As of June 30, 2022 and December 31, 2021, the short-term restricted cash balance was $0.3 million and $0.5 million, respectively, which was comprised of security deposits for the credit cards of employees.

As of June 30, 2022 and December 31, 2021, our inventory, net, consisted of the following components:



	June 30,		December 31,
(in thousands)	2022		2021
Purchased materials	$	15,451	$	7,993
Work in process		12,808		8,611
Finished goods		7,862		7,995
Inventory	$	36,121	$	24,599

For our facility located at 1305 O’Brien Drive, Menlo Park, California (the “O’Brien Lease”), we were required to establish a letter of credit for the benefit of the landlord and to submit $4.5 million as a deposit for the letter of credit in October 2015. Subsequently, pursuant to the terms of the O’Brien Lease, beginning on May 1, 2019, the amount of the letter of credit was reduced by $0.5 million each year thereafter on May 1. As such, $2.5 million and $3.0 million was recorded in long-term restricted cash related to the O’Brien Lease in the Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, respectively. In connection with the acquisition of Omniome in September 2021, we acquired $1.6 million of long-term restricted cash related to a letter of credit established for a facility lease. Long-term restricted cash related to this facility was $0 and $1.6 million in the Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, respectively. At June 30, 2022, we had an additional $0.4 million in long-term restricted cash primarily related to a letter of credit established for a facility lease.

Intangible assets include acquired in-process research and development (IPR&D) of $400 million as a result of the Omniome acquisition in September 2021. The IPR&D will remain on our consolidated balance sheet as an indefinite-lived intangible asset until the completion or abandonment of the associated research and development activities. During the development period following the acquisition, IPR&D will not be amortized, but instead will be tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Upon completion of the development, we will begin to amortize the asset over the life of the product, or record an impairment charge if the asset is determined to be impaired.

In addition to IPR&D, we had the following definite-lived intangible assets from business acquisitions (in thousands, except years):


		As of June 30, 2022						As of December 31, 2021
	Estimated	Gross				Net		Gross				Net
	Useful Life	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	(in years)	Amount		Amortization		Amount		Amount		Amortization		Amount
Developed technology	15	$	11,000	$	(672)	$	10,328	$	11,000	$	(306)	$	10,694
Customer relationships	2		360		(165)		195		360		(75)		285
Total		$	11,360	$	(837)	$	10,523	$	11,360	$	(381)	$	10,979

The estimated future amortization expense of acquisition-related intangible assets with definite lives is estimated as follows:


		(in thousands)
Remainder of 2022	$	457
2023		838
2024		733
2025		733
2026		733
2027 and thereafter		7,029
Total	$	10,523

We review definite-lived intangible assets for impairment when indication of potential impairment exists, such as a significant reduction in cash flows associated with the assets.

Goodwill is reviewed for impairment at least annually during the second quarter, or more frequently if an event occurs indicating the potential for impairment. We performed our annual assessment for goodwill impairment in the second quarter of 2022, noting no impairment.

Deferred revenue

As of June 30, 2022, we had a total of $33.9 million of deferred revenue, $32.1 million of which was recorded as deferred revenue, current, and primarily relates to future performance obligations under the Amended and Restated Agreement with Invitae as described in Note 3. Invitae Collaboration in Part I, Item 1 of this Quarterly Report on Form 10-Q. The deferred revenue, non-current balance of $1.8 million primarily relates to deferred service contract revenues and is scheduled to be recognized in the next 5 years. Revenue recorded in the six months ended June 30, 2022 includes $9.2 million of previously deferred revenue that was included in deferred revenue as of December 31, 2021. Contract assets as of June 30, 2022 and December 31, 2021 were not material.

As of June 30, 2022, we had a total of $0.6 million of deferred commissions included in prepaid expenses and other current assets which is recognized as sales, general and administrative expense as the related revenue is recognized. Costs to obtain a contract are expensed as incurred if the amortization period would have been a year or less.

Product Warranties

We generally provide a one-year warranty on instruments. In addition, we provide a limited warranty on consumables. At the time revenue is recognized, an accrual is established for estimated warranty costs based on historical experience as well as anticipated product performance. We periodically review the warranty reserve for adequacy and adjust the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred. Warranty expense is recorded as a component of cost of product revenue. There were no material changes in estimates for the periods presented below.

Changes in the reserve for product warranties were as follows for the periods indicated (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Balance at beginning of period	$	1,174	$	179	$	594	$	161
Additions charged to cost of product revenue		912		412		1,865		615
Repairs and replacements		(477)		(320)		(850)		(505)
Balance at end of period	$	1,609	$	271	$	1,609	$	271

Term loans

In connection with the acquisition of Omniome, we acquired $1.3 million in short-term debt and $3.0 million in long-term debt relating to a term loan facility that Omniome obtained in April 2020. Borrowings on the term loan facility were used to fund Omniome’s purchases of equipment, which serves as collateral. Each term loan has a term of 43

months and bears a fixed interest rate of approximately 17% annually. The fee for the elective option to prepay all, but not less than all, of the borrowed amounts at any time after the 24^th month and before the 43^rd month after the commencement date, is 4% of the outstanding loan balance. Payments are made in equal monthly installments including principal and interest.