0000727207falseDecember 31Q22023P1YP2Y0.10.0050.002260.138890.120480.138890.120481930.10.1388900007272072023-01-012023-06-3000007272072023-08-10xbrli:shares00007272072023-06-30iso4217:USD00007272072022-12-310000727207us-gaap:RelatedPartyMember2023-06-300000727207us-gaap:RelatedPartyMember2022-12-31iso4217:USDxbrli:shares00007272072023-04-012023-06-3000007272072022-04-012022-06-3000007272072022-01-012022-06-300000727207us-gaap:NonrelatedPartyMember2023-04-012023-06-300000727207us-gaap:NonrelatedPartyMember2022-04-012022-06-300000727207us-gaap:NonrelatedPartyMember2023-01-012023-06-300000727207us-gaap:NonrelatedPartyMember2022-01-012022-06-300000727207us-gaap:RelatedPartyMember2023-04-012023-06-300000727207us-gaap:RelatedPartyMember2022-04-012022-06-300000727207us-gaap:RelatedPartyMember2023-01-012023-06-300000727207us-gaap:RelatedPartyMember2022-01-012022-06-3000007272072021-12-3100007272072022-06-300000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-06-30xbrli:pure0000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-300000727207us-gaap:PreferredStockMember2023-03-310000727207us-gaap:PreferredStockMember2022-03-310000727207us-gaap:PreferredStockMember2022-12-310000727207us-gaap:PreferredStockMember2021-12-310000727207us-gaap:PreferredStockMemberus-gaap:RelatedPartyMember2023-04-012023-06-300000727207us-gaap:PreferredStockMemberus-gaap:RelatedPartyMember2023-01-012023-06-300000727207us-gaap:PreferredStockMember2023-06-300000727207us-gaap:PreferredStockMember2022-06-300000727207us-gaap:CommonStockMember2023-03-310000727207us-gaap:CommonStockMember2022-03-310000727207us-gaap:CommonStockMember2022-12-310000727207us-gaap:CommonStockMember2021-12-310000727207us-gaap:CommonStockMemberus-gaap:RelatedPartyMember2023-04-012023-06-300000727207us-gaap:CommonStockMemberus-gaap:RelatedPartyMember2023-01-012023-06-300000727207us-gaap:CommonStockMember2023-04-012023-06-300000727207us-gaap:CommonStockMember2022-04-012022-06-300000727207us-gaap:CommonStockMember2023-01-012023-06-300000727207us-gaap:CommonStockMember2022-01-012022-06-300000727207us-gaap:CommonStockMember2023-06-300000727207us-gaap:CommonStockMember2022-06-300000727207us-gaap:AdditionalPaidInCapitalMember2023-03-310000727207us-gaap:AdditionalPaidInCapitalMember2022-03-310000727207us-gaap:AdditionalPaidInCapitalMember2022-12-310000727207us-gaap:AdditionalPaidInCapitalMember2021-12-310000727207srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2021-12-310000727207us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300000727207us-gaap:AdditionalPaidInCapitalMember2023-01-012023-06-300000727207us-gaap:AdditionalPaidInCapitalMemberus-gaap:RelatedPartyMember2023-04-012023-06-300000727207us-gaap:AdditionalPaidInCapitalMemberus-gaap:RelatedPartyMember2023-01-012023-06-300000727207us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300000727207us-gaap:AdditionalPaidInCapitalMember2022-01-012022-06-300000727207us-gaap:AdditionalPaidInCapitalMember2023-06-300000727207us-gaap:AdditionalPaidInCapitalMember2022-06-300000727207us-gaap:RetainedEarningsMember2023-03-310000727207us-gaap:RetainedEarningsMember2022-03-310000727207us-gaap:RetainedEarningsMember2022-12-310000727207us-gaap:RetainedEarningsMember2021-12-310000727207srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2021-12-310000727207us-gaap:RetainedEarningsMember2023-04-012023-06-300000727207us-gaap:RetainedEarningsMember2022-04-012022-06-300000727207us-gaap:RetainedEarningsMember2023-01-012023-06-300000727207us-gaap:RetainedEarningsMember2022-01-012022-06-300000727207us-gaap:RetainedEarningsMember2023-06-300000727207us-gaap:RetainedEarningsMember2022-06-300000727207us-gaap:TreasuryStockCommonMember2023-03-310000727207us-gaap:TreasuryStockCommonMember2022-03-310000727207us-gaap:TreasuryStockCommonMember2022-12-310000727207us-gaap:TreasuryStockCommonMember2021-12-310000727207us-gaap:TreasuryStockCommonMember2023-06-300000727207us-gaap:TreasuryStockCommonMember2022-06-300000727207us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310000727207us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000727207us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000727207us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000727207us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300000727207us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000727207us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-06-300000727207us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-06-300000727207us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300000727207us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000727207axdx:LiabilitiesOutstandingNotesMemberus-gaap:LenderConcentrationRiskMemberaxdx:AdHocNoteholderGroupMember2023-03-132023-03-130000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-03-130000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-03-150000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-04-210000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMemberaxdx:August2022ExchangeTransactionMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2023-04-212023-04-210000727207axdx:RestructuringSupportAgreementMemberaxdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-06-092023-06-090000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-06-090000727207axdx:RestructuringSupportAgreementMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-092023-06-090000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-090000727207axdx:RestructuringSupportAgreementMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-090000727207us-gaap:SeniorNotesMemberaxdx:RestructuringSupportAgreementMembersrt:AffiliatedEntityMember2023-06-092023-06-090000727207axdx:RestructuringSupportAgreementMemberus-gaap:SeriesAPreferredStockMember2023-06-092023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:March2022SecuritiesPurchaseAgreementMembersrt:AffiliatedEntityMember2023-06-092023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:RestructuringSupportAgreementMembersrt:AffiliatedEntityMember2023-06-090000727207axdx:RestructuringSupportAgreementMemberus-gaap:ScenarioPlanMemberus-gaap:CommonStockMember2023-06-090000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2022-12-3100007272072023-03-3100007272072022-03-310000727207srt:MinimumMember2023-06-300000727207srt:MaximumMember2023-06-300000727207axdx:InstrumentsMember2023-06-300000727207us-gaap:EquipmentMember2023-06-300000727207us-gaap:SubsequentEventMember2023-07-112023-07-110000727207us-gaap:CashAndCashEquivalentsMemberus-gaap:CreditConcentrationRiskMemberaxdx:FinancialInstitutionOneMember2023-01-012023-06-300000727207us-gaap:CashAndCashEquivalentsMemberaxdx:FinancialInstitutionTwoMemberus-gaap:CreditConcentrationRiskMember2023-01-012023-06-300000727207us-gaap:CashAndCashEquivalentsMemberus-gaap:CreditConcentrationRiskMemberaxdx:FinancialInstitutionOneMember2022-01-012022-12-310000727207us-gaap:CashAndCashEquivalentsMemberaxdx:FinancialInstitutionTwoMemberus-gaap:CreditConcentrationRiskMember2022-01-012022-12-310000727207axdx:FinancialInstitutionThreeMemberus-gaap:CashAndCashEquivalentsMemberus-gaap:CreditConcentrationRiskMember2022-01-012022-12-310000727207us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberaxdx:OneCustomerMember2023-01-012023-06-300000727207us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberaxdx:OneCustomerMember2022-01-012022-12-310000727207us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMemberaxdx:OneCustomerMember2023-01-012023-06-300000727207us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMemberaxdx:OneCustomerMember2023-04-012023-06-300000727207us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMemberaxdx:OneCustomerMember2022-01-012022-06-300000727207us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMemberaxdx:OneCustomerMember2022-04-012022-06-300000727207us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-06-300000727207us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-06-300000727207us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-06-300000727207us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-06-300000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-06-300000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-06-300000727207us-gaap:FairValueMeasurementsRecurringMember2023-06-300000727207us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-06-300000727207us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-06-300000727207us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-06-300000727207us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMember2023-06-300000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2023-06-300000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2023-06-300000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMember2023-06-300000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-06-300000727207us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310000727207us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310000727207us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310000727207us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310000727207us-gaap:FairValueMeasurementsRecurringMember2022-12-310000727207us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310000727207us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310000727207us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310000727207us-gaap:MutualFundMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000727207us-gaap:CertificatesOfDepositMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310000727207us-gaap:CertificatesOfDepositMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310000727207us-gaap:CertificatesOfDepositMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310000727207us-gaap:CertificatesOfDepositMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000727207us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310000727207us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310000727207us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310000727207us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000727207us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310000727207us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310000727207us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310000727207us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2022-12-310000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2022-12-310000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CorporateDebtSecuritiesMember2022-12-310000727207us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2022-12-310000727207us-gaap:StockOptionMemberus-gaap:FairValueInputsLevel3Member2023-06-300000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMembersrt:AffiliatedEntityMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMember2023-06-300000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMemberus-gaap:FairValueInputsLevel3Memberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2022-12-310000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:FairValueInputsLevel3Memberus-gaap:ConvertibleDebtMember2023-06-300000727207us-gaap:SeniorNotesMemberaxdx:TwoPointFiveZeroConvertibleNotesDue2023Membersrt:AffiliatedEntityMember2023-06-300000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMemberus-gaap:FairValueInputsLevel2Member2022-12-310000727207us-gaap:CorporateDebtSecuritiesMember2023-06-300000727207us-gaap:CertificatesOfDepositMember2022-12-310000727207us-gaap:USTreasuryAndGovernmentMember2022-12-310000727207us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember2022-12-310000727207us-gaap:CorporateDebtSecuritiesMember2022-12-310000727207us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-04-012022-06-300000727207us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-01-012022-06-300000727207us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-01-012023-06-300000727207us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-04-012023-06-300000727207us-gaap:ComputerEquipmentMember2023-06-300000727207us-gaap:ComputerEquipmentMember2022-12-310000727207us-gaap:TechnologyEquipmentMember2023-06-300000727207us-gaap:TechnologyEquipmentMember2022-12-310000727207us-gaap:LeaseholdsAndLeaseholdImprovementsMember2023-06-300000727207us-gaap:LeaseholdsAndLeaseholdImprovementsMember2022-12-310000727207axdx:InstrumentsMember2022-12-310000727207us-gaap:ConstructionInProgressMember2023-06-300000727207us-gaap:ConstructionInProgressMember2022-12-310000727207axdx:ProductsandServicesnotYetDeliveredMember2023-06-300000727207axdx:ProductsandServicesnotYetDeliveredMember2022-12-310000727207axdx:CommercialAgentRelationshipWithBDMember2023-06-302023-06-300000727207axdx:CommercialAgentRelationshipWithBDMember2023-01-012023-06-300000727207axdx:CommercialAgentRelationshipWithBDMember2023-06-300000727207us-gaap:ConvertibleDebtMember2023-06-300000727207us-gaap:ConvertibleDebtMember2022-12-310000727207us-gaap:ConvertibleDebtMember2023-04-012023-06-300000727207us-gaap:ConvertibleDebtMember2022-04-012022-06-300000727207us-gaap:ConvertibleDebtMember2023-01-012023-06-300000727207us-gaap:ConvertibleDebtMember2022-01-012022-06-300000727207axdx:ConvertibleNotesExchangeAgreementMemberus-gaap:ConvertibleDebtMember2023-04-012023-06-300000727207axdx:ConvertibleNotesExchangeAgreementMemberus-gaap:ConvertibleDebtMember2022-04-012022-06-300000727207axdx:ConvertibleNotesExchangeAgreementMemberus-gaap:ConvertibleDebtMember2023-01-012023-06-300000727207axdx:ConvertibleNotesExchangeAgreementMemberus-gaap:ConvertibleDebtMember2022-01-012022-06-300000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2018-03-270000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2018-03-272018-03-270000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2018-04-042018-04-040000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-06-302023-06-300000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:ConvertibleDebtMember2018-03-272018-03-27axdx:day0000727207us-gaap:DebtInstrumentRedemptionPeriodTwoMemberaxdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2018-03-272018-03-270000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-04-012023-06-300000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2022-04-012022-06-300000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-01-012023-06-300000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2022-01-012022-06-300000727207axdx:ForbearanceAgreementMember2023-03-130000727207axdx:ForbearanceAgreementMemberaxdx:AdHocNoteholderGroupMember2023-01-012023-06-300000727207axdx:ForbearanceAgreementMemberaxdx:OtherHoldersMember2023-01-012023-06-300000727207axdx:ForbearanceAgreementMemberaxdx:OtherHoldersMember2023-03-130000727207axdx:RestructuringSupportAgreementMemberaxdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-06-090000727207us-gaap:SeniorNotesMemberaxdx:RestructuringSupportAgreementMemberus-gaap:SeriesAPreferredStockMember2023-06-092023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:March2022SecuritiesPurchaseAgreementMembersrt:AffiliatedEntityMember2023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:March2022SecuritiesPurchaseAgreementMemberus-gaap:PrivatePlacementMembersrt:AffiliatedEntityMember2023-06-092023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:RestructuringSupportAgreementMemberus-gaap:CommonStockMembersrt:AffiliatedEntityMember2023-06-090000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberaxdx:June2023ExchangeTransactionMemberus-gaap:ConvertibleDebtMember2023-06-092023-06-090000727207axdx:June2023ExchangeTransactionMemberaxdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-06-092023-06-090000727207axdx:June2023ExchangeTransactionMemberaxdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-06-090000727207axdx:June2023ExchangeTransactionMemberaxdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-01-012023-06-300000727207axdx:June2023ExchangeTransactionMemberaxdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2023-04-012023-06-300000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2022-03-210000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberaxdx:March2022ExchangeTransactionMemberus-gaap:ConvertibleDebtMember2022-03-212022-03-21axdx:tranche0000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberaxdx:March2022ExchangeTransactionMemberus-gaap:ConvertibleDebtMember2022-03-210000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2022-06-300000727207axdx:ConvertibleNotesExchangeAgreementMemberaxdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2022-01-012022-06-300000727207axdx:PrepaidForwardMember2023-01-012023-06-300000727207axdx:PrepaidForwardMember2023-06-300000727207axdx:PrepaidForwardMember2023-03-240000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:ConvertibleDebtMember2023-06-092023-06-090000727207srt:MinimumMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-090000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ScenarioPlanMemberus-gaap:ConvertibleDebtMember2023-06-302023-06-300000727207us-gaap:StockOptionMember2023-03-310000727207us-gaap:StockOptionMember2022-03-310000727207us-gaap:StockOptionMember2022-12-310000727207us-gaap:StockOptionMember2021-12-310000727207us-gaap:StockOptionMember2023-04-012023-06-300000727207us-gaap:StockOptionMember2022-04-012022-06-300000727207us-gaap:StockOptionMember2023-01-012023-06-300000727207us-gaap:StockOptionMember2022-01-012022-06-300000727207us-gaap:StockOptionMember2023-06-300000727207us-gaap:StockOptionMember2022-06-300000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:FairValueInputsLevel3Memberus-gaap:ConvertibleDebtMember2023-06-090000727207us-gaap:StockOptionMember2023-06-090000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-092023-06-090000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2022-12-310000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-04-012023-06-300000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2022-04-012022-06-300000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-01-012023-06-300000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2022-01-012022-06-300000727207us-gaap:MeasurementInputDiscountRateMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-300000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMemberaxdx:MeasurementInputCouponRateMember2023-06-30axdx:material0000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMemberaxdx:MeasurementInputCouponRateMember2023-06-090000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:MeasurementInputExpectedTermMemberus-gaap:ConvertibleDebtMember2023-06-300000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:MeasurementInputExpectedTermMemberus-gaap:ConvertibleDebtMember2023-06-090000727207us-gaap:MeasurementInputPriceVolatilityMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-300000727207us-gaap:MeasurementInputPriceVolatilityMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-090000727207us-gaap:MeasurementInputRiskFreeInterestRateMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-300000727207us-gaap:MeasurementInputRiskFreeInterestRateMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-090000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:MeasurementInputInceptionDiscountRateMemberus-gaap:ConvertibleDebtMember2023-06-300000727207axdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:MeasurementInputInceptionDiscountRateMemberus-gaap:ConvertibleDebtMember2023-06-090000727207us-gaap:MeasurementInputDiscountRateMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-090000727207us-gaap:MeasurementInputSharePriceMember2023-06-300000727207us-gaap:MeasurementInputSharePriceMember2023-06-090000727207us-gaap:MeasurementInputConversionPriceMember2023-06-300000727207us-gaap:MeasurementInputConversionPriceMember2023-06-090000727207axdx:MeasurementInputConversionCapPriceMember2023-06-300000727207axdx:MeasurementInputConversionCapPriceMember2023-06-090000727207us-gaap:MeasurementInputExpectedTermMember2023-06-300000727207us-gaap:MeasurementInputExpectedTermMember2023-06-090000727207axdx:MeasurementInputTimeToCallMember2023-06-300000727207axdx:MeasurementInputTimeToCallMember2023-06-090000727207us-gaap:MeasurementInputPriceVolatilityMember2023-06-300000727207us-gaap:MeasurementInputPriceVolatilityMember2023-06-090000727207us-gaap:MeasurementInputRiskFreeInterestRateMember2023-06-300000727207us-gaap:MeasurementInputRiskFreeInterestRateMember2023-06-090000727207us-gaap:MeasurementInputInceptionDiscountRateMember2023-06-300000727207us-gaap:MeasurementInputInceptionDiscountRateMember2023-06-090000727207srt:MinimumMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-06-092023-06-090000727207axdx:JackWSchulerLivingTrustMemberus-gaap:ConvertibleDebtMemberaxdx:August2022ExchangeTransactionMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2022-08-152022-08-150000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMemberaxdx:August2022ExchangeTransactionMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2022-08-152022-08-150000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMemberaxdx:August2022ExchangeTransactionMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2022-08-150000727207axdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2022-08-150000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMemberus-gaap:FairValueInputsLevel3Memberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2022-08-150000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMemberaxdx:August2022ExchangeTransactionMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2023-06-300000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMemberaxdx:August2022ExchangeTransactionMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2022-12-310000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMemberaxdx:August2022ExchangeTransactionMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2023-04-012023-06-300000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMemberaxdx:August2022ExchangeTransactionMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2022-04-012022-06-300000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMemberaxdx:August2022ExchangeTransactionMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2023-01-012023-06-300000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMemberaxdx:August2022ExchangeTransactionMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMembersrt:AffiliatedEntityMember2022-01-012022-06-300000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMembersrt:AffiliatedEntityMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMember2023-06-080000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMembersrt:AffiliatedEntityMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMember2023-06-090000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeniorNotesMembersrt:AffiliatedEntityMemberaxdx:FivePointZeroPercentSecuredPromissoryNoteMember2023-06-092023-06-0900007272072023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:EmbededWarrantMembersrt:AffiliatedEntityMemberaxdx:August2022ExchangeTransactionMember2023-01-012023-06-300000727207us-gaap:RestrictedStockUnitsRSUMember2023-04-012023-06-300000727207us-gaap:RestrictedStockUnitsRSUMember2022-04-012022-06-300000727207us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-06-300000727207us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-06-300000727207us-gaap:EmployeeStockOptionMember2023-04-012023-06-300000727207us-gaap:EmployeeStockOptionMember2022-04-012022-06-300000727207us-gaap:EmployeeStockOptionMember2023-01-012023-06-300000727207us-gaap:EmployeeStockOptionMember2022-01-012022-06-300000727207us-gaap:WarrantMember2023-04-012023-06-300000727207us-gaap:WarrantMember2022-04-012022-06-300000727207us-gaap:WarrantMember2023-01-012023-06-300000727207us-gaap:WarrantMember2022-01-012022-06-300000727207srt:MinimumMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:ConvertibleDebtMember2023-06-092023-06-090000727207axdx:RestrictedStockUnitsAndRestrictedStockAwardsMember2022-12-310000727207axdx:RestrictedStockUnitsAndRestrictedStockAwardsMember2023-01-012023-06-300000727207axdx:RestrictedStockUnitsAndRestrictedStockAwardsMember2023-06-300000727207us-gaap:CostOfSalesMember2023-04-012023-06-300000727207us-gaap:CostOfSalesMember2022-04-012022-06-300000727207us-gaap:CostOfSalesMember2023-01-012023-06-300000727207us-gaap:CostOfSalesMember2022-01-012022-06-300000727207us-gaap:ResearchAndDevelopmentExpenseMember2023-04-012023-06-300000727207us-gaap:ResearchAndDevelopmentExpenseMember2022-04-012022-06-300000727207us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-06-300000727207us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-06-300000727207us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-04-012023-06-300000727207us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-04-012022-06-300000727207us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-01-012023-06-300000727207us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-06-300000727207us-gaap:RestrictedStockUnitsRSUMember2023-06-300000727207axdx:PerformanceBasedRestrictedStockUnitsMembersrt:MinimumMember2023-01-012023-06-300000727207axdx:PerformanceBasedRestrictedStockUnitsMembersrt:MaximumMember2023-01-012023-06-300000727207axdx:PerformanceBasedRestrictedStockUnitsMember2023-01-012023-06-300000727207axdx:PerformanceBasedRestrictedStockUnitsMember2021-12-310000727207axdx:PerformanceBasedRestrictedStockUnitsMember2022-01-012022-06-300000727207axdx:A2022OmnibusEquityIncentivePlanMember2023-06-302023-06-300000727207axdx:A2022OmnibusEquityIncentivePlanMember2023-06-3000007272072022-04-30axdx:segment0000727207us-gaap:GeographicDistributionForeignMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-04-012023-06-300000727207us-gaap:GeographicDistributionForeignMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2022-04-012022-06-300000727207us-gaap:GeographicDistributionForeignMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-06-300000727207us-gaap:GeographicDistributionForeignMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMember2022-01-012022-06-300000727207us-gaap:GeographicDistributionForeignMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:AccountsReceivableMember2023-06-300000727207us-gaap:GeographicDistributionForeignMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:AccountsReceivableMember2022-12-310000727207us-gaap:GeographicDistributionDomesticMember2023-04-012023-06-300000727207us-gaap:GeographicDistributionDomesticMember2022-04-012022-06-300000727207us-gaap:GeographicDistributionDomesticMember2023-01-012023-06-300000727207us-gaap:GeographicDistributionDomesticMember2022-01-012022-06-300000727207us-gaap:GeographicDistributionForeignMember2023-04-012023-06-300000727207us-gaap:GeographicDistributionForeignMember2022-04-012022-06-300000727207us-gaap:GeographicDistributionForeignMember2023-01-012023-06-300000727207us-gaap:GeographicDistributionForeignMember2022-01-012022-06-300000727207axdx:AcceleratePhenoMember2023-04-012023-06-300000727207axdx:AcceleratePhenoMember2022-04-012022-06-300000727207axdx:AcceleratePhenoMember2023-01-012023-06-300000727207axdx:AcceleratePhenoMember2022-01-012022-06-300000727207axdx:OtherRevenueMember2023-04-012023-06-300000727207axdx:OtherRevenueMember2022-04-012022-06-300000727207axdx:OtherRevenueMember2023-01-012023-06-300000727207axdx:OtherRevenueMember2022-01-012022-06-300000727207us-gaap:ProductMember2023-04-012023-06-300000727207us-gaap:ProductMember2022-04-012022-06-300000727207us-gaap:ProductMember2023-01-012023-06-300000727207us-gaap:ProductMember2022-01-012022-06-300000727207us-gaap:ServiceMember2023-04-012023-06-300000727207us-gaap:ServiceMember2022-04-012022-06-300000727207us-gaap:ServiceMember2023-01-012023-06-300000727207us-gaap:ServiceMember2022-01-012022-06-300000727207us-gaap:GeographicConcentrationRiskMemberus-gaap:PropertyPlantAndEquipmentMemberus-gaap:GeographicDistributionDomesticMember2023-06-300000727207us-gaap:GeographicConcentrationRiskMemberus-gaap:PropertyPlantAndEquipmentMemberus-gaap:GeographicDistributionDomesticMember2022-12-310000727207us-gaap:GeographicDistributionForeignMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:PropertyPlantAndEquipmentMember2023-06-300000727207us-gaap:GeographicDistributionForeignMemberus-gaap:GeographicConcentrationRiskMemberus-gaap:PropertyPlantAndEquipmentMember2022-12-310000727207us-gaap:GeographicConcentrationRiskMemberus-gaap:PropertyPlantAndEquipmentMember2023-06-300000727207us-gaap:GeographicConcentrationRiskMemberus-gaap:PropertyPlantAndEquipmentMember2022-12-310000727207axdx:ConvertibleNotesExchangeAgreementMemberaxdx:TwoPointFiveZeroConvertibleNotesDue2023Memberus-gaap:ConvertibleDebtMember2022-03-292022-03-290000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeriesAPreferredStockMemberaxdx:September2021SecuritiesPurchaseAgreementMembersrt:AffiliatedEntityMember2021-09-220000727207axdx:JackWSchulerLivingTrustMemberus-gaap:SeriesAPreferredStockMemberaxdx:September2021SecuritiesPurchaseAgreementMembersrt:AffiliatedEntityMember2023-06-092023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:September2021SecuritiesPurchaseAgreementMemberus-gaap:CommonStockMembersrt:AffiliatedEntityMember2023-06-092023-06-090000727207us-gaap:SeriesAPreferredStockMember2023-06-300000727207axdx:JackWSchulerLivingTrustMemberaxdx:March2022SecuritiesPurchaseAgreementMemberus-gaap:PrivatePlacementMembersrt:AffiliatedEntityMember2022-03-240000727207axdx:JackWSchulerLivingTrustMemberaxdx:March2022SecuritiesPurchaseAgreementMemberus-gaap:PrivatePlacementMembersrt:AffiliatedEntityMember2023-06-080000727207axdx:JackWSchulerLivingTrustMemberaxdx:March2022SecuritiesPurchaseAgreementMemberus-gaap:PrivatePlacementMembersrt:AffiliatedEntityMember2023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:March2022SecuritiesPurchaseAgreementMemberaxdx:FreestandingEquityMembersrt:AffiliatedEntityMember2023-06-080000727207axdx:JackWSchulerLivingTrustMemberaxdx:March2022SecuritiesPurchaseAgreementMemberaxdx:FreestandingEquityMembersrt:AffiliatedEntityMember2023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:March2022SecuritiesPurchaseAgreementMemberus-gaap:PrivatePlacementMemberaxdx:FreestandingEquityMembersrt:AffiliatedEntityMember2023-06-092023-06-090000727207axdx:JackWSchulerLivingTrustMemberus-gaap:CommonStockMemberaxdx:SchulerPurchaseObligationMemberaxdx:PublicStockOfferingMembersrt:AffiliatedEntityMember2023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:SchulerPurchaseObligationMemberaxdx:PublicStockOfferingMembersrt:AffiliatedEntityMember2023-06-090000727207axdx:PublicStockOfferingSharesToThePublicMemberaxdx:SchulerPurchaseObligationMember2023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:PublicStockOfferingSharesToThePublicMemberaxdx:SchulerPurchaseObligationMembersrt:AffiliatedEntityMember2023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:PublicStockOfferingSharesToThePublicMemberus-gaap:CommonStockMemberaxdx:SchulerPurchaseObligationMembersrt:AffiliatedEntityMember2023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:SchulerPurchaseObligationMembersrt:AffiliatedEntityMember2023-06-092023-06-090000727207axdx:JackWSchulerLivingTrustMemberaxdx:SchulerPurchaseObligationMembersrt:AffiliatedEntityMember2023-01-012023-06-300000727207axdx:JackWSchulerLivingTrustMemberaxdx:SchulerPurchaseObligationMembersrt:AffiliatedEntityMember2023-04-012023-06-300000727207us-gaap:MeasurementInputExercisePriceMember2023-06-300000727207us-gaap:MeasurementInputExercisePriceMember2023-06-09axdx:year0000727207us-gaap:MeasurementInputOfferedPriceMember2023-06-300000727207us-gaap:MeasurementInputOfferedPriceMember2023-06-090000727207axdx:MeasurementInputNumberOfSharesMember2023-06-300000727207axdx:MeasurementInputNumberOfSharesMember2023-06-0900007272072023-05-012023-05-3100007272072023-05-310000727207us-gaap:SubsequentEventMemberaxdx:JackWSchulerLivingTrustMemberus-gaap:CommonStockMemberaxdx:September2021SecuritiesPurchaseAgreementMembersrt:AffiliatedEntityMember2023-07-112023-07-110000727207axdx:JackWSchulerLivingTrustMembersrt:AffiliatedEntityMember2023-06-092023-06-090000727207us-gaap:SubsequentEventMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-07-070000727207us-gaap:SubsequentEventMemberaxdx:FivePointZeroZeroConvertibleNotesDue2026Memberus-gaap:ConvertibleDebtMember2023-07-072023-07-07

(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, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____

(Exact name of registrant as specified in its charter)

Delaware									84-1072256
(State or other jurisdiction									(I.R.S. Employer Identification No.)
of incorporation or organization)
3950 South Country Club Road,						Suite 470
Tucson,			Arizona						85714
(Address of principal executive offices)									(Zip Code)

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

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.

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

At August 10, 2023, 14,367,971 shares of common stock were outstanding, net of treasury shares. All common stock share data and share-based calculations set forth in this report have been adjusted to reflect the registrant’s 1-for-10 reverse stock split, which was effective July 11, 2023, on a retroactive basis for the periods presented.

(in thousands, except share data)

			June 30,			December 31,
			2023			2022
			Unaudited
ASSETS
Current assets:
Cash and cash equivalents			$	29,282		$	34,905
Investments			1,423			10,656
Trade accounts receivable, net			2,342			2,416
Inventory			5,106			5,194
Prepaid expenses			1,274			818
Other current assets			2,812			2,025
Total current assets			42,239			56,014
Property and equipment, net			2,896			3,478
Finance lease assets, net			2,091			2,422
Operating lease right of use assets, net			1,527			1,859
Other non-current assets			1,125			1,242
Total assets			$	49,878		$	65,015
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable			$	4,033		$	4,501
Accrued liabilities			3,229			2,682
Accrued interest			348			472
Deferred revenue			478			547
Current portion of convertible notes			726			56,413
Finance lease, current			1,180			1,113
Operating lease, current			936			829
Derivative liability			42,786			—
Total current liabilities			53,716			66,557
Finance lease, non-current			375			782
Operating lease, non-current			1,064			1,545
Other non-current liabilities			1,097			874
Accrued interest related-party			—			663
Long-term debt related-party			—			16,858
Convertible notes			32,289			—
Total liabilities			$	88,541		$	87,279
Commitments and contingencies (see Note 14)

(in thousands, except share data)

(in thousands, except per share data)

			Three Months Ended									Six Months Ended
			June 30,			June 30,						June 30,			June 30,
			2023			2022						2023			2022
Net sales			$	2,921		$	3,861					$	5,733		$	6,820
Cost of sales			2,122			2,781						3,923			4,937
Gross profit			799			1,080						1,810			1,883
Costs and expenses:
Research and development			5,820			7,576						12,788			13,600
Sales, general and administrative			7,564			11,493						17,669			22,167
Total costs and expenses			13,384			19,069						30,457			35,767
Loss from operations			(12,585)			(17,989)						(28,647)			(33,884)
Other (expense) income:
Interest expense			(1,175)			(713)						(1,593)			(1,630)
Interest expense related-party			(804)			—						(1,817)			—
(Loss) gain on extinguishment of debt			(6,550)			199						(6,550)			3,565
(Loss) on extinguishment of debt with related party			(6,755)			—						(6,755)			—
(Loss) on fair value adjustment			(5,030)			—						(5,030)			—
Foreign currency exchange gain			25			31						258			40
Interest income			255			56						675			78
Other income (expense), net			40			(107)						85			(157)
Total other (expense) income, net			(19,994)			(534)						(20,727)			1,896
Net loss before income taxes			(32,579)			(18,523)						(49,374)			(31,988)
Provision for income taxes			(156)			—						(156)			—
Net loss			$	(32,735)		$	(18,523)					$	(49,530)		$	(31,988)
Basic and diluted net loss per share			$	(2.97)		$	(2.43)					$	(4.75)		$	(4.44)
Weighted average shares outstanding			11,009			7,623						10,420			7,200
Other comprehensive loss:
Net loss			$	(32,735)		$	(18,523)					$	(49,530)		$	(31,988)
Net unrealized gain (loss) on debt securities available-for-sale			4			(39)						28			(132)
Foreign currency translation adjustment			(26)			(161)						(281)			(240)
Comprehensive loss			$	(32,757)		$	(18,723)					$	(49,783)		$	(32,360)

(in thousands)

			Six Months Ended
			June 30,			June 30,
			2023			2022
Cash flows from operating activities:
Net loss			$	(49,530)		$	(31,988)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			1,617			1,435
Amortization of investment discount			—			79
Equity-based compensation			2,208			6,950
Amortization of debt discount and issuance costs			692			284
Amortization of debt discount related-party			1,033			—
Loss on disposal of property and equipment			68			283
Unrealized (gain) loss on equity investments			(90)			157
Loss (gain) on extinguishment of debt			6,550			(3,565)
Loss on extinguishment of debt with related party			6,755			—
Loss on fair value adjustments			5,030			—
(Increase) decrease in assets:
Contributions to deferred compensation plan			—			(110)
Accounts receivable			74			(615)
Inventory			(30)			(416)
Prepaid expense and other			(77)			(719)
Increase (decrease) in liabilities:
Accounts payable			(451)			658
Accrued liabilities and other			125			2,288
Accrued interest			900			(159)
Accrued interest from related-party			784			—
Deferred revenue and income			(69)			(116)
Deferred compensation			223			(51)
Net cash used in operating activities			(24,188)			(25,605)
Cash flows from investing activities:
Purchases of equipment			(167)			(447)
Purchase of marketable securities			—			(27,504)
Maturities of marketable securities			9,291			18,738
Net cash provided (used) by investing activities			9,124			(9,213)
Cash flows from financing activities:
Proceeds from issuance of common stock to related party			4,000			—
Payments on finance leases			(540)			(424)
Proceeds from exercise of options			—			7
Proceeds from issuance of common stock under employee purchase plan			—			137
Proceeds from issuance of convertible notes			10,000			—
Transaction costs related to debt and equity issuances			(3,731)			—
Net cash provided (used) by financing activities			9,729			(280)

(in thousands)

			Six Months Ended
			June 30,			June 30,
			2023			2022
Effect of exchange rate on cash			(288)			(219)
Decrease in cash and cash equivalents			(5,623)			(35,317)
Cash and cash equivalents, beginning of period			34,905			39,898
Cash and cash equivalents, end of period			$	29,282		$	4,581
Non-cash investing activities:
Net transfer of instruments from inventory to property and equipment			$	88		$	202
Non-cash financing activities:
Extinguishment of 2.50% Convertible Senior Notes through issuance of common stock			$	—		$	10,180
Capital contribution from the exchange of secured note and accrued interest through the issuance of common stock with related party			$	25,363		$	—
Exchange of 2.50% Convertible Senior Notes and accrued interest for 5.00% Convertible Senior Secured Notes			$	56,893		$	—
Debt premium on issuance of 5.00% Convertible Senior Secured Notes			$	6,023		$	—
Derivative liability			$	38,160		$	—
Supplemental cash flow information:
Interest paid			$	—		$	1,506

(in thousands)

			Three Months Ended									Six Months Ended
			June 30,									June 30,
			2023			2022						2023			2022
Preferred stock shares outstanding
Beginning			3,955			3,955						3,955			3,955
Conversion of preferred stock into common stock with related party			(3,955)			—						(3,955)			—
Ending			—			3,955						—			3,955
Preferred stock
Beginning			$	4		$	4					$	4		$	4
Conversion of preferred stock into common stock with related party			(4)			—						(4)			—
Ending			$	—		$	4					$	—		$	4
Common stock shares outstanding
Beginning			9,964			6,873						9,749			6,767
Issuance of common stock to a related party			488			—						488			—
Conversion of preferred stock into common stock with related party			396			—						396			—
Restricted stock awards released			78			97						293			112
Issuance of shares to retire senior promissory notes with related party			3,432			—						3,432			—
Issuance of common stock under employee purchase plan			—			7						—			13
Issuance of shares to retire convertible notes			—			995						—			1,080
Ending			14,358			7,972						14,358			7,972
Common stock
Beginning			$	10		$	7					$	10		$	7
Issuance of common stock to a related party			1			—						1			—
Issuance of shares to retire senior promissory notes with related party			3			—						3			—
Issuance of common stock under employee purchase plan			—			—						—			—
Issuance of shares to retire convertible notes			—			1						—			1
Ending			$	14		$	8					$	14		$	8

(in thousands)

			Three Months Ended									Six Months Ended
			June 30,									June 30,
			2023			2022						2023			2022
Contributed capital
Beginning			$	630,992		$	547,444					$	630,428		$	580,714
Cumulative effect of accounting changes			—			—						—			(37,438)
Proceeds from issuance of common stock			3,996			—						3,996			—
Capital contribution from modification of securities purchase agreement with related party			1,805			—						1,805			—
Exercise of options			—			6						—			6
Issuance of shares to retire senior promissory notes with related party			25,363			—						25,363			—
Issuance of common stock under employee purchase plan			—			60						—			137
Issuance of shares to retire convertible notes			—			8,912						—			10,169
Equity-based compensation			1,615			3,826						2,177			6,659
Reclassification of common stock par value due to reverse stock split			41			10						43			11
Ending			$	663,812		$	560,258					$	663,812		$	560,258
Accumulated deficit
Beginning			$	(624,034)		$	(558,211)					$	(607,239)		$	(570,668)
Cumulative effect of accounting changes			—			—						—			25,922
Net loss			(32,735)			(18,523)						(49,530)			(31,988)
Ending			$	(656,769)		$	(576,734)					$	(656,769)		$	(576,734)
Treasury stock
Beginning			$	(45,067)		$	(45,067)					$	(45,067)		$	(45,067)
Ending			$	(45,067)		$	(45,067)					$	(45,067)		$	(45,067)
Accumulated other comprehensive (loss) income
Beginning			$	(631)		$	(232)					$	(400)		$	(60)
Net unrealized gain (loss) on debt securities available-for-sale			3			(39)						27			(132)
Foreign currency translation adjustment			(25)			(161)						(280)			(240)
Ending			$	(653)		$	(432)					$	(653)		$	(432)
Total stockholders' deficit			$	(38,663)		$	(61,963)					$	(38,663)		$	(61,963)

Accelerate Diagnostics, Inc. (“we” or “us” or “our” or “Accelerate” or the “Company”) is an in vitro diagnostics company dedicated to providing solutions that improve patient outcomes and lower healthcare costs through the rapid diagnosis of serious infections.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. 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 consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 31, 2023.

The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date but does not include all disclosures such as notes required by U.S. GAAP.

The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods presented, but are not necessarily indicative of the results of operations to be anticipated for the entire year ending December 31, 2023, or any future period.

All amounts are rounded to the nearest thousand dollars unless otherwise indicated.

On July 11, 2023, the Company effected a one-for-ten reverse stock split. Consequently, on the Company’s condensed consolidated balance sheet, the aggregate par value of the issued common stock was reduced by reclassifying the par value amount of the eliminated shares of common stock to additional paid-in capital. All per share amounts and outstanding shares, including all common stock equivalents (stock options), have been retroactively restated in the condensed consolidated financial statements and in the Notes to the condensed consolidated financial statement for all periods presented to reflect the reverse stock split.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of intercompany transactions and balances.

On March 9, 2023, the Company entered into a forbearance agreement (the “Forbearance Agreement”), which became effective on March 13, 2023, with the holders of approximately 85% of the Company’s outstanding 2.50% Convertible Senior Notes due 2023 (the “2.50% Notes”) (collectively, the “Ad Hoc Noteholder Group”) and the trustee for the 2.50% Notes (the “Trustee”). On March 15, 2023, the 2.50% Notes matured and became due and payable. Pursuant to the Forbearance Agreement, the members of the Ad Hoc Noteholder Group agreed, and directed the Trustee, to forbear from exercising their rights and remedies under the indenture governing the 2.50% Notes (the “2.50% Notes Indenture”) in connection with certain events of default under the 2.50% Notes Indenture, including, but not limited to, the failure to timely pay in full the principal of any 2.50% Note due and payable on March 15, 2023 and the failure to pay any interest on any 2.50% Note due and payable.

The Forbearance Agreement was initially effective for the period commencing on March 13, 2023 and ending on March 29, 2023, which was subsequently extended by the parties to April 21, 2023. On April 21, 2023, the Company entered into a restructuring support agreement (the “Restructuring Support Agreement”) with certain holders of the 2.50% Notes, the holder of the Company’s secured promissory note in an aggregate principal amount of $34.9 million (the “Secured Note”) and the holders of the Company’s Series A Preferred Stock to negotiate in good faith to effect the restructuring of the Company’s capital structure (the “Restructuring Transactions”).

On June 9, 2023, the Company completed the Restructuring Transactions contemplated by the Restructuring Support Agreement whereby the Company (i) exchanged approximately $55.9 million aggregate principal amount of 2.50% Notes for approximately $56.9 million aggregate principal amount of newly issued 5.00% Senior Secured Convertible Notes due 2026 (the “5.00% Notes”), which was inclusive of additional 5.00% Notes in respect of interest accrued on the 2.50% Notes from September 15, 2022; (ii) issued and sold an additional $10.0 million aggregate principal amount of 5.00% Notes; (iii) repurchased the Secured Note, plus accrued interest, by issuing approximately 3.4 million shares of the Company’s common stock; (iv) issued approximately 0.4 million shares of the Company’s common stock upon conversion of all of the Company’s outstanding Series A Preferred Stock; (v) amended the March 2022 Securities Purchase Agreement (as defined in Note 17) and issued and sold approximately 0.5 million shares of the Company’s common stock for proceeds of $4.0 million; and (vi) entered into a new securities purchase agreement with the Jack W. Schuler Living Trust (the “Schuler Trust”) pursuant to which the Schuler Trust is required, prior to December 15, 2023, to either purchase an aggregate of $10.0 million of the Company’s common stock from the Company or to backstop an underwritten public offering by the Company of its common stock for aggregate proceeds of $10.0 million, at the Company’s option. See Note 9, Convertible Notes, Note 10, Long-Term Debt Related-Party, Note 17, Stockholders' Equity and Note 18, Related-Party Transactions for additional information.

As of June 30, 2023, the Company had $30.7 million in cash and cash equivalents and investments, a decrease of $14.9 million from $45.6 million at December 31, 2022. The primary reason for the decrease was due to cash used in operations, cash used for nonrecurring legal and professional services in connection with the restructuring activities of the 2.50% Notes and common stock issuances, offset by the proceeds from the issuance of the 5.00% Notes and such common stock issuances. The future success of the Company is dependent on its ability to successfully commercialize its products, obtain regulatory clearance for and successfully launch its future product candidates, obtain additional capital and ultimately attain profitable operations.

The Company’s primary use of capital has been for the development and commercialization of the Accelerate Pheno system and development of complementary products. The Company is subject to a number of risks similar to other early commercial stage life science companies, including, but not limited to commercially launching the Company’s products, development and market acceptance of the Company’s product candidates, development by its competitors of new technological innovations, protection of proprietary technology, and raising additional capital. Historically, the Company has funded its operations primarily through multiple equity raises and the issuance of debt. See Note 9, Convertible Notes, Note 10, Long-Term Debt Related-Party and Note 17, Stockholders' Equity for additional information.

Although the Company is actively considering all available strategic alternatives to maximize value, if the Company is unable to obtain adequate capital resources to fund operations, the Company would not be able to continue to operate its business pursuant to its current plans. This may require the Company to, among other things, materially modify its operations to reduce spending; sell assets or operations; delay the implementation of, or revising certain aspects of, its business strategy; or discontinue its operations entirely.

The Company is required to evaluate its financial condition as of the date of filing this Form 10-Q pursuant to the requirements of Accounting Standards Codification (“ASC”) 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

Based on its evaluation pursuant to ASC 205-40, the Company has determined that, as of the date of this Form 10-Q filing, there is substantial doubt about its ability to continue as a going concern, as the Company does not currently have adequate financial resources to fund its forecasted operating costs for at least twelve months from the date of issuance of these condensed consolidated financial statements.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

The preparation of the Company’s condensed consolidated financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to accounts receivable, inventory, property and equipment, accrued liabilities, warranty liabilities, derivatives, convertible notes, tax valuation accounts, equity-based compensation, warrants, revenue and leases. Actual results could differ materially from those estimates.

The Company follows ASC 820, Fair Value Measurement, which has defined fair value and requires the Company to establish a framework for measuring and disclosing fair value. The framework requires the valuation of assets and liabilities subject to fair value measurements using a three-tiered approach and fair value measurement be classified and disclosed in one of the following three categories:

•Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

•Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

•Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The carrying amounts of financial instruments such as cash and cash equivalents, trade accounts receivable, prepaid expenses, other current assets, accounts payable, accrued liabilities, and other current liabilities approximate the related fair values due to the short-term maturities of these instruments.

See Note 4, Fair Value of Financial Instruments, for further information and related disclosures regarding the Company’s fair value measurements.

The 2.50% Notes matured on March 15, 2023 and became due and payable on such date. As of June 30, 2023, $0.7 million of the 2.50% Notes had not been converted and remained outstanding and in default. The carrying amount of these 2.50% Notes approximates the related fair value due to the instrument being fully matured and payable on June 30, 2023. As of December 31, 2022, the Notes were instruments measured at fair value using Level 2 inputs, as the Notes were traded on an active market with observable inputs. See Note 9, Convertible Notes for further details on the 2.50% Notes.

The 5.00% Notes are instruments measured at fair value at initial measurement using Level 3 inputs. As of June 30, 2023, the debt is carried at amortized cost and the fair value is disclosed. See Note 9, Convertible Notes for further details on the 5.00% Notes.

The Company’s 5.00% Notes conversion option (the “Conversion Option”) met the bifurcation criteria under, Derivatives and Hedging (“Topic 815”), at inception and through June 30, 2023, and must be recorded at fair value, and marked to market at each reporting period until it becomes fixed. The Conversion Option is considered a derivative that is measured at fair value using Level 3 inputs. See Note 9, Convertible Notes for further details on the Conversion Option.

During the three months ended June 30, 2023, the Company entered into a securities purchase agreement with the Schuler Trust to purchase common stock from the Company at the Company’s option (the “Schuler Purchase Obligation”). The Schuler Purchase Obligation was determined to be a freestanding financial instrument that must be recorded as an asset at fair value, and marked to market at each reporting period that is outstanding using Level 3 inputs. See Note 17, Stockholders' Equity for further details on the Schuler Purchase Obligation.

During the three months ended June 30, 2023, the Company fully extinguished the Secured Notes held by the Schuler Trust by exchanging the Secured Notes for common stock. As of December 31, 2022, the Secured Notes were instruments carried at amortized cost while fair value was disclosed using Level 3 inputs. See Note 10, Long-Term Debt Related-Party for further details on the Secured Notes.

All highly liquid investments with an original maturity of three months or less at time of purchase are considered to be cash equivalents. Cash and cash equivalents include overnight repurchase agreement accounts and other investments. As part of the Company’s cash management process, excess operating cash is invested in overnight repurchase agreements with its bank. Repurchase agreements and other investments classified as cash and cash equivalents are not deposits and are not insured by the U.S. Government, the FDIC or any other government agency and involve investment risk including possible loss of principal. Notwithstanding the possibility of bank failures, we believe that as a result of the Company’s selected banks, diversified holdings strategy, and the U.S. Government’s continued support to stabilize the banking system, such as steps taken in March 2023 as a result of certain bank failures, that the market risk arising from holding these financial instruments is minimal.

The Company invests in various debt and equity securities which are primarily held in the custody of major financial institutions. Debt securities consist of certificates of deposit, U.S. government and agency securities, commercial paper, and corporate notes and bonds. Equity securities consist of mutual funds. The Company records these investments in the condensed consolidated balance sheet at fair value. Unrealized gains or losses for debt securities available-for-sale are included in accumulated other comprehensive loss, a component of stockholders’ deficit. Unrealized gains or losses for equity securities are included in other income (expense), net, a component of condensed consolidated statements of operations and comprehensive loss. The Company considers all debt securities to be available-for-sale, including those with maturity dates beyond 12 months, as they are available to support current operational liquidity needs. The Company classifies its investments as current based on the nature of the investments and their availability for use in current operations.

We perform an assessment to determine whether there have been any events or economic circumstances to indicate that a debt security available-for-sale in an unrealized loss position has suffered impairment as a result of credit loss or other factors.

A debt security is considered impaired if its fair value is less than its amortized cost basis at the reporting date. If we intend to sell the debt security or if it is more-likely-than-not that we will be required to sell the debt security before the recovery of its amortized cost basis, the impairment is recognized and the unrealized loss is recorded as a direct write-down of the security's amortized cost basis with an offsetting entry to earnings. If we do not intend to sell the debt security or believe we will not be required to sell the debt security before the recovery of its amortized cost basis, the impairment is assessed to determine if a credit loss component exists. We use a discounted cash flow method to determine the credit loss component. In the event a credit loss exists, an allowance for credit losses is recorded in earnings for the credit loss component of the impairment while the remaining portion of the impairment attributable to factors other than credit loss is recognized, net of tax, in accumulated other comprehensive income (loss). The amount of impairment recognized due to credit factors is limited to the excess of the amortized cost basis over the fair value of the security.

Inventory is stated at the lower of cost or net realizable value. The Company determines the cost of inventory using the first-in, first-out method. The Company estimates the recoverability of inventory by reference to internal estimates of future demands and product life cycles, including expiration. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value and records a charge to expense for such inventory as appropriate.

We charge cost of sales for inventory provisions to write-down our inventory to the lower of cost or net realizable value or for obsolete or excess inventory. Most of our inventory provisions relate to excess quantities of products, based on our inventory levels and future product purchase commitments compared to assumptions about future demand and market conditions. Once inventory has been written-off or written-down, it creates a new cost basis for the inventory that is not subsequently written-up.

See Note 6, Inventory, for further information and related disclosures.

Accounts receivable consist of amounts due to the Company for sales to customers and are based on what we expect to collect in exchange for goods and services. Receivables are considered past due based on the contractual payment terms and are written off if reasonable collection efforts prove unsuccessful.

We maintain an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the consolidated statements of operations. We assess collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when we identify specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, we consider historical collectability and make judgments about the creditworthiness of customers based on credit evaluations. Our customers typically have good credit quality. We also consider customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data.

The allowance for credit losses for the three and six months ended June 30, 2023 and 2022 is comprised of the following (in thousands):

The Company’s three and six months ended June 30, 2023 beginning and ending balances increased when compared to the three and six months ended June 30, 2022 beginning and ending balances due to provisions recorded during the year ended December 31, 2022. These provisions were in connection with aged net investment in sales-type leases.

Property and equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred and expenditures for major improvements are capitalized. Gains and losses from retirement or replacement are included in costs and expenses. Depreciation of property and equipment is computed using the straight-line method over the estimated useful life of the assets, ranging from one to seven years. Leasehold improvements are depreciated over the remaining life of the lease or the life of the asset, whichever is less.

Property and equipment includes Accelerate Pheno systems (also referred to as instruments) used for sales demonstrations, instruments under rental agreements and instruments used for research and development. Depreciation expense for instruments used for sales demonstrations is recorded as a component of sales, general and administrative expense. Depreciation expense for instruments placed at customer sites pursuant to reagent rental agreements is recorded as a component of cost of sales. Depreciation expense for instruments used in our laboratory and research is recorded as a component of research and development expense. The Company retains title to these instruments and depreciates them over five years. Losses from the retirement of returned instruments are included in costs and expenses.

The Company evaluates the recoverability of the carrying amount of its instruments whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable, and at least annually. This evaluation is based on our estimate of future cash flows and the estimated fair value of such long-lived assets, and provides for impairment if such undiscounted cash flows or the estimated fair value are insufficient to recover the carrying amount of instruments. No impairment charges have been recorded for the three and six months ended June 30, 2023 and 2022.

See Note 7, Property and Equipment, for further information and related disclosures.

Long-lived assets and certain identifiable intangibles to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company continuously evaluates the recoverability of its long-lived assets based on estimated future cash flows from and the estimated fair value of such long-lived assets, and provides for impairment if such undiscounted cash flows or the estimated fair value are insufficient to recover the carrying amount of the long-lived asset.

Instruments are typically sold with a one year limited warranty, while kits and accessories are typically sold with a sixty days limited warranty. Accordingly, a provision for the estimated cost of the limited warranty repair is recorded at the time revenue is recognized. Our estimated warranty provision is based on our estimate of future repair events and the related estimated cost of repairs. The Company periodically assesses the adequacy of the warranty reserve and adjusts the amount as necessary. The cost incurred for these provisions is included in cost of sales on the condensed consolidated statements of operations and comprehensive loss.

Warranty reserve activity for the three and six months ended June 30, 2023 and 2022 is as follows (in thousands):

The Company follows Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). The Notes are accounted for as a liability measured at their amortized cost. Interest expense is comprised of (1) cash interest payments, (2) amortization of any debt discounts or premiums based on the original offering, and (3) amortization of any debt issuance costs. Gain or loss on extinguishment of Notes is calculated as the difference between the (i) fair value of the consideration transferred and (ii) the carrying value of the debt at the time of repurchase, conversion or settlement.

The Company recognizes revenue when control of the promised good or service is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales taxes are excluded from revenues.

The Company determines revenue recognition through the following steps:

•Identification of the contract with a customer

•Identification of the performance obligations in the contract

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations

•Recognition of revenue as we satisfy a performance obligation

Product revenue is derived from the sale or rental of instruments and sales of related consumable products. When an instrument is sold, revenue is generally recognized upon installation of the unit consistent with contract terms, which do not include a right of return. When a consumable product is sold, revenue is generally recognized upon shipment. Invoices are generally issued when revenue is recognized. Payment terms vary by the type and location of the customer and the products or services offered. The term between invoicing and when payment is due is not significant.

Service revenue is derived from the sale of extended service agreements which are generally non-cancellable. This revenue is recognized on a straight-line basis over the contract term beginning on the effective date of the contract because the Company is standing ready to provide services. Invoices are generally issued annually and coincide with the beginning of individual service terms.

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines relative standalone selling prices based on the price charged to customers for each individual performance obligation.

Sales commissions earned by the Company’s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. The Company has determined these costs would have an amortization period of less than one year and has elected to recognize them as an expense when incurred. Contract asset opening and closing balances were immaterial for the three and six months ended June 30, 2023.

Gross profit consists of total revenue, net of allowances, less cost of sales. Cost of sales includes cost of materials, direct labor, equity-based compensation, facility and other manufacturing overhead costs for consumable tests and instruments sold to customers. Cost of sales for instruments also includes depreciation on revenue generating instruments that have been placed with our customers under a reagent rental agreement. Cost of sales includes repair and maintenance cost for instruments covered by a service agreement or instruments covered by a reagent rental agreement. Cost of sales also includes warranty related costs.

The Company manufactures pre-launch inventory in advance of regulatory approval. This inventory is expensed before an economic benefit is probable. Pre-launch inventory sold to customers (not capitalized and instead expensed in a previous year) during each of the three and six months ended June 30, 2023 was none and $0.1 million, respectively. Pre-launch inventory sold to customers (not capitalized and instead expensed in a previous year) during each of the three and six months ended June 30, 2022 was $0.2 million and $0.3 million, respectively.

Shipping and handling costs billed to customers are included as a component of revenue. The corresponding expense incurred with third party carriers is included as a component of sales, general and administrative costs on the consolidated statements of operations and comprehensive loss.

The Company has entered into an exclusive commercial agreement with BD to act as the Company’s agent and representative. The purpose of this agreement is to establish an on-going commercialization of the Company’s products. The Company is classified as the principal and BD as the agent. BD shall pay the Company a fee in multiple installments for exclusive rights, while the Company will pay BD an agent fee based on the Company’s revenues.

The Company accounts for agent fees consistent with how it accounts for sales commissions as described above. In most instances the agent fees are determined to be costs that would have an amortization period of less than one year and the Company has elected to recognize them as an expense when incurred. The agent fee is a component of sales, general and administrative expenses, within the condensed consolidated statement of operations and comprehensive loss.

The Company accounts for the fee from BD as a deferred liability when the cash is received. The deferred liability is then amortized using estimates to reduce the amount of agent fee expense for the period. The Company uses forecasted revenue to estimate the amount of deferred liability to amortize within a period. The deferred liability is a component of deferred revenue, within the condensed consolidated balance sheet, while the corresponding amortization is charged to sales, general and administrative expenses, within the condensed consolidated statement of operations and comprehensive loss.

See Note 8, Deferred Revenue and Remaining Performance Obligations, for further information and related disclosures.

The Company accounts for leases in accordance with ASC 842, Leases. The Company determines if an arrangement is or contains a lease and the type of lease at inception. The Company classifies leases as finance leases (lessee) or sales-type leases (lessor) when there is either a transfer of ownership of the underlying asset by the end of the lease term, the lease contains an option to purchase the asset that we are reasonably certain will be exercised, the lease term is for the major part of the remaining economic life of the asset, the present value of the lease payments and any residual value guarantee equals or substantially exceeds all the fair value of the asset, or the asset is of such a specialized nature that it will have no alternative use to the lessor at the end of the lease term.

Payments contingent on future events (i.e., based on usage) are considered variable and excluded from lease payments for the purposes of classification and initial measurement. Several of our leases include options to renew or extend the term upon mutual agreement of the parties and others include one-year extensions exercisable by the lessee. None of our leases contain residual value guarantees, restrictions, or covenants.

To determine whether a contract contains a lease, the Company uses its judgment in assessing whether the lessor retains a material amount of economic benefit from an underlying asset, whether explicitly or implicitly identified, which party holds control over the direction and use of the asset, and whether any substantive substitution rights over the asset exist.

Operating leases are included in right-of-use (“ROUs”) assets and corresponding lease liabilities, and finance leases are included in ROU assets and corresponding lease liabilities within our condensed consolidated balance sheets. These assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and their related liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Typically, we use our incremental borrowing rate based on the information available at commencement in determining the present value of lease payments. We use the implicit rate when readily determinable. ROU assets are net of lease payments made and exclude lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term, which may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option.

Our operating leases consist primarily of leased office, factory, and laboratory space in the U.S. and office space in Europe, have between two and six-year terms, and typically contain penalizing, early-termination provisions. Our finance leases consist of leased equipment and have three-year terms.

The Company leases instruments to customers under “reagent rental” agreements, whereby the customer agrees to purchase consumable products over a stated term, typically five years or less, for a volume-based price that includes an embedded rental for the instruments. When collectability is probable, that amount is recognized as income at lease commencement for sales-type leases and as product is shipped, typically in a straight–line pattern, over the term for operating leases, which typically include a termination without cause or penalty provision given a short notice period.

Consideration is allocated between lease and non-lease components based on stand-alone selling price in accordance with ASC 606, Revenue from Contracts with Customers.

Net investment in sales-type leases are included within our condensed consolidated balance sheets as a component of other current assets and other non-current assets, which include the present value of lease payments not yet received and the present value of the residual asset, which are determined using the information available at commencement, including the lease term, estimated useful life, rate implicit in the lease, and expected fair value of the instrument.

The Company’s Cash Deferral Plan (the “Deferral Plan”) provides certain key employees with an opportunity to defer the receipt of such participant's base salary. The Deferral Plan is intended to be a nonqualified deferred compensation plan that complies with the provisions of Section 409A of the Internal Revenue Code. All of the investments held in the Deferral Plan are equity securities consisting of mutual funds and recorded at fair value with changes in the investments’ fair value recognized as earnings in the period they occur. The corresponding liability for the Deferral Plan is included in other non-current liabilities in the condensed consolidated balance sheet.

The Company may award stock options, restricted stock units (“RSUs”), performance-based awards and other equity-based instruments to its employees, directors and consultants. Compensation cost related to equity-based instruments is based on the fair value of the instrument on the grant date, and is recognized over the requisite service period on a straight-line basis over the vesting period for each tranche (an accelerated attribution method). Performance-based awards vest based on the achievement of performance targets. Compensation costs associated with performance-based awards are recognized over the requisite service period based on probability of achievement. Performance-based awards require management to make assumptions regarding the likelihood of achieving performance targets.

The Company estimates the fair value of service based and performance-based stock option awards, including modifications of stock option awards, using the Black-Scholes option pricing model. This model derives the fair value of stock options based on certain assumptions related to expected stock price volatility, expected option life, risk-free interest rate and dividend yield.

•Volatility: The expected volatility is based on the historical volatility of the Company's stock price over the most recent period commensurate with the expected term of the stock option award.

•Expected term: The estimated expected term for employee awards is based on a simplified method that considers an insufficient history of employee exercises. For consultant awards, the estimated expected term is the same as the life of the award.

•Risk-free interest rate: The risk-free interest rate is based on published U.S. Treasury rates for a term commensurate with the expected term.

•Dividend yield: The dividend yield is estimated as zero as the Company has not paid dividends in the past and does not have any plans to pay any dividends in the foreseeable future.

The Company records the fair value of RSUs or stock grants based on the published closing market price on the day before the grant date.

The Company accounts for forfeitures as they occur rather than on an estimated basis.

See Note 12, Employee Equity-Based Compensation for further information.

The Company identified a derivative financial instrument in connection with the Company’s 5.00% Notes Conversion Option. The Company’s derivative is recorded at fair value on the condensed consolidated balance sheet as a current derivative liability and changes in the fair value of the derivative financial instrument is recognized in gain (loss) on financial instruments, within the condensed consolidated statement of operations and comprehensive loss, depending on the changes in fair value.

See Note 9, Convertible Notes for further information.

Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying condensed consolidated balance sheet. The change in deferred tax assets and liabilities for the period represents the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws in deferred tax assets and liabilities are reflected as an adjustment to the tax provision or benefit in the period of enactment.

The Company follows the provisions of ASC 740, Income Taxes, to account for any uncertainty in income taxes with respect to the accounting for all tax positions taken (or expected to be taken) on any income tax return. This guidance applies to all open tax periods in all tax jurisdictions in which the Company is required to file an income tax return. Under U.S. GAAP, in order to recognize an uncertain tax benefit the taxpayer must be more likely than not certain of sustaining the position, and the measurement of the benefit is calculated as the largest amount that is more likely than not to be realized upon resolution of the position.

Interest and penalties, if any, would be recorded within tax expense.

Adjustments resulting from translating foreign functional currency financial statements into U.S. Dollars are included in the foreign currency translation adjustment, a component of accumulated other comprehensive loss in the condensed consolidated statements of stockholders’ deficit.

The Company has assets and liabilities, including receivables and payables, which are denominated in currencies other than their functional currency. These balance sheet items are subject to re-measurement, the impact of which is recorded in foreign currency exchange gain and loss, within the condensed consolidated statement of operations and comprehensive loss.

Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Potentially dilutive common shares consist of shares issuable from stock options, unvested RSUs and the Warrant (see Note 10). Other potentially dilutive common shares would also include common shares that would be outstanding if the 5.00% Notes were converted. Diluted earnings are not presented when the effect of adding such additional common shares is antidilutive.

See Note 11, Loss Per Share, for further information.

In addition to net loss, comprehensive loss includes all changes in equity during a period, except those resulting from investments by and distributions to owners. The Company holds debt securities as available-for-sale and records the change in fair market value as a component of comprehensive loss. The Company also has adjustments resulting from translating foreign functional currency financial statements into U.S. Dollars which is included as a component of comprehensive loss.

In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method. ASU 2022-01 is related to the portfolio layer method of hedge accounting. The amendments in this update clarify the accounting and promote consistency in reporting for hedges where the portfolio layer method is applied. This ASU was adopted January 1, 2023, and did not impact the Company’s consolidated financial statements at January 1, 2023.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 relates to troubled debt restructurings (“TDRs”) and vintage disclosures for financing receivables. The amendments in this update eliminate the accounting guidance for TDRs by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulty. The amendments also require disclosure of current-period gross write-offs by year of origination for financing receivables. This ASU was adopted January 1, 2023, and did not impact the Company's consolidated financial statements at January 1, 2023.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, short-term investments and accounts receivable.

The Company has financial institutions for banking operations that hold 10% or more of the Company’s cash and cash equivalents. As of June 30, 2023, two of the Company's financial institutions held 79% and 12%, of the Company’s cash and cash equivalents. As of December 31, 2022, three of the Company’s financial institutions held 52%, 24% and 21% of the Company’s cash and cash equivalents.

The Company grants credit to domestic and international customers. Exposure to losses on accounts receivable is principally dependent on each client’s financial position. The Company had one customer that accounted for 16% and 15% of the Company’s net accounts receivable balance as of June 30, 2023 and December 31, 2022, respectively.

The Company had one customer that represented 10% of the Company’s total revenue for the three and six months ended June 30, 2023 and no customers that represented 10% or more of the Company’s total revenue for the three and six months ended June 30, 2022.

The following tables represent the financial instruments measured at fair value on a recurring basis in the financial statements of the Company and the valuation approach applied to each class of financial instruments at June 30, 2023 and December 31, 2022 (in thousands):

Highly liquid investments with an original maturity of three months or less at time of purchase are included in cash and cash equivalents on the condensed consolidated balance sheet.

Level 1 assets are priced using quoted prices in active markets for identical assets which include money market funds, U.S. Treasury securities and mutual funds as these specific assets are liquid.

Level 2 available-for-sale securities are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs.

As of June 30, 2023, the Company’s Conversion Option, which is classified as a derivative liability, has a fair value of $42.8 million, using Level 3 measurement assumptions. See Note 9, Convertible Notes for further detail on the Conversion Option.

As of June 30, 2023, the Company’s Schuler Purchase Obligation, which is classified as a financial instrument asset, has a fair value of $0.9 million, using Level 3 measurement assumptions. See Note 17, Stockholders' Equity for further detail on the Schuler Purchase Obligation.

As of December 31, 2022, the Secured Notes had an outstanding principal amount of $34.9 million, and a fair value of $16.0 million, using Level 3 measurement assumptions. No Secured Notes were outstanding as of June 30, 2023. See Note 10, Long-Term Debt Related-Party for further detail on the Secured Note.

As of June 30, 2023, the Company’s 5.00% Notes had an outstanding principal amount of $66.9 million, and a fair value of $35.2 million, using Level 3 measurement assumptions. See Note 9, Convertible Notes for further detail on the 5.00% Notes.

The 2.50% Notes matured on March 15, 2023 and became due and payable on such date. The amortized carrying amount of the 2.50% Notes is $0.7 million as of June 30, 2023 and approximates the related fair value due to the instrument being fully matured and payable. As of December 31, 2022, the 2.50% Notes represented a Level 2 measurement with an outstanding principal amount of $56.6 million, and a fair value of $51.9 million. See Note 9, Convertible Notes for further detail on the 2.50% Notes.

The following tables summarize the Company’s debt securities classified as available-for-sale investments at June 30, 2023 and December 31, 2022 (in thousands):

The following table summarizes the maturities of the Company’s debt securities classified as available-for-sale investments at June 30, 2023 and December 31, 2022 (in thousands):

There were no proceeds from sales of debt securities available-for-sale (including principal paydowns) for the three and six months ended June 30, 2023 and 2022. The Company determines gains and losses on marketable securities based on specific identification of the securities sold. There were no material realized gains or losses from debt securities available-for-sale during the three and six months ended June 30, 2023 and 2022. No material balances were reclassified out of accumulated other comprehensive loss for the three and six months ended June 30, 2023 and 2022. No unrealized losses on debt securities available-for-sale have been recognized in income for the three and six months ended June 30, 2023 and 2022, as the issuers of such securities were of high credit quality.

As of June 30, 2023 the Company did not carry any debt securities available-for-sale that were below the Company's minimum credit rating. All debt securities available-for-sale had a credit rating of A- or better as of June 30, 2023.

Equity securities are comprised of investments in mutual funds. The fair value of equity securities at June 30, 2023 and December 31, 2022 was $1.0 million and $0.9 million, respectively.

Unrealized gains or losses on equity securities recorded in income during the three and six months ended June 30, 2023 and 2022 were as follows (in thousands):

These unrealized gains or losses are recorded as a component of other income (expense), net. There were no realized gains or losses from equity securities for each of the three and six months ended June 30, 2023 and 2022.

Inventories consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

Property and equipment consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

Depreciation expense for the three and six months ended June 30, 2023 and 2022 were as follows (in thousands):

Instruments at cost and accumulated depreciation where the Company is the lessor under operating leases consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):

Deferred revenue consists of amounts received for products or services not yet delivered or earned. If we anticipate revenue will not be earned within the following twelve months, the amount is reported as other non-current liabilities. A summary of the balances as of June 30, 2023 and December 31, 2022 follows (in thousands):

We recognized $0.2 million of revenues that were included in the beginning contract liabilities balances for each of the three months ended June 30, 2023 and June 30, 2022 and $0.4 million and $0.3 million for the six months ended June 30, 2023 and June 30, 2022, respectively. No material amount of revenue recognized during the period was from performance obligations satisfied in prior periods.

As of June 30, 2023, $6.1 million of revenue is expected to be recognized from remaining performance obligations. This balance primarily relates to product shipments for reagents sold to customers under sales-type lease agreements. These agreements have between two and four year terms and revenue is recognized as product is shipped, typically on a straight-line basis. The remaining balance relates to executed service contracts that begin as warranty periods expire. These service contracts typically provide for four-year terms and revenue is recognized on a straight-line basis.

The Company elects not to disclose the value of unsatisfied performance obligations for (i) contracts with an expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

The Company has entered into an exclusive commercial agreement with BD to act as the Company’s agent and representative. As of June 30, 2023, BD has paid the Company exclusivity fees totaling $0.8 million, of which $0.7 million has been amortized as a credit to sales, general and administrative expenses. The remaining $0.1 million remains in deferred income to be amortized in future periods. The Company has recognized $0.5 million in agent fee expense in the six months ended June 30, 2023 associated with partnership-related commercial activity which is recorded to sales, general and administrative expenses.

The information presented in this section summarizes the data for all of the Company’s convertible notes.

The carrying value of the convertible notes at June 30, 2023 and December 31, 2022 consisted of the following (in thousands):

At June 30, 2023 and December 31, 2022 the convertible notes were classified as follows (in thousands):

Interest expense during the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

(Loss) gain on extinguishment of exchanged convertible notes during the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

On March 27, 2018, the Company issued $150.0 million aggregate principal amount of 2.50% Notes. In connection with the offering of the 2.50% Notes, the Company granted the initial purchasers of the Notes a 13-day option to purchase up to an additional $22.5 million aggregate principal amount of the 2.50% Notes on the same terms and conditions. On April 4, 2018 the option was partially exercised, which resulted in $21.5 million of additional proceeds, for total proceeds of $171.5 million. The 2.50% Notes matured on March 15, 2023 (the “Maturity Date”).

As of June 30, 2023, approximately $0.7 million aggregate principal amount of 2.50% Notes remains outstanding and in default accruing interest at 2.5% per annum.

The Company incurred issuance costs related to the issuance of the 2.50% Notes which were amortized over the five-year contractual term of the 2.50% Notes using the effective interest method. The effective interest rate on the 2.50% Notes, including accretion of the 2.50% Notes to par was 3.2%.

Holders had the option to convert the Notes in multiples of $1,000 principal amount at any time prior to December 15, 2022, but only in the following circumstances:

•if the Company’s stock price exceeds 130% of the conversion price for 20 of the last 30 trading days of any calendar quarter after June 30, 2018;

•during the 5 business day period after any 5 consecutive trading day period in which the 2.50% Notes’ trading price is less than 98% of the product of the common stock price times the conversion rate; or

•the occurrence of certain corporate events, such as a change of control, merger or liquidation.

At any time on or after December 15, 2022, a holder could have converted its 2.50% Notes in multiples of $1,000 principal amount. Holders of the 2.50% Notes who convert their 2.50% Notes in connection with a make-whole fundamental change (as defined in the Indenture) were, under certain circumstances, entitled to an increase in the conversion rate. In addition, in the event of a fundamental change or event of default prior to the Maturity Date, holders, subject to certain conditions, had the right, at their option, to require the Company to repurchase for cash all or part of the 2.50% Notes at a repurchase price equal to 100% of the principal amount of the 2.50% Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the repurchase date.

As of June 30, 2023, none of the 2.50% Notes outstanding are convertible pursuant to their original terms. None of the 2.50% Notes converted prior to the Maturity Date. As of June 30, 2023, the Company will continue to accrue interest on the remaining outstanding 2.50% Notes. As of June 30, 2023 the amount of accrued interest on the remaining outstanding 2.50% Notes is immaterial.

The carrying value of the 2.50% Notes at June 30, 2023 and December 31, 2022 consisted of the following (in thousands):

At June 30, 2023 and December 31, 2022 the 2.50% Notes were classified as follows (in thousands):

Interest expense for the 2.50% Notes during the three and six months ended June 30, 2023 and 2022 were as follows (in thousands):

On March 9, 2023, the Company entered into the Forbearance Agreement, which became effective on March 13, 2023, with the Ad Hoc Noteholder Group holding approximately 85% of the Company’s outstanding 2.50% Notes, the Trustee and any other owner of the 2.50% Notes who executes and delivers to the Company a joinder to the Forbearance Agreement (collectively with the Trustee and Ad Hoc Noteholder Group, the “Counterparties”). Pursuant to the Forbearance Agreement, the members of the Ad Hoc Noteholder Group agreed, and directed the Trustee, to forbear from exercising their rights and remedies under the Indenture in connection with certain events of default under the Indenture, such as (i) failure to timely pay in full the principal of any 2.50% Note when due and payable on March 15, 2023, (ii) failure to pay any interest on any 2.50% Note when due and payable, (iii) failure to convert any 2.50% Notes, (iv) default under any agreement with outstanding indebtedness for money borrowed in excess of $15.0 million and (v) any other breach, default or event of default under the Indenture arising from the failure of the Company to timely pay in full the principal of any 2.50% Note when due and payable on the Maturity Date. The Forbearance Agreement was initially effective for the period commencing on March 13, 2023 and ending on April 21, 2023, the date of the Restructuring Support Agreement.

The holders of the 2.50% Notes that joined the Forbearance Agreement received a fee (the “Forbearance Premium”) equal to $5.00 per $1,000 principal amount of the 2.50% Notes held by such party, by executing and delivering a joinder to the Forbearance Agreement to the Company. During the six months ended June 30, 2023 the Ad Hoc Noteholder Group received $0.2 million in Forbearance Premiums. The Forbearance Premium of $0.2 million paid during the six months ended June 30, 2023, was capitalized and amortized to expense for the period commencing on March 13, 2023 through March 31, 2023.

On June 9, 2023, the Company completed the Restructuring Transactions contemplated by the Restructuring Support Agreement whereby the Company (i) exchanged approximately $55.9 million aggregate principal amount of the 2.50% Notes for approximately $56.9 million aggregate principal amount of newly issued 5.00% Notes, which was inclusive of additional 5.00% Notes in respect of interest accrued on the 2.50% Notes from September 15, 2022, for $1.0 million; (ii) issued and sold an additional $10.0 million aggregate principal amount of 5.00% Notes; (iii) repurchased the Secured Note, plus accrued interest, by issuing approximately 3.4 million shares of the Company’s common stock; (iv) issued approximately 0.4 million shares of the Company’s common stock upon conversion of all of the Company’s outstanding Series A Preferred Stock; (v) amended the March 2022 Securities Purchase Agreement (as defined in Note 17) and issued and sold approximately 0.5 million shares of the Company’s common stock for proceeds of $4.0 million; and (vi) entered into a new securities purchase agreement with the Schuler Trust pursuant to which the Schuler Trust is required, prior to December 15, 2023, to either purchase an aggregate of $10 million of the Company’s common stock from the Company or to backstop an underwritten public offering by the Company of its common stock for aggregate proceeds of $10 million, at the Company’s option. See Note 10, Long-Term Debt Related-Party, Note 17, Stockholders' Equity and Note 18, Related-Party Transactions for additional information.

As described above, on June 9, 2023, the Company entered into an exchange agreement (the “June 2023 Exchange Transaction”) with certain holders of the Notes. On June 9, 2023 the June 2023 Exchange Transaction was accounted for as an extinguishment which resulted in the $56.9 million in aggregate principal of the 5.00% Notes replacing the $55.9 million of the 2.50% Notes and the $1.0 million of accrued interest expense. The 5.00% Notes were recorded at fair value on initial measurement, while the $55.9 million of the 2.50% Notes and the $1.0 million of accrued interest expense was retired. During the three and six months ended June 30, 2023 the extinguishment of the 2.50% Notes resulted in a loss of $6.6 million. See further discussion of the 5.00% Notes below.

On March 21, 2022, the Company entered into a privately negotiated exchange agreement (the “March 2022 Exchange Agreement”) with a holder of the 2.50% Notes. Under the terms of the March 2022 Exchange Agreement, the note holder agreed to exchange with the Company $14.0 million in aggregate principal amount 2.50% Notes held by it in eight equal tranches as follows for each tranche: (a) 2.26 shares per $1,000 principal amount of 2.50% Notes exchanged, plus (b) an additional number of shares of the Company’s common stock per $1,000 principal amount of 2.50% Notes exchanged equal to the sum, for each of the trading days during a separate agreed upon reference period for each tranche commencing on March 21, 2022 for the first tranche, of the quotient of (i) $15.567 divided by (ii) the daily volume-weighted average price for such trading day (collectively, the “Exchange Transaction”). The closing of the March 2022 Exchange Agreement occurred in eight tranches (“2022 Obligation to Exchange”), with the first closing occurring on March 29, 2022 and the last closing on May 18, 2022.

On March 21, 2022 the 2022 Obligation to Exchange the $14.0 million of Notes was accounted for as an extinguishment and was replaced by new notes with an embedded feature (the “2022 New Notes”). The 2022 New Notes were elected to be carried using the fair value option. The 2022 New Notes were recorded at fair value on initial measurement and remeasured at fair value (“mark to market”) at each reporting period with changes in fair value reported in other income and expense, net. This fair value election was exclusive to the 2022 New Notes and did not extend to other 2.50% Notes. At June 30, 2022 the embedded feature was no longer outstanding as the 2022 New Notes were exchanged and the 2022 Obligation to Exchange was retired. As of June 30, 2023 and 2022 no 2.50% Notes were carried using the fair value option.

During the six months ended June 30, 2022 the holder of the Notes exchanged approximately $14.0 million in aggregate principal amount of Notes held by the holder for approximately 1.1 million shares of the Company's common stock pursuant to the Exchange Agreement. The legal exchange of the 2.50% Notes resulted in a gain of $3.6 million during the six months ended June 30, 2022. The Company’s common stock was determined to have a fair value of $10.2 million, which was recorded to contributed capital during the six months ended June 30, 2022.

In connection with the initial offering of the 2.50% Notes, we entered into a prepaid forward stock repurchase transaction (the “Prepaid Forward”) with a financial institution. Pursuant to the Prepaid Forward, we used approximately $45.1 million of the proceeds from the offering of the 2.50% Notes to pay the prepayment amount. The aggregate number of our common stock underlying the Prepaid Forward is approximately 0.2 million shares (based on the sale price of $24.25). On March 24, 2023, approximately 0.2 million shares of common stock were returned to the Company pursuant to our agreement with the counterparty.

On March 27, 2018 and forward, these shares purchased under the Prepaid Forward were treated as treasury stock on the condensed consolidated balance sheet (and not outstanding for purposes of the calculation of basic and diluted earnings per share), but remain outstanding for corporate law purposes, including for purposes of any future stockholders’ votes.

As described above, on June 9, 2023, the Company entered into the June 2023 Exchange Transaction with holders of the 2.50% Notes. The June 2023 Exchange Transaction was accounted for as an extinguishment which resulted in the 5.00% Notes replacing the 2.50% Notes and associated accrued interest expense. The 5.00% Notes were recorded at fair value on initial measurement, while the 2.50% Notes and the associated accrued interest expense were retired. In addition the Company issued an additional $10.0 million aggregate principal amount of 5.00% Notes, for cash proceeds with certain existing note holders. The 5.00% Notes have an aggregate principal amount of $66.9 million and a maturity date of December 15, 2026 (the “Maturity Date”).

The 5.00% Notes bear interest at a rate of 5.00% per annum. The Company shall pay interest on the 5.00% Notes by payment-in-kind (“PIK”), by the issuance of additional 5.00% Notes (“PIK Notes”). The amount shall be payable to holders by increasing the principal amount of each outstanding 5.00% Note by an amount equal to the interest payable for the applicable interest period. The Company will calculate PIK interest semi-annually which is June 15 and December 15, on a compound basis based on the stated rate of 5.00%. The PIK Notes will also incur interest at a rate of 5.00% per annum.

The 5.00% Note is secured by substantially all of the assets of the Company and its subsidiaries.

Holders of the 5.00% Notes who convert their 5.00% Notes in connection with a make-whole fundamental change (as defined in the Indenture) are, under certain circumstances, entitled to an increase in the conversion rate. If a fundamental change occurs at any time prior to the Maturity Date, each holder shall have the right, at such holder’s option, to require the Company to repurchase for cash all of such holder’s 5.00% Notes, at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest.

The 5.00% Notes shall not be redeemable by the Company prior to June 15, 2025 except as set forth below:

•On or after June 15, 2025 the Company may, at its option, redeem for cash all or a portion of the 5.00% Notes. If the Company does not redeem 100% of the 5.00% Notes then the redeemed amount is subject to minimums as outlined in the Indenture.

Redeeming the 5.00% Notes before June 15, 2025 could trigger a make-whole fundamental change as described above.

Each holder of the 5.00% Notes has the right at their option, to convert any portion of the 5.00% Notes at an initial conversion rate of 138.88889 shares of common stock per $1,000 principal amount of the 5.00% Notes. Effective October 18, 2023, the initial conversion rate shall be adjusted to a conversion rate calculated based on a conversion price of $7.20 per share of common stock plus 50% of the difference between the Post-Closing VWAP (as defined in the indenture governing the 5.00% Notes) and $7.20 (if such difference is a positive number), provided that in no event shall the adjusted conversion rate be lower than 120.48193 per $1,000 principal amount of the 5.00% Notes, based on a conversion price of $8.30 per share of common stock. The provision of the agreement is collectively referred to as the (“Conversion Option”).

The Company cannot require the holder of the 5.00% Notes to convert at any time. As of June 30, 2023 none of the 5.00% Notes have converted. The number of shares of common stock issuable upon conversion of the 5.00% Notes based on the initial conversion rate is 9.3 million shares as of June 30, 2023, and are available for conversion at the holder’s option.

The Conversion Option provides the note holders with the option to convert their notes to shares of the Company’s common stock at either the initial conversion rate or an adjusted conversion rate depending on the timing of conversion, and can be exercised at any time until maturity. The Conversion Option provides the Company with a choice of cash, shares, or combination settlement. Management determined the Conversion Option meets the derivative bifurcation criteria under ASC 815 at inception through October 17, 2023, the date at which the conversion rate will become fixed, during which the derivative instrument will be bifurcated and adjusted to fair value through earnings.

From end of day October 17, 2023 and thereafter, the Conversion Option will no longer meet the bifurcation criteria and the derivative instrument will cease being bifurcated and will be accounted for based on applicable accounting guidance. The Derivative is an instrument measured at fair value using Level 3 inputs. The Company’s Conversion Option was recorded at fair value at inception, and marked to market as of June 30, 2023.

Changes in the fair value of the derivative financial instrument are recognized in gain (loss) on financial instruments, within the condensed consolidated statement of operations and comprehensive loss. The derivative financial instrument activity for the three and six months ended June 30, 2023 and 2022 is comprised of the following (in thousands):

Under ASC 470-50-40, the June 2023 Exchange Transaction qualified as an extinguishment of debt. Under extinguishment accounting, the 2.50% Notes were derecognized and the new instruments, which include the 5.00% Notes and the Conversion Option derivative, were recorded at their respective fair values. The 5.00% Notes represent an instrument measured at fair value on a non-recurring basis using Level 3 inputs. The estimated fair value of the 5.00% Notes on June 9, 2023 is $34.8 million, which included a $6.0 million debt premium.

The fair value of the Conversion Option derivative liability of $38.2 million as of the transaction date was recorded as a debt issuance discount at inception on June 9, 2023. The Company incurred issuance costs of $3.0 million. The debt premium, debt discount and debt issuance costs will be amortized using the effective interest method over 3.5 years which is the contractual term of the 5.00% Notes. The effective interest rate on the 5.00% Notes, to par is 27.30%.

The carrying value of the 5.00% Notes at June 30, 2023 and December 31, 2022 consisted of the following (in thousands):

At June 30, 2023 and December 31, 2022 the 5.00% Notes were classified as follows (in thousands):

Interest expense for the 5.00% Notes during the three and six months ended June 30, 2023 and 2022 were as follows (in thousands):