UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2022

or


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

For the transition period from ________ to _________
Commission File Number: 001-39486

QUANTUM-SI INCORPORATED
(Exact name of registrant as specified in its charter)



Delaware
 
85-1388175
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)

530 Old Whitfield Street
   
Guilford, Connecticut
 
06437
(Address of principal executive offices)
 
(Zip Code)

(203) 458-7100
(Registrant’s telephone number, including area code)

Not applicable
(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class
 
Trading Symbols(s)
 
Name of each exchange on which registered
Class A common stock, $0.0001 per share
 
QSI
 
The Nasdaq Stock Market LLC
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share
 
QSIAW
 
The Nasdaq Stock Market LLC

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

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

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

Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company

   
Emerging growth company


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

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

As of November 3, 2022, the registrant had 119,881,495 shares of Class A common stock outstanding and 19,937,500 shares of Class B common stock outstanding.



QUANTUM-SI INCORPORATED
FORM 10-Q
For the quarterly period ended September 30, 2022

TABLE OF CONTENTS

   
Page
 
3
     
Part I
4
     
Item 1.
4
     
 
4
     
 
5
     
 
6
     
 
8
     
 
9
     
Item 2.
22
     
Item 3.
30
     
Item 4.
30
     
Part II
32
     
Item 1.
32
     
Item 1A.
32
     
Item 2.
32
     
Item 3.
32
     
Item 4.
32
     
Item 5.
32
     
Item 6.
33
     
34

In this Quarterly Report on Form 10-Q, the terms “we”, “us”, “our”, the “Company” or “Quantum-Si” mean Quantum-Si Incorporated (formerly HighCape Capital Acquisition Corp.) and our subsidiaries. On June 10, 2021 (the “Closing Date”), HighCape Capital Acquisition Corp., a Delaware corporation (“HighCape” and after the Business Combination described herein, the “Company”), consummated a business combination (the “Business Combination”) pursuant to the terms of the Business Combination Agreement, dated as of February 18, 2021 (the “Business Combination Agreement”), by and among HighCape, Tenet Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and Quantum-Si Incorporated, a Delaware corporation (“Legacy Quantum-Si”). Immediately upon the consummation of the Business Combination and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”, and such completion, the “Closing”), Merger Sub merged with and into Legacy Quantum-Si, with Legacy Quantum-Si surviving the Business Combination as a wholly-owned subsidiary of HighCape (the “Merger”). In connection with the Transactions, HighCape changed its name to “Quantum-Si Incorporated” and Legacy Quantum-Si changed its name to “Q-SI Operations Inc.”

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that relate to future events, our future operations or financial performance, or our plans, strategies and prospects. These statements are based on the beliefs and assumptions of our management team. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or performance, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or the negative of these terms, or other comparable terminology intended to identify statements about the future, although not all forward-looking statements contain these identifying words. The forward-looking statements are based on projections prepared by, and are the responsibility of, our management. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:


the ability to recognize the benefits of the Business Combination, which may be affected by, among other things, competition and our ability to grow and manage growth profitably and retain our key employees;

the ability to maintain the listing of our Class A common stock on The Nasdaq Stock Market LLC (“Nasdaq”);

changes in applicable laws or regulations;

our ability to raise financing in the future;

the success, cost and timing of our product development activities;

the commercialization and adoption of our existing products and the success of any product we may offer in the future;

the potential attributes and benefits of our products once commercialized;

our ability to obtain and maintain regulatory approval for our products, and any related restrictions and limitations of any approved product;

our ongoing leadership transition;

our ability to identify, in-license or acquire additional technology;

our ability to maintain our existing license agreements and manufacturing arrangements;

our ability to compete with other companies currently marketing or engaged in the development of products and services that serve customers engaged in proteomic analysis, many of which have greater financial and marketing resources than us;

the size and growth potential of the markets for our products, and the ability of each product to serve those markets once commercialized, either alone or in partnership with others;

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

our financial performance; and

the impact of the COVID-19 pandemic on our business.

These forward-looking statements are based on information available as of the date of this report, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Important factors could cause actual results, performance or achievements to differ materially from those indicated or implied by forward-looking statements such as those described under the caption “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in other filings that we make with the Securities and Exchange Commission. The risks described under the heading “Risk Factors” are not exhaustive. New risk factors emerge from time to time, and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

PART I – FINANCIAL INFORMATION

Item 1.
Financial Statements

QUANTUM-SI INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share amounts)
(Unaudited)

   
September 30,
2022
   
December 31,
2021
 
Assets
           
Current assets:
           
Cash and cash equivalents
 
$
78,263
   
$
35,785
 
Marketable securities
    293,811       435,519  
Prepaid expenses and other current assets
   
6,799
     
5,868
 
Total current assets
   
378,873
     
477,172
 
Property and equipment, net
   
13,764
     
8,908
 
Goodwill
    9,483       9,483  
Other assets     697       690  
Operating lease right-of-use assets
   
15,166
     
6,973
 
Total assets
 
$
417,983
   
$
503,226
 
Liabilities and stockholders’ equity
               
Current liabilities:
               
Accounts payable
 
$
1,775
   
$
3,393
 
Accrued expenses and other current liabilities
   
9,586
     
7,276
 
Short-term operating lease liabilities
    1,280       859  
Total current liabilities
   
12,641
     
11,528
 
Long-term liabilities:
               
Warrant liabilities
   
2,118
     
7,239
 
Other long-term liabilities
   
-
     
206
 
Operating lease liabilities
    15,774       7,219  
Total liabilities
   
30,533
     
26,192
 
Commitments and contingencies (Note 14)
           
Stockholders’ equity
               
Class A Common stock, $0.0001 par value; 600,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 119,848,170 and 118,025,410 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
   
12
     
12
 
Class B Common stock, $0.0001 par value; 27,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 19,937,500 shares issued and outstanding as of September 30, 2022 and December 31, 2021
   
2
     
2
 
Additional paid-in capital
   
753,970
     
744,252
 
Accumulated deficit
   
(366,534
)
   
(267,232
)
Total stockholders’ equity
   
387,450
     
477,034
 
Total liabilities and stockholders’ equity
 
$
417,983
   
$
503,226
 

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

QUANTUM-SI INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
 (in thousands, except share and per share amounts)
(Unaudited)

   
Three months ended September 30,
   
Nine months ended September 30,
 
   
2022
   
2021
   
2022
   
2021
 
Operating expenses:
                       
Research and development
 
$
16,675
   
$
11,104
   
$
53,905
   
$
32,190
 
Selling, general and administrative
   
10,983
     
14,071
     
31,093
     
36,928
 
Total operating expenses
   
27,658
     
25,175
     
84,998
     
69,118
 
Loss from operations
   
(27,658
)
   
(25,175
)
   
(84,998
)
   
(69,118
)
Interest expense     -       -       -       (5 )
Dividend income     1,381       739       3,288       741  
Change in fair value of warrant liabilities
   
137
     
6,975
     
5,121
     
3,442
 
Other (expense), net
   
(5,573
)
   
(630
)
   
(22,713
)
   
(627
)
Loss before provision for income taxes
   
(31,713
)
   
(18,091
)
   
(99,302
)
   
(65,567
)
Provision for income taxes
   
-
     
-
     
-
     
-
 
Net loss and comprehensive loss
 
$
(31,713
)
 
$
(18,091
)
 
$
(99,302
)
 
$
(65,567
)
Net loss per common share attributable to common stockholders, basic and diluted
 
$
(0.23
)
 
$
(0.13
)
 
$
(0.71
)
 
$
(1.09
)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted
   
139,542,660
     
136,456,848
     
139,057,663
     
60,104,891
 

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

QUANTUM-SI INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS’ EQUITY (DEFICIT)
 (in thousands, except share amounts)
(Unaudited)

   
Convertible preferred stock
   
Class A
common stock
   
Class B
common stock
   
Additional paid-in capital
     
Accumulated deficit
   
Total stockholders’
equity (deficit)
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
             
Balance - December 31, 2020
   
90,789,268
   
$
195,814
     
5,378,287
   
$
1
     
-
   
$
-
   
$
12,517
   
$
(172,243
)
 
$
(159,725
)
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(11,779
)
   
(11,779
)
Issuance of Series E convertible preferred stock, net of issuance costs
   
-
     
(4
)
   
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Common stock issued upon exercise of stock options and vesting of restricted stock units
   
-
     
-
     
581,237
     
-
     
-
     
-
     
999
     
-
     
999
 
Stock-based compensation
   
-
     
-
     
-
     
-
     
-
     
-
     
457
     
-
     
457
 
Balance - March 31, 2021
   
90,789,268
   
$
195,810
     
5,959,524
   
$
1
     
-
   
$
-
   
$
13,973
   
$
(184,022
)
 
$
(170,048
)
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(35,697
)
   
(35,697
)
Common stock issued upon exercise of stock options and vesting of restricted stock units
    -       -       1,327,823       -       -       -       2,712       -       2,712  
Conversion of the convertible preferred stock into Class A and Class B common stock
    (90,789,268 )     (195,810 )     52,466,941       5       19,937,500       2       195,803       -       195,810  
Net equity infusion from the Business Combination
    -       -       56,708,872       6       -       -       501,166       -       501,172  
Stock-based compensation
   
-
     
-
     
-
     
-
     
-
     
-
     
9,987
     
-
     
9,987
 
Balance - June 30, 2021
   
-
   
$
-
     
116,463,160
   
$
12
     
19,937,500
   
$
2
   
$
723,641
   
$
(219,719
)
 
$
503,936
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(18,091
)
   
(18,091
)
Common stock issued upon exercise of stock options and vesting of restricted stock units
    -       -       254,830       -       -       -       676       -       676  
Net equity infusion from the Business Combination
    -       -       -       -       -       -       (2 )     -       (2 )
Stock-based compensation
   
-
     
-
     
-
     
-
     
-
     
-
     
7,396
     
-
     
7,396
 
Balance - September 30, 2021
   
-
   
$
-
     
116,717,990
   
$
12
     
19,937,500
   
$
2
   
$
731,711
   
$
(237,810
)
 
$
493,915
 

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

QUANTUM-SI INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS’ EQUITY (DEFICIT)
 (in thousands, except share amounts)
(Unaudited)

   
Class A
common stock
   
Class B
common stock
   
Additional paid-in capital
     
Accumulated deficit
     
Total stockholders’ equity (deficit)
 
   
Shares
   
Amount
   
Shares
   
Amount
             
Balance - December 31, 2021
 

118,025,410
   
$
12
     
19,937,500
   
$
2
   
$
744,252
   
$
(267,232
)
 
$
477,034
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
(35,175
)
   
(35,175
)
Common stock issued upon exercise of stock options and vesting of restricted stock units
   
946,987
     
-
     
-
     
-
     
730
     
-
     
730
 
Stock-based compensation
   
-
     
-
     
-
     
-
     
(714
)
   
-
     
(714
)
Balance - March 31, 2022
 

118,972,397
   
$
12
     
19,937,500
   
$
2
   
$
744,268
   
$
(302,407
)
 
$
441,875
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
(32,414
)
   
(32,414
)
Common stock issued upon exercise of stock options and vesting of restricted stock units
   
271,731
     
-
     
-
     
-
     
264
     
-
     
264
 
Stock-based compensation
   
-
     
-
     
-
     
-
     
3,770
     
-
     
3,770
 
Balance - June 30, 2022
   
119,244,128
   
$
12
     
19,937,500
   
$
2
   
$
748,302
   
$
(334,821
)
 
$
413,495
 
Net loss
   
-
     
-
     
-
     
-
     
-
     
(31,713
)
   
(31,713
)
Common stock issued upon exercise of stock options and vesting of restricted stock units
    604,042       -       -       -       1,625       -       1,625  
Stock-based compensation
   
-
     
-
     
-
     
-
     
4,043
     
-
     
4,043
 
Balance - September 30, 2022
   
119,848,170
   
$
12
     
19,937,500
   
$
2
   
$
753,970
   
$
(366,534
)
 
$
387,450
 

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

QUANTUM-SI INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
(Unaudited)

   
Nine Months Ended September 30,
 
   
2022
   
2021
 
Cash flows from operating activities:
           
Net loss
 
$
(99,302
)
 
$
(65,567
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation
   
1,789
     
712
 
Loss on marketable securities (realized and unrealized)
    22,783       634  
Loss on disposal of fixed assets
    9       -  
Change in fair value of warrant liabilities
   
(5,121
)
   
(3,442
)
Change in fair value of contingent consideration
    141       -
 
Stock-based compensation
   
7,099
     
17,840
 
Changes in operating assets and liabilities:
               
Prepaid expenses and other current assets
   
(931
)
   
(4,049
)
Other assets
    (7 )     (117 )
Other assets - related party
    -
      738  
Operating lease right-of-use assets     (8,193 )     (6,443 )
Accounts payable
   
(444
)
   
1,268
 
Accrued expenses and other current liabilities
   
2,224
     
2,627
 
Operating lease liabilities     8,976       7,451  
Net cash used in operating activities
 
$
(70,977
)
 
$
(48,348
)
Cash flows from investing activities:
               
Purchases of property and equipment
   
(7,241
)
   
(3,123
)
Purchases of marketable securities     (834 )     (438,736 )
 Sales of marketable securities
    119,759       -  
Net cash provided by (used in) investing activities
 
$
111,684
   
$
(441,859
)
Cash flows from financing activities:
               
Proceeds from exercise of stock options
   
2,619
     
4,387
 
Net proceeds from equity infusion from the Business Combination
    -
      512,794  
Payment of notes payable
    -       (1,749 )
Payment of contingent consideration - business acquisition
    (348 )     -  
Payment of deferred consideration - business acquisition
    (500 )     -  
Stock issuance costs for Series E convertible preferred stock
   
-
      (4 )
Principal payments under finance lease obligations
   
-
      (28 )
Net cash provided by financing activities
 
$
1,771
   
$
515,400
 
Net increase in cash and cash equivalents
   
42,478
     
25,193
 
Cash and cash equivalents at beginning of period
   
35,785
     
36,910
 
Cash and cash equivalents at end of period
 
$
78,263
   
$
62,103
 
Supplemental disclosure of cash flow information:
               
Cash received from exchange of research and development tax credits
 
$
-
   
$
377
 
Supplemental disclosure of noncash information:
               
Noncash acquisition of property and equipment
 
$
798
   
$
599
 
Forgiveness of related party promissory notes
 
$
-
   
$
150
 
Noncash equity related transaction costs from the Business Combination
  $ -     $ 6  
Noncash equity related warrants from the Business Combination
  $ -     $ 11,618  
Conversion of the convertible preferred stock into Class A and Class B common stock
  $ -     $ 195,810  

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

QUANTUM-SI INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021
AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(in thousands, except share and per share amounts)
(Unaudited)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Quantum-Si Incorporated (including its subsidiaries, the “Company” or “Quantum-Si”) was originally incorporated in Delaware on June 10, 2020 as a special purpose acquisition company under the name HighCape Capital Acquisition Corp. (“HighCape”) for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving HighCape and one or more businesses. On June 10, 2021 (the “Closing”), the Company consummated the transaction contemplated by the Business Combination Agreement, dated February 18, 2021 (the “Business Combination Agreement”), by and among HighCape, Tenet Merger Sub, Inc., a Delaware corporation (“Merger Sub”) and Quantum-Si Incorporated, a Delaware corporation (“Legacy Quantum-Si”).

Pursuant to the terms of the Business Combination Agreement, a business combination between HighCape was effected through the merger of Merger Sub with and into Legacy Quantum-Si, with Legacy Quantum-Si surviving as the surviving company and a wholly owned subsidiary of HighCape (the “Merger” and collectively with the other transaction described in the Business Combination Agreement, the “Business Combination”). Effective as of the Closing, HighCape changed its name to Quantum-Si Incorporated and Legacy Quantum-Si changed its name to Q-SI Operations Inc. The financial information prior to the Business Combination represents the financial results and condition of Legacy Quantum-Si.

The Company is an innovative life sciences company with the mission of transforming single-molecule analysis and democratizing its use by providing researchers and clinicians access to the proteome, the set of proteins expressed within a cell. The Company has developed a proprietary universal single-molecule detection platform that the Company is first applying to proteomics to enable Next-Generation Protein Sequencing (“NGPS”), the ability to sequence proteins in a massively parallel fashion (rather than sequentially, one at a time), and can be used for the study of nucleic acids. The Company’s platform is comprised of the CarbonTM automated sample preparation instrument, the PlatinumTM NGPS instrument, the Quantum-Si CloudTM software service, and reagent kits and chips for use with its instruments.

Although the Company has incurred recurring losses each year since its inception, the Company expects its cash and cash equivalents, and marketable securities will be able to fund its operations for at least the next twelve months.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation and Principles of Consolidation
 
The accompanying condensed consolidated financial statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. All intercompany transactions are eliminated. 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.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including certain notes required by U.S. GAAP, on an annual reporting basis.

In the opinion of management, the accompanying 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. The results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 2022, or any other period.

There have been no material changes to the Company’s significant accounting policies as described in the Company’s audited consolidated financial statements as of and for the years ended December 31, 2021 and 2020.
 
COVID-19 Outbreak
 
The outbreak of the novel coronavirus (“COVID-19”), which was declared a pandemic by the World Health Organization on March 11, 2020 and declared a National Emergency by the President of the United States on March 13, 2020, has led to adverse impacts on the United States and global economies and created uncertainty regarding potential impacts on the Company’s operating results, financial condition and cash flows. The COVID-19 pandemic had, and is expected to continue to have, an adverse impact on the Company’s operations, particularly as a result of preventive and precautionary measures that the Company, other businesses, and governments are taking. Governmental mandates related to COVID-19 or other infectious diseases, or public health crises, have impacted, and the Company expects them to continue to impact, its personnel and personnel at third-party manufacturing facilities in the United States and other countries, and the availability or cost of materials, which would disrupt or delay the Company’s receipt of instruments, components and supplies from the third parties the Company relies on to, among other things, produce its products currently under development. The COVID-19 pandemic has also had an adverse effect on the Company’s ability to attract, recruit, interview and hire at the pace the Company would typically expect to support its rapidly expanding operations. To the extent that any governmental authority imposes additional regulatory requirements or changes existing laws, regulations, and policies that apply to the Company’s business and operations, such as additional workplace safety measures, the Company’s product development plans may be delayed, and the Company may incur further costs in bringing its business and operations into compliance with changing or new laws, regulations, and policies. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including expenses and research and development costs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impacts, including inflation on product and service costs.

The estimates of the impact on the Company’s business may change based on new information that may emerge concerning COVID-19 and the actions to contain it or address its impact and the economic impact on local, regional, national and international markets as well as other changes in macroeconomic factors. The COVID-19 pandemic and related economic disruptions have not had a material adverse impact on the Company’s operations to date. While the Company is unable to predict the full impact that the COVID-19 pandemic will have on the Company’s future results of operations, liquidity and financial condition due to numerous uncertainties, including the duration of the pandemic, the actions that may be taken by government authorities across the United States, adverse changes in macroeconomic conditions, if sustained or recurrent, could result in significant changes in costs going forward with material adverse effect on the Company’s operating results, financial condition, and cash flows.
 
The Company has not incurred any significant impairment losses in the carrying values of the Company’s assets as a result of the COVID-19 pandemic and is not aware of any specific related event or circumstance that would require the Company to revise its estimates reflected in its condensed consolidated financial statements.
 
Other Global Developments
 
In 2022, various central banks around the world (including the Federal Reserve in the United States) raised interest rates. While these rate increases have not had a significant adverse impact on the Company to date, the impact of such rate increases on the overall financial markets and the economy may adversely impact the Company in the future. In addition, the global economy has experienced and is continuing to experience high levels of inflation and global supply chain disruptions. The Company continues to monitor these supply chain, inflation and interest rate factors, as well as the uncertainty resulting from the overall economic environment.

In addition, although the Company has no operations in or direct exposure to Russia, Belarus and Ukraine, the Company has experienced limited constraints in availability and increasing costs required to obtain some materials and supplies due, in part, to the negative impact of the Russia-Ukraine military conflict on the global economy. To date, the Company’s business has not been materially impacted by the conflict, however, as the conflict continues or worsens, it may impact the Company’s business, financial condition or results of operations.

Concentration of Credit Risk
 
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents and marketable securities. As of September 30, 2022 and December 31, 2021, substantially all of the Company’s cash and cash equivalents and marketable securities were invested in fixed income mutual funds at one financial institution. The Company also maintains balances in various operating accounts above federally insured limits. After considering dividend income derived from such investments, the Company has not recognized any significant realized losses on such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents and marketable securities.
 
Reclassifications
 
Certain prior year amounts have been reclassified for consistency with the current year’s presentation.

Use of Estimates
 
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions about future events that affect the amounts reported in its condensed consolidated financial statements and accompanying notes. Future events and their effects cannot be determined with certainty. On an ongoing basis, management evaluates these estimates and assumptions. Significant estimates and assumptions include:


valuation allowances with respect to deferred tax assets;


valuation for acquisitions;


valuation of goodwill;


assumptions used for leases;


valuation of warrant liabilities; and


assumptions underlying the fair value used in the calculation of the stock-based compensation.

The Company bases these estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s condensed consolidated financial statements.

Foreign Currency Translation and Transactions
 
For the Company’s international operations, the local currency has been determined to be the functional currency. The results of its non-U.S. dollar-based operations are translated to U.S. dollars at the average exchange rates during the period. Assets and liabilities are translated at the rate of exchange prevailing on the balance sheet date. Equity is translated at the prevailing rate of exchange at the date of the equity transaction. Translation adjustments are reflected in Stockholders’ equity and are included as a component of Other comprehensive (loss)/income. The translational effects of revaluing non-functional currency assets and liabilities into the functional currency are recorded as Other (expense), net in the condensed consolidated statements of operations and comprehensive loss.

The Company realizes foreign currency gains/(losses) in the normal course of business based on movement in the applicable exchange rates. These transactional gains/(losses) are included as a component of Other (expense), net in the condensed consolidated statements of operations and comprehensive loss.  As of September 30, 2022 and for the three and nine months ended September 30, 2022, there was no material effect of foreign currency translation and transactions on the condensed consolidated financial statements.

Investments in Marketable Securities

The Company’s investments in marketable securities consist of ownership interests in fixed income mutual funds. The securities are stated at fair value, as determined by quoted market prices. As the securities have readily determinable fair value, unrealized gains and losses are reported as Other (expense), net on the condensed consolidated statements of operations and comprehensive loss. Subsequent gains or losses realized upon redemption or sale of these securities are also recorded as Other (expense), net on the condensed consolidated statements of operations and comprehensive loss. The Company considers all of its investments in marketable securities as available for use in current operations and therefore classifies these securities within current assets on the condensed consolidated balance sheets.

For the three and nine months ended September 30, 2022, the Company reported unrealized losses of $4,240 and $20,384, respectively, related to securities held as of September 30, 2022.  Realized losses related to securities that matured or were sold during the three and nine months ended September 30, 2022 were $1,348 and $2,399, respectively.  For the three and nine months ended September 30, 2022, the Company recognized $1,381 and $3,288, respectively, in dividend income from marketable securities.  For the three and nine months ended September 30, 2021, the Company reported unrealized losses of $634 related to securities held as of September 30, 2021.  There were no realized losses related to securities that matured or were sold during the three and nine months ended September 30, 2021.  For the three and nine months ended September 30, 2021, the Company recognized $739 and $741, respectively, in dividend income from marketable securities.

Leases

Effective December 31, 2021, the Company lost its emerging growth company status which accelerated the adoption of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). The Company’s adoption of ASU 2016-02 was effective retrospectively to January 1, 2021, the beginning of the year.  In accordance with ASU 2016-02, for arrangements in existence as of January 1, 2021 and any new arrangements entered into thereafter, the Company determines if an arrangement is a lease at inception and records right-of-use (“ROU”) assets and lease liabilities on the condensed consolidated balance sheets at lease commencement.

The Company’s leases generally do not have a readily determinable implicit discount rate.  As such, the Company uses an incremental borrowing rate based on the information available at the lease commencement date to determine the present value of the lease payments. The Company’s incremental borrowing rate is the estimated rate that would be required to pay for a collateralized borrowing equal to the total lease payment over the lease term. The Company measures ROU assets based on the corresponding lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred and (iii) tenant incentives under the lease. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term for operating leases. Finance leases will result in a front-loaded expense pattern. With respect to finance leases, amortization of the ROU asset is presented separately from interest expense related to the finance lease liability. In addition, the Company does not have significant residual value guarantees or restrictive covenants in the lease portfolio.

The Company expenses monthly rental payments as incurred in Selling, general and administrative and in Research and development in the condensed consolidated statements of operations and comprehensive loss. The Company’s lease agreements contain variable lease costs for common area maintenance, utilities, taxes and insurance, which are expensed as incurred.

As a result of its adoption of the new lease standard effective January 1, 2021, the Company has implemented new accounting policies and processes which changed the Company’s internal controls over financial reporting for lease accounting.

Goodwill

Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. Beginning in 2022, the Company will review goodwill for possible impairment annually during the fourth quarter as of October 1, or whenever events or circumstances indicate that the carrying amount may not be recoverable. No impairments were recorded for the three and nine months ended September 30, 2022 or 2021.

In order to test goodwill for impairment, an entity is permitted to first assess qualitative factors to determine whether a quantitative assessment of goodwill is necessary. The qualitative factors considered by the Company may include, but are not limited to, general economic conditions, the Company’s outlook, market performance of the Company’s industry and recent and forecasted financial performance. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. If a quantitative assessment is required, the Company determines the fair value of its reporting unit using a combination of the income and market approaches. If the net book value of the reporting unit exceeds its fair value, the Company recognizes a goodwill impairment charge for the reporting unit equal to the lesser of (i) the total goodwill allocated to that reporting unit and (ii) the amount by which that reporting unit’s carrying amount exceeds its fair value.  Assumptions and estimates used in the evaluation of impairment which primarily include, but are not limited to, discount rates, terminal growth rates, market comparables, and capital expenditure and cash flow forecasts, may affect the fair value of goodwill, which could result in impairment charges in future periods.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment at least annually or when the Company determines a triggering event has occurred. When a triggering event has occurred, each impairment test is based on a comparison of the future expected undiscounted cash flow to the recorded value of the asset. If the recorded value of the asset is less than the undiscounted cash flow, the asset is written down to its estimated fair value. No impairments were recorded for the three and nine months ended September 30, 2022 or 2021.

Warrant Liabilities
 
The Company’s outstanding warrants include publicly-traded warrants (the “Public Warrants”) which were issued as one-third of one redeemable warrant per unit issued during HighCape’s initial public offering on September 9, 2020, and warrants sold in a private placement (the “Private Warrants”) to HighCape’s sponsor, HighCape Capital Acquisition LLC (the “Sponsor”). The Company evaluated its warrants under Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging-Contracts in Entity’s Own Equity (“ASC 815-40”), and concluded that they do not meet the criteria to be classified in stockholders’ equity. Since the Public Warrants and Private Warrants meet the definition of a derivative under ASC 815-40, the Company recorded these warrants as long-term liabilities on the condensed consolidated balance sheet at fair value upon the Closing of the Business Combination, with subsequent changes in their respective fair values recognized in the condensed consolidated statements of operations and comprehensive loss at each reporting date.
 
Recently Issued Accounting Pronouncements
 
Accounting pronouncements issued but not yet adopted

No new accounting pronouncement issued or effective during the three and nine months ended September 30, 2022 had, or is expected to have, a material impact on the Company’s condensed consolidated financial statements.

3. BUSINESS COMBINATION
 
As discussed in Note 1, “Organization and Description of Business,” on June 10, 2021, the Company consummated the Business Combination, with Legacy Quantum-Si surviving the Merger as a wholly owned subsidiary of the Company.
 
Pursuant to the Business Combination Agreement, at the effective time of the Merger (the “Effective Time”), each share of Legacy Quantum-Si capital stock (other than shares of Legacy Quantum-Si Series A preferred stock) that was issued and outstanding was automatically cancelled and extinguished and converted into the right to receive 0.7975 (the “Exchange Ratio”) shares of the Company’s Class A common stock, and each share of Legacy Quantum-Si Series A preferred stock that was issued and outstanding was automatically cancelled and extinguished and converted into the right to receive the number of shares of the Company’s Class B common stock equal to the Exchange Ratio.

The total number of shares of the Company’s Class A common stock outstanding immediately following the Closing was 116,463,160, and the total number of the Company’s Class B common stock outstanding immediately following the Closing was 19,937,500.

In connection with the Business Combination, certain institutional investors purchased from the Company an aggregate of 42,500,000 shares of the Company’s Class A common stock for a purchase price of $10.00 per share and an aggregate purchase price of $425,001 pursuant to separate subscription agreements entered into effective as of February 18, 2021.  In addition, pursuant to subscription agreements entered into effective as of February 18, 2021, certain affiliates of Foresite Capital Management, LLC purchased an aggregate of 696,250 shares of the Company’s Class A common stock at a purchase price of $0.001 per share for aggregate purchase price of $1 after a corresponding number of shares of the Company’s Class B common stock was irrevocably forfeited by the Sponsor to HighCape for no consideration and automatically cancelled.

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP primarily due to the fact that Legacy Quantum-Si stockholders continued to control the Company following the Closing of the Business Combination. Under this method of accounting, HighCape was treated as the “acquired” company for accounting purposes and the Business Combination was treated as the equivalent of Legacy Quantum-Si issuing stock for the net assets of HighCape, accompanied by a recapitalization. The net assets of HighCape were stated at historical cost, with no goodwill or other intangible assets recorded. Reported shares and earnings per share available to holders of the Company’s capital stock and equity awards prior to the Business Combination were retroactively restated reflecting the Exchange Ratio.

Upon the Closing, the Company’s certificate of incorporation was amended and restated to, among other things, adopt a dual class structure, comprised of the Company’s Class A common stock, which is entitled to one vote per share, and the Company’s Class B common stock, which is entitled to 20 votes per share. The Company’s Class B common stock has the same economic terms as the Company’s Class A common stock, but is subject to a “sunset” provision if Jonathan M. Rothberg, Ph.D., the founder of Legacy Quantum-Si and Chairman of the Company (“Dr. Rothberg”), and other permitted holders of the Company’s Class B common stock collectively cease to beneficially own at least twenty percent (20%) of the number of shares of the Company’s Class B common stock (as such number of shares is equitably adjusted in respect of any reclassification, stock dividend, subdivision, combination or recapitalization of the Company’s Class B common stock) collectively held by Dr. Rothberg and permitted transferees of the Company’s Class B common stock as of the Effective Time.

4. ACQUISITION

Majelac Technologies LLC

Pursuant to the terms and conditions of an Asset Purchase Agreement by and among the Company, Majelac Technologies LLC (“Majelac”), and certain other parties, on November 5, 2021 (the “Majelac Closing Date”), the Company acquired certain assets and assumed certain liabilities of Majelac, a privately-owned company providing semiconductor chip assembly and packaging capabilities located in Pennsylvania, for $4,632 in cash including $132 in reimbursement for certain recently purchased equipment, and 535,715 shares of Class A common stock, valued at $4,232, issued to Majelac subject to certain restrictions. An additional 59,523 shares of Class A common stock valued at $471 will be issued to Majelac 12 months after the Majelac Closing Date less the number of shares of Class A common stock that may be required by the buyer indemnitees to satisfy any unresolved claims for indemnification, if any. The Company also assumed the legal fees of Majelac of $50. Additional purchase price consideration of $500 in cash was to be paid six months after the Majelac Closing Date less any amount that could be required by the buyer indemnitees to satisfy any unresolved claims for indemnification, if any. The Company agreed to pay additional milestone-based consideration of up to $800, which was fair valued at $531. On May 4, 2022, the Company paid Majelac $900 in cash, which consisted of $500 for the additional purchase price consideration and $400 (fair value of $348 at the Majelac Closing Date) for the first of two milestones that was met.

The acquisition brings semiconductor chip assembly and packaging capabilities in-house to secure the Company’s supply chain and support scaling commercialization efforts. Prior to the acquisition, Majelac was a vendor of the Company.

The following table summarizes the final purchase price allocation at the Majelac Closing Date as follows:

   
Purchase Price
Allocation
 
Prepaid expenses and other current assets
 
$
27
 
Property and equipment, net
   
906
 
Goodwill
   
9,483
 
Total
 
$
10,416
 

Goodwill represents the excess of the consideration transferred over the aggregate fair values of assets acquired and liabilities assumed. The goodwill recorded in connection with this acquisition was based on operating synergies and other benefits expected to result from the combined operations. The goodwill acquired is amortizable for tax purposes over a period of 15 years.

Acquisition-related costs recognized for the three and nine months ended September 30, 2022 including transaction costs such as legal, accounting, valuation and other professional services, were $0 and $26, respectively, and are included in Selling, general and administrative on the condensed consolidated statements of operations and comprehensive loss.

5. FAIR VALUE OF FINANCIAL INSTRUMENTS
 
Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value.
 
The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:


Level 1 -  Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.


Level 2 -  Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.


Level 3 -  Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
 
The carrying value of cash and cash equivalents, accounts payable and accrued expenses and other current liabilities approximates their fair values due to the short-term or on demand nature of these instruments. There were no transfers between fair value measurement levels during the three and nine months ended September 30, 2022. The Company accounted for the warrants as liabilities in accordance with ASC 815-40 and are presented as Warrant liabilities on the condensed consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented as Change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive loss.

The Public Warrants and Private Warrants were carried at fair value as of September 30, 2022. The Public Warrants were valued using Level 1 inputs as they are traded in an active market. The Private Warrants were valued using a binomial lattice model, which results in a Level 3 fair value measurement. The primary unobservable input utilized in determining the fair value of the Private Warrants was the expected volatility of the Company’s Class A common stock. The expected volatility was based on consideration of the implied volatility from the Company’s own public warrant pricing and on the historical volatility observed at guideline public companies. As of September 30, 2022, the significant assumptions used in preparing the binomial lattice model for valuing the Private Warrants liability include (i) volatility of 72.7%, (ii) risk-free interest rate of 4.10%, (iii) strike price of $11.50, (iv) fair value of common stock of $2.75, and (v) expected life of 3.7 years.
 
Fixed income mutual funds were valued using quoted market prices and accordingly were classified as Level 1.
 
The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy:
 
         
Fair Value Measurement Level
 
   
Total
   
Level 1
   
Level 2
   
Level 3
 
September 30, 2022:
                       
Assets:
                       
Fixed income mutual funds - Cash and cash equivalents
 
$
77,567
   
$
77,567
   
$
-
   
$
-
 
Marketable securities
    293,811
      293,811
      -
      -
 
Total assets at fair value on a recurring basis
 
$
371,378
   
$
371,378
   
$
-
   
$
-
 
 
                               
Liabilities:
                               
Public Warrants
 
$
2,032
   
$
2,032
   
$
-
   
$
-
 
Private Warrants
   
86
     
-
     
-
     
86
 
Total liabilities at fair value on a recurring basis
 
$
2,118
   
$
2,032
   
$
-
   
$
86
 
 
         
Fair Value Measurement Level
 
   
Total
   
Level 1
   
Level 2
   
Level 3
 
December 31, 2021:
                       
Assets:
                       
Fixed income mutual funds - Cash and cash equivalents
 
$
33,965
   
$
33,965
   
$
-
   
$
-
 
Marketable securities
    435,519       435,519       -       -  
Total assets at fair value on a recurring basis
 
$
469,484
   
$
469,484
   
$
-
   
$
-
 
 
                               
Liabilities:
                               
Public Warrants
 
$
6,900
   
$
6,900
   
$
-
   
$
-
 
Private Warrants
   
339
     
-
     
-
     
339
 
Total liabilities at fair value on a recurring basis
 
$
7,239
   
$
6,900
   
$
-
   
$
339
 

 6. PROPERTY AND EQUIPMENT, NET
 
Property and equipment, net, are recorded at historical cost and consist of the following:

   
  September 30,
2022
   
December 31,
2021
 
Laboratory and production equipment
 
$
13,353
   
$
7,465
 
Computer equipment
   
1,291
     
637
 
Software
   
188
     
156
 
Furniture and fixtures
   
216
     
125
 
Leasehold improvements     1,277       790  
Construction in process
   
3,101
     
3,610
 
Property and equipment, gross    
19,426
     
12,783
 
Less: Accumulated depreciation
   
(5,662
)
   
(3,875
)
Property and equipment, net
 
$
13,764
   
$
8,908
 
 
Depreciation expense amounted to $729 and $264 for the three months ended September 30, 2022 and 2021, respectively, and $1,789 and $712 for the nine months ended September 30, 2022 and 2021, respectively.  The Company had disposals of $9 relating to property and equipment of $11 with accumulated depreciation of $2 for the nine months ended September 30, 2022.  There were no disposals for the nine months ended September 30, 2021.

7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
 
Accrued expenses and other current liabilities consist of the following:

   
September 30,
2022
   
December 31,
2021
 
Employee compensation and benefits
 
$
4,766
   
$
2,680
 
Contracted services
   
3,215
     
2,606
 
Business acquisition costs and contingencies     779       1,331  
Legal fees
   
802
     
636
 
Other
   
24
     
23
 
Total accrued expenses and other current liabilities
 
$
9,586
   
$
7,276
 

8. LEASES

The Company has commitments under lease arrangements for office and manufacturing space and office equipment. The Company’s leases have initial lease terms ranging from one year to 10 years. These leases include options to extend or renew the leases for an additional period of one to 10 years.

Operating leases are accounted for on the condensed consolidated balance sheets with ROU assets being recognized in “Operating lease right-of-use assets” and lease liabilities recognized in “Short-term operating lease liabilities” and “Operating lease liabilities”. Lease-related costs are included in Research and development and Selling, general and administrative in the condensed consolidated statements of operations and comprehensive loss.

Lease-related costs for the three and nine months ended September 30, 2022  and 2021 are as follows:

   
Three months ended
September 30,
   
Nine months ended
September 30,
 
   
2022
   
2021
   
2022
   
2021
 
Operating lease cost
 
$
819
   
$
240
   
$
2,352
   
$
240
 
Short-term lease cost
   
110
     
133
     
322
     
382
 
Variable lease cost
   
321
     
21
     
922
     
21
 
Total lease cost
 
$
1,250
   
$
394
   
$
3,596
   
$
643
 

Other information related to operating leases as of September 30, 2022 and December 31, 2021 is as follows:

   
September 30,


December 31,

   
2022


2021

Weighted-average remaining lease term (years)
 
7.5



5.9

Weighted-average discount rate
 
7.6
%
 
7.0
%

The following table provides certain cash flow and supplemental cash flow information related to the Company’s lease liabilities for the nine months ended September 30, 2022  and 2021:

   
Nine months ended September 30,
 
   
2022
   
2021
 
Operating cash paid to settle operating lease liabilities
 
$
1,362
   
$
-
 
                 
Right-of-use assets obtained in exchange for lease liabilities
 
$
9,466
   
$
6,600
 

Future minimum lease payments under non-cancellable leases as of September 30, 2022 are as follows:

   
Operating Leases
 
Remainder of 2022
 
$
1,028
 
2023
   
4,159
 
2024
   
4,266
 
2025
   
4,376
 
2026
   
4,456
 
Thereafter
   
17,039
 
Total undiscounted lease payments
 
$
35,324
 
Less: Imputed interest
   
9,166
 
Less: Lease incentives (1)
   
9,104
 
Total lease liabilities
 
$
17,054
 

(1)
Includes lease incentives that may be realized in 2022 and 2023.

9. EQUITY INCENTIVE PLAN
 
The Company’s 2013 Employee, Director and Consultant Equity Incentive Plan, as amended on March 12, 2021 (the “2013 Plan”), was originally adopted by its Board of Directors and stockholders in September 2013. In connection with the Closing of the Business Combination, the Company adjusted the equity awards as described in Note 3 “Business Combination”. The adjustments to the awards did not result in incremental expense as the equitable adjustments were made pursuant to a preexisting nondiscretionary antidilution provision in the 2013 Plan, and the fair-value, vesting conditions, and classification are the same immediately before and after the modification. In connection with the Business Combination, HighCape’s stockholders approved and adopted the Quantum-Si Incorporated 2021 Equity Incentive Plan (the “2021 Plan”) and the Company no longer makes issuances under the 2013 Plan. The 2021 Plan provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting or advisory services for the Company, are eligible for grants under the 2021 Plan.
 
Stock option activity
 
During the nine months ended September 30, 2022, the Company granted 6,903,630 stock option awards to participants with vesting subject to the participant’s continued employment with the Company through the applicable vesting date, which included 2,000,000 stock options granted to the President and Chief Operating Officer of the Company subject to service and/or market conditions.  The service condition requires the participant’s continued employment with the Company through the applicable vesting date.  The market condition requires that the Company’s Class A common stock trades above a specified level for a defined period of time.  Stock-based compensation related to stock options for the three months ended September 30, 2022 and 2021 was $1,868 and $1,556, respectively.  Stock-based compensation related to stock options for the nine months ended September 30, 2022 and 2021 was $5,169 and $4,608, respectively.
 
A summary of the stock option activity under the 2013 Plan and the 2021 Plan is presented in the table below:

   
Number of
Options
   
Weighted Average
Exercise Price
   
Weighted Average
Remaining
Contractual Term
(Years)
   
Aggregate
Intrinsic Value
 
Outstanding at December 31, 2021
   
7,726,972
   
$
5.14
     
7.58
   
$
24,511
 
Granted
   
6,903,630
     
3.72
                 
Exercised
   
(1,069,934
)
   
2.45
                 
Forfeited
   
(1,315,366
)
   
5.48
                 
Outstanding at September 30, 2022