Quantum-Si Inc (QSI)

ITEM 7.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in this Annual Report on Form 10-K. This discussion contains forward looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. For a discussion on forward-looking statements, see the information set forth in the introductory note to this Annual Report under the caption “Cautionary Note Regarding Forward Looking Statements,” which information is incorporated herein by reference. Unless the context otherwise requires, references to “we”, “us”, “our”, the “Company” or “Quantum-Si” are intended to mean the business and operations of Quantum-Si Incorporated and its consolidated subsidiaries. For discussion and analysis pertaining to the year ended December 31, 2023 overview and highlights as compared to the year ended December 31, 2022, please refer to the Company’s Annual Report on Form 10-K, as filed with the SEC on February 29, 2024.

Overview

Quantum-Si Incorporated (including its subsidiaries, the “Company” or “Quantum-Si”) was incorporated in Delaware on June 10, 2020 as HighCape Capital Acquisition Corp. (“HighCape”). The Company’s legal name became Quantum-Si Incorporated following a business combination on June 10, 2021 between the Company and Q-SI Operations Inc. (formerly Quantum-Si Incorporated) (the “Business Combination”), which was founded in 2013.

We are a life sciences company focused on proteomics research, 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. We have developed a proprietary universal single-molecule detection platform that we are applying to proteomics to enable Next-Generation Protein SequencingTM (“NGPS”), to sequence proteins in a massively parallel fashion (rather than sequentially, one at a time), which can also be used for the study of nucleic acids. We believe that the ability to sequence proteins in a massively parallel fashion and offer a fast analysis time provides NGPS with the potential to unlock significant biological information through improved resolution and unbiased access to the proteome at a speed and scale that is not available today. Traditionally, proteomic workflows to sequence proteins required days or weeks to complete. Our platform includes our Platinum NGPS instrument, Platinum Analysis Software, and consumable kits for use with our Platinum instrument. In 2021, we introduced our Platinum early access program to sites with participation from leading academic centers and key industry partners. The early access program introduced the Platinum single-molecule sequencing system to key opinion leaders across the globe for both expansion and development of applications and workflows. We began a controlled launch of the Platinum instrument and started to take orders in December 2022, and subsequently began a controlled commercial launch of Platinum in January 2023, and then moved to a full commercial launch of Platinum beginning the second quarter of 2024.

Going forward, we intend to follow a systematic, phased approach to continue to successfully launch updates and enhancements to our platform which can include improvements to our hardware, software and chemistry that works together to produce the overall platform.

We believe that our platform offers a differentiated solution in a rapidly evolving proteomics tools market. Within our initial focus market of proteomics, our platform is designed to provide users a seamless opportunity to gain key insights into the immediate state of biological pathways and cell state. Our platform aims to address many of the key challenges and bottlenecks with legacy proteomic solutions, such as mass spectrometry (“MS”), which include high instrument costs both in terms of acquisition and ownership, and complexity with data analysis, which together limit broad adoption. We believe our platform, which is designed to streamline sequencing and data analysis at a lower instrument cost and with greater automation than legacy proteomic solutions, could allow our product to have wide utility across the study of the proteome. For example, our platform could be used for biomarker discovery and disease detection, pathway analysis, immune response, vaccine development, quality assurance and quality control, among other applications.

Global Developments

The macroeconomic climate has experienced, and is continuing to experience, pressure from global developments such as high levels of inflation, global supply chain disruptions and international geopolitical conflicts. We continue to monitor these supply chain, inflation and interest rate factors, as well as the uncertainty resulting from the overall economic

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environment. Although we do not expect to be significantly impacted by geopolitical conflicts, we have experienced some constraints in product and material availability and increasing costs required to obtain some materials and supplies as a result of these conflicts on the global economy. As geopolitical conflicts continue or worsen, it may impact our business, financial condition or results of operations. We have taken and will continue to take actions to help mitigate the impact of these economic challenges, but there can be no assurance as to the effectiveness of our efforts going forward.

Restructuring

On November 21, 2024, we announced that we committed to an organizational restructuring program designed to streamline and focus our overall corporate resources, as well as align required resources to focus on future product development objectives, including its recently announced Proteus™ platform. As a result, we terminated approximately 23% of our 187 employee workforce. In connection with the restructuring, we recognized one-time cash charges related to severance and other benefits of approximately $2.3 million in 2024 and expect to recognize $0.7 million in the first six months of 2025. In addition, we recognized non-cash expense of approximately $0.1 million in the fourth quarter of 2024 related to stock option modifications. The severance and other benefits related charge, as well as the expense related to stock option modifications are subject to a number of assumptions, and actual results may differ materially. We may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the restructuring. We substantially completed the restructuring in the fourth quarter of 2024. For further information regarding our restructuring activities, please refer to Note 14. Restructuring.

Equity Transactions

On August 11, 2023, we filed a universal shelf registration statement on Form S-3 (the “Shelf Registration Statement”), which became effective on August 22, 2023, covering the offering of Class A common stock, preferred stock, debt securities, warrants, rights and units.

On December 11, 2024, we entered into an Equity Distribution Agreement (the “Sales Agreement”) with Canaccord Genuity LLC (“Canaccord”) to sell shares of our Class A common stock, par value $0.0001, having an aggregate offering price of up to $75.0 million, from time to time through an “at-the-market” offering program under which Canaccord will act as sales agent (the “ATM Offering”). We have no obligation to sell any shares under the Sales Agreement and may at any time suspend solicitation and offers under the EDA. The ATM Offering is being made pursuant to our shelf registration and a prospectus supplement related to the ATM Offering dated December 11, 2024. During the year ended December 31, 2024, we sold and issued 23,425,650 shares of our Class A common stock under the ATM Offering, resulting in gross proceeds of $36.2 million. Net proceeds were $34.8 million after commissions and issuance costs of $1.4 million.

Also on December 11, 2024, we exercised its right to terminate the Equity Distribution Agreement (the “Equity Distribution Agreement”), dated August 11, 2023, by and between the Company and Evercore Group L.L.C. (“Evercore”), as sales agent. The Equity Distribution Agreement previously established an “at-the-market” offering program through which we had the right to sell, from time to time, through Evercore, up to an aggregate of $75.0 million of our Class A Common Stock. We sold no shares under the Equity Distribution Agreement.

On January 3, 2025, we entered into a securities purchase agreement with certain institutional investors pursuant to which we agreed to issue and sell, in a registered direct offering (the “Registered Direct Offering”) an aggregate of 15,625,000 shares of our Class A common stock at a price of $3.20 per Share. The gross proceeds from the Registered Direct Offering were $50.0 million. After deducting estimated placement agents’ fees and other offering expenses payable by the Company, net proceeds were approximately $46.9 million.

In connection with the Registered Direct Offering, we entered into a placement agency agreement with A.G.P./Alliance Global Partners (the “Placement Agent”), pursuant to which the Placement Agent agreed to serve as the sole placement agent for the Company, on a reasonable best efforts basis. We agreed to pay the Placement Agent an aggregate cash fee equal to 6.0% of the gross proceeds received in the Registered Direct Offering.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets and

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liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, as well as expenses incurred during the reporting periods. Our estimates are based on historical experience and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about items not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

Revenue is derived from sales of products and services. Product revenue is primarily generated from the sales of instruments and consumables used in protein sequencing and analysis. Service revenue is primarily generated from service maintenance contracts including access to analysis software and advanced training for instrument use. We recognize revenue when or as a customer obtains control of the promised goods and services. The amount of revenue recognized reflects the consideration to which we expect to be entitled in exchange for these goods and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue as the performance obligations have been satisfied. We have made the accounting policy election allowed for under ASC 606-10-32-2A to exclude all sales taxes from transaction price. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We allocate transaction price to the performance obligations in a contract with a customer based on the relative standalone selling price of each performance obligation. We determine standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price taking into account available information and specific factors such as competitive positioning, internal costs, profit objectives, and internally approved pricing guidelines related to the performance obligation.

We consider performance obligation for sales of products satisfied upon shipment of the goods to the customer in accordance with the shipping terms (either upon shipment or delivery), which is when control of the product is deemed to be transferred; this includes instruments and consumables. Customers generally do not have a right to return products, except for defective or damaged products during the warranty period or unless prior written consent is provided. In instances where right of payment or transfer of title is contingent upon the customer’s acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenues for service maintenance contracts, which start after the first year of purchase and are considered as service type warranties that effectively extend the standard first-year service coverage at the customer’s option are recognized ratably over the contract service period as these services are performed evenly over time. Revenues for advanced training is recognized at a point in time upon satisfaction of the underlying performance obligation. We typically provide a standard one-year warranty which covers defects in materials, workmanship and manufacturing or performance conditions under normal use and service. The first year of the warranty of the products is considered an assurance-type warranty and is recorded as Cost of revenue within the Consolidated Statements of Operations and Comprehensive Loss. We have determined this standard first-year warranty is not a distinct performance obligation.

Stock-based Compensation

Stock-based compensation expense for stock option grants with only service conditions is recognized on a straight-line basis over the requisite service period of the individual grants, which is generally the vesting period, based on the estimated grant date fair values. Stock-based compensation expense for stock option grants subject to non-financing event performance conditions on an accelerated basis is recognized as though each vesting portion of the award was, in substance, a separate award.

Prior to the Business Combination, the fair value of the shares of common stock underlying stock options had been determined by the Board, with input from management and contemporaneous third-party valuations, as there was no public market for the common stock. Given the absence of a public trading market for our common stock, the Board exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock at each option grant date.

After the completion of the Business Combination, we measure compensation expense for stock-based awards to employees, non-employees and directors based upon the awards’ initial grant-date fair values. Stock-based compensation

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expense for stock options, restricted stock units and performance awards is recorded over the requisite service period. For awards with only a service condition, we expense stock-based compensation using the straight-line method over the requisite service period for the entire award. For awards with a market condition, we expense the grant date fair value at the target over the vesting period regardless of the value the award recipients ultimately receive. The fair value of restricted stock without a market condition is estimated using the current market price of our common stock on the date of grant. The fair value of stock option grants with a market condition is estimated at the date of grant using the Monte Carlo simulation model (“Monte Carlo”). The fair values of stock option grants with only a service condition are estimated as of the date of grant by applying the Black-Scholes option valuation model (“Black-Scholes model”). The Black-Scholes model and Monte Carlo models incorporate assumptions as to stock price volatility, the expected life of options or restricted stock, a risk-free interest rate and dividend yield. The effect of forfeiture in compensation costs is recognized based on actual forfeitures when they occur.

The Black-Scholes model is affected by the stock price on the date of the grant as well as assumptions regarding a number of variables. These variables include the expected term of the option, expected risk-free interest rate, the expected volatility of common stock, and expected dividend yield; each of which is described below. The assumptions for expected term of the option and expected volatility of common stock are the two assumptions that significantly affect the grant date fair value.

•Expected Term: The expected term is calculated using the weighted-average period that the stock options are expected to be outstanding prior to being exercised. We determine expected term based on historical exercise patterns and our expectation of the time that it will take for employees to exercise options still outstanding. We estimate non-employees’ options based on the contractual term.

•Risk-free Interest Rate: The risk-free interest rate for periods within the expected term of the awards is based on the U.S. Treasury yield curve in effect at the time of the grant.

•Expected Stock Price Volatility: We determined expected annual equity volatility based on the combination of the historical volatility of our common stock and the historical volatility of the common stock comparable to our common stock.

•Dividend Yield: Because we have never paid a dividend and do not expect to begin doing so in the foreseeable future, we assume no dividend yield in valuing the stock-based awards.

•Exercise Price: The exercise price is taken directly from the grant notice issued to employees and non-employees.

Stock options granted to non-employees are accounted for based on their fair value on the measurement date using the Black-Scholes model. For further information regarding our stock-based compensation and equity incentive plans, please refer to Note 2. Summary of Significant Accounting Policies, and Note 11. Stock-based Compensation, in the accompanying notes to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Inventory

Inventory is stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method. Materials that may be utilized for either commercial or, alternatively, for research and development purposes, are classified as inventory. Amounts in inventory used for research and development purposes are charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes and, therefore, does not have an “alternative future use” as defined in authoritative guidance. During the years ended December 31, 2024 and 2023 we identified $3.2 million and $3.4 million, respectively, of product that no longer had an alternative future use and therefore was included as part of research and development expense. There was no such expense identified for the year ended December 31, 2022.

An assessment of the recoverability of capitalized inventory is performed during each reporting period and, if needed, we record a reserve for any excess and obsolete inventory to record inventory at its estimated net realizable value in the period it is identified. Inventory excess and obsolescence reserves related to cost of revenue were immaterial for the years ended December 31, 2024 and 2023.

For further information regarding our significant accounting policies and estimates, please refer to Note 2. Summary of Significant Accounting Policies, in the accompanying notes to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Warrant Liability

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Outstanding warrants include Public Warrants which were issued as one-third of one redeemable warrant per unit during HighCape’s initial public offering on September 9, 2020, and Private Warrants sold to the Sponsor. The Public Warrants and Private Warrants meet the definition of a derivative and we recorded these warrants as long-term liabilities in the Consolidated Balance Sheets at fair value upon the closing of the Business Combination, with subsequent changes in their respective fair values recognized in the Consolidated Statements of Operations and Comprehensive Loss at each reporting date. For further information regarding our warrants, please refer to Note 12. Warrant Liabilities.

Recently Issued Accounting Pronouncements

For a discussion of recently adopted accounting pronouncements and accounting pronouncements pending adoption, please refer to Note 2. Summary of Significant Accounting Policies, in the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Results of Operations for the Year Ended December 31, 2024 as Compared to the Year Ended December 31, 2023

The following table summarizes the results of our operations for the years ended December 31, 2024 and 2023 (dollars in thousands):

(1)“nm” indicates amount is not meaningful.

Revenue, Cost of Revenue and Gross Profit

Revenue is derived from sales of products and services. Product revenue is generated from the following sources: (i) sales of our Platinum® instrument, (ii) consumables, which consist of sales of our library preparation kits, sequencing kit (which includes sequencing reagents and semiconductor chips), and (iii) freight revenue, which is recognized upon shipment. Service revenue is generated from service maintenance contracts including Platinum Analysis Software access, and advanced training for instrument use.

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Cost of revenue primarily consists of product and service costs including material costs, personnel costs and benefits, inbound and outbound freight, packaging, warranty replacement costs, royalty costs, facilities costs, depreciation and amortization expense, and inventory write-offs.

Revenue, Cost of revenue and Gross profit for the years ended December 31, 2024 and 2023 are as follows (dollars in thousands):

Total revenue for the sale of Platinum instruments, related reagent kits and service maintenance contracts increased $2.0 million, or 182.6% as compared to the same period in 2023.

Cost of revenue increased $0.9 million, or 145.5% as compared to the same period in 2023.

Gross profit increased $1.1 million, or 227.9% as compared to the same period in 2023.

We began a controlled launch of the Platinum instrument and started to take orders in December 2022, and subsequently began a controlled commercial launch of Platinum in January 2023, and then moved to a full commercial launch of Platinum beginning in the second quarter of 2024.

Research and Development Expenses

Research and development expenses primarily consist of personnel costs and benefits, stock-based compensation, lab supplies, consulting and professional services, fabrication services, charges related to product without an alternative future use, facilities costs, software, and other outsourced expenses. Research and development expenses are recognized as incurred. Our research and development expenses are primarily related to developing new products and services.

Research and development expenses for the years ended December 31, 2024 and 2023 are as follows (dollars in thousands):

Research and development expenses decreased by $7.4 million, or 11.0%, for the year ended December 31, 2024 as compared to the same period in 2023. This decrease was primarily due to a $7.3 million decrease in payroll and payroll-related costs, which includes a $0.3 million decrease in stock-based compensation, a $2.2 million decrease in fabrication and outsourced services and a $0.8 million net decrease of other research and development expenses. The decrease in payroll and payroll-related costs were primarily driven by restructuring activities and an increase in personnel costs that were capitalized during the year ended December 31, 2024. These decreases were partially offset by a $2.9 million increase in laboratory supplies expense.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily consist of personnel costs and benefits, stock-based compensation, patent and filing fees, consulting and professional services, legal and accounting services, facilities costs, depreciation and amortization expense, insurance and office expenses, product advertising and marketing.

Selling, general and administrative expenses for the years ended December 31, 2024 and 2023 are as follows (dollars in thousands):

Selling, general and administrative expenses increased by $5.9 million, or 13.2%, for the year ended December 31, 2024 as compared to the same period in 2023. The increase was primarily due to a $4.1 million increase in payroll and payroll-related costs, which includes a $0.7 million increase in stock-based compensation, a $2.1 million increase in legal fees, a $1.0 million increase in outsourced services, a $0.7 million increase in trade show and other marketing-related expenses, a $0.6 million increase in non-income tax expenses and a $0.9 million net increase in other selling, general and administrative expenses. The increase in payroll and payroll-related costs are primarily related to on-going investments made in commercial operations. These increases were partially offset by a decrease of $2.8 million in professional services and consulting fees and a $0.7 million decrease in insurance costs from lower market premiums.

Dividend and Interest Income

For the year ended December 31, 2024, dividend and interest income is derived primarily from fixed income securities and money market mutual funds. For the year ended December 31, 2023, dividend and interest income was derived from mutual funds.

Dividend and interest income for the years ended December 31, 2024 and 2023 is as follows (dollars in thousands):

Dividend and interest income increased by $1.8 million, or 19.2% for the year ended December 31, 2024 as compared to the same period in 2023. This increase was a result of higher dividends earned on invested balances in marketable securities resulting from higher market interest rates.

Unrealized Gain on Trading Securities

Unrealized gain on trading securities for the years ended December 31, 2024 and 2023 is as follows (dollars in thousands):

There was no Unrealized gain on trading securities for the year ended December 31, 2024 as compared to a gain of $10.7 million for the same period in 2023. The prior year gain was primarily related to market adjustments of investments in trading securities, which consisted of fixed income mutual funds.

Realized loss on Trading Securities

Realized loss on trading securities for the years ended December 31, 2024 and 2023 is as follows (dollars in thousands):

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There was no Realized loss on trading securities for the year ended December 31, 2024 as compared to a loss of $5.1 million for the same period in 2023. The prior year losses were primarily related to market adjustments of investments in trading securities, which consisted of fixed income mutual funds.

Change in Fair Value of Warrant Liabilities

The warrant liabilities were recorded at fair value as part of the Business Combination. Change in fair value of warrant liabilities primarily consists of the change in the fair value of our Public Warrants and Private Warrants.

Change in warrant liabilities for the years ended December 31, 2024 and 2023 is as follows (dollars in thousands):

The change in fair value of warrant liabilities increased by $3.4 million, or 1238.8% for the year ended December 31, 2024 as compared to the same period in 2023. Change in fair value of warrant liabilities increased $3.7 million for the year ended December 31, 2024 as compared to an increase of $0.3 million for the same period in 2023. This increase was primarily driven by the change in the underlying trading price of our Class A common stock during the periods reported.

Other income, net

Other income, net, for the years ended December 31, 2024 and 2023 is as follows (dollars in thousands):

Other (expense) income, net, decreased by $0.4 million, or 105.2%, for the year ended December 31, 2024 as compared to the same period in 2023. For the year ended December 31, 2023, Other income, net, included a $0.4 million gain for the write off of contingent consideration related to the Majelac acquisition. For further details regarding the acquisition of Majelac, please refer to Note 3. Acquisition, in the accompanying notes to the Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K.

Liquidity and Capital Resources

The following table presents a summary of our consolidated cash flows for operating, investing, and financing activities for the years ended December 31, 2024 and 2023 (in thousands):

Net cash used in operating activities

For the year ended December 31, 2024, net cash used in operating activities of $87.8 million was primarily due to a net loss of $101.0 million resulting from continued spend on research and development and commercialization efforts, accretion on marketable securities of $8.4 million and a $3.2 million write-down of inventory partially offset by stock-based compensation of $8.9 million, a net increase in cash provided by operating assets and liabilities of $4.6 million due to timing of cash receipts and disbursements, depreciation and amortization of $4.6 million, a change in fair value of warrant liabilities of $3.7 million, and non-cash lease expense of $2.4 million.

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For the year ended December 31, 2023, the net cash used in operating activities of $94.0 million was primarily due to a net loss of $96.0 million resulting from the continued ramp-up of research and development and commercialization efforts, unrealized net gains on trading securities of $10.7 million, net cash outflows from changes in operating assets and liabilities of $3.2 million due to timing of cash receipts and disbursements and a $3.4 million write-down of inventory, partially offset by stock-based compensation of $8.5 million, realized net losses on trading securities of $5.1 million, depreciation and amortization of $4.2 million and non-cash lease expense of $1.4 million.

Net cash (used in) provided by investing activities

For the year ended December 31, 2024, net cash used in investing activities was $32.7 million as compared to net cash provided by investing activities in $143.4 million for the same period in 2023. The increase in cash used was due primarily to an increase of purchases of marketable securities of $245.6 million partially offset by a $68.9 million increase in proceeds from the sales and maturities of marketable securities.

Net cash provided by financing activities

For the year ended December 31, 2024, net cash provided by financing activities was $35.9 million as compared to $0.1 million for the same period in 2023. This increase in cash provided was due primarily to $34.8 million of net proceeds from the issuance of common stock under the ATM Offering. Further information regarding the ATM Offering can be found below.

Liquidity Outlook

Since our inception, we have funded our operations primarily with proceeds from the issuance of equity to private investors, as well as with the proceeds received from the closing of the Business Combination. Additionally, we began to generate revenue during 2023 from commercial sales of our Platinum instrument. Our primary uses of liquidity have been operating expenses, capital expenditures and our acquisition of certain assets. Cash flows from operations have been historically negative as we continue to invest in the development of our technology in NGPS. Going forward, we anticipate debt or equity offerings will be the primary source of funds to support our operating needs and capital expenditures until we reach scale of our commercial operations. We expect to incur negative operating cash flows on an annual basis for the foreseeable future until such time that we can scale our revenue growth.

We expect that our existing cash and cash equivalents and investments in marketable securities, together with revenue from the sale of our products and services, will be sufficient to meet our liquidity, capital expenditure, and anticipated working capital requirements and fund our operations for at least the next 12 months. We expect to use our cash and cash equivalents and investments in marketable securities and funds from revenue generated to invest in our continued commercialization efforts, to further invest in research and development, for other operating expenses, business acquisitions and for working capital and general corporate purposes.

As of December 31, 2024, we had cash and cash equivalents and investments in marketable securities totaling $209.6 million. Our future capital requirements may vary from those currently planned and will depend on various factors including the pace and success of product commercialization.

Our ongoing commercialization of Platinum and Platinum Pro as well as our continuing research and development efforts to enhance our instruments may require an accelerated amount of spending to enhance the sales and marketing teams, continue to drive development, and build inventory. Other factors that could accelerate cash needs include: (i) delays in achieving scientific and technical milestones, (ii) unforeseen capital expenditures and fabrication costs related to manufacturing for commercialization, (iii) changes we may make in our business or commercialization strategy, (iv) costs of running a public company, (v) other items affecting our forecasted level of expenditures and use of cash resources, including potential acquisitions, and (vi) increased product and service costs.

On August 11, 2023, we filed a universal shelf registration statement on Form S-3 (the “Shelf Registration Statement”), which became effective on August 22, 2023, covering the offering of Class A common stock, preferred stock, debt securities, warrants, rights and units.

On December 11, 2024, we entered into an Equity Distribution Agreement (the “Sales Agreement”) with Canaccord Genuity LLC (“Canaccord”) to sell shares of our Class A common stock, par value $0.0001, having an aggregate offering price of up to $75.0 million, from time to time through an “at-the-market” offering program under which Canaccord will

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act as sales agent. We have no obligation to sell any shares under the Sales Agreement and may at any time suspend solicitation and offers under the EDA. The ATM Offering is being made pursuant to our shelf registration and a prospectus supplement related to the ATM Offering dated December 11, 2024. During the year ended December 31, 2024, we sold and issued 23,425,650 shares of our Class A common stock under the ATM Offering, resulting in gross proceeds of $36.2 million. Net proceeds were $34.8 million after commissions and issuance costs of $1.4 million.

Also on December 11, 2024, we exercised its right to terminate the Equity Distribution Agreement (the “Equity Distribution Agreement”), dated August 11, 2023, by and between the Company and Evercore Group L.L.C. (“Evercore”), as sales agent. The Equity Distribution Agreement previously established an “at-the-market” offering program through which we had the right to sell, from time to time, through Evercore, up to an aggregate of $75.0 million of our Class A common stock. We sold no shares under the Equity Distribution Agreement.

On January 3, 2025, we entered into a securities purchase agreement with certain institutional investors pursuant to which we agreed to issue and sell, in a registered direct offering (the “Registered Direct Offering”) an aggregate of 15,625,000 shares of our Class A common stock at a price of $3.20 per Share. The gross proceeds from the Registered Direct Offering were $50.0 million. After deducting estimated placement agents’ fees and other offering expenses payable by the Company, net proceeds were approximately $46.9 million.

In connection with the Registered Direct Offering, we entered into a placement agency agreement with A.G.P./Alliance Global Partners (the “Placement Agent”), pursuant to which the Placement Agent agreed to serve as the sole placement agent for the Company, on a reasonable best efforts basis. We agreed to pay the Placement Agent an aggregate cash fee equal to 6.0% of the gross proceeds received in the Registered Direct Offering.

In the future, we may be unable to obtain any required additional financing on terms favorable to us, if at all. If adequate funds are not available to us on acceptable terms or otherwise, we may be unable to successfully develop or enhance products and services, respond to competitive pressure or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition, operating results and cash flows.

Related Party Transactions

For a description of our related party transactions, please refer to Note 17. Related Party Transactions, in the accompanying notes to the Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K.

Capital Expenditures

During the year ended December 31, 2024, capital expenditures were $4.6 million. We forecast capital expenditures in order to execute on our business plan and maintain growth; however, the actual amount and timing of such capital expenditures will ultimately be determined by the volume of business. We anticipate our future capital expenditures will be at approximately the same level as compared to the year ended December 31, 2024. We have funded and plan to continue funding these capital expenditures with cash and financing.

Contractual Obligations

We lease certain facilities and equipment under noncancellable lease agreements that expire at various dates through 2032. As of December 31, 2024, the future lease payments, before adjustments for tenant incentives, were approximately $26.7 million.

Licenses related to certain intellectual property

We license certain intellectual property, some of which may be utilized in our current or future product offerings. To preserve the right to use such intellectual property, we are required to make annual minimum fixed payments totaling approximately $0.2 million as well as royalties based on net sales if the royalties exceed annual minimum fixed payments.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and
financial condition. The discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in this Annual Report on Form 10-K. This discussion contains forward looking statements and involves numerous
risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. For a
discussion on forward-looking statements, see the information set forth in the introductory note to this Annual Report under the caption “Cautionary Note Regarding Forward Looking Statements,” which information is incorporated herein by
reference. Unless the context otherwise requires, references to “we”, “us”, “our”, the “Company” or “Quantum-Si” are intended to mean the business and operations of Quantum-Si Incorporated and its consolidated subsidiaries. For discussion and
analysis pertaining to the year ended December 31, 2022 overview and highlights as compared to the year ended December 31, 2021, please refer to the Company’s Annual Report on Form 10-K, as filed with the SEC on March 17, 2023.

Overview

We are 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. We have developed a proprietary universal single-molecule detection platform that we are first applying to proteomics to enable NGPS, the ability to sequence proteins in a massively parallel fashion
(rather than sequentially, one at a time), that can be used for the study of nucleic acids. We believe that with the ability to sequence proteins in a massively parallel fashion and offer a simplified workflow with a faster turnaround time,
NGPS has the potential to unlock significant biological information through improved resolution and unbiased access to the proteome at a speed and scale that is not available today. Traditionally, proteomic workflows to sequence proteins
required days or weeks to complete. Our platform, as originally planned, was designed to offer an end-to-end workflow including both sample preparation and sequencing and was comprised of CarbonTM, our automated sample preparation instrument, our Platinum® NGPS instrument, the Platinum Analysis Software service, and reagent
kits and proprietary semiconductor chips for use with our Platinum® instrument. In 2021, we introduced our Platinum® early access program to sites with participation from leading academic centers and key industry partners. The early access program introduced the Platinum® single-molecule sequencing system to key opinion leaders across the globe, for both expansion and development of applications and workflows. We began a controlled launch of the Platinum® instrument and started to take orders in December 2022, and subsequently began limited commercial shipments of Platinum® in January 2023.

Since our initial launch of the Platinum® instrument, we have found that, consistent with other proteomics
detection technologies, customers select the biological sample type and sample preparation method they use. The range of sample types and sample preparation methods utilized in proteomics is extensive and often some level of optimization is
required to make them compatible with the downstream detection technology. Our initial platform contemplated CarbonTM as an automated sample preparation
instrument. While CarbonTM could help reduce sample preparation variation and streamline the end-to-end workflow in utilizing our Platinum® protein sequencing instrument, it is not an absolute requirement, and may not be
the best solution long-term. To this end, in October 2023, we completed an evaluation of CarbonTM as it relates to the workflow and in comparison to other
potential liquid handler and sample preparation solutions. This evaluation concluded that pursuing efforts to continue development of CarbonTM was not the most
effective use of our research and development efforts and therefore, we paused development related to CarbonTM to focus efforts on Platinum®, our reagent kits and semiconductor chips for use on Platinum®, and our Platinum
Analysis Software environment as our go forward platform to maximize value.

Now that our Platinum® and Platinum Analysis Software system has launched, we intend to follow a systematic, phased
approach to continue to successfully launch updates to our platform. We believe we are the first company to successfully enable NGPS on a semiconductor chip, thus digitizing a massive proteomics opportunity, which allows for a massively
parallel solution at the ultimate level of sensitivity -single-molecule detection.

We believe that our platform offers a differentiated workflow solution in a rapidly evolving proteomics tools market. Within our initial focus market of proteomics, our workflow is designed to
provide users a seamless opportunity to gain key insights into the immediate state of biological pathways and cell state. Our platform aims to address many of the key challenges and bottlenecks with legacy proteomic solutions, such as MS, high
instrument costs both in terms of acquisition and ownership and complexity with data analysis, which together prevent broad adoption. We believe our platform, which is designed to streamline sequencing and data analysis at a lower instrument cost
than legacy proteomic solutions, could allow our product to have wide utility across the study of the proteome. For example, our platform could be used for biomarker discovery and disease detection, pathway analysis, immune response, vaccine
development, quality assurance and quality control, among other applications.

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COVID-19

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 our operating results, financial condition and cash flows. On May 11, 2023, the federal public
health emergency for COVID-19, declared under Section 319 of the Public Health Service Act, expired.

We have not incurred significant impairment losses in the carrying values of our assets as a result of the COVID-19 pandemic and are not aware of any specific related event or circumstance that
would require us to revise our estimates reflected in the Consolidated Financial Statements. We will continue to evaluate the impact of the COVID-19 pandemic on our industry. We have concluded that, while it is possible that the virus could
have a future negative effect on our financial position, results of operations and cash flows in the Consolidated Financial Statements, the specific future impact is not readily determinable as of the date of the filing of this Annual Report on
Form 10-K. The Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.

Other Global Developments

Throughout 2022 and 2023, 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 to
date, the impact of such rate increases on the overall financial markets and the economy may adversely impact us in the future. In addition, the global economy has experienced, and is continuing to experience, high levels of inflation and global
supply chain disruptions. We continue to monitor these supply chain, inflation and interest rate factors, as well as the uncertainty resulting from the overall economic environment.

Although we do not expect to be significantly impacted by the conflicts in Ukraine or Israel and Gaza, we have experienced some constraints in product and material availability and increasing costs required to
obtain some materials and supplies as a result of these conflicts on the global economy. To date, our business has not been materially impacted by the conflicts, however, as the conflicts continue or worsen, it may impact our business, financial
condition or results of operations.

Business Combination

On June 10, 2021, we consummated the Business Combination. The Business Combination was approved by HighCape’s stockholders at its special meeting held on June 9, 2021. The transaction resulted in
the combined company being renamed “Quantum-Si Incorporated” and Legacy Quantum-Si being renamed “Q-SI Operations Inc.” The combined company’s Class A common stock and warrants to purchase Class A common stock commenced trading on Nasdaq on June
11, 2021 under the symbol “QSI” and “QSIAW”, respectively. As a result of the Business Combination, we received proceeds of approximately $511.2 million on the day of the Closing. For further details on the impact of the Business Combination,
please refer to Note 3. Business Combination, in the accompanying notes to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Recent Developments

In April 2023, we informed the contract manufacturer that had manufactured our Platinum® and CarbonTM instruments that we intended to wind down the relationship and transition to a different contract manufacturer. In October 2023, we were informed the contract
manufacturer had filed a complaint in the state of Texas alleging breach of contract and made claims for economic damage under the contract as well as attorney costs. In January 2024 the suit was withdrawn and refiled in the state of Minnesota
alleging similar claims. Although it is not possible to determine the potential financial exposure associated with the alleged claim at this time given its early stage, we believe we have a meritorious defense and intend to vigorously defend
against all claims asserted in the complaint.

In August 2023, we filed a universal shelf registration statement on Form S-3 (the “Shelf Registration Statement”), which became effective on August 22, 2023, covering the offering of Class A
common stock, preferred stock, debt securities, warrants, rights and units.

In August 2023, we also entered into an Equity Distribution Agreement (“EDA”) with an outside placement agent (the “Agent”), under which we may, from time to time, sell shares of our Class A common
stock having an aggregate offering price of up to $75.0 million in “at-the-market” offerings through the Agent (the “ATM Offering”). The Shelf Registration Statement included a prospectus supplement covering the offering, issuance and sale of up
to $75.0 million of our Class A common stock, from time to time, through the ATM Offering. The shares to be sold under the EDA may be issued and sold pursuant to the Shelf Registration Statement. The EDA also provides that the Agent will be
entitled to compensation for its services in an amount up to 3.0% of the gross proceeds from the sales of shares sold through the Agent under the EDA. We have no obligation to sell any shares under the EDA and may at any time suspend solicitation
and offers under the EDA. To date, we have not issued or sold any shares of our Class A common stock under the ATM Offering.

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Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our Consolidated Financial Statements, which have been prepared in accordance with U.S.
GAAP. The preparation of these Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the
Consolidated Financial Statements, as well as expenses incurred during the reporting periods. Our estimates are based on historical experience and various other factors we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about items not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

Revenue is derived from sales of products and services. Product revenue is primarily generated from the sales of instruments and consumables used in protein sequencing and analysis. Service
revenue is primarily generated from service maintenance contracts including access to analysis software and advanced training for instrument use. We recognize revenue when or as a customer obtains control of the promised goods and services. The
amount of revenue recognized reflects the consideration to which we expect to be entitled in exchange for these goods and services. This process involves identifying the contract with a customer, determining the performance obligations in the
contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue as the performance obligations have been satisfied. We have made the accounting policy
election allowed for under ASC 606-10-32-2A to exclude all sales taxes from transaction price. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the
contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is
separately identified in the contract. We allocate transaction price to the performance obligations in a contract with a customer based on the relative standalone selling price of each performance obligation. We determine standalone selling
price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price taking into account available information and
specific factors such as competitive positioning, internal costs, profit objectives, and internally approved pricing guidelines related to the performance obligation.

We consider performance obligation for sales of products satisfied upon shipment of the goods to the customer in accordance with the shipping terms (either upon shipment or delivery), which is
when control of the product is deemed to be transferred; this includes instruments and consumables. Customers generally do not have a right to return products, except for defective or damaged products during the warranty period or unless prior
written consent is provided. In instances where right of payment or transfer of title is contingent upon the customer’s acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenues for service maintenance
contracts, which start after the first year of purchase and are considered as service type warranties that effectively extend the standard first-year service coverage at the customer’s option are recognized ratably over the contract service
period as these services are performed evenly over time. Revenues for advanced training is recognized at a point in time upon satisfaction of the underlying performance obligation. We typically provide a standard one-year warranty which covers
defects in materials, workmanship and manufacturing or performance conditions under normal use and service. The first year of the warranty of the products is considered an assurance-type warranty and is recorded as Cost of revenue within the
Consolidated Statements of Operations and Comprehensive Loss. We have determined this standard first-year warranty is not a distinct performance obligation.

Stock-based Compensation

Stock-based compensation expense for stock option grants with only service conditions is recognized on a straight-line basis over the requisite service period of the individual grants, which is
generally the vesting period, based on the estimated grant date fair values. Stock-based compensation expense for stock option grants subject to non-financing event performance conditions on an accelerated basis is recognized as though each
vesting portion of the award was, in substance, a separate award.

Prior to the Business Combination, the fair value of the shares of common stock underlying stock options had historically been determined by the Board, with input from management and contemporaneous
third-party valuations, as there was no public market for the common stock. Given the absence of a public trading market for our common stock, the Board exercised reasonable judgment and considered numerous objective and subjective factors to
determine the best estimate of the fair value of our common stock at each option grant date.

After the completion of the Business Combination, we measure compensation expense for stock-based awards to employees, non-employees and directors based upon the awards’ initial grant-date fair
values. Stock-based compensation expense for stock options, restricted stock units and performance awards is recorded over the requisite service period. For awards with only a service condition, we expense stock-based compensation using the
straight-line method over the requisite service period for the entire award. For awards with a market condition, we expense the grant date fair value at the target over the vesting period regardless of the value the award recipients ultimately
receive. The fair value of restricted stock without a market condition is estimated using the current market price of our common stock on the date of grant. The fair value of stock option grants with a market condition is estimated at the date of
grant using the Monte Carlo simulation model (“Monte Carlo”). The fair values of stock option grants are estimated as of the date of grant by applying the Black-Scholes option valuation model (“Black-Scholes”). The Black-Scholes and Monte Carlo
models incorporate assumptions as to stock price volatility, the expected life of options or restricted stock, a risk-free interest rate and dividend yield. The effect of forfeiture in compensation costs is recognized based on actual forfeitures
when they occur.

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Black-Scholes is affected by the stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include the expected term
of the option, expected risk-free interest rate, the expected volatility of common stock, and expected dividend yield; each of which is described below. The assumptions for expected term and expected volatility are the two assumptions that
significantly affect the grant date fair value.

Stock options granted to non-employees are accounted for based on their fair value on the measurement date using the Black-Scholes option-pricing model. For further information regarding our
stock-based compensation and equity incentive plans, please refer to Note 2. Summary of Significant Accounting Policies, and Note 12. Stock-based Compensation, in the accompanying notes to our Consolidated Financial Statements included elsewhere
in this Annual Report on Form 10-K.

Warrant Liability

Outstanding warrants include Public Warrants which were issued as one-third of one redeemable warrant per unit during HighCape’s initial public offering on September 9, 2020, and Private Warrants
sold to the Sponsor. The Public Warrants and Private Warrants meet the definition of a derivative and we recorded these warrants as long-term liabilities in the Consolidated Balance Sheets at fair value upon the Closing of the Business
Combination, with subsequent changes in their respective fair values recognized in the Consolidated Statements of Operations and Comprehensive Loss at each reporting date.

Inventory

Inventory is stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method. Materials that may be
utilized for either commercial or, alternatively, for research and development purposes, are classified as inventory. Amounts in inventory used for
research and development purposes are charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes and, therefore, does not have an “alternative
future use” as defined in authoritative guidance. During the year ended December 31, 2023, we identified $3.4 million of product that no longer had an alternative
future use and therefore was included as part of research and development expense.

An assessment of the recoverability of capitalized inventory is performed during each reporting period and, if needed, we record a reserve for any excess and obsolete inventory to
record inventory at its estimated net realizable value in the period it is identified. We also recorded an immaterial inventory excess and obsolescence reserve related to cost of revenue. There were no
such reserves recorded against inventory for the years ended December 31, 2022 or 2021.

For further information regarding our significant accounting policies and estimates, please refer to Note 2. Summary of Significant Accounting Policies, in the accompanying notes to our
Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Recently Issued Accounting Pronouncements

For a discussion of recently adopted accounting pronouncements and accounting pronouncements pending adoption, please refer to Note 2. Summary of Significant Accounting Policies, in the Consolidated
Financial Statements included elsewhere in this Annual Report on Form 10-K.

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Results of Operations for the year ended December 31, 2023 as compared with the year ended December 31, 2022

The following table presents the Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2023 (dollars in thousands):

Revenue, Cost of Revenue and Gross Profit

Revenue is derived from sales of products and services. Product revenue is generated from the following sources: (i) sales of our Platinum® instrument, (ii) consumables, which consist of sales of our library, sequencing reagents and semiconductor chips, and (iii) freight revenue, which is recognized upon shipment. Service revenue is generated from
service maintenance contracts including Platinum® Analysis Software access, and advanced training for instrument use.

Cost of revenue primarily consists of product and service costs including material costs, personnel costs and benefits, inbound and outbound freight, packaging, warranty replacement costs, royalty
costs, facilities costs, depreciation and amortization expense, and inventory excess and obsolescence reserves.

Revenue, Cost of revenue and Gross profit for the years ended December 31, 2023 and 2022 are as follows (dollars in thousands):

We began a controlled launch of the Platinum® instrument and started to take orders in December 2022. We
subsequently began limited commercial shipments of Platinum® in January 2023.

Total revenue recognized for the year ended December 31, 2023 was $1.1 million for the sale of Platinum® instruments,
related reagent kits and service maintenance contracts. Cost of revenue recognized for the year ended December 31, 2023 was $0.6 million. Gross profit was $0.5 million for the year ended December 31, 2023. There was no such revenue or cost of
revenue recognized, or gross profit for the year ended December 31, 2022.

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Research and Development Expenses

Research and development expenses primarily consist of personnel costs and benefits, stock-based compensation, lab supplies, consulting and professional services, fabrication services, charges
related to product without an alternative future use, facilities costs, software, and other outsourced expenses. Research and development expenses are recognized as incurred. Our research and development expenses are primarily related to
developing new products and services.

Research and development expenses for the years ended December 31, 2023 and 2022 are as follows (dollars in thousands):

Research and development expenses decreased by $5.0 million, or 7.0%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was primarily due to a $5.3
million decrease in fabrication and outsourced services, a $2.0 million decrease in payroll and payroll-related costs primarily driven by restructuring activities in 2023, and a $1.9 million decrease in collaboration costs. The decreases were
also partially offset by a $3.4 million increase in reserves in related to product that no longer had an alternative future use, a $1.5 million increase in depreciation and amortization expense as well as other small fluctuations from 2022.
During the fourth quarter of 2023 we secured critical parts required to transition our Platinum® contract manufacturing process to a new manufacturing partner. As
part of this process, we were required to buy a minimum amount of parts from our former contracted manufacturer, resulting in $3.4 million of inventory without an alternative future use being included in the aforementioned inventory reserve.

Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily consist of personnel costs and benefits, stock-based compensation, patent and filing fees, consulting and professional services, legal and
accounting services, facilities costs, depreciation and amortization expense, insurance and office expenses, product advertising and marketing.

Selling, general and administrative expenses for the years ended December 31, 2023 and 2022 are as follows (dollars in thousands):

Selling, general and administrative expenses increased by $2.3 million, or 5.5%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022. This increase was primarily due
to a $2.9 million increase in consulting costs, a $1.6 million increase in payroll and payroll-related costs and a $0.6 million increase in trade show costs. Payroll and payroll-related costs increased primarily due to increased headcount for
anticipated ramp up of commercial sales and also severance related restructuring costs. These increases were partially offset by a $3.4 million decrease in other costs, primarily driven by a $1.6 million decrease in insurance costs from lower
market premiums.

Goodwill Impairment

Goodwill impairment for the years ended December 31, 2023 and 2022 is as follows (dollars in thousands):

Goodwill impairment decreased for the year ended December 31, 2023 compared to the year ended December 31, 2022. Goodwill was recorded as part of the Majelac Technologies LLC
(“Majelac”) acquisition in 2021 and was fully impaired in the fourth quarter of 2022.

Dividend Income

Dividend income primarily consists of dividends earned on fixed income mutual funds classified as marketable securities.

Dividend income for the years ended December 31, 2023 and 2022 is as follows (dollars in thousands):

Dividend income increased by $4.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 as a result of higher dividends earned on invested balances in marketable
securities.

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Gain (Loss) on Marketable Securities, Net

Gain (loss) on marketable securities, net, for the years ended December 31, 2023 and 2022 is as follows (dollars in thousands):

Realized and unrealized gain (loss) on marketable securities, net, was a gain of $5.6 million for the year ended December 31, 2023 as compared to a loss of $20.6 million for the year ended
December 31, 2022. The current year gains related to market adjustments of investments in marketable securities, primarily resulting from a decrease in interest rates during the year ended December 31, 2023 as compared to increases in interest
rates during the year ended December 31, 2022. These gains were partially offset by an increase in marketable securities sold with associated realized losses during the year ended December 31, 2023 as compared to 2022.

Change in Fair Value of Warrant Liabilities

The warrant liabilities were recorded at fair value as part of the Business Combination. Change in fair value of warrant liabilities primarily consists of the change in the fair value of our
Public Warrants and Private Warrants.

Change in warrant liabilities for the years ended December 31, 2023 and 2022 is as follows (dollars in thousands):

The fair value of warrant liabilities decreased $6.5 million, or 104.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was primarily driven by
the decrease in the underlying price of our Class A common stock experienced during the year ended December 31, 2023.

Other income, net

Other income, net, for the years ended December 31, 2023 and 2022 are as follows (dollars in thousands):

Other income, net, decreased by $0.1 million, or 20.1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. For the year ended December 31, 2023, Other income, net,
included a $0.4 million gain for the write off of contingent consideration related to the Majelac acquisition. For the year ended December 31, 2022, Other income, net, included a $0.5 million decrease in fair value related to the Majelac
acquisition. For further details regarding the acquisition of Majelac, please refer to Note 4. Acquisition, in the accompanying notes to the Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K.

Liquidity and Capital Resources

To date, we have financed our operations through the initial capital provided from the Business Combination. Going forward, we anticipate debt or equity offerings will be the primary source of
funds to support our operating needs and capital expenditures until we reach scale of our commercial operations.

The following table presents a summary of our consolidated cash flows for operating, investing, and financing activities for the years ended December 31, 2023 and 2022, as well as the period
ending cash and cash equivalents and working capital (in thousands):

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Net cash used in operating activities

The net cash used in operating activities of $94.0 million for the year ended December 31, 2023 was primarily due to our net loss of $96.0 million, which primarily resulted from continued spend on
research and development efforts and commercialization ramp up, stock-based compensation of $8.5 million, net cash outflows from changes in operating assets and liabilities of $6.6 million, realized and unrealized gain (loss) on marketable
securities, net, of $5.6 million and depreciation and amortization of $4.2 million.

Net cash provided by investing activities

The net cash provided by investing activities of $143.4 million in the year ended December 31, 2023 was due primarily to sales of marketable securities of $272.5 million, partially offset by
purchases of marketable securities of $123.8 million and purchases of property and equipment of $4.5 million. Of the property and equipment spend, approximately $4.1 million was utilized to expand our Branford, Connecticut facility with the
remaining amount primarily utilized to fund research and development equipment.

Net cash provided by financing activities

The net cash provided by financing activities of $0.1 million in the year ended December 31, 2023 was due primarily to approximately $0.4 million of proceeds from the exercise of stock options.
These proceeds were offset by approximately $0.2 million of deferred offering costs paid for the Shelf Registration Statement and the ATM Offering, both of which are defined and described below.

Liquidity Outlook

Since our inception, we have generated no revenue and have funded our operations primarily with proceeds from the issuance of equity to private investors. In addition, on June 10, 2021, we
completed the Business Combination, and as a result we received proceeds of approximately $511.2 million on the day of the Closing. Our primary uses of liquidity have been operating expenses, capital expenditures and our acquisition of certain
assets of Majelac. Cash flows from operations have been historically negative as we continue to invest in the development of our technology in NGPS. We expect to incur negative operating cash flows on an annual basis for the foreseeable future
until such time that we can successfully reach commercial scale of our current products and products under development. However, we can provide no assurance our current products will reach commercial scale, or products under development will be
successfully commercialized in the future.

We expect that our cash and cash equivalents and investments in marketable securities as of December 31, 2023, which includes the funds raised in connection with the Business Combination, will be
sufficient to meet our liquidity, capital expenditure, and anticipated working capital requirements and fund our operations for at least the next 12 months. We expect to use the funds on hand to continue to invest in the commercial launch of
our products, to further invest in research and development, for other operating expenses, business acquisitions and for working capital and general corporate purposes.

As of December 31, 2023, we had cash and cash equivalents and investments in marketable securities totaling $257.7 million. Our future capital requirements may vary from those currently planned
and will depend on various factors including the pace and success of product commercialization.

We launched the Platinum® instrument and started to take orders in December 2022 and we began commercial shipments
of Platinum® in January 2023. Our business will require an accelerated amount of spending to enhance the sales and marketing teams, continue to drive development,
and build inventory. Other factors that could accelerate cash needs include: (i) delays in achieving scientific and technical milestones; (ii) unforeseen capital expenditures and fabrication costs related to manufacturing for commercialization;
(iii) changes we may make in our business or commercialization strategy; (iv) costs of running a public company; (v) other items affecting our forecasted level of expenditures and use of cash resources including potential acquisitions; and (vi)
increased product and service costs.

In August 2023, we filed a universal shelf registration statement on Form S-3 (the “Shelf Registration Statement”), which became effective on August 22, 2023, covering the offering of Class A
common stock, preferred stock, debt securities, warrants, rights and units.

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In August 2023, we also entered into an Equity Distribution Agreement (“EDA”) with an outside placement agent (the “Agent”), under which we may, from time to time, sell shares of our Class A
common stock having an aggregate offering price of up to $75.0 million in “at-the-market” offerings through the Agent (the “ATM Offering”). The Shelf Registration Statement included a prospectus supplement covering the offering, issuance and
sale of up to $75.0 million of our Class A common stock, from time to time, through the ATM Offering. The shares to be sold under the EDA may be issued and sold pursuant to the Shelf Registration Statement. The EDA also provides that the Agent
will be entitled to compensation for its services in an amount up to 3.0% of the gross proceeds from the sales of shares sold through the Agent under the EDA. We have no obligation to sell any shares under the EDA and may at any time suspend
solicitation and offers under the EDA. To date, we have not issued or sold any shares of our Class A common stock under the ATM Offering.

In the future, we may be unable to obtain any required additional financing on terms favorable to us, if at all. If adequate funds are not available to us on acceptable terms or otherwise, we may
be unable to successfully develop or enhance products and services, respond to competitive pressure or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition,
operating results and cash flows.

Related Party Transaction

For a description of our related party transactions, please refer to Note 17. Related Party Transactions, in the accompanying notes to the Consolidated Financial Statements included elsewhere in
the Annual Report on Form 10-K.

Capital Expenditures

During the year ended December 31, 2023, capital expenditures were $4.5 million. We forecast capital expenditures in order to execute on our business plan and maintain growth; however, the actual
amount and timing of such capital expenditures will ultimately be determined by the volume of business. We anticipate our future capital expenditures will be at approximately the same level as compared to the year ended December 31, 2023. We
have funded and plan to continue funding these capital expenditures with cash and financing.

Contractual Obligations

We lease certain facilities and equipment under noncancelable lease agreements that expire at various dates through 2032. As of December 31, 2023, the future payments, before adjustments for
tenant incentives, under leases was $31.1 million.

Licenses related to certain intellectual property

We license certain intellectual property, some of which may be utilized in our current or future product offerings. To preserve the right to use such intellectual property, there are minimum
annual fixed royalty payments of approximately $0.1 million.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and
financial condition. The discussion should be read in conjunction with the consolidated financial statements and notes thereto contained in this Annual Report on Form 10-K. This discussion contains forward looking statements and involves numerous
risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. Unless the
context otherwise requires, references to “we”, “us”, “our”, the “Company” or “Quantum-Si” are intended to mean the business and operations of Quantum-Si Incorporated and its consolidated subsidiaries. The consolidated financial statements for
the years ended December 31, 2022, 2021 and 2020, respectively, present the financial position and results of operations of Quantum-Si Incorporated and its consolidated subsidiaries.

Overview

We are 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. We have developed a proprietary universal single-molecule detection platform that we are 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), that can be used for the study of nucleic acids. We believe that with the ability to sequence proteins in a massively parallel fashion and offer a simplified workflow with a
faster turnaround time, NGPS has the potential to unlock significant biological information through improved resolution and unbiased access to the proteome at a speed and scale that is not available today. Traditionally, proteomic workflows to
sequence proteins required days or weeks to complete. Our platform is designed to offer a single-day workflow including both sample preparation and sequencing. Our platform is comprised of the Carbon™ automated sample preparation instrument, the
Platinum™ NGPS instrument, the Quantum-Si Cloud™ software service, and reagent kits and chips for use with our instruments. We intend to follow a systematic, phased approach to successfully launch our platform, for research use only (“RUO”). We
believe we are the first company to successfully enable NGPS on a semiconductor chip, thus digitizing a massive proteomics opportunity, which allows for a massively parallel solution at the ultimate level of sensitivity —single-molecule
detection.

We believe that our platform will offer a differentiated end-to-end workflow solution in a rapidly evolving proteomics tools market. Within our initial focus market of proteomics, our workflow will
be designed to provide users a seamless opportunity to gain key insights into the immediate state of biological pathways and cell state. Our platform aims to address many of the key challenges and bottlenecks with legacy proteomic solutions, such
as mass spectrometry (“MS”), which are complicated and often limited by manual sample preparation workflows, high instrument costs both in terms of acquisition and ownership and complexity with data analysis, which together prevent broad
adoption. We believe our platform, which is designed to streamline sample preparation, sequencing, and data analysis at a lower instrument cost than legacy proteomic solutions, could allow our product to have wide utility across the study of the
proteome. For example, our platform could be used for biomarker discovery and disease detection, pathway analysis, immune response, and vaccine development, among other applications.

In 2021, we introduced our Platinum early access program to sites with participation from leading academic centers and key industry partners. The early access program introduced the Platinum
single-molecule sequencing system to key opinion leaders across the globe, for both expansion and development of applications and workflows.  We launched the PlatinumTM
instrument and started to take orders in December 2022 and we began commercial shipments of Platinum™ in January 2023.

COVID-19

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 our operating results, financial condition and cash flows. The COVID-19 pandemic had, and is
expected to continue to have, an adverse impact on our operations, particularly as a result of preventive and precautionary measures that we, other businesses, and governments are taking. Governmental mandates related to COVID-19 or other
infectious diseases, or public health crises, have impacted, and we expect them to continue to impact, our 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 our receipt of instruments, components and supplies from the third parties we rely on to, among other things, produce our products currently under development. To the extent that any governmental authority
imposes additional regulatory requirements or changes existing laws, regulations, and policies that apply to our business and operations, such as additional workplace safety measures, our product development plans may be delayed, and we may incur
further costs in bringing our 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 our 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.

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The estimates of the impact on our 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 our operations to date. While we are unable to
predict the full impact that the COVID-19 pandemic will have on our 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 our operating results, financial condition,
and cash flows.

We have not incurred any impairment losses in the carrying values of our assets as a result of the COVID-19 pandemic and are not aware of any specific related event or circumstance that would
require us to revise our estimates reflected in our 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 us to date, the
impact of such rate increases on the overall financial markets and the economy may adversely impact us in the future. In addition, the global economy has experienced and is continuing to experience high levels of inflation and global supply chain
disruptions. We continue to monitor these supply chain, inflation and interest rate factors, as well as the uncertainty resulting from the overall economic environment.

In addition, although we have no operations in or direct exposure to Russia or Ukraine, we have experienced some constraints in product and material
availability and increasing costs required to obtain some materials and supplies as a result of the Russia-Ukraine military conflict on the global economy. To
date, our business has not been materially impacted by the conflict, however, as the conflict continues or worsens, it may impact our business, financial condition or results of operations.

Business Combination

On June 10, 2021, we consummated the previously announced Business Combination. The Business Combination was approved by HighCape’s stockholders at its special meeting held on June 9,
2021. The transaction resulted in the combined company being renamed “Quantum-Si Incorporated” and Legacy Quantum-Si being renamed “Q-SI Operations Inc.” The combined company’s Class A common stock and warrants to purchase Class A common stock
commenced trading on Nasdaq on June 11, 2021 under the symbol “QSI” and “QSIAW”, respectively. As a result of the Business Combination, we received proceeds of approximately $511.2 million on the day of the Closing. See Note 3 “Business
Combination” in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information regarding the business combination.

Recent Developments

Restructuring

On January 30, 2023, we announced that we committed to an organizational restructuring designed to decrease our costs and create a more streamlined organization to support our business. As a result,
we are terminating approximately 12% of our workforce, effective in the first quarter of 2023. In connection with the restructuring, we currently estimate we will incur up to $1.0 million of costs, consisting primarily of cash severance costs and
other severance benefits. We expect to substantially complete the restructuring in the first quarter of 2023. The estimates of costs and expenses that we expect to incur in connection with the restructuring are subject to a number of assumptions
and actual results may differ materially. We may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the restructuring.

Partnership Agreements

On January 9, 2023, we announced that we entered into a partnership and license agreement with Biovista Inc. effective as of December 16, 2022 to provide our customers greater proteomic insights
beyond their protein sequence output. We believe the partnership enhances our offering by making proteomic-to-drug workflows more efficient for researchers. Biovista’s VIZIT™ exploration tool will be integrated into our cloud-based suite of
analytic tools enabling researchers to visualize the connections of their protein sequences identified during their experiment to diseases, other proteins, and post-translational modifications.

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Additionally, on January 9, 2023, we announced that we entered into a partnership with Aviva Systems Biolog effective as of December 16, 2022. This partnership seeks to co-develop protein enrichment
kits to enable deep interrogation of proteins of interest and their variants (proteoforms) through protein sequencing. The co-developed products will include immunoprecipitation kits that fit into existing research workflows to conveniently
enrich target proteins prior to amino acid mutation or post-translational modification (“PTM”) analysis with our PlatinumTM protein sequencing platform.

Description of Certain Components of Financial Data

Research and development

Research and development expenses primarily consist of personnel costs and benefits, stock-based compensation, lab supplies, consulting and professional services, fabrication services, facilities
costs, software, and other outsourced expenses. Research and development expenses are expensed as incurred. All of our research and development expenses are related to developing new products and services.

Selling, general and administrative

Selling, general and administrative expenses primarily consist of personnel costs and benefits, stock-based compensation, patent and filing fees, consulting and professional services, legal and
accounting services, facilities costs, depreciation and amortization expense, insurance and office expenses, product advertising and marketing.

Goodwill impairment

Goodwill was recorded as part of the Majelac Technologies LLC (“Majelac”) acquisition in 2021 and it was fully impaired in the fourth quarter of 2022.

Interest expense

Interest expense primarily consists of interest that was paid on our Paycheck Protection Program (“PPP”) loan.

Dividend income

Dividend income primarily consists of dividends earned on fixed income mutual funds classified as marketable securities.

Change in fair value of warrant liabilities

Change in fair value of warrant liabilities primarily consists of the change in the fair value of our publicly traded warrants (the “Public Warrants”) and our warrants sold in a private placement
(the “Private Warrants”).

Other (expense), net

Other (expense), net primarily consists of realized and unrealized losses on fixed income mutual funds in marketable securities.

Provision for income taxes

We utilize the asset and liability method of accounting for income taxes where deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences
between the carrying amounts and the tax basis of assets and liabilities using the enacted statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A
valuation allowance is established against net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the net deferred tax assets will not be realized. We recorded a full valuation
allowance as of December 31, 2022 and 2021. Based on the available evidence, we believe that it is more likely than not that we will be unable to utilize all of our deferred tax assets in the future.

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Comparison of the Years Ended December 31, 2022 and 2021

Results of Operations

The following is a discussion of our results of operations for the years ended December 31, 2022 and 2021.

Research and development

Research and development expenses increased by $25.5 million, or 54.7%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase was primarily due to the
following elements: $14.5 million related to internal and external product development activities; $12.3 million in personnel costs as a result of increased headcount; and $1.9 million of collaboration fees, which includes $1.1 million paid to
Protein Evolution, Inc. These increases were partially offset by decreases primarily related to the Business Combination in 2021: $1.2 million of stock-based compensation and $2.0 million of transaction bonuses.

Selling, general and administrative

Selling, general and administrative expenses decreased by $8.0 million, or 16.0% for the year ended December 31, 2022 compared to the year ended December 31, 2021. The decrease was primarily due to
the following elements related to the Business Combination in 2021: $3.9 million in consulting and professional fees; $1.0 million of transaction bonuses; and $12.5 million of reduced stock-based compensation due primarily to stock option and
restricted stock unit awards granted and vested in connection with the Closing of the Business Combination in 2021.  The reduced stock-based compensation of $12.5 million also resulted from a reversal of $4.7 million of restricted stock unit
awards that were forfeited by our former Chief Executive Officer upon his separation. These decreases were partially offset by the following increases: $6.3 million of headcount expenses to scale up our administrative and executive functions and
$3.1 million of expenses primarily due to being a publicly traded company including consulting, professional fees and insurance.

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Goodwill impairment

Goodwill impairment increased for the year ended December 31, 2022 compared to the year ended December 31, 2021.  Goodwill was recorded as part of the Majelac acquisition in
2021 and was fully impaired in the fourth quarter of 2022.

Interest expense

Interest expense on the PPP loan decreased for the year ended December 31, 2022 compared to the year ended December 31, 2021 as a result of us repaying the loan in full in June 2021 in connection
with the Business Combination.

Dividend income

Dividend income increased by $2.8 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 as a result of higher dividends earned on invested balances in marketable
securities.

Change in fair value of warrant liabilities

The fair value of warrant liabilities decreased, which resulted in a gain of $1.9 million, or 42.6% for the year ended December 31, 2022 compared to the year ended December 31, 2021. The warrant
liabilities were recorded at fair value as part of the Business Combination.

Other (expense), net

Other (expense), net increased by $15.1 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily as a result of an increase in reported unrealized and
realized losses on investments in marketable securities, which consist of fixed income mutual funds that are marked to market.

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Comparison of the Years Ended December 31, 2021 and 2020

Results of Operations

The following is a discussion of our results of operations for the years ended December 31, 2021 and 2020.

Research and development

Research and development expenses increased by $19.0 million, or 69.0%, for the year ended December 31, 2021 compared to the year ended December 31, 2020. This increase was primarily due to an increase of $14.4
million in personnel costs as a result of increased headcount, including $4.4 million of stock-based compensation, as well as other internal and external product development activities.

Selling, general and administrative

Selling, general and administrative expenses increased by $41.2 million for the year ended December 31, 2021 compared to the year ended December 31, 2020. This increase was primarily due to an increase of $24.7
million in personnel costs as a result of increased headcount associated with investments to scale up our administrative and executive functions, including $18.5 million of stock-based compensation. In addition to personnel costs, the increase
was primarily due to an increase of $9.8 million in consulting, legal and professional fees.  This increase included a $3.8 million payment to a third-party service provider in connection with the Closing of the Business Combination and a write
off of Other assets – related party of $0.7 million in connection with the termination of our participation under the Amended and Restated Technology Services Agreement, most recently amended on November 11, 2020, by and among 4Catalyzer
Corporation (“4C”), us and other participant companies controlled by the Rothberg family, as well as other general and administrative costs incremental to being a publicly traded company.

Interest expense

Interest expense on the PPP loan decreased for the year ended December 31, 2021 compared to the year ended December 31, 2020 as a result of the Company repaying the loan in full in June of 2021 in connection with
the Business Combination.

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Dividend income

Dividend income increased by $2.5 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 as a result of higher invested balances in marketable securities.

Change in fair value of warrant liabilities

Change in fair value of warrant liabilities resulted in a gain of $4.4 million for the year ended December 31, 2021 compared to the year ended December 31, 2020. The warrant liabilities were recorded as part of the
Business Combination and therefore did not exist in the prior year.

Other (expense), net

Other (expense), net increased by $5.0 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily as a result of unrealized losses on cash invested in marketable securities.

Non-GAAP Financial Measures

We present non-GAAP financial measures in order to assist readers of our consolidated financial statements in understanding the core operating results that our management uses to evaluate the
business and for financial planning purposes. Our non-GAAP financial measures, EBITDA and Adjusted EBITDA, provide an additional tool for investors to use in comparing our financial performance over multiple periods.

EBITDA and Adjusted EBITDA are key performance measures that our management uses to assess our operating performance. EBITDA and Adjusted EBITDA facilitate internal comparisons of our operating
performance on a more consistent basis. We use these performance measures for business planning purposes and forecasting. We believe that EBITDA and Adjusted EBITDA enhance an investor’s understanding of our financial performance as it is useful
in assessing our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business.

Our EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate these measures in the same manner. EBITDA and Adjusted EBITDA are
not prepared in accordance with U.S. GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. When evaluating our performance, you should consider EBITDA and Adjusted EBITDA
alongside other financial performance measures prepared in accordance with U.S. GAAP, including net loss.

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EBITDA and Adjusted EBITDA

We calculate EBITDA as net loss adjusted to exclude interest expense, dividend income and depreciation and amortization expense.  Adjusted EBITDA is calculated as EBITDA adjusted to exclude goodwill
impairment, change in fair value of warrant liabilities, other expense, net, stock-based compensation, and other non-recurring items.  The other non-recurring items include costs related to discretionary transaction bonuses and other costs
incurred with the Closing of the Business Combination on June 10, 2021.

The following table reconciles Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Liquidity and Capital Resources

Since our inception, we have generated no revenue and have funded our operations primarily with proceeds from the issuance of equity to private investors. In addition, on June 10, 2021, we completed
the Business Combination, and as a result we received proceeds of approximately $511.2 million on the day of the Closing. Our primary uses of liquidity have been operating expenses, capital expenditures and our acquisition of certain assets of
Majelac. Cash flows from operations have been historically negative as we continue to invest in the development of our technology in NGPS. We expect to incur negative operating cash flows on an annual basis for the foreseeable future until such
time that we can successfully commercialize our products that are currently under development. However, we can provide no assurance that such products will be successfully developed and commercialized in the future.

We expect that the funds raised in connection with the Business Combination will be sufficient to meet our liquidity, capital expenditure, and anticipated working capital requirements and fund our
operations for at least the next 12 months. We expect to use the funds raised in connection with the Business Combination to invest in the commercial launch of our products, to further invest in research and development, for other operating
expenses, business acquisitions and for working capital and general corporate purposes.

As of December 31, 2022, we had cash and cash equivalents and investments in marketable securities totaling $351.3 million. Our future capital requirements may vary from those currently planned and
will depend on various factors including the pace and success of product commercialization.

We launched the PlatinumTM instrument and started to take orders in December 2022 and we began commercial shipments
of Platinum™ in January 2023.  We plan to launch CarbonTM in 2023.  Our business will require an accelerated amount of spending to enhance the sales and marketing
teams, continue to drive development, and build inventory. Other factors that could accelerate cash needs include: (i) delays in achieving scientific and technical milestones; (ii) unforeseen capital expenditures and fabrication costs related to
manufacturing for commercialization; (iii) changes we may make in our business or commercialization strategy; (iv) the impact of the COVID-19 pandemic; (v) costs of running a public company; (vi) other items affecting our forecasted level of
expenditures and use of cash resources including potential acquisitions; and (vii) increased product and service costs.

In the future, we may be unable to obtain any required additional financing on terms favorable to us, if at all.  If adequate funds are not available to us on acceptable terms or otherwise, we may
be unable to successfully develop or enhance products and services, respond to competitive pressure or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition, operating
results and cash flows.

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Cash flows

The following table summarizes our cash flows for the periods indicated:

Net cash used in operating activities

The net cash used in operating activities represents the cash receipts and disbursements related to our activities other than investing and financing activities. We expect that the cash provided by
financing activities in 2021 will continue to be our primary source of funds to support operating needs and capital expenditures for the foreseeable future.

The net cash used in operating activities of $90.6 million for the year ended December 31, 2022 was due primarily to a net loss of $132.4 million and a change in fair value of warrant liabilities of
$6.2 million, partially offset by losses on marketable securities (realized and unrealized) of $20.6 million, stock-based compensation of $11.2 million, goodwill impairment of $9.5 million, net cash inflows from changes in operating assets and
liabilities of $4.3 million and depreciation and amortization of $2.6 million.

The net cash used in operating activities of $66.8 million for the year ended December 31, 2021 was due primarily to a net loss of $95.0 million and a change in fair value of warrant liabilities of $4.4 million,
partially offset by stock-based compensation of $24.9 million, losses on marketable securities (realized and unrealized) of $5.0 million, net cash inflows from changes in operating assets and liabilities of $1.5 million and depreciation and
amortization of $1.0 million.

The net cash used in operating activities of $32.6 million for the year ended December 31, 2020 was due primarily to a net loss of $36.6 million, offset by net cash inflows from changes in operating assets and
liabilities of $1.2 million and adjustments for stock-based compensation of $1.9 million and depreciation and amortization of $0.9 million.

Net cash provided by (used in) investing activities

The net cash provided by investing activities of $137.2 million in the year ended December 31, 2022 was due primarily to sales of marketable securities of $148.8 million, partially offset by
purchases of property and equipment of $10.7 million and marketable securities of $0.8 million.

The net cash used in investing activities of $450.9 million in the year ended December 31, 2021 was due to purchases of marketable securities of $440.5 million, purchases of property and equipment of $5.8 million,
and the payment of $4.6 million related to the Majelac acquisition.

The net cash used in investing activities of $0.5 million in the year ended December 31, 2020 was due to purchases of property and equipment.

Net cash provided by financing activities

The net cash provided by financing activities of $1.9 million in the year ended December 31, 2022 was due primarily from $2.8 million from proceeds from exercise of stock options, offset by $0.5
million from payment of deferred consideration and $0.3 million from payment of contingent consideration related to the Majelac acquisition.

The net cash provided by financing activities of $516.6 million in the year ended December 31, 2021 was primarily from $512.8 million from proceeds from the Business Combination and $5.6 million from proceeds from
exercise of stock options, partially offset by a $1.7 million payment of notes payable.

The net cash provided by financing activities of $37.0 million in the year ended December 31, 2020 was primarily from $35.3 million from proceeds from issuance of Series E convertible preferred stock and $1.7
million from proceeds from notes payable.

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Contractual Obligations

We lease certain facilities and equipment under non-cancellable lease agreements that expire at various dates through 2032. As of December 31, 2022, the future payments, before adjustments for
tenant incentives, under leases was $35.1 million, which includes a lease we entered into in December 2021 for a facility in New Haven, Connecticut, which commenced in January 2022 and a lease that commenced in April 2022 for a facility in
Branford, Connecticut.

Licenses related to certain intellectual property

We license certain intellectual property, some of which may be utilized in our current or future product offerings. To preserve the right to use such intellectual property, there are minimum annual
fixed royalty payments of approximately $0.2 million. Once we commercialize and begin to generate revenue, there will be royalties based on the current anticipated utilization.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S.
GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the
consolidated financial statements, as well as expenses incurred during the reporting periods. Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of
which form the basis for making judgments about items that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Stock-based compensation

The fair values of stock option grants are estimated using a Black-Scholes option-pricing model. Key inputs and assumptions include the expected term of the option, stock price volatility, risk-free
interest rate, dividend yield, stock price and exercise price. Many of the assumptions require significant judgment and any changes could have a material impact in the determination of stock-based compensation.

Key assumptions used to value option grants were as follows:

The fair value of awards with market conditions is primarily estimated using the Monte Carlo simulation method.

Stock options granted to non-employees are accounted for based
on their fair value on the measurement date using the Black-Scholes option-pricing model. Beginning January 1, 2020, the treatment of grants to nonemployees was aligned with those granted to employees in accordance with Accounting Standards
Update 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”).
See Note 10 “Equity Incentive Plan” in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information regarding our equity incentive plans.

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Warrant liability

We account for  warrants  as  either  equity-classified  or  liability classified  instruments  based  on  an  assessment  of  the  warrant’s  specific  terms  and applicable authoritative guidance in Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from  Equity  (“ASC  480”)  and  ASC  815,  Derivatives  and  Hedging  (“ASC  815”).  The
assessment  considers  whether  the  warrants  are  freestanding  financial instruments  pursuant  to  ASC  480,  meet  the  definition  of  a  liability  pursuant  to  ASC  480,  and  whether  the  warrants  meet  all  of  the  requirements
for  equity classification under ASC 815, including whether the warrants are indexed to our own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the
time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as
a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of
issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a noncash gain or loss on the consolidated statements of operations and comprehensive loss. The fair value of the Private
Warrants was valued using a binomial lattice model and the Public Warrants are traded in an active market in which the value is known. Subsequent to trading on the public markets, the warrants were valued using the closing price at the balance
sheet date. See Note 12 “Warrant Liabilities” in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information regarding warrants.

We evaluated the Public Warrants under ASC 815-40, in conjunction with the statement regarding the accounting and reporting considerations for
warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies” (“SPACs”) (the “SEC Statement”) and concluded that they do not meet the criteria to be classified in stockholders’ equity. Specifically, the exercise of the warrants may be settled in cash upon the occurrence of
a tender offer or exchange offer in which the maker of the tender offer or exchange offer, upon completion of the tender offer or exchange offer, beneficially owns more than 50% of the outstanding shares of the Company’s Class A common stock,
even if it would not result in a change of control of the Company. This provision would preclude the warrants from being classified in equity and thus the warrants have been classified as a liability.

We evaluated the Private Warrants under ASC 815-40, in conjunction with the SEC Statement, and concluded that they do not meet the criteria to be classified
in stockholders’ equity. Specifically, the terms of the warrants provide for potential changes to the settlement amounts depending upon the characteristics of the warrant holder, and, because the holder of a warrant is not an input into the
pricing of a fixed-for-fixed option on equity shares, such provision would preclude the warrant from being classified in equity and thus the warrant has been classified as a liability.

Acquisition

Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of
assets acquired and liabilities assumed is recorded as goodwill. Determining fair value of identifiable assets and liabilities acquired also requires management to make estimates, which are based on all available information. This judgment and
determination affects the amount of consideration paid that is allocable to assets and liabilities acquired in the business purchase transaction.

See Note 2 “Summary of Significant Accounting Policies” in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information regarding our
significant accounting policies and estimates.

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Goodwill Impairment

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 reviews 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.

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.

Majelac was fully integrated into the Company after the acquisition. As a result, the Company operates as a single reporting unit. Accordingly, all of the goodwill is associated with
the entire Company.  The Company performed its annual goodwill impairment test during the fourth quarter of 2022 quantitatively evaluating its reporting unit.

See Note 2 “Summary of Significant Accounting Policies” in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information regarding our
significant accounting policies and estimates.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 “Summary of Significant Accounting
Policies – Recently Issued Accounting Pronouncements” in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial
condition. The discussion should be read in conjunction with the consolidated financial statements and notes thereto contained in this Annual Report on Form 10-K. This discussion contains forward looking statements and involves numerous risks
and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. Unless the context
otherwise requires, references to “we”, “us”, “our” the “Company” and “Quantum-Si” are intended to mean the business and operations of Quantum-Si Incorporated and its consolidated subsidiaries. The consolidated financial statements for the
years ended December 31, 2021, 2020 and 2019, respectively, present the financial position and results of operations of Quantum-Si Incorporated and its consolidated subsidiaries.

Overview

We are 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. We have developed a proprietary universal single molecule detection platform that we are 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. We believe that with the ability to sequence proteins in a massively parallel fashion and offer a simplified workflow with a
faster turnaround time, NGPS has the potential to unlock significant biological information through improved resolution and unbiased access to the proteome at a speed and scale that is not available today. Traditionally, proteomic workflows to
sequence proteins required days or weeks to complete. Our platform is designed to offer a single-day workflow including both sample preparation and sequencing. Our platform is comprised of the Carbon™ automated sample preparation instrument,
the Platinum™ NGPS instrument, the Quantum-Si Cloud™ software service, and reagent kits and chips for use with our instruments. We intend to follow a systematic, phased approach to successfully launch and commercialize our platform, for
research use only (“RUO”), in the second half of 2022, and have initiated our early access limited release to enable key thought leaders early access to our platform in 2021. We believe we are the first company to successfully enable NGPS on a
semiconductor chip, thus digitizing a massive proteomics opportunity, which allows for a massively parallel solution at the ultimate level of sensitivity —single molecule detection.

We believe that our platform will offer a differentiated end-to-end workflow solution in a rapidly evolving proteomics tools market. Within our initial focus market of proteomics, our workflow will be designed to
provide users a seamless opportunity to gain key insights into the immediate state of biological pathways and cell state. Our platform aims to address many of the key challenges and bottlenecks with legacy proteomic solutions, such as mass
spectrometry (“MS”), which are complicated and often limited by manual sample preparation workflows, high instrument costs both in terms of acquisition and ownership and complexity with data analysis, which together prevent broad adoption. We
believe our platform, which is designed to streamline sample preparation, sequencing, and data analysis at a lower instrument cost than legacy proteomic solutions, could allow our product to have wide utility across the study of the proteome.
For example, our platform could be used for biomarker discovery and disease detection, pathway analysis, immune response, and vaccine development, among other applications.

We have expanded our Platinum early access program to additional sites with participation from leading academic centers and key industry partners. The early access program introduces the Platinum single molecule
sequencing system to key opinion leaders across the globe, for both expansion and development of applications and workflows.

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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 U.S. and global economies and created uncertainty regarding potential impacts on our operating results, financial condition and cash flows. The COVID-19 pandemic had, and is expected to continue
to have, an adverse impact on our operations, particularly as a result of preventive and precautionary measures that we, other businesses, and governments are taking. Governmental mandates related to COVID-19 or other infectious diseases, or
public health crises, have impacted, and we expect them to continue to impact, our 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 our receipt of instruments, components and supplies from the third parties we rely on to, among other things, produce our products currently under development. The COVID-19 pandemic has also had an adverse effect on our ability
to attract, recruit, interview and hire at the pace we would typically expect to support our rapidly expanding operations. To the extent that any governmental authority imposes additional regulatory requirements or changes existing laws,
regulations, and policies that apply to our business and operations, such as additional workplace safety measures, our product development plans may be delayed, and we may incur further costs in bringing our 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 our 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.

The estimates of the impact on our business may change based on new information that may emerge concerning COVID-19 and the actions to contain it or treat its impact and the economic impact on local, regional,
national and international markets. While we are unable to predict the full impact that the COVID-19 pandemic will have on our future results of operations, liquidity and financial condition due to numerous uncertainties, including the duration
of the pandemic, and the actions that may be taken by government authorities across the United States, it is not expected to result in any significant changes in costs going forward.

We have not incurred any significant impairment losses in the carrying values of our assets as a result of the COVID-19 pandemic and are not aware of any specific related event or circumstance that would require
us to revise our estimates reflected in our consolidated financial statements.

Business Combination

On June 10, 2021, we consummated the previously announced Business Combination. The Business Combination was approved by HighCape’s stockholders at its special meeting held on June 9, 2021. The transaction
resulted in the combined company being renamed “Quantum-Si Incorporated” and Legacy Quantum-Si being renamed “Q-SI Operations Inc.” The combined company’s Class A common stock and warrants to purchase Class A common stock commenced trading on
Nasdaq on June 11, 2021 under the symbol “QSI” and “QSIAW”, respectively. As a result of the Business Combination, we received proceeds of approximately $511.2 million on the day of the Closing.  See Note 3 “Business Combination” in our
consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information regarding the business combination.

Acquisition

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 “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 $4.6 million in cash including $0.1 million in reimbursement for certain recently purchased equipment, and 535,715 shares
of Class A common stock, valued at $4.2 million, issued to Majelac subject to certain restrictions. An additional 59,523 shares of Class A common stock valued at $0.5 million will be issued to Majelac 12 months after the 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 $0.1 million. Additional purchase
price consideration of $0.5 million in cash will be paid 6 months after the Closing date less any amount that may be required by the buyer indemnitees to satisfy any unresolved claims for indemnification, if any. We may pay up to an
additional $0.8 million valued at $0.5 million subject to certain future milestones being met. The acquisition brings semiconductor chip assembly and packaging capabilities in-house to secure our supply chain and support scaling
commercialization efforts.  Prior to the acquisition, Majelac was a vendor of the Company. See Note 4 “Acquisition” in our consolidated
financial statements included elsewhere in this Annual Report on Form 10-K for further information regarding the Majelac acquisition.

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Recent Developments

Effective February 8, 2022, John Stark’s employment with us as our Chief Executive Officer and his service as a member of our board of directors ended. We have launched a search for Mr. Stark’s replacement and,
pending such replacement, Jonathan M. Rothberg, Ph.D., the Executive Chairman of our board of directors, will serve as Interim Chief Executive Officer. We and Mr. Stark entered into a separation agreement (the “Separation Agreement”), dated as
of February 11, 2022, that provides that Mr. Stark is entitled to: (i) severance pay equal to $500,000, or one year of his current annual base salary, (ii) an annual bonus equal to $352,750 for the year ended December 31, 2021 and (iii) a
special bonus equal to $250,000, provided that Mr. Stark did not revoke the Separation Agreement on or before February 18, 2022. The Separation Agreement also includes other customary provisions. A copy of the Separation Agreement is filed as