908 Devices Inc. [MASS] Filings

10-Q 1 mass-20240630x10q.htm 10-Q

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, 2024

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

For the transition period from to .

Commission File Number: 001-39815

908 DEVICES INC.

(Exact name of registrant as specified in its charter)

Delaware	45-4524096
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

645 Summer Street, Boston, MA	02210
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (857) 254-1500

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

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

Title of each class

Trading Symbol(s)

Name of each exchange

on which registered

Common Stock, par value $0.001 per share

MASS

The Nasdaq Global Market

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 August 2, 2024, the registrant had 34,656,778 shares of common stock, $0.001 par value per share, issued and outstanding.

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908 DEVICES INC.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	4
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of 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	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	46
PART II.	OTHER INFORMATION	47
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	49
Signatures		50

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations, are forward-looking statements, and are made under the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “could,” “target,” “predict,” “seek” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short- and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referenced in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.

We own various trademark registrations and applications, and unregistered trademarks, including MX908, ThreatID, ProtectIR, XplorIR, Rebel, ZipChip, Maven, Maverick, 908 Devices and our corporate logo. All other trade names, trademarks and service marks of other companies appearing in this Quarterly Report on Form 10-Q are the property of their respective holders. Solely for convenience, the trademarks and trade names in this Quarterly Report on Form 10-Q may be referred to without the ®,™ or RTM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend to use or display other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

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PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

908 DEVICES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share amounts)


	June 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	46,811	$	121,041
Marketable securities		30,572		24,641
Accounts receivable, net of allowance for credit losses of $585 and $395 at June 30, 2024 and December 31, 2023		10,987		8,989
Inventory		18,589		14,938
Prepaid expenses and other current assets		3,485		4,181
Total current assets		110,444		173,790
Operating lease, right-of-use assets		5,904		6,233
Property and equipment, net		3,556		3,342
Goodwill		40,220		10,367
Intangible assets, net		47,298		7,860
Other long-term assets		1,352		1,389
Total assets	$	208,774	$	202,981
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,974	$	1,191
Accrued expenses		5,636		8,713
Deferred revenue		11,954		10,629
Operating lease liabilities		2,153		2,016
Total current liabilities		21,717		22,549
Operating lease liabilities, net of current portion		3,439		3,929
Deferred revenue, net of current portion		9,528		8,571
Deferred income taxes		2,231		2,441
Contingent consideration		15,500		—
Total liabilities		52,415		37,490
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized, no shares issued or outstanding at June 30, 2024 and December 31, 2023, respectively		—		—
Common stock, $0.001 par value; 100,000,000 shares authorized; 34,630,883 shares and 32,519,023 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		35		33
Additional paid-in capital		349,530		334,692
Accumulated other comprehensive income		858		1,365
Accumulated deficit		(194,064)		(170,599)
Total stockholders' equity		156,359		165,491
Total liabilities and stockholders' equity	$	208,774	$	202,981

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

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908 DEVICES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue:
Product revenue	$	10,266	$	9,595	$	17,499	$	16,617
Service revenue		3,681		2,354		6,439		4,594
Contract revenue		100		145		100		370
Total revenue		14,047		12,094		24,038		21,581
Cost of revenue:
Product cost of revenue		4,732		4,800		7,942		8,586
Service cost of revenue		1,823		1,448		3,601		2,718
Contract cost of revenue		74		52		74		99
Total cost of revenue		6,629		6,300		11,617		11,403
Gross profit		7,418		5,794		12,421		10,178
Operating expenses:
Research and development		6,381		5,525		12,171		10,923
Selling, general and administrative		14,597		11,208		26,498		23,211
Total operating expenses		20,978		16,733		38,669		34,134
Loss from operations		(13,560)		(10,939)		(26,248)		(23,956)
Other income, net:
Interest income		1,133		1,689		2,862		2,706
Interest expense		—		—		—		(551)
Other (expense) income, net		(190)		(167)		(218)		(200)
Total other income, net		943		1,522		2,644		1,955
Loss from operations before income taxes		(12,617)		(9,417)		(23,604)		(22,001)
Benefit for income taxes		69		71		139		122
Net loss	$	(12,548)	$	(9,346)	$	(23,465)	$	(21,879)
Net loss per share
Basic and diluted	$	(0.37)	$	(0.29)	$	(0.70)	$	(0.68)
Weighted average common shares outstanding
Basic and diluted		34,061,933		32,199,156		33,386,413		32,083,122

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

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908 DEVICES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss	$	(12,548)	$	(9,346)	$	(23,465)	$	(21,879)
Other comprehensive income (loss)
Foreign currency translation adjustment		(125)		(57)		(495)		234
Unrealized gain (loss) on marketable securities, net of tax of $0		3		112		(12)		112
Total other comprehensive income (loss)	$	(122)	$	55	$	(507)	$	346
Comprehensive loss	$	(12,670)	$	(9,291)	$	(23,972)	$	(21,533)

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908 DEVICES INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share amounts)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders'
	Shares	Amount		Capital		Income		Deficit		Equity
Balances at December 31, 2023	32,519,023	$	33	$	334,692	$	1,365	$	(170,599)	$	165,491
Issuance of common stock upon exercise of stock options	34,563		—		61		—		—		61
Stock-based compensation expense	—		—		2,643		—		—		2,643
Vesting of restricted stock units	370,511		—		—		—		—		—
Net loss	—		—		—		—		(10,917)		(10,917)
Foreign currency translation adjustments	—		—		—		(370)		—		(370)
Unrealized loss on marketable securities	—		—		—		(15)		—		(15)
Balances at March 31, 2024	32,924,097	$	33	$	337,396	$	980	$	(181,516)	$	156,893
Issuance of common stock upon exercise of stock options	57,610		—		97		—		—		97
Stock-based compensation expense	—		—		3,096		—		—		3,096
Issuance of common stock pursuant to the acquisition of RedWave Technology	1,497,171		2		8,615		—		—		8,617
Issuance of common stock upon ESPP purchase	67,292		—		326						326
Vesting of restricted stock units	84,713		—		—		—		—		—
Net loss	—		—		—		—		(12,548)		(12,548)
Foreign currency translation adjustments	—		—		—		(125)		—		(125)
Unrealized gains on marketable securities	—		—		—		3		—		3
Balances at June 30, 2024	34,630,883	$	35	$	349,530	$	858	$	(194,064)	$	156,359


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders'
	Shares	Amount		Capital		Income		Deficit		Equity
Balances at December 31, 2022	31,859,847	$	32	$	323,969	$	798	$	(134,200)	$	190,599
Issuance of common stock upon exercise of stock options	56,547		—		88		—		—		88
Stock-based compensation expense	—		—		2,166		—		—		2,166
Vesting of restricted stock units	145,123		—		—		—		—		—
Net loss	—		—		—		—		(12,532)		(12,532)
Foreign currency translation adjustments	—		—		—		291		—		291
Balances at March 31, 2023	32,061,517	$	32	$	326,223	$	1,089	$	(146,732)	$	180,612
Issuance of common stock upon exercise of stock options	166,226		—		301		—		—		301
Stock-based compensation expense	—		—		2,578		—		—		2,578
Issuance of common stock upon ESPP purchase	45,082		—		259		—		—		259
Vesting of restricted stock units	54,036		—		—		—		—		—
Net loss	—		—		—		—		(9,346)		(9,346)
Foreign currency translation adjustments	—		—		—		(57)		—		(57)
Unrealized gains on marketable securities	—		—		—		112		—		112
Balances at June 30, 2023	32,326,861	$	32	$	329,361	$	1,144	$	(156,078)	$	174,459

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

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908 DEVICES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(23,465)	$	(21,879)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		1,832		1,239
Stock-based compensation expense		5,739		4,744
Noncash interest expense and loss on extinguishment of debt		—		523
Provision for inventory obsolescence		229		38
Net amortization of premiums and accretion of discounts on marketable securities		(87)		—
Loss on disposal of property and equipment		28		—
Provision for credit losses		190		108
Change in fair value of contingent consideration		—		231
Deferred income tax		(138)		(122)
Changes in operating assets and liabilities, net of business combinations:
Accounts receivable, net		(1,260)		(376)
Inventory		(3,073)		(1,680)
Prepaid expenses and other current assets		740		(274)
Other long-term assets		35		(58)
Accounts payable and accrued expenses		(1,443)		(918)
Deferred revenue		(1,698)		278
Right-of-use operating lease assets		962		741
Operating lease liabilities		(988)		(682)
Other long-term liabilities		—		(442)
Net cash used in operating activities		(22,397)		(18,529)
Cash flows from investing activities:
Purchases of property and equipment		(256)		(1,505)
Purchases of marketable securities		(30,208)		(19,616)
Acquisition of RedWave Technology, net of cash acquired		(44,783)		—
Proceeds from sales and maturities of marketable securities		24,356		—
Net cash used in investing activities		(50,891)		(21,121)
Cash flows from financing activities:
Payments for withholding taxes on vested awards		(996)		(530)
Proceeds from issuance of common stock		485		648
Repayment of notes payable		—		(15,000)
Payments for contingent consideration		(417)		(900)
Net cash used in financing activities		(928)		(15,782)
Effect of foreign exchange rate changes on cash and cash equivalents		(14)		6
Net decrease in cash, cash equivalents and restricted cash		(74,230)		(55,426)
Cash, cash equivalents and restricted cash at beginning of period		121,212		188,593
Cash, cash equivalents and restricted cash at end of period	$	46,982	$	133,167
Supplemental disclosure of noncash investing and financing information:
Property and equipment included in account payable	$	—	$	48
Transfers of inventory to property and equipment	$	589	$	195
Fair value of common stock issued for acquisition of RedWave Technology	$	8,616	$	—
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	46,811	$	132,996
Restricted cash included in other long-term assets		171		171
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	46,982	$	133,167

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

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908 DEVICES INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of the Business and Basis of Presentation

908 Devices Inc. (the “Company”) was incorporated in the State of Delaware on February 10, 2012. The Company is a commercial-stage technology company providing a suite of purpose-built handheld and desktop devices used at the point-of-need for chemical and biochemical analysis in a broad array of markets including life sciences research, bioprocessing, pharma/biopharma, forensics and adjacent markets.

The Company is subject to risks and uncertainties common to technology companies in the device industry and of similar size, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, uncertainty of market acceptance of products, and the need to obtain additional financing to fund operations. Potential risks and uncertainties also include, without limitation, uncertainties regarding rising inflation and higher interest rates. Products currently under development will require additional research and development efforts prior to commercialization and will require additional capital and adequate personnel and infrastructure. The Company’s research and development may not be successfully completed, adequate protection for the Company’s technology may not be obtained, the Company may not obtain necessary government regulatory approval, and approved products may not prove commercially viable. The Company operates in an environment of rapid change in technology and competition.

Acquisition

The Company acquired CAM2 Technologies, LLC (d/b/a RedWave Technology) (“RedWave”), located in Danbury, Connecticut in April 2024. RedWave is a leading provider of portable FTIR spectroscopic analyzers for rapid chemical identification of bulk materials. FTIR (Fourier Transform Infrared), an optical spectroscopy technology, is highly regarded for its specific substance identification abilities across a broad range of bulk materials. This acquisition provides the Company with an expanded portfolio of handheld chemical analysis devices for forensic workflows that quickly detect and identify unknown solids, liquids, vapors, and aerosols at the point of need. In addition, RedWave bolsters the Company’s desktop portfolio with a line of accessories for pharma Process Analytical Technology (PAT) and industrial QC applications. See Note 13, Acquisition, for further information.

The accompanying condensed consolidated financial statements have been prepared based on continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company has incurred recurring losses since inception, including net losses of $23.5 million for the six months ended June 30, 2024 and $36.4 million for the year ended December 31, 2023. As of June 30, 2024, the Company had an accumulated deficit of $194.1 million. The Company expects to continue to generate operating losses in the foreseeable future. The Company expects that its cash and cash equivalents and revenue from product and service will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of the condensed consolidated financial statements. The Company may seek additional funding through private or public equity financings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborations or other arrangements. The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, product expansion or commercialization efforts, or the Company may be unable to continue operations.

2. Summary of Significant Accounting Policies

Unaudited Condensed Interim Financial Information

The condensed consolidated balance sheet at December 31, 2023 was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 have been prepared by

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the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 on file with the SEC. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of June 30, 2024 and results of operations for the three and six months ended June 30, 2024 and 2023 and statements of stockholders’ equity for the three and six months ended June 30, 2024 and 2023 and cash flows for the six months ended June 30, 2024 and 2023 have been made. The Company’s results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2024 or any other period.

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, 908 Devices Securities Corporation, RedWave, 908 Devices (Shanghai) Technology Co., Ltd. and 908 Devices GmbH. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, revenue recognition and accounts receivable, the valuation of inventory, fair value of assets acquired and liabilities assumed in acquisitions, fair value of contingent consideration, and the valuation of stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Due to the impact of inflation and changes in interest rates, there has been uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require further updates to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of these condensed consolidated financial statements. These estimates may change, as new events occur and additional information is obtained. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.

Risk of Concentrations of Credit, Significant Customers and Significant Suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and accounts receivable. The Company’s cash and cash equivalents and restricted cash are maintained in bank deposit accounts and money market funds that regularly exceed federally insured limits. The Company is exposed to credit risk on its cash, cash equivalents and restricted cash in the event of default by the financial institutions to the extent account balances exceed the amount insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company’s marketable securities are invested in U.S. treasury securities and as a result, the Company believes represent minimal credit risk.

Significant customers are those that accounted for 10% or more of the Company’s total revenue or accounts receivable. For the three months ended June 30, 2024, no customer represented 10% or more of total revenue. For the comparable three months ended June 30, 2023, three customers represented 13%, 12% and 10% of total revenue, respectively. For the six months ended June 30, 2024, one customer represented 10% of total revenue, respectively. For the comparable six months ended June

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30, 2023, one customer represented 14% of total revenue. As of June 30, 2024, one customer accounted for 14% of gross accounts receivable. As of December 31, 2023, one customer accounted for 19% of gross accounts receivable.

Certain of the components included in the Company’s products are obtained from a sole source, a single source or a limited group of suppliers. Although the Company seeks to reduce dependence on those limited sources of suppliers and manufacturers, the partial or complete loss of certain of these sources, or the requirement to establish a new supplier for the components, could have a material adverse effect on the Company’s operating results, financial condition and cash flows and damage its customer relationships.

Accounts Receivable

Accounts receivable are presented net of an allowance for credit losses, which is an estimate of amounts that may not be collectible. The Company performs ongoing credit evaluations of its customers and monitors economic conditions to identify facts and circumstances that may indicate its receivables are at risk of not being collected. The Company provides reserves against accounts receivable for estimated credit losses, if any, that may result from a customer’s inability to pay based on the composition of its accounts receivable, current economic conditions and historical credit loss activity, and relevant available forward-looking information. Amounts deemed uncollectible are charged or written-off against the reserve.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Balances at beginning of period	$	420	$	25	$	395	$	25
Current period change for expected credit loss		165		108		190		108
Deduction / recoveries collected		—		—		—		—
Balances at end of period	$	585	$	133	$	585	$	133

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

●

Level 1 - Quoted prices in active markets for identical assets or liabilities.

●

Level 2 - Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

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Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company's financial instruments consist primarily of cash equivalents, marketable securities, accounts receivable, accounts payable, accrued expenses and contingent consideration. The Company’s cash equivalents and marketable securities, consisting of money market funds (a Level 1 measurement) and U.S. treasury notes (a Level 2 measurement), are carried at fair value, determined according to the fair value hierarchy described above (See Note 3, Fair Value Measurements). The carrying values of the Company’s accounts receivable, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. The carrying value of the Company’s long-term debt approximates its fair value (a Level 2 measurement) at each balance sheet date due to its variable interest rate, which approximates a market interest rate. The Company’s contingent consideration is measured at its fair value at each balance sheet date using unobservable inputs in the valuation methodology (a Level 3 measurement).

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Marketable Securities

The Company’s marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Premiums and discounts on marketable securities are amortized and accreted, respectively, to earliest call date and maturity, respectively, and included in interest income in the consolidated statements of operations.

When the fair value is below the amortized cost basis of a marketable security, an estimate of expected credit losses is made. The credit-related impairment amount is recognized in the consolidated statements of operations. Credit losses are recognized through the use of an allowance for credit losses account in the consolidated balance sheet and subsequent improvements in expected credit losses are recognized as a reversal of an amount in the allowance account. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for the credit loss is written-off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations. There were no credit losses recorded for the six months ended June 30, 2024. The Company purchased a total of approximately $30.2 million of U.S. treasury securities for the six months ended June 30, 2024 and all marketable securities mature in one year or less.

Goodwill and Intangible Assets

Goodwill is not amortized, but is evaluated for impairment on an annual basis, or on an interim basis when events or changes in circumstances indicate that the carrying value may not be recoverable. In assessing the recoverability of goodwill, the Company must make assumptions regarding the estimated future cash flows, and other factors, to determine the fair value. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges in the reporting period in which the impairment is determined.

The Company tests goodwill for impairment at the reporting unit level, which is the operating segment, in the fourth quarter of every fiscal year. The Company has the option of performing a qualitative assessment to determine whether further impairment testing is necessary before performing the quantitative assessment. If as a result of the qualitative assessment, it is more-likely-than-not that the fair value of its reporting unit is less than its carrying amount, a quantitative impairment test will be required. The quantitative goodwill impairment test requires management to estimate and compare the fair value of the reporting unit with its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets, goodwill is not impaired. If the fair value of the reporting unit is less than the carrying value, the difference is recorded as an impairment loss.

Intangible assets with a finite useful life are recorded at cost, net of accumulated amortization and are amortized on a straight-line basis over their estimated useful lives as follows:



Customer Relationships		8 years
Developed Technology		15 years
Software		3 years
Trade Name		2 years

The Company reviews other long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or an asset group may not be recoverable. In evaluating long-lived assets for recoverability, the Company estimates the future cash flows that are expected from the use of each asset group. Impairment losses are measured and recorded for the excess of an asset's carrying value over its fair value. To determine the fair value of long-lived assets, the Company utilizes the valuation technique or techniques deemed most appropriate based on the nature of the asset or asset group, which may include the use of quoted market prices, prices for similar assets or other valuation techniques such as discounted future cash flows or earnings.

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Revenue Recognition

The Company recognizes revenue from sales to customers under ASC 606, Revenue from Contracts with Customers (“ASC 606”), by applying the following five steps: (1) identification of the contract, or contracts, with a customer, (2) identification of the performance obligations in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations in the contract and (5) recognition of revenue when, or as, performance obligations are satisfied.

For a contract with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation on a relative standalone selling price basis using the Company’s best estimate of the standalone selling price of each distinct product or service in the contract. The primary method used to estimate standalone selling price is the price observed in standalone sales to customers; however, when prices in standalone sales are not available the Company may use third party pricing for similar products or services or estimate the standalone selling price, which is set by management. Allocation of the transaction price is determined at the contract’s inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied.

Product and Service Revenue

The Company derives product and service revenue primarily from the sale of handheld and desktop products and related consumables and services. Revenue is recognized when control of the promised products, consumables or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products, consumables or services (the transaction price). A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of accounting under ASC 606. For devices and consumables sold by the Company, control transfers to the customer at a point in time. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer, the customer must have the significant risks and rewards of ownership, and where acceptance is other than perfunctory, the customer must have accepted the product or service. The Company’s principal terms of sale are freight on board (“FOB”) shipping point, or equivalent, and, as such, the Company primarily transfers control and records revenue for product sales upon shipment. Sales arrangements with delivery terms that are not FOB shipping point are not recognized upon shipment and the transfer of control for revenue recognition is evaluated based on the associated shipping terms and customer obligations. If a performance obligation to the customer with respect to a sales transaction remains to be fulfilled following shipment (typically installation or acceptance by the customer), revenue recognition for that performance obligation is deferred until such commitments have been fulfilled. For extended warranty and support, control transfers to the customer over the term of the arrangement. Revenue for extended warranty and support is recognized based upon the period of time elapsed under the arrangement as this period represents the transfer of benefits or services under the agreement.

The Company recognizes a receivable at the point in time at which it has an unconditional right to payment. Such receivables are not contract assets. Payment terms for customer orders, including for each of the Company’s primary performance obligations, are typically 30 to 90 days after the shipment or delivery of the product, and such payments typically do not include payments that are variable, dependent on specified factors or events. In limited circumstances, there exists a right of return for a product if agreed to by the Company. Revenue is only recognized for those goods that are not expected to be returned such that it is probable that there will not be a significant reversal of cumulative revenue. Service arrangements commonly call for payments in advance of performing the work (e.g., extended warranty/service contracts), upon completion of the service or a mix of both. The Company does not enter into significant financing agreements or other forms of variable consideration.

Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is not only subject to the passage of time. The Company had no contract assets related to product or service revenue as of June 30, 2024 or December 31, 2023.

Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer. The Company has determined that its only contract liability related to product and service revenue is deferred revenue, which consists of customer deposits and upfront payments but that have not been recognized as revenue. Amounts expected to be recognized as revenue within 12 months of the balance sheet date are

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classified as current deferred revenue and amounts expected to be recognized as revenue beyond 12 months of the balance sheet date are classified as noncurrent deferred revenue.

The following is a summary of the activity of the Company’s deferred revenue related to product and service revenue (in thousands):


	Six Months Ended June 30,
	2024		2023
Balances at beginning of period	$	19,200	$	16,510
Recognition of revenue included in balance at beginning of the period		(5,494)		(3,811)
Deferred revenue acquired, net of revenue recognized		3,625		—
Revenue deferred during the period, net of revenue recognized		4,151		6,589
Balances at end of period	$	21,482	$	19,288

The amount of deferred revenue equals the transaction price allocated to unfulfilled performance obligations for the period presented. Such deferred revenue amounts related to product and service revenue are expected to be recognized in the future as follows (in thousands):


	June 30,		December 31,
	2024		2023
Deferred revenue expected to be recognized in:
One year or less	$	11,954	$	10,629
One to two years		5,204		5,080
Three years and beyond		4,324		3,491
	$	21,482	$	19,200

Distribution Channels

A majority of the Company’s revenue is generated by sales in conjunction with its channel partners, such as its international channel partners and, in the United States, for end customers where a government contract is required or a customer has a pre-existing relationship. When the Company transacts with a channel partner, its contractual arrangement is with the partner and not with the end-use customer. Whether the Company transacts business with and receives the order from a channel partner or directly from an end-use customer, its revenue recognition policy and resulting pattern of revenue recognition for the order are the same.

Disaggregated Revenue

The Company’s product and service revenue consists of sales of devices and recurring revenue which includes consumables, accessories and the sale of service and extended warranty plans. The following table presents the Company’s product and service revenue by revenue stream (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Product and service revenue:
Device sales revenue	$	8,643	$	7,959	$	14,104	$	13,042
Recurring revenue		5,304		3,990		9,834		8,169
Total product and service revenue		13,947		11,949		23,938		21,211
Contract revenue		100		145		100		370
Total revenue	$	14,047	$	12,094	$	24,038	$	21,581

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The following table presents the Company’s product and service revenue by device type (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Handheld revenue:
Device sales revenue	$	7,759	$	6,503	$	12,349	$	10,249
Recurring revenue		3,336		2,319		6,169		4,745
Total handheld revenue		11,095		8,822		18,518		14,994

908 Devices Inc. [MASS] Filings
10-Q	[2024-08-06]
10-Q	[2024-05-03]
10-K	[2024-03-08]
10-Q	[2023-11-07]
10-Q	[2023-08-08]
10-Q	[2023-05-09]
10-K	[2023-03-15]
10-Q	[2022-11-14]
10-Q	[2022-08-09]
10-Q	[2022-05-10]
10-K	[2022-03-11]
S-1	[2021-11-08]
10-Q	[2021-11-04]
10-Q	[2021-08-04]
10-Q	[2021-05-13]
10-K	[2021-03-31]
S-1	[2020-11-25]