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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___ to___

Commission file number: 333-257810

MaxCyte, Inc.

(Exact name of registrant as specified in its charter)

Delaware

52-2210438

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

22 Firstfield Road, Suite 110

Gaithersburg, Maryland 20878

(Address of principal executive offices)

Registrant’s telephone number, including area code: (301) 944-1700

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

MXCT

The Nasdaq Stock Market LLC

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of September 8, 2021, the registrant had 100,410,560 shares of common stock, $0.01 par value per share, issued and outstanding.

Table of Contents

Table of Contents

Page No

PART I. FINANCIAL INFORMATION

5

Item 1.

Financial Statements (Unaudited)

5

Condensed Consolidated Balance Sheets

5

Condensed Consolidated Statements of Operations

6

Condensed Consolidated Statements of Changes in Stockholders’ Equity

7

Condensed Consolidated Statements of Cash Flows

8

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

Item 4.

Controls and Procedures

31

PART II. OTHER INFORMATION

32

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

32

Item 3.

Defaults Upon Senior Securities

32

Item 4.

Mine Safety Disclosures

32

Item 5.

Other Information

33

Item 6.

Exhibits

34

Signatures

35

2

Table of Contents

Risk Factors Summary

Our business is subject to numerous risks that you should carefully consider. These risks are more fully described in the section titled “Risk Factors” included in our Final Prospectus filed with the SEC on July 30, 2021. A summary of these risks that could materially and adversely affect our business, financial condition, operating results and prospects include the following:

We have incurred significant losses since our inception, we expect to incur losses for the foreseeable future and we may never achieve or maintain profitability.
We are highly dependent on a limited number of product offerings that require a substantial sales cycle and as a result we are prone to quarterly fluctuations in revenue. If we fail to maintain significant market acceptance in existing markets or fail to successfully increase our penetration in new and expanding markets, we will not generate expected revenue and our prospects may be harmed.
We operate in a highly competitive market characterized by rapid technological change, evolving industry standards, changes in customer needs, emerging competition, new product introductions and strong price competition. Our success depends, in part, on our ability to maintain a competitive position in the development of technologies, enhancements and products for use by our customers.
Our business currently depends significantly on research and development spending by biopharmaceutical companies and academic institutions, a reduction in which could limit demand for our products and adversely affect our business and operating results.
We must develop new products, as well as enhancements to existing products, and adapt to rapid and significant technological change to remain competitive.
If we cannot maintain and expand current partnerships and enter into new partnerships, including internationally, that generate marketed licensed products, our business could be adversely affected.
The failure of our partners to meet their contractual obligations to us could adversely affect our business.
Our partners may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, or may discontinue some or all of their programs, which could have an adverse impact on our business.
In recent periods, we have depended on a limited number of partners for our revenue, the loss of any of which could have an adverse impact on our business.
We depend on continued supply of components and raw materials for our ExPERT instruments and PAs from third-party suppliers, and if shortages of these components or raw materials arise, we may not be able to secure enough components to build new products to meet customer demand or we may be forced to pay higher prices for these components. As such, we must also accurately forecast customer demand for our products and manage our inventory.
Our FDA Master File, and equivalent Technical Files in foreign jurisdictions, are an important part of our strategic offering which allows our partners to expedite their cellular therapies into and through the clinic. Delays in filing or obtaining, or our inability to obtain or retain, acceptance of such filings in individual countries could negatively impact the progress of our partners if they intend to run clinical trials in such countries, and as a result, could negatively affect our reputation and revenues or require disclosure of confidential information to our partners.
We may need additional funding and may be unable to raise capital when needed, which would force us to delay, reduce, eliminate or abandon our commercialization efforts or product development programs.

3

Table of Contents

The COVID-19 pandemic has had and could continue to have an adverse impact on our business, operations, and the markets and communities in which we, our partners and our customers operate.
Our common stock is traded on two separate stock markets and investors seeking to take advantage of price differences between such markets may create unexpected volatility in our share price; in addition, investors may not be able to easily move shares for trading between such markets.

4

Table of Contents

Part I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

MaxCyte, Inc.

Condensed Consolidated Balance Sheets

June 30, 

December 31, 

    

2021

    

2020

(Unaudited)

 

(Note 2)

Assets

 

Current assets:

 

  

 

  

Cash and cash equivalents

$

37,423,200

$

18,755,200

Short-term investments, at amortized cost

 

35,968,700

 

16,007,500

Accounts receivable, net

 

5,719,200

 

5,171,900

Inventory, net

 

4,169,500

 

4,315,800

Other current assets

 

1,345,700

 

1,003,000

Total current assets

 

84,626,300

 

45,253,400

Property and equipment, net

5,472,200

 

4,546,200

Right of use asset - operating leases

 

1,173,900

 

1,728,300

Right of use asset - finance leases

 

170,700

 

218,300

Other assets

 

1,704,100

 

33,900

Total assets

$

93,147,200

$

51,780,100

Liabilities and stockholders’ equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

644,700

$

890,200

Accrued expenses and other

 

4,518,300

 

5,308,500

Operating lease liability, current

 

616,500

 

572,600

Deferred revenue, current portion

 

6,754,800

 

4,843,000

Total current liabilities

 

12,534,300

 

11,614,300

Note payable, net of discount, and deferred fees

 

 

4,917,000

Operating lease liability, net of current portion

 

606,700

 

1,234,600

Other liabilities

 

1,185,000

 

788,800

Total liabilities

 

14,326,000

 

18,554,700

Commitments and contingencies (Note 7)

 

  

 

  

Stockholders’ equity

 

  

 

  

Common stock, $0.01 par value; 200,000,000 shares authorized, 84,719,345 and 77,382,473 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

847,200

773,800

Additional paid-in capital

 

184,723,700

 

127,673,900

Accumulated deficit

 

(106,749,700)

 

(95,222,300)

Total stockholders’ equity

 

78,821,200

 

33,225,400

Total liabilities and stockholders’ equity

$

93,147,200

$

51,780,100

See accompanying notes to unaudited condensed consolidated financial statements.

5

Table of Contents

MaxCyte, Inc.

Unaudited Condensed Consolidated Statements of Operations

    

Three Months Ended June 30, 

Six Months Ended June 30, 

2021

    

2020

    

2021

    

2020

Revenue

$

7,108,100

$

5,150,400

$

13,602,900

$

10,892,400

Costs of goods sold

 

784,500

 

466,300

 

1,477,600

 

1,125,300

Gross profit

 

6,323,600

 

4,684,100

 

12,125,300

 

9,767,100

Operating expenses:

 

  

 

  

 

  

 

  

Research and development

 

3,205,500

 

4,090,400

 

9,283,200

 

8,335,100

Sales and marketing

 

2,912,900

 

1,843,900

 

5,702,000

 

3,894,000

General and administrative

 

4,622,400

 

1,594,400

 

7,930,400

 

3,370,900

Total operating expenses

 

10,740,800

 

7,528,700

 

22,915,600

 

15,600,000

Operating loss

 

(4,417,200)

 

(2,844,600)

 

(10,790,300)

 

(5,832,900)

Other income (expense):

 

  

 

  

 

  

 

  

Interest and other expense

 

(13,200)

 

(164,700)

 

(755,500)

 

(281,800)

Interest income

 

8,600

 

5,200

 

18,400

 

48,700

Total other income (expense)

 

(4,600)

 

(159,500)

 

(737,100)

 

(233,100)

Provision for income taxes

Net loss

$

(4,421,800)

$

(3,004,100)

$

(11,527,400)

$

(6,066,000)

Basic and diluted net loss per share

$

(0.05)

$

(0.05)

$

(0.14)

$

(0.10)

Weighted average shares outstanding, basic and diluted

 

84,706,516

 

65,834,978

 

82,865,526

 

61,619,280

See accompanying notes to unaudited condensed consolidated financial statements.

6

Table of Contents

MaxCyte, Inc.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

Total 

Common Stock

Additional

Accumulated 

Stockholders’

    

Shares

    

Amount

    

Paid-in Capital

    

Deficit

    

 Equity

Balance January 1, 2020

 

57,403,583

$

574,000

$

96,433,700

$

(83,405,900)

$

13,601,800

Stock-based compensation expense

 

 

 

547,600

 

 

547,600

Net loss

 

 

 

 

(3,061,900)

 

(3,061,900)

Balance March 31, 2020

 

57,403,583

574,000

96,981,300

(86,467,800)

11,087,500

Issuance of common stock

19,181,423

191,900

28,375,300

28,567,200

Stock-based compensation expense

 

 

 

559,000

 

 

559,000

Net loss

 

 

 

 

(3,004,100)

 

(3,004,100)

Balance June 30, 2020

 

76,585,006

$

765,900

$

125,915,600

$

(89,471,900)

$

37,209,600

Total 

Common Stock

Additional

Accumulated 

Stockholders’

    

Shares

    

Amount

    

Paid-in Capital

    

Deficit

    

 Equity

Balance January 1, 2021

 

77,382,473

$

773,800

$

127,673,900

$

(95,222,300)

$

33,225,400

Issuance of common stock

5,740,000

57,400

51,751,500

51,808,900

Stock-based compensation expense

 

 

 

1,319,800

 

 

1,319,800

Exercise of stock options

1,567,086

15,700

2,021,400

2,037,100

Net loss

 

 

 

 

(7,105,600)

 

(7,105,600)

Balance at March 31, 2021

 

84,689,559

846,900

182,766,600

(102,327,900)

81,285,600

Stock-based compensation expense

 

 

 

1,905,200

 

 

1,905,200

Exercise of stock options

29,786

300

51,900

52,200

Net loss

 

 

 

 

(4,421,800)

 

(4,421,800)

Balance at June 30, 2021

 

84,719,345

$

847,200

$

184,723,700

$

(106,749,700)

$

78,821,200

See accompanying notes to unaudited condensed consolidated financial statements.

7

Table of Contents

MaxCyte, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

    

Six Months Ended June 30, 

2021

    

2020

Cash flows from operating activities:

 

  

 

  

Net loss

$

(11,527,400)

$

(6,066,000)

Adjustments to reconcile net loss to net cash used in operating activities:

 

  

 

  

Depreciation and amortization on property and equipment, net

 

641,400

 

478,200

Net book value of consigned equipment sold

 

13,900

 

12,000

Loss on disposal of fixed assets

 

19,800

 

51,300

Fair value adjustment of liability classified warrant

 

358,200

 

-

Stock-based compensation

 

3,225,000

 

1,106,600

Bad debt (recovery) expense

 

-

 

(117,200)

Amortization of discounts on short-term investments

 

1,900

 

(1,100)

Noncash interest expense

 

5,400

 

10,800

Changes in operating assets and liabilities:

 

  

 

  

Accounts receivable

 

(547,300)

 

(385,600)

Inventory

 

(182,300)

 

(608,900)

Other current assets

 

(342,700)

 

9,700

Right of use asset – operating leases

 

554,400

 

258,200

Right of use asset – finance lease

 

47,600

 

35,700

Other assets

 

(1,670,200)

 

(100,000)

Accounts payable, accrued expenses and other

 

(992,400)

 

(2,339,200)

Operating lease liability

 

(584,000)

 

(248,800)

Deferred revenue

 

1,911,800

 

1,879,000

Other liabilities

 

38,000

 

(14,300)

Net cash used in operating activities

 

(9,028,900)

 

(6,039,600)

Cash flows from investing activities:

 

  

 

  

Purchases of short-term investments

 

(35,963,100)

 

(1,001,100)

Maturities of short-term investments

 

16,000,000

 

2,500,000

Purchases of property and equipment

 

(1,271,100)

 

(1,049,900)

Proceeds from sale of equipment

4,600

-

Net cash (used in) provided by investing activities

 

(21,229,600)

 

449,000

Cash flows from financing activities:

 

  

 

  

Net proceeds from issuance of common stock

51,808,900

28,567,200

Borrowings under notes payable

 

 

1,440,000

Principal payments on notes payable

 

(4,922,400)

 

(1,440,000)

Proceeds from exercise of stock options

 

2,089,300

 

Principal payments on finance leases

 

(49,300)

 

(15,700)

Net cash provided by financing activities

 

48,926,500

 

28,551,500

Net increase in cash and cash equivalents

 

18,668,000

 

22,960,900

Cash and cash equivalents, beginning of period

 

18,755,200

 

15,210,800

Cash and cash equivalents, end of period

$

37,423,200

$

38,171,700

Supplemental cash flow information:

 

  

 

  

Cash paid for interest

$

419,200

$

210,700

Supplemental disclosure of non-cash investing and financing activities:

 

  

 

  

Property and equipment purchases included in accounts payable

$

6,000

$

159,000

Lease liability reduction due to operating lease modification

$

304,600

$

See accompanying notes to unaudited condensed consolidated financial statements.

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1.   Organization and Description of Business

MaxCyte, Inc. (the “Company”) is a global life sciences company focused on advancing the discovery, development and commercialization of next-generation cell therapies. The Company leverages its proprietary cell engineering technology platform to enable the programs of its biotechnology and pharmaceutical company customers who are engaged in cell therapy, including gene editing and immuno-oncology, as well as in drug discovery and development and biomanufacturing. The Company licenses and sells its instruments and technology and sells its consumables to developers of cell therapies and to pharmaceutical and biotechnology companies for use in drug discovery and development and biomanufacturing. In early 2020, the Company established a wholly owned subsidiary, CARMA Cell Therapies, Inc., as part of its development of CARMA, the Company’s proprietary, mRNA-based, clinical-stage, immuno-oncology cell therapy platform. In the first quarter of 2021, the Company concluded all pre-clinical and clinical activities related to the CARMA platform. During the six months ended June 30, 2021, the Company incurred CARMA-related operating expenses of $4.3 million, which consisted of $2.5 million of ongoing CARMA expenses primarily for preclinical research and clinical activities as well as $1.8 million of severance, legal and other costs associated with the cessation of CARMA activities.

The COVID-19 pandemic has disrupted economic markets and the economic impact, duration and spread of related effects is uncertain at this time and difficult to predict. As a result, it is not possible to ascertain the overall future impact of COVID-19 on the Company’s business and, depending upon the extent and severity of such effects, including, but not limited to potential slowdowns in customer operations, extension of sales cycles, shrinkage in customer capital budgets or delays in customers’ clinical trials, the pandemic could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. In 2020, the Company made adjustments to its operating, sales and marketing practices to mitigate the effects of COVID-19 restrictions which reduced planned spending, particularly on travel and marketing expenditures. In addition, COVID-19 restrictions may have delayed or slowed the research activities of some existing and prospective customers. It is not possible to quantify the impact of COVID-19 on the Company’s revenues and expenses in the first half of 2021or its expected impact on future periods.

2.    Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the financial position, results of operations, and cash flow as of and for the periods presented. The condensed consolidated balance sheet at December 31, 2020 has been derived from audited consolidated financial statements as of that date. The unaudited condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year or any other future year or period. Certain information and footnotes disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim condensed consolidated financial statements are read in conjunction with the audited consolidated financial statements and notes included in the Company’s final prospectus filed with the SEC pursuant to Rule 424(b)(4) on July 30, 2021 (the “Final Prospectus”).

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the footnotes to its audited consolidated financial statements for the year ended December 31, 2020 included in the Final Prospectus and have not materially changed during the six months ended June 30, 2021, except as noted below.

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Concentration of Significant Customers

Significant customers are those that accounted for 10% or more of the Company’s total revenue for the period or accounts receivable as the end of a reporting period. During the three and six months ended June 30, 2021, one customer represented 17% and 18% of revenue, respectively. During the three months ended June 30, 2020, one customer represented 23% of revenue, and during the six months ended June 30, 2020, two customers represented 15% and 12% of revenue, respectively. As of June 30, 2021, one customer accounted for 22% of accounts receivable. No customer accounted for over 10% of accounts receivable at December 31, 2020.

Certain components included in the Company’s products are obtained from a single source or a limited group of suppliers. During the three and six months ended June 30, 2021, the Company purchased approximately 56% and 48% of its inventory from three and two suppliers, respectively. During the three and six months ended June 30, 2020, the Company purchased approximately 60% and 57% of its inventory from three suppliers and one supplier, respectively. As of June 30, 2021 and December 31, 2020, amounts payable to these suppliers totaled 11% and 31% of total accounts payable, respectively.

Foreign Currency

The Company’s functional currency is the US dollar; transactions denominated in foreign currencies are subject to currency risk. The Company recognized $3,600 in foreign currency transaction gains and $7,600 in foreign currency transaction losses for the three months ended June 30, 2021 and 2020, respectively. The Company recognized $23,400 and $16,700 in foreign currency transaction gains for the six months ended June 30, 2021 and 2020, respectively.

Cash, Cash Equivalents and Short-term Investments

The following table summarizes the Company’s cash equivalents and short-term investments at June 30, 2021:

Gross

Gross

Amortized

unrecognized

unrecognized

Aggregate

Description

    

Classification

    

cost

    

holding gains

    

holding losses

    

fair value

Money market funds

 

Cash equivalents

$

5,270,300

$

$

$

5,270,300

Corporate Debt

Cash equivalents

1,001,500

(100)

1,001,400

Commercial Paper

 

Cash equivalent

 

27,996,800

 

1,400

 

 

27,998,200

Corporate Debt

 

Short-term investments

 

35,968,700

 

21,600

 

 

35,990,300

Total Investments

 

  

$

70,237,300

$

23,000

$

(100)

$

70,260,200

The following table summarizes the Company’s cash equivalents and short-term investments at December 31, 2020:

Gross

Gross

Amortized

unrecognized

unrecognized

Aggregate

Description

    

Classification

    

cost

    

holding gains

    

holding losses

    

fair value

Money market funds

 

Cash equivalents

$

8,702,200

$

$

$

8,702,200

Commercial Paper

 

Cash equivalents

 

6,523,500

 

 

 

6,523,500

Commercial Paper

 

Short‑term investments

 

13,996,800

 

1,800

 

 

13,998,600

Corporate Debt

Short‑term investments

2,010,700

(100)

2,010,600

Total Investments

 

  

$

31,233,200

$

1,800

$

(100)

$

31,234,900

At times the Company’s cash balances may exceed federally insured limits and cash may also be deposited in foreign bank accounts that are not covered by federal deposit insurance. The Company does not believe that this results in any significant credit risk.

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Inventory

Inventory is carried at the lower of cost or net realizable value. Inventory consisted of the following at:

    

June 30, 

    

December 31, 

2021

2020

Raw materials inventory

$

1,859,600

$

1,771,300

Finished goods inventory

 

2,309,900

 

2,544,500

Total inventory

$

4,169,500

$

4,315,800

The Company determined no allowance for obsolescence was necessary at June 30, 2021 or December 31, 2020.

Accounts Receivable

Accounts receivables are reduced by an allowance for doubtful accounts, if needed. The Company determined no allowance was necessary at June 30, 2021 or December 31, 2020.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method. Leasehold improvements are amortized over the shorter of the estimated lease term or useful life.

Property and equipment consisted of the following:

    

June 30, 

    

December 31, 

2021

2020

Furniture and equipment

$

3,696,400

$

3,492,900

Instruments

 

1,755,600

 

1,424,600

Leasehold improvements

 

641,400

 

641,400

Internal-use software under development

 

980,200

 

Internal-use software

 

1,999,300

 

1,963,000

Accumulated depreciation and amortization

 

(3,600,700)

 

(2,975,700)

Property and equipment, net

$

5,472,200

$

4,546,200

For the six months ended June 30, 2021, the Company transferred $328,600 of instruments previously classified as inventory to property and equipment leased to customers. For the six months ended June 30, 2020, the Company transferred $154,000 of instruments previously classified as inventory to property and equipment leased to customers.

For the three and six months ended June 30, 2021, the Company incurred depreciation and amortization expense of $325,000 and $641,400, respectively. For the three and six months ended June 30, 2020, the Company incurred depreciation and amortization expense of $256,500 and $478,200, respectively.

In the three and six months ended June 30, 2020, the Company capitalized $5,700 and $8,200, respectively, of interest expense related to capitalized software development projects. No interest expense was capitalized in the three and six months ended June 30, 2021.

Deferred Offering Costs

The Company capitalizes certain legal, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs (non-current) until such financings are consummated or determined not to be probable of consummation. After consummation of the equity financing, these costs are recorded in stockholders’ equity as a reduction of proceeds received as a result of the offering. If the equity financing is no longer considered probable of being consummated, all deferred offering costs will be charged to operating expenses in the consolidated statement of operations at such time.

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As of June 30, 2021 and December 31, 2020, $1,384,500 and $0, respectively, of deferred offering costs were reported as other assets in the condensed consolidated balance sheets.

Leases

In transactions where the Company is the lessee, at the inception of a contract, the Company determines if the arrangement is, or contains, a lease. See Note 7 for additional details over leases where the Company is the lessee.

All transactions in which the Company is the lessor are short-term (one year or less) and have been classified as operating leases. All leases require upfront payments covering the full period of the lease and thus, there are no future payments expected to be received from existing leases. See Note 3 for details over revenue recognition related to lease agreements.

Loss Per Share

Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method.

For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all dilutive potential common shares is anti-dilutive. The number of anti-dilutive shares excluded from the computation of diluted loss per share, consisting of shares underlying stock options and stock purchase warrants, was 12.2 million and 12.4 million for the three and six months ended June 30, 2021 and 2020, respectively.

Recent Accounting Pronouncements

Recently Adopted

On January 1, 2021, the Company adopted new guidance addressing income taxes, which is intended to simplify various aspects related to the accounting for income taxes. The guidance removes certain exceptions to the general principles in Accounting Standards Codification (“ASC”) 740, Income Taxes, and also clarifies and amends existing guidance to improve consistent application. The adoption did not have a material effect on the Company’s condensed consolidated interim financial statements.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued guidance with respect to measuring credit losses on financial instruments, including trade receivables. The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses. Under the previous guidance, an entity only considered past events and current conditions. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the remaining amendments must be applied on a prospective basis. The Company is currently evaluating the impact, if any, that this new accounting pronouncement will have on its consolidated financial statements.

The Company has evaluated all other issued and unadopted Accounting Standards Updates and believes the adoption of these standards will not have a material impact on its results of operations, financial position, or cash flows.

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3.    Revenue

Revenue is principally from the sale of instruments and processing assemblies, and extended warranties and the lease of instruments, which leases also include customer-specific milestone payments. In some arrangements, products and services have been sold together representing distinct performance obligations. In these arrangements the Company allocates the sale price to the various performance obligations in the arrangement on a relative selling price basis. Under this basis, the Company determines the estimated selling price of each performance obligation in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis.

Revenue is recognized at the time control is transferred to the customer and the performance obligation is satisfied. Revenue from the sale of instruments and processing assemblies is generally recognized at the time of shipment to the customer, provided that no significant vendor obligations remain and collectability is reasonably assured. Revenue from equipment leases is recognized ratably over the contractual term of the lease agreement and when specific milestones are achieved by a customer. Licensing fee revenue is recognized ratably over the license period. Revenue from fees for research services is recognized when services have been provided.

Disaggregation of Revenue

The following table depicts the disaggregation of revenue by type of contract:

Three months ended June 30, 2021

Six months ended June 30, 2021

Revenue from

Revenue

Revenue from

Revenue

Contracts

from

Contracts

from

 with

Lease

Total

 with

Lease

Total

    

Customers

    

Elements

    

Revenue

    

Customers

    

Elements

    

Revenue

Product Sales

$

4,041,600

$

$

4,041,600

$

8,117,400

$

$

8,117,400

Lease Elements

 

 

2,889,700

 

2,889,700

 

 

5,145,600

 

5,145,600

Other

 

176,800

 

 

176,800

 

339,900

 

 

339,900

Total

$

4,218,400

$

2,889,700

$

7,108,100

$

8,457,300

$

5,145,600

$

13,602,900

Three months ended June 30, 2020

Six months ended June 30, 2020

Revenue from

Revenue

Revenue from

Revenue

Contracts

from

Contracts

from

 with

Lease

Total

 with

Lease

Total

    

Customers

    

Elements

    

Revenue

    

Customers

    

Elements

    

Revenue

Product Sales

$

2,244,300

$

$

2,244,300

$

5,439,500

$

$

5,439,500

Lease Elements

 

 

2,824,100

 

2,824,100

 

 

5,252,100

 

5,252,100

Other

 

82,000

 

 

82,000

 

200,800

 

 

200,800

Total

$

2,326,300

$

2,824,100

$

5,150,400

$

5,640,300

$

5,252,100

$

10,892,400

Additional Disclosures Relating to Revenue from Contracts with Customers

Deferred revenue represents payments received for performance obligations not yet satisfied and is presented as current or long-term in the accompanying condensed consolidated balance sheets based on the expected timing and satisfaction of the underlying goods or services. Deferred revenue was $7.1 million and $5.0 million as of June 30, 2021 and December 31, 2020, respectively. During the three and six months ended June 30, 2021, the Company recognized $1.5 million and $3.5 million, respectively, and during the three and six months ended June 30, 2020, $1.0 million and $2.5 million, respectively, of revenue that was included in deferred revenue at the beginning of such periods.

Remaining contract consideration for which revenue has not been recognized due to unsatisfied performance obligations with a duration greater than one year at June 30, 2021 was $366,800, of which the Company expects to recognize $71,200 in one year or less, $72,000 in one to two years, $67,000 in two to three years, and $156,600 thereafter.

For the three and six months ended June 30, 2021 and 2020, the Company did not incur, and therefore did not defer, any material incremental costs to obtain contracts or costs to fulfill contracts.

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4.    Debt

In November 2019, the Company entered into a new credit facility with MidCap Financial SBIC, LP (“MidCap”). The credit facility provided for a $5 million term loan maturing on November 1, 2024. The term loan provided for (i) an interest rate of one-month Libor plus 6.5% with a 1.5% Libor floor, (ii) monthly interest payments, (iii) 30 monthly principal payments of $166,700 beginning in June 2022 and (iv) a 3% final payment fee. The Company used the proceeds from the credit facility for general operating purposes. The debt was collateralized by substantially all assets of the Company. At December 31, 2020, the term loan had an outstanding principal balance of $5.0 million and $83,000 of unamortized debt discount. In March 2021, the Company repaid the MidCap loan in full. The Company incurred fees of $260,000 associated with early repayment of the loan. The unamortized debt discounts and fees were expensed and recorded as interest expense.

In April 2020, the Company received a loan from Silicon Valley Bank in the amount of $1,440,000 under the US Small Business Administration’s Paycheck Protection Program (“PPP”). The PPP was established as part of the US Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The loan provided for interest at 1% and a maturity date of April 2022. In May 2020, the Company repaid the loan in full.

5.    Stockholders’ Equity

Common Stock

During the first quarter of 2021, the Company completed an equity capital raise issuing 5,740,000 shares of its common stock at a price of ₤7.00 (or approximately $9.64) per share. The transaction generated gross proceeds of ₤40.2 million (or $55.3 million). In conjunction with the transaction, the Company incurred costs of $3.5 million which resulted in the Company receiving net proceeds of $51.8 million.

Warrant

In connection with the November 2019 credit facility (see Note 4), the Company issued the lender a warrant to purchase 71,168 shares of common stock at an exercise price of £1.09081 per share. Through June 30, 2021, the warrant is exercisable at any time through the tenth anniversary of issuance. The warrant was classified as a liability, as its strike price was in a currency other than the Company’s functional currency. The warrant was recorded at fair value at the end of each reporting period with changes from the prior balance sheet date recorded on the condensed consolidated statements of operations (see Note 6). In August 2021, MidCap exercised the warrant in full (see Note 8).

Stock Options

The Company adopted the MaxCyte, Inc. Long-Term Incentive Plan (the “Plan”) in January 2016 to amend and restate the MaxCyte 2000 Long-Term Incentive Plan to provide for the awarding of (i) stock options, (ii) restricted stock, (iii) incentive shares, and (iv) performance awards to employees, officers, and Directors of the Company and to other individuals as determined by the Board of Directors. Under the Plan, as amended, the maximum number of shares of Common Stock of the Company that the Company may issue is increased by ten percent (10%) of the shares that are issued and outstanding at the time awards are made under the Plan. On December 10, 2019 and October 27, 2020, the Company’s Board resolved to increase the number of shares available for grant under the Plan by 3,000,000 and 1,500,000, respectively.

At December 31, 2020 and June 30, 2021, there were 4,175,737 and 4,090,810 shares available to be issued under the Plan, respectively.

The weighted-average fair value of the options granted during the three months ended June 30, 2021 and 2020 was estimated to be $7.22 and $1.09, respectively. The weighted-average fair value of the options granted during the six months ended June 30, 2021 and 2020 was estimated to be $7.32 and $0.87, respectively.

The value of an option award is recognized as expense on a straight-line basis over the requisite service period. At June 30, 2021, total unrecognized compensation expense was $20,211,400, which will be recognized over the next 3.2 years.

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The Company recorded stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations:

    

Three months ended June 30, 

Six months ended June 30, 

2021

    

2020

    

2021

    

2020

General and administrative

$

1,169,600

$

265,900

$

1,911,300

$

519,900

Sales and marketing

 

352,400

 

112,000

 

621,600

 

218,000

Research and development

 

383,200

 

181,100

 

692,100

 

368,700

Total

$

1,905,200

$

559,000

$

3,225,000

$

1,106,600

6.    Fair Value

The Company’s condensed consolidated balance sheets include various financial instruments (primarily cash and cash equivalents, accounts receivable and accounts payable) that are carried at cost, which approximates fair value due to the short-term nature of the instruments. The Company’s short-term investments are carried at amortized cost (see Note 2 for fair values of short-term investments). Notes payable are reflective of fair value based on market comparable instruments with similar terms.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company had an outstanding warrant accounted for as a liability and measured at fair value on a recurring basis, using Level 3 inputs. The following table identifies the carrying amount of this warrant at June 30, 2021:

    

Level 1

    

Level 2

    

Level 3

    

Total

Liabilities

 

  

 

  

 

  

 

  

Liability classified warrant

$

  —

$

  —

$

799,400

$

799,400

Total at June 30, 2021

$

$

$

799,400

$

799,400

The following table identifies the carrying amount of this warrant at December 31, 2020:

    

Level 1

    

Level 2

    

Level 3

    

Total

Liabilities

 

  

 

  

 

  

 

  

Liability classified warrant

$

  —

$

  —

$

441,200

$

441,200

Total at December 31, 2020

$

$

$

441,200

$

441,200

The following table presents the activity for those items measured at fair value on a recurring basis using Level 3 inputs for the three and six months ended June 30, 2021 and 2020:

Mark-to-market liabilities – warrant

Three Months Ended

Six Months Ended

June 30,

June 30,

 

2021

 

2020

 

2021

 

2020

Balance, beginning of period

$

789,100

$

74,500

$

441,200

$

74,700

Change in fair value

 

10,300

 

51,500

 

358,200

 

51,300

Balance, end of period

$

799,400

$

126,000

$

799,400

$

126,000

The gains and losses resulting from the changes in the fair value of the warrant liability are classified as other income or expense in the accompanying condensed consolidated statements of operations. The fair value of the Common Stock purchase warrants is determined based on the Black-Scholes option pricing model or other option pricing models as appropriate and included the use of unobservable inputs such as the expected term, anticipated volatility and expected dividends. Changes in any of the assumptions related to such unobservable inputs may change the fair value; increases in expected term, anticipated volatility and expected dividends generally result in increases in fair value, while decreases in these unobservable inputs generally result in decreases in fair value.

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The Company has no other financial assets or liabilities measured at fair value on a recurring basis.

Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Short-term investments carried at amortized cost are measured at fair value on a non-recurring basis when they are deemed to be impaired on an other-than-temporary basis. No fair value impairment was recognized during the three and six months ended June 30, 2021 and 2020.

Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company has no non-financial assets and liabilities that are measured at fair value on a recurring basis.

Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company measures its long-lived assets, including property and equipment, at fair value on a non-recurring basis. These assets are recognized at fair value when they are deemed to be impaired. No fair value impairment was recognized during the three and six months ended June 30, 2021 and 2020.

7.    Commitments and Contingencies

Operating Leases

The Company is a party to various leases for office and laboratory space. A member of the Company’s Board of Directors is the CEO and Board member of the lessor of certain of these leases for which the rent payments totaled $159,600 and $155,800 in the three months ended June 30, 2021 and 2020, respectively, and $318,300 and $310,500 in the six months ended June 30, 2021 and 2020, respectively.

At June 30, 2021, the Company had a $1,173,900 right of use (ROU) lease asset, a $616,500 short-term lease liability and a $606,700 long-term lease liability related to its operating leases. At December 31, 2020, the Company had a $1,728,300 ROU asset, a $572,600 short-term lease liability and a $1,234,600 long-term lease liability related to its operating leases.

At June 30, 2021 and December 31, 2020, the weighted average remaining lease term for the Company’s operating leases was 2.1 years and 2.8 years, respectively.

On May 27, 2021, the Company entered into an operating lease for new office and manufacturing space. The lease for the new space consists of three phases, with Phase 1 estimated to commence in October 2021 which is subject to revision, and the lease of all phases is estimated to expire on June 30, 2035. Both the Company and the landlord have a one-time right to terminate a portion of Phase 3 of the lease during a defined time window. The Company will design and construct the leasehold improvements with the approval of the landlord. The landlord will reimburse the Company for the costs of property improvements up to amounts specified in the lease. The total incremental non-cancellable lease payments under the new lease agreements are approximately $24.5 million over the lease term.

Finance Leases

At June 30, 2021, the Company had a $170,700 ROU asset, a $102,800 short-term lease liability included in “Accrued expenses and other” and a $90,100 long-term lease liability included in “Other liabilities” related to its finance lease.

At December 31, 2020, the Company had a $218,300 ROU asset, a $100,000 short-term lease liability included in “Accrued expenses and other” and a $142,200 long-term lease liability included in “Other liabilities” related to its finance lease.

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Table of Contents

All Leases

Lease costs for the three and six months ended June 30, 2021 and 2020 were as follows:

    

Three months ended

Six months ended

June 30, 

June 30, 

2021

    

2020

    

2021

    

2020

Finance lease cost

 

  

 

  

 

  

 

  

Amortization of ROU asset

$

23,800

$

23,800

$

47,600

$

35,700

Interest on expense

 

2,900

 

4,200

 

6,100

 

6,900

Operating lease cost

 

174,200

 

170,100

 

346,900

 

337,200

Short-term lease cost

 

10,000

 

 

18,900

 

Variable lease cost

 

75,600

 

65,700

 

151,200

 

141,500

Total lease cost

$

286,500

$

263,800

$

570,700

$

521,300

As of June 30, 2021, maturities of lease liabilities that have commenced prior to June 30, 2021 were as follows:

    

Operating Leases

    

Finance Leases

Remainder of 2021

$

360,300

$

55,400

2022

 

579,200

 

110,800

2023

 

405,000

 

36,900

Total lease payments

 

1,344,500

 

203,100

Discount factor

 

(121,300)

 

(10,300)

Present value of lease liabilities

$