of raw materials supplied to us. Some of our suppliers are based overseas and therefore may need to maintain export or import licenses. If the supply of raw materials is interrupted, our business, financial condition, results of operations, cash flows, and prospects may be adversely affected.

Natural disasters (including earthquakes, fire, and drought), geopolitical unrest, war (including the war in Ukraine and the Israeli-Hamas war),war, terrorism, public health issues, or other catastrophic events, some possibly related to the increasing effects of climate change, could disrupt the supply, production, delivery, or demand of our products, which could negatively affect our operations and performance.

Because we rely heavily on third-party package-deliverypackage delivery services, a significant disruption in these services, damages or losses sustained during shipping or significant increases in prices could adversely affect our business, financial condition, results of operations, cash flows, and prospects.

We ship a significant portion of our products to our customers through independent package delivery companies, such as FedEx, UPS, and FedEx Freight. If one or more of these third-party package-deliverypackage delivery providers were to experience a significant service disruption, preventing our products from being delivered in a timely fashion or causing us to incur additional shipping costs we could not pass on to our customers, our costs could increase and our relationships with certain of our customers could be adversely affected. In addition, if one or more of these third-party package-deliverypackage delivery providers were to increase prices, and we were not able to find comparable alternatives or make adjustments to our delivery network, our business could be adversely affected. Furthermore, if one or more of these third-party package-deliverypackage delivery providers were to experience performance problems or other difficulties, it could negatively impact our operating results and our customers’ experience. In the past, some of our products have sustained serious damage in transit such that they were no longer usable. Although we have taken steps to improve our packaging and shipping containers, there is no guarantee our products will not become damaged or lost in transit in the future. If our products are damaged or lost in transit, it may result in a substantial delay in the fulfillment of our customers' orders and, depending on the type and extent of the damage, it may result in a substantial financial loss. If our products are not delivered in a timely, cost-effective fashion, or are damaged or lost during the delivery process, our customers could become dissatisfied and cease using our products, which would adversely affect our business, financial condition, results of operations, cash flows, and prospects.

In addition, at times, we have relied on and may again utilize consultants to assist us in developing and implementing commercial, engineering and operational advancements. Our consultants and advisors may be contracted by companies other than ours and therefore may have commitments that may limit their availability to us.

We believe that our culture has been and will continue to be a critical contributor to our success. If we do not continue to develop our corporate culture or maintain and preserve our guiding principles as we grow and evolve, we may be unable to foster the innovation, curiosity, creativity, focus on execution, teamwork, and the facilitation of critical knowledge transfer and knowledge sharing we believe we need to support our growth. Recent reductions in our workforce could result in a change to our corporate culture, which could harm our business.

our distributors or collaborators may experience operational disruptions or financial difficulties; and business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement.

Despite the implementation of security measures, our internal computer systems and those of our suppliers, customers, and contractors, are vulnerable to damage from computer viruses and unauthorized access. We and our suppliers, including security and infrastructure suppliers, manage and maintain our data using a combination of on-site systems and cloud-based data centers. We face a number of risks related to protecting information, including inappropriate use or disclosure, unauthorized access or acquisition, or inappropriate modification of information. Cyberattacks are increasing in their frequency, sophistication, and intensity and have become increasingly difficult to detect. Cyberattacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering, and other means to affect service reliability and threaten the confidentiality, integrity, and availability of information. Cyberattacks also could include phishing attempts or e-mail fraud to cause unauthorized payments or information to be transmitted to an unintended recipient, or to permit unauthorized access to systems.systems The advancement of technologies like artificial intelligence, which malicious third parties are using to create new, sophisticated and more frequent attacks, also exacerbates cybersecurity risk. A material cyberattack or security incident could cause interruptions in our operations and could result in a material disruption of our business operations, damage to our reputation, financial condition, results of operations, cash flows, and prospects.

The conduct of our business is subject to various laws and regulations administered by state and local government agencies in the state of CaliforniaCalifornia, county of San Benito, and the city of Hollister where we manufacture our products. These laws and regulations and interpretations thereof may change, sometimes dramatically, as a result of political, economic or social events, such as the election of the new officials. Changes in laws, regulations or governmental policy and the related interpretations may alter the environment in which we do business, and therefore,therefore may impact our results or increase our operating costs.

We and our customers’ respective business operations are and will continue to be subject to extensive laws and regulations, and assessing the applicability and relevant requirements of, and maintaining compliance with, these laws and regulations can be expensive and time consuming.time-consuming.

Establishing policies, procedures, and monitoring and oversight with consideration of both legal requirements and industry best practices in these areas are costly and time consuming.time-consuming. Defending against any actions for non-compliance of such laws can also be costly, time consuming,time-consuming, and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.

We have recorded, and may be required to record in the future, a significant charge to earnings if our intangible or long-lived assets, or other investments become impaired.

As of December 31, 2024,2025, intangible assets represented approximately 11%12% of our total assets. In the future we may acquire other businesses, products, or technologies as well as pursue strategic alliances, join ventures, technology licenses, or investments in complementary businesses, resulting in goodwill and other intangible assets. Such goodwill and intangible assets must be tested and reviewed as described above. If in the future we again determine that there has been impairment, we may be required to record charges to earnings, and our financial results for the relevant period would be reduced by the amount of the impairment, net of tax effects, if any. We may be required in the future to record charges to earnings if our intangible or long-lived assets, or other investments become impaired. Any such charge would adversely impact our financial results.

Although we do not currently own any issued patents covering our proprietary products or manufacturing processes, we may in the future file patent applications or acquire or license intellectual property rights, including patents and patent applications. The patent prosecution process is expensive and time consuming,time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions where protection may be commercially advantageous. It is also possible that we may fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. In addition, we or our collaborators may only pursue, obtain, or maintain patent protection in a limited number of countries. Even if patents do successfully issue, such patents may not adequately protect our intellectual property, provide exclusivity for our current or future product and service offerings, prevent others from designing around our claims, or otherwise provide us with a competitive advantage.

Enforcing a claim that a third party illegally obtained or is using any of our trade secrets is expensive and time consuming,time-consuming, and the outcome is unpredictable. We may not have adequate remedies in the event of unauthorized use or disclosure of our trade secrets or other proprietary information in the case of a breach of any such agreements, and our trade secrets and other proprietary information could be disclosed to third parties, including our competitors. Many of our partners also collaborate with our competitors and other third parties. The disclosure of our trade secrets to our competitors, or more broadly, would impair our competitive position and may materially harm our business, financial condition, results of operations, cash flows, and prospects. Costly and time-consuming litigation could be necessary to determine the scope of and enforce our rights, and failure to maintain trade-secret protection could adversely affect our competitive business position. The enforceability of confidentiality agreements may vary from jurisdiction to jurisdiction. Courts outside the U.S. are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop substantially equivalent or superior knowledge, methods, and know-how, and the existence of our own trade secrets affords no protection against such independent discovery.

If we are sued for infringing, misappropriating, or otherwise violating intellectual property rights of third parties, such litigation could be costly and time consumingtime-consuming and could prevent or delay us from developing or commercializing our current or future products.

The life sciences industry has produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our products or methods of use either do not infringe the patent claims of the relevant patent and/or that the patent claims are invalid or unenforceable, and we may not be able to do this. Proving invalidity, in particular, is difficult since it requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Third parties have, and may in the future have, U.S. and non-U.S. issued patents and pending patent applications that may cover our current or future products. Such a third party may claim that we or our manufacturing or commercialization partners are using inventions covered by the third party’s patent rights and may go to court or a tribunal to stop us from engaging in our normal operations and activities, including making or selling our current or future products. In the event thatIf any of these patent rights were asserted against us, we believe that we may have defenses against any such action, including that such patents would not be infringed by our current or future products and/or that such patents are not valid. However, if any such patent rights were to be asserted against us and our defenses to such assertion were unsuccessful, unless we obtain a license to the patents concerned, we could be liable for damages, which could be significant and include treble damages and attorneys’ fees if we are found to have willfully infringed. We could also be precluded from commercializing any future products that were ultimately held to infringe such patents, all of which could have a material adverse effect on our business, financial condition, results of operations, cash flows, and prospects.

If we are found to infringe the patent rights of a third party, or in order to avoid potential claims, we or our collaborators may choose or be required to seek a license from a third party and be required to pay license fees or royalties or both. These licenses may not be available on reasonable terms, or at all. In particular, any of our competitors that control intellectual property that we are found to infringe may be unwilling to provide us a license under any terms. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product,product or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into licenses on acceptable terms. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent. Further, if a patent infringement suit is brought against us or our third-party service providers and if we are unable to successfully obtain rights to required third-party intellectual property, we may be required to expend significant time and resources to redesign our current or future products, or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis, and may delay or require us to abandon our development, manufacturing or sales activities relating to our current or future products. A finding of infringement could prevent us from commercializing our future products or force us to cease some of our business operations, which could harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, cash flows, and prospects.

We may need or may choose to obtain licenses from third parties to advance our research or allow commercialization of our current or future products, and we cannot provide any assurances that we would be able to do so.

We may need or may choose to obtain licenses from third parties to advance our research or allow commercialization of our current or future products, and we cannot provide any assurances that third-party patents do not exist that might be enforced against our current or future products in the absence of such a license. We may fail to obtain any of these licenses on commercially reasonable terms, if at all. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. If we could not obtain a license, we may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected products, which could materially harm our business. The third parties owning such intellectual property rights could also seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation.

The U.S. Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation. Fluctuations in interest rates, as a result of actions by the Federal Reserve or otherwise,rates can increase borrowing costs. Increases in interest rates, such as those increases observed during 2023 and early 2024,rates may directly impact the amount of interest we are required to pay and reduce earnings accordingly. In addition, tax laws, including the disallowance or deferral of tax deductions for interest paid on outstanding indebtedness, could have an adverse effect on our liquidity and our business, financial condition, results of operations, cash flows, and prospects. In addition, our Second Amended and Restated Credit Agreement contains customary affirmative and negative covenants and certain restrictions on operations that could impose operating and financial limitations and restrictions on us, including restrictions on our ability to enter into particular transactions and to engage in other actions that we may believe are advisable or necessary for our business.

THP controls a majority of the voting power of our outstanding common stock. As a result, we are a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Under these corporate governance standards, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements. For example, controlled companies, within one year of the date of the listing of their common stockcompanies:

Because we are a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting in order to comply with Section 404 of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act). These internal controls may not be determined to be effective, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming.time-consuming. These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We have invested and intend to continue to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of our management’s time and attention from revenue-generating activities. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, which could have a material adverse effect on our business, financial condition, results of operations, cash flows, and prospects.

provide that, at any time after THP first ceases to beneficially own more than 50% in voting power of the outstanding shares of our common stock entitled to vote generally in the election of directors (the THP Trigger Event), directors may only be removed for cause, and only by the affirmative vote of holders of at least 66 266-2/3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class;

provide that, at any time after the THP Trigger Event, any alteration, amendment, or repeal, in whole or in part, of any provision of our bylaws by our stockholders will require the affirmative vote of the holders of at least 66 266-2/3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class; and establish advance notice requirements for nominations for elections to our board of directors and for proposing matters that can be acted upon by stockholders at stockholder meetings.

A significant portion of our total outstanding shares of common stock are available for immediate resale and may be sold into the market in the near future.market. This could cause the market price of our common stock to drop significantly, even if our business is doing well.

As of December 31, 2024,2025, we have 53,409,72753,562,154 shares of common stock outstanding, substantially all of which are freely tradeable although a substantial portion of such shares are held by directors, executive officers, and other affiliates and will beare subject to volume, manner of sale, and othercertain limitations under Rule 144.144 of the Securities Act.

The market price of our stock could decline if the holders of currentlya restrictedlarge number of shares of our common stock sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities. In addition, shares of our common stock that are issued pursuant to our equity incentive plans and our Employee Stock Purchase Plan (ESPP) will become eligible for sale in the public market, subject to provisions relating to various vesting agreements, lock-up agreements, and Rule 144, as applicable.

As of December 31, 2024,2025, there were 312,174,308,449, 1,527,1051,321,054 and 2,280,6673,687,459 shares of common stock reserved for issuance pursuant to outstanding stock option awards under the 2016 Stock Plan, as amended (2016 Plan),amended, the 2020 Equity Incentive Plan, as amended (2020 Plan)amended, and the 2021 Equity Incentive Plan (2021 Plan), respectively. In addition, the 2021 Plan and the ESPP provide for annual automatic increases in the number of shares reserved thereunder. AsNo of January 1, 2025, a total of 6,963,260 and 1,207,030new shares of common stock werebecame available and have been reserved for future issuance under either the 2021 Plan andor ourESPP ESPP,in respectively.2026. In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.

Since our founding in 1996, we have been producing critical reagents for the discovery, development, and commercialization of novel therapies, vaccines, and molecular diagnostics. Our approximatelymore than 3,000 customers span the entire continuum of the life sciences market, including leading pharmaceutical and biotechnology companies, contract development and manufacturing organizations, in vitro diagnostics franchises, and academic and government research institutions. Our Company is built around our knowledge, methods, and know-how in our proprietary manufacturing processes, which are highly adaptable and configurable. These proprietary processes enable us to manufacture and deliver high-quality, custom, made-to-order products with short turnaround times and at scale, across all stages of our customers’ product development, from early research through commercialization.

We have two primary product categories: Lab Essentials; and Clinical Solutions. Our products cross all stages of development, from early research through commercialization. We offer three primary product types: (i) pre-poured media plates for cell growth and cloning; (ii) liquid cellmicrobial culture media and supplements for cellular expansion; and (iii) molecular biology reagents for sample manipulation, resuspension, and purification. Our liquid cell culture media and supplements and molecular biology reagents are available in both of our two primary product categories; pre-poured media plates are available in our Lab Essentials category only.

invest in processes and infrastructure to improve operating efficiency and expand capacity at our facilities, including the ramp up of our new,new state-of-the-art manufacturing, warehouse,warehouse and distribution facilitiesfacility; and build our brand and market, and sell our products and services.

We arecontinue to closely monitoringmonitor economic uncertainty in the U.S. and abroad. General inflation in the U.S. hasrose risenin recent years to levels not experienced in recent decades. While the rate of inflation moderated in 2024, general inflation, including rising prices for our raw materials and other inputs, tariffs, as well as rising salaries and other expenses, can negatively impact our business by increasing our cost of sales and operating expenses. InInflation, addition,together duringwith 2023uncertainty and early 2024, the U.S. Federal Reserve has raised interest rates in response to concerns about inflation, and although the U.S. Federal Reserve lowered interest rates in September of 2024, the direction and timing ofregarding future interest rate changeschanges, remainsand uncertain.broader Inflation,macroeconomic together with increased interest rates,uncertainty, may cause our customers to reduce, delay, or cancel orders for our goods and servicesservices, thereby causing a decrease in or change in the timing of sales of our products and services. We cannot predict the impact of future inflation and interest rate changes on the results of our operations. Furthermore, changes to tariff and related international trade policy that began in 2025 has created uncertainty about the broader economy and our business. For further information regarding the impact of these economic factors on us, please see Item 1A., “Risk Factors” in this report, which is incorporated herein by reference.

Lab EssentialsTotal revenue was $28.9$40.5 million in 2024,2025, an increase of $0.1$2.8 million, or 0.3%,7.4%, compared with $28.8$37.7 million in 2023. The slight increase in Lab Essentials revenue was attributable to an increased number of customers, partially offset by lower average revenue per customer.2024.

ClinicalLab SolutionsEssentials revenue was $7.1$31.0 million in 2024,2025, an increase of $0.4$2.2 million, or 5.3%,7.5%, compared with $6.7$28.9 million in 2023.2024. The increase in ClinicalLab SolutionsEssentials revenue was attributable to an increased number of customers, partially offset by lower average revenue per customer. Excluding revenue of $2.7 million from a single large order in 2023, Clinical Solutions revenue was up 76% in 2024.

Revenue from sales to customers in the United StatesU.S. was $38.2 million in 2025, and $35.9 million in 2024, and $35.0 million in 2023.2024. Revenue from U.S. sales was consistent year over year, representing 95.2%94.4% and 95.4%95.2% of our total revenue in 20242025 and 2023,2024, respectively.

Revenue from sales to customers in markets outside of the U.S. was $2.3 million in 2025, and $1.8 million in 2024, and $1.7 million in 2023.2024. Revenue from international sales was also consistent year over year, representing 4.8%5.6% and 4.6%4.8% of our total revenue in 20242025 and 2023,2024, respectively. Revenue from sales to customers in markets outside of the U.S. was primarily derived from the United Kingdom, Canada, and Singapore in both 2025 and 2024.

Gross profit percentage was 33.2% in 2025, and 19.2% in 2024, and 28.1% in 2023.2024. The decrease in gross profit percentageincrease was primarily driven by $2.8 million of non-recurring and non-cash charges during 2024 related to the disposal of expired inventory and write down of excess inventory created in the second half of 2022 when we increased production in anticipation of persistent high demand.inventory. Excluding the $2.8 million ofthose non-recurring and non-cash charges, thegross profit would have been $10.0 million and gross profit percentage for 2024, would have been 26.5%.26.5%, respectively, in the year ended December 31, 2024. The decreaseimprovement in gross profit percentage from 26.5% to 33.2% was alsoprimarily driven by increasedhigher overheadrevenue costs, largely depreciation expense following the completion of our newand manufacturing facilityefficiency in 2023, which were partially offset by reduced headcount.gains.

Research and development expenses were $2.2 million in 2025 and $2.8 million in 2024 and $5.6 million in 2023.2024. The decrease was primarily driven by reducedlower headcountsalaries and supplieswages expense.resulting from the reduction in workforce that was completed in early 2024.

Sales and marketing expenses were $6.8 million in 2025 and $6.3 million in 2024 and $9.3 million in 2023.2024. The decreaseincrease was primarily driven by reducedhigher headcount.marketing costs during 2025, partially offset by lower salaries and wages resulting from the reduction in workforce that occurred in early 2024.

General and administrative expenses were $20.3 million in 2025 and $23.2 million in 20242024. andExcluding $25.5the non-recurring charges of $0.5 million in 2023.2025 Excludingrelated the one-time,to non-recurring chargestransaction costs and $1.4 million in 2024 of $1.4 million of which $1.3 million related to ourthe reduction in workforce and $0.1 million increase in a loss contingency accrual and a total of $1.4 million of one-time non-recurring charges in 2023 of which $0.7 million related to our reduction in workforce, $0.4 million in charges related to our write off of at-the-market facility costs, and $0.3 million related to a loss contingency accrual,contingency, general and administrative expenses decreased $2.3$2.1 million. The decrease was driven primarily by reducedfacility compensationcosts, insurance, freight, depreciation, and benefits and spending, primarily on professional fees andas insurance,well partiallyas offset by increasedlower stock-based compensation expense relateddue to one-time costs incurred in connection with the stock option repricing asthat welloccurred asin facilityearly costs.2024. See “Notes to Financial Statements—Note 12. Stock-Based Compensation” for a more detailed discussion of the stock option repricing.

Other expenses, net for the years ended December 31, 20242025 and 20232024 waswere as follows (dollars in thousands):

Total other expenses, net was $0.7$0.2 million in 2024,2025, compared to total other expenses, net of $1.5$0.7 million in 2023.2024. The decrease in total other expenses,expense, net was primarily dueattributable to thea $0.8$0.5 million lossadjustment recognized on extinguishmentthe exit fee concurrent with the refinancing of debtour credit agreement in 2023early 2025 coupled with lower capitalizedinterest interest.income, Welargely capitalizedoffset aby portion of thelower interest on funds borrowed to finance certain of our capital expenditures. Capitalized interest costs were zero and $0.9 million in 2024 and 2023, respectively. Additionally, interest expense was lower due to a lower debt balance outstanding despite higher interest rates as well as higher interest income earned on short-term liquid investments.expense.

Our provision for (benefit from) income taxes for the years ended December 31, 20242025 and 20232024 was as follows (dollars in thousands):

Our benefitprovision fromfor income taxes was $0.1 million in 2024,2025, compared to a $0.3benefit of $0.1 million in 2023.2024. The decreasechange in ourfrom benefit from income taxes to provision for income taxes was attributable to operating losses not expected to produce a benefit.

The primary sources of financing for our operations are our (i) registered direct offering and concurrent private placement completed in September 2023 (collectively, the September 2023 Offerings), which resulted in aggregate gross proceeds of $22.9 million before deducting offering expenses of $0.4 million and the prepayment of $10.0 million owed underof the Term Loan as discussed below,Loan, and (ii) private placement completed in July 2024 (the July 2024 Offering), which resulted in aggregate gross proceeds of $15.4 million before deducting offering expenses of $0.2 million.

On March 3, 2025, we entered into the Second Amended and Restated Credit Agreement with MidCap Financial (Midcap) Trust which provides for loan commitments in an aggregate amount of up to $28.245 million consisting of a $23.245 million senior secured term loan (Amended Term Loan) and a $5.0 million working capital facility (Amended Revolver). The Amended Term Loan consists of the $12.135 million balance outstanding under the previous term loan, plus an additional $1.110 million related to the exit fee that would otherwise have been due upon closing of the Second Amended and Amended Restated Term Loan Credit Agreement, as well as an additional tranche of $10.0 million that may become available for use in an acquisition, with MidCap’s consent. The Second Amended and Restated Credit Agreement includes minimum net revenue requirements that are measured on a trailing twelve-month basis and a minimum cash requirement throughout the term of the agreement. For example, our minimum net revenue requirement for the twelve months ending December 31, 2025, iswas $39.0 million. The minimum cash requirement is $8.0 million, which includes cash and cash equivalents as well as short-term investments in U.S. Treasuries. We were in compliance with our financial covenants under the terms of the Second Amended and Restated Credit Agreement as of December 31, 2025. See “Notes to Financial Statements—Note 17.10. SubsequentLong-Term EventsDebt, Net” for a more detailed discussion of the material terms of our Second Amended and Restated Credit Agreement.

Net cash provided by (used in) investing activities relates primarily to the purchase and maturity of short-term investments as well as capital expenditures and proceeds from the sale of any long-lived assets.

Net cash provided by financing activities primarily relates to proceeds from our September 2023 Offerings and July 2024 Offering, proceeds and payments related to our long-term debt, the exercise of stock options, issuance of common stock under our employee stock purchase plan, and other financing activities.

We review our definite-lived intangible assets and other long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated. Significant judgment is required to estimate the amount and timing of future cash flows and the relative risk of achieving those cash flows. The key assumptions that we use in our discounted cash flow model are the amount and timing of estimated future cash flows to be generated by the asset over an extended period of time and a rate of return that considers the relative risk of achieving the cash flows, the time value of money, and other factors that a willing market participant would consider.

Indefinite lived intangible assets are also subject to an impairment test at least annually, as of October 1, or more frequently if events or circumstances indicate that it is more likely than not that the asset is impaired. If the fair value of the asset is less than the carrying amount, an impairment loss would be recognized in an amount equal to the difference between the carrying amount and the fair value. We completed our assessment in the fourth quarter of 2025 and determined that asit ofis Decembernot 31,more 2023,likely than not that the fair value of our indefinite livedindefinite-lived intangible assets wasis less than the carrying amount. As a result, we recorded a $2.2 million impairment charge during the year ended December 31, 2023 related to our tradename, with no comparable charges in 2024. Refer to “Notes to Financial Statements—Note 8. Intangible Assets, Net,” in our financial statements for details regarding the impairment.

The asset and liability method is used in accounting for deferred income taxes. Under this method, deferred income taxes are provided for differences between the carrying amounts of assets and liabilities for financial reporting and tax purposes using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accordingly, our tax provision contemplates tax rates currently in effect to determine our current tax provision as well as enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recoveredrealized or settled to determine our deferred tax provision. Any significant fluctuation in rates or changes in tax laws could lead to either increases or decreases in our effective tax rate.

Stock-based compensation expense is recognized based on the fair value and is expensed on a straight-line basis over the requisite service periods of the award, which generally represents the scheduled vesting period. Forfeitures are recognized as they occur. We account for stock-based compensation expense based on the estimated grant date fair value, using the Black-Scholes option-pricing model which requires us to make a number of assumptions, including expected volatility, the expected risk-free interest rate, the expected term and the expected dividend.

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), which requires disaggregation of specific expense categories in the notes to the financial statements and a qualitative description of the remaining expense amounts not separately disaggregated. This standard is effective for annual reporting periods beginning after December 15, 2026, and requires prospective application with the option to apply it retrospectively. We are currently evaluating the impact of adopting this standard to determine its impact on our disclosures.

We have incurred operating losses in the past, may incur operating losses in the future and may never achieve or maintain profitability. For the three and six months ended MarchJune 31,30, 2026, we incurred net losses of $4.6$3.2 million.million and $7.7 million, respectively. We have incurred and will continue to incur costs in connection with legal, accounting, and other administrative expenses related to operating as a public company and we expect that our operating expenses will increase modestly with the growth of our business. Since our inception, we have financed our operations primarily through revenue from our products, the sale of our equity securities, and debt. While our revenue has generally grown over the last several years, including the first six months of 2026 compared to the comparable period of 2025, and 2025 compared to 2024, it decreased in 2023 compared to 2022. If our revenue declines or fails to grow at a rate sufficient to offset our operating expenses, we will not be able to achieve and maintain profitability in future periods. We may never be able to generate sufficient revenue to achieve or maintain profitability, and our more recent growth and historical profitability should not be considered predictive of our future performance.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and related notes thereto included in Part I, Item I1. of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes thereto for the year ended December 31, 2025, included in the 2025 Annual Report on Form 10-K (the 2025 Annual Report on Form 10-K) filed on March 2, 2026, with the Securities and Exchange Commission (SEC). For a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q, you should review the risk factors identified in Part I, Item 1A, Risk Factors, of our 2025 Annual Report on Form 10-K and in Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q.

Since our founding in 1996, we have been producing critical reagents for the discovery, development, and commercialization of novel therapies, vaccines, and molecular diagnostics. Our approximately 3,000 customers span the entire continuum of the life sciences market, including leading pharmaceutical and biotechnology companies, contract development and manufacturing organizations, in vitro diagnosticsdiagnostic franchises, and academic and government research institutions. Our Company is built around our knowledge, methods, and know-how in our proprietary manufacturing processes, which are highly adaptable and configurable. These proprietary processes enable us to manufacture and deliver high-quality, custom, made-to-order products with short turnaround times and at scale, across all stages of our customers’ product development, from early research through commercialization.

We generated revenue of $11.1$12.2 million during the three months ended MarchJune 31,30, 2026, which represented an increase of $1.3$1.9 million compared to revenue of $9.8$10.3 million during the three months ended MarchJune 31,30, 2025. For the three months ended MarchJune 31,30, 2026 and 2025, only 4.7%4.3% and 5.3%,5.0%, respectively, of our revenue was generated from customers located outside of the United States. We generated revenue of $23.3 million during the six months ended June 30, 2026, which represents an increase of $3.2 million compared to revenue of $20.1 million during the six months ended June 30, 2025. For the six months ended June 30, 2026 and 2025, only 4.5% and 5.1%, respectively, of our revenue was generated from customers located outside of the United States. Our sales outside of the United States are denominated in U.S. Dollars. We primarily generate sales through direct channels and a small salesforce, supported by an established network of distributors.

We had an operating loss of $4.3$2.9 million during the three months ended MarchJune 31,30, 2026, compared to an operating loss of $5.0$3.4 million during the three months ended MarchJune 31,30, 2025. We had an operating loss of $7.2 million during the six months ended June 30, 2026, compared to an operating loss of $8.4 million during the six months ended June 30, 2025. While our expenses may fluctuate over the short term, we expect our expenses will increase in future periods, but at a slower rate, in connection with our ongoing activities as we:

We continue to closely monitor economic uncertainty in the U.S. and abroad. General inflation in the U.S. rose in recent years to levels not experienced in recent decades. While the rate of inflation has moderated in recent years, general inflation, including rising prices for our raw materials and other inputs, tariffs, as well as rising salaries and other expenses, can negatively impact our business by increasing our cost of sales and operating expenses. Inflation, together with uncertainty regarding future interest rate changes, and broader macroeconomic uncertainty, may cause our customers to reduce, delay, or cancel orders for our goods and services, thereby causing a decrease in or change in the timing of sales of our products and services. We cannot predict the impact of future inflation and interest rate changes on the results of our operations. Furthermore, changes to tariff and related international trade policy that began in 2025 hashave created uncertainty about the broader economy and our business. For further information regarding the impact of these economic factors on the Company, please see the risk factors identified in Part I, Item 1A, Risk Factors, of our 2025 Annual Report on Form 10-K.

Comparison of the Three Months Ended MarchJune 31,30, 2026, and Three Months Ended MarchJune 31,30, 2025

The following tables set forth our results of operations for the three months ended MarchJune 31,30, 2026 and 2025 (dollars in thousands):

Our revenue disaggregated by product category for the three months ended MarchJune 31,30, 2026 and 2025, was as follows (dollars in thousands):

Total revenue was $11.1$12.2 million and $9.8$10.3 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Lab Essentials revenue was $8.4$9.2 million for the three months ended MarchJune 31,30, 2026, an increase of $0.3$1.4 million, or 3.4%,17.9%, compared to $8.1$7.8 million for the three months ended MarchJune 31,30, 2025. The increase in Lab Essentials revenue was attributable to higher average revenue per customer,customer partiallyand, offset byto a decreasedslightly lesser extent, an increased number of customers.

Clinical Solutions revenue was $2.4 million for the three months ended June 30, 2026, an increase of $0.4 million, or 17.9%, compared to $2.1 million for the three months ended MarchJune 31, 2026, an increase of $1.0 million, or 84.6%, compared to $1.2 million for the three months ended March 31,30, 2025. The increase in Clinical Solutions revenue was attributable to an increased number of customerscustomers, and,partially tooffset aby slightly lesser extent higherlower average revenue per customer.

Our revenue disaggregated by geographic region, for the three months ended MarchJune 31,30, 2026 and 2025, was as follows (dollars in thousands):

Revenue from U.S. sales was $10.6$11.7 million and $9.3$9.8 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Revenue from U.S. sales as a percentage of our total revenue was consistent period over period, representing 95.3%95.7% and 94.7%95.0% of our total revenue during the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Revenue from international sales was $0.5 million for each of the three months ended MarchJune 31,30, 2026 and 2025, respectively.2025. Revenue from international sales as a percentage of our total revenue was also consistent period over period, representing 4.7%4.3% and 5.3%5.0% of our total revenue during the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Our gross profit for the three months ended MarchJune 31,30, 2026 and 2025, was as follows (dollars in thousands):

Gross profit percentage was 34.2%40.1% and 30.7%38.7% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase in gross profit percentage was primarily driven by higher revenue.revenue, partially offset by higher fixed cost absorption into cost of goods sold from faster finished goods inventory turns. This compares to the same period in the prior year that had benefited from unusually favorable manufacturing efficiency gains.

Our operating expenses for the three months ended MarchJune 31,30, 2026 and 2025, were as follows (dollars in thousands):

Research and development expenses were consistent at $0.6 million andfor $0.6each million forof the three months ended MarchJune 31,30, 2026 and 2025, respectively.2025.

Sales and marketing expenses were $2.1 million and $1.6 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase was primarily driven by higher headcount and increased marketing expenses.

General and administrative expenses were $5.1$4.8 million and $5.5$4.9 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The decrease was primarily driven by lower stock-based compensation expenseexpense, andpartially offset by increased professional fees.

Amortization of intangible assets was consistent at $0.3 million for each of the three months ended MarchJune 31,30, 2026 and 2025.

Other (expenses) income,expenses, net

Our other (expenses) income,expenses, net for the three months ended MarchJune 31,30, 2026 and 2025, were as follows (dollars in thousands):

Total other (expenses) income,expenses, net was an$0.3 expensemillion offor the three months ended June 30, 2026, compared to $0.2 million for the three months ended MarchJune 31, 2026, compared to income of $0.3 million for the three months ended March 31,30, 2025. The increase in total other expense,expenses, net was primarily attributable to thelower $0.5interest million adjustment recognized on the exit fee concurrent with the refinancing of our credit agreement during the three months ended March 31, 2025.income.

Our provision for income taxes for the three months ended MarchJune 31,30, 2026 and 2025, was as follows (dollars in thousands):

Our income taxestax expenses were not significant for either the three months ended MarchJune 31,30, 2026 or 2025. The effective tax rates for the three months ended MarchJune 31,30, 2026 and 2025 were (1.0%) and (0.5)%, respectively. The effective tax rates differ from the federal statutory rate primarily due to operating losses not expected to produce an income tax benefit.

Our principal liquidity requirements are to fund our operations and capital expenditures. During the threesix months ended MarchJune 31,30, 2026, we incurred net losses of $4.6$7.7 million. In addition, as of MarchJune 31,30, 2026, we had an accumulated deficit of $140.3$143.5 million and $13.2 million in borrowings outstanding under our Term Loan (defined below). As of MarchJune 31,30, 2026, we had $24.8$24.0 million in net working capital, which included $17.8$17.4 million in cash and cash equivalents and short-term investments. Our material cash requirements from known contractual obligations and commitments relate primarily to operating leases for our office, manufacturing, warehouse, and distribution facilities at MarchJune 31,30, 2026. See “Notes to Financial Statements—Note 9. Leases,” for a discussion of our lease obligations reflected on our Condensed Balance Sheets.

In addition to our existing cash and cash equivalents and short-term investments, our principal source of liquidity is our credit facility. On March 3, 2025, we entered into the Second Amended and Restated Credit Agreement with MidCap Financial Trust (MidcapMidCap) Trust which provides for loan commitments in an aggregate amount of up to $28.245 million consisting of a $23.245 million senior secured term loan (Term Loan) and a $5.0 million working capital facility (Revolver). The Term Loan consists of the $12.135 million balance outstanding under the previous term loan, plus an additional $1.110 million related to the exit fee that would otherwise have been due upon closing of the Second Amended and Restated Term Loan Credit Agreement, as well as an additional tranche of $10.0 million that may become available for use in an acquisition, with MidCap’s consent. As of MarchJune 31,30, 2026, there were no amounts outstanding under the Revolver, and $3.6$3.4 million was available based on borrowing base estimates. The Second Amended and Restated Credit Agreement includes minimum net revenue requirements that are measured on a trailing twelve-month basis and a minimum cash requirement throughout the term of the agreement. The minimum cash requirement is $8.0 million, which includes cash and cash equivalents as well as short-term investments in U.S. Treasuries. We were in compliance with our financial covenants under the terms of the Second Amended and Restated Credit Agreement as of MarchJune 31,30, 2026. See “Notes to Financial Statements—Note 12. Long-Term Debt, Net” for a more detailed discussion of the material terms of our Second Amended and Restated Credit Agreement.

The following table sets forth, for the periods indicated, net cash flows used in operating activities, provided by investing activities, and provided by (used in) financing activities (in thousands):

Net cash used in operating activities for both the threesix months ended MarchJune 31,30, 2026 and 2025 consisted primarily of net loss, adjusted for certain non-cash items, and changes in working capital and other operating activities.

Net cash used in operating activities was $3.4$3.8 million for the threesix months ended MarchJune 31,30, 2026, which primarily consisted of net loss of $4.6$7.7 million plus net adjustments for non-cash charges of $2.7$5.4 million, offset by net changes in operating assets and liabilities of $1.5 million. The primary non-cash adjustments to net loss included $1.6$3.2 million of depreciation and amortization, $0.7$1.3 million of stock-based compensation, and a $0.4$0.8 million provision for inventory. The main drivers of the changes in operating assets and liabilities were a $1.1$0.8 million increase in accounts receivable, a $0.8$0.7 million increase in inventories, and a $0.7 million decrease in accrued liabilities, and a $0.2 million increase in inventories, partially offset by a $0.3 million increase in accounts payable, and a $0.2 million decrease in prepaid expenses and other current assets.assets, a $0.2 million decrease in other non-current assets, and a $0.2 million increase in accounts payable.

Net cash used in operating activities was $4.1$6.2 million for the threesix months ended MarchJune 31,30, 2025, which primarily consisted of net loss of $4.6$8.2 million plus net adjustments for non-cash charges of $2.3$5.4 million, offset by net changes in operating assets and liabilities of $1.8$3.4 million. The primary non-cash adjustments to net loss included $1.6$3.2 million of depreciation and amortization, $0.9$1.8 million of stock-based compensation, and $0.4$0.9 million provision for inventory, partially offset by an adjustment to the loan exit fee of $0.5 million, and amortization of the discount on short-term investments of $0.2$0.4 million. The main drivers of the changes in operating assets and liabilities were a $1.3$1.7 million increase in accounts receivable,inventories, a $1.0$1.2 million decrease in accrued liabilities, and a $0.2$0.9 million increase in inventories,accounts receivable, partially offset by a $0.7$0.4 million increase in accounts payable.

Net cash provided by investing activities was $1.8$3.8 million for the threesix months ended MarchJune 31,30, 2026, which consisted of maturities of short-term investments of $6.0$12.0 million, partially offset by purchases of short-term investments of $3.9$7.9 million and purchases of property, plant, and equipment of $0.2$0.3 million.

Net cash usedprovided inby investing activities was $3.8$5.9 million for the threesix months ended MarchJune 31,30, 2025, which consisted of maturities of short-term investments of $6.0$16.0 million, partially offset by purchases of short-term investments of $2.0$9.7 million and purchases of property, plant, and equipment of $0.2$0.4 million.

Net cash provided by financing activities was $0.1 million for the threesix months ended MarchJune 31,30, 2026, which was primarily attributable to proceeds of $0.2 million from exercise of stock options and proceeds of $0.1 million from the issuance of common stock under our employee stock purchase plan, partially offset by the repayment of financed insurance premiums of $0.1 million.

Net cash used in financing activities was $0.1 million for the threesix months ended MarchJune 31,30, 2025, which was primarily attributable to payment of exit fee costs of $1.1 million in connection with entering into the Second Amended and Restated Term Loan Credit Agreement, payment of debt issuance costs of $0.1 million, and repayment of financed insurance premiums of $0.1 million, largely offset by proceeds from long-term debt of $1.1 million.million and proceeds of $0.1 million from the issuance of common stock under our employee stock purchase plan.

We are also a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. WeIf we continue as a smaller reporting company, we may take advantage of certain of the scaled disclosures available to smaller reporting companies including (i) an exemption from auditor attestation requirements, (ii) being able to present only two years of audited financial statements in annual reports, and (iii) reduced disclosure obligations regarding executive compensation. We may continue as a smaller reporting company until the fiscal year following the determination that (i) the market value of our voting and non-voting common stock held by non-affiliates equals or exceeds $250.0 million measured on the last business day of our most recently completed second fiscal quarter, and our annual revenues are more than $100.0 million during the most recently completed fiscal year or (ii) the market value of our voting and non-voting common stock held by non-affiliates equals or exceeds $700.0 million measured on the last business day of our most recently completed second fiscal quarter.