Quotient Ltd (Form: 10-Q, Received: 02/04/2021 16:12:37)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2020

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

For the transition period from to

Commission File Number 001-36415

QUOTIENT LIMITED

(Exact name of registrant as specified in its charter)

Jersey, Channel Islands		Not Applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

B1, Business Park Terre Bonne, Route de Crassier 13, 1262 Eysins, Switzerland		Not Applicable
(Address of principal executive offices)		(Zip Code)

011-41-22-716-9800

(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol		Name of each exchange on which registered
Ordinary Shares, nil par value		QTNT		The Nasdaq Global Market

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

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

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

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

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

As of February 2, 2021, there were 101,133,253 Ordinary Shares, nil par value, of Quotient Limited outstanding.

TABLE OF CONTENTS

	Page

PART I – FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3. Quantitative and Qualitative Disclosures About Market Risk		41
Item 4. Controls and Procedures		42
PART II – OTHER INFORMATION		43
Item 1. Legal Proceedings		43
Item 1A. Risk Factors		44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		45
Item 3. Defaults Upon Senior Securities		45
Item 4. Mine Safety Disclosures		45
Item 5. Other Information		46
Item 6. Exhibits		47
Signatures		48

- i -

Cautionary note regarding forward-looking statements

This Quarterly Report on Form 10-Q, and exhibits thereto, contains estimates, predictions, opinions, projections and other statements that may be interpreted as “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve substantial risks and uncertainties. The forward-looking statements are contained principally in Part I, Item 2: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and are also contained elsewhere in this Quarterly Report. Forward-looking statements can be identified by words such as “strategy,” “objective,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “contemplate,” “might,” “design” and other similar expressions, although not all forward-looking statements contain these identifying words. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain, and are subject to numerous known and unknown risks and uncertainties.

Forward-looking statements include statements about:

●

the continuing development, regulatory approval and commercialization of the MosaiQ^TM technology, or “MosaiQ”;

●

the design of blood grouping and disease screening capabilities of MosaiQ, the potential for the expansion of MosaiQ into the larger clinical diagnostics market and the benefits of MosaiQ for both customers and patients (including using MosaiQ to test for novel coronavirus disease 2019, or COVID-19, antibodies);

●

future demand for and customer adoption of MosaiQ, the factors that we believe will drive such demand and our ability to address such demand;

●

our expected profit margins for MosaiQ;

●

the size of the market for MosaiQ;

●

the regulation of MosaiQ by the U.S. Food and Drug Administration, or the FDA, or other regulatory bodies, or any unanticipated regulatory changes or scrutiny by such regulators;

●

future plans for our conventional reagent products;

●

the status of our future relationships with customers, suppliers, and regulators relating to our products;

●

future demand for our conventional reagent products and our ability to meet such demand;

●

our ability to manage the risks associated with international operations;

●

anticipated changes, trends and challenges in our business and the transfusion diagnostics market;

●

continued or worsening adverse conditions in the global economic and financial markets, including as a result of the on-going COVID-19 pandemic;

●

the impact on our business of the United Kingdom ceasing to be a member of the European Union;

●

the effects of competition;

●

the expected outcome or impact of arbitration or litigation;

●

our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;

●

our anticipated cash needs, including the adequacy of our available cash and short-term investment balances relative to our forecasted cash requirements for the next twelve months, our expected sources of funding, and our estimates regarding our capital requirements and capital expenditures; and

●

our plans for executive and director compensation for the future.

- 1 -

You should also refer to the various factors identified in this and other reports filed by us with the Securities and Exchange Commission, or SEC, including but not limited to those discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2020, for a discussion of other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Further, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us that we will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements in this Quarterly Report represent our views only as of the date of this Quarterly Report. Subsequent events and developments may cause our views to change. While we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to publicly update any forward-looking statements, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report.

Available Information

Access to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed with or furnished to the SEC, may be obtained through the investor section of our website at www.quotientbd.com as soon as reasonably practical after we electronically file or furnish these reports. We do not charge for access to and viewing of these reports. Information on our website, including in the investor section, is not part of this Quarterly Report on Form 10-Q or any of our other securities filings unless specifically incorporated herein or therein by reference. In addition, our filings with the SEC may be accessed through the SEC’s website at www.sec.gov. All statements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.

- 2 -

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(Expressed in thousands of U.S. Dollars — except for share data and per share data)

	December 31, 2020			March 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	3,401		$	3,923
Short-term investments		131,062			116,871
Trade accounts receivable, net		4,539			5,402
Inventories		23,709			20,501
Prepaid expenses and other current assets		4,928			3,775
Total current assets		167,639			150,472
Restricted cash		9,046			9,017
Property and equipment, net		40,894			40,165
Operating lease right-of-use assets		22,364			21,493
Intangible assets, net		632			625
Deferred income taxes		237			237
Other non-current assets		4,914			4,454
Total assets	$	245,726		$	226,463
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	5,860		$	4,826
Accrued compensation and benefits		4,844			7,210
Accrued expenses and other current liabilities		11,351			15,490
Current portion of long-term debt		24,167			—
Current portion of operating lease liability		3,309			3,033
Current portion of finance lease obligation		878			598
Total current liabilities		50,409			31,157
Long-term debt, less current portion		135,490			153,024
Operating lease liability, less current portion		21,203			19,914
Finance lease obligation, less current portion		582			1,117
Deferred income taxes		1,455			—
Defined benefit pension plan obligation		7,707			6,353
7% Cumulative redeemable preference shares		21,213			20,425
Total liabilities		238,059			231,990
Commitments and contingencies		—			—
Shareholders' equity (deficit):
Ordinary shares (nil par value) 101,075,845 and 80,398,326 issued and outstanding at December 31, 2020 and March 31, 2020 respectively		540,819			459,931
Additional paid in capital		36,630			33,132
Accumulated other comprehensive loss		(16,186	)		(15,155	)
Accumulated deficit		(553,596	)		(483,435	)
Total shareholders' equity (deficit)		7,667			(5,527	)
Total liabilities and shareholders' equity (deficit)	$	245,726		$	226,463

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

- 3 -

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

(Expressed in thousands of U.S. Dollars — except for share data and per share data)

	Quarter ended						Nine months ended
	December 31,						December 31,
	2020			2019			2020			2019
Revenue:
Product sales	$	8,740		$	7,636		$	26,207		$	22,901
Other revenues		11			305			7,534			1,055
Total revenue		8,751			7,941			33,741			23,956
Cost of revenue		(4,970	)		(4,532	)		(14,883	)		(13,067	)
Gross profit		3,781			3,409			18,858			10,889
Operating expenses:
Sales and marketing		(2,283	)		(2,290	)		(6,757	)		(7,123	)
Research and development, net of government grants		(14,485	)		(14,160	)		(38,813	)		(38,895	)
General and administrative expense:
Compensation expense in respect of share options and management equity incentives		(1,214	)		(1,196	)		(3,498	)		(3,375	)
Other general and administrative expenses		(7,524	)		(8,120	)		(24,334	)		(20,717	)
Total general and administrative expense		(8,738	)		(9,316	)		(27,832	)		(24,092	)
Total operating expense		(25,506	)		(25,766	)		(73,402	)		(70,110	)
Operating loss		(21,725	)		(22,357	)		(54,544	)		(59,221	)
Other income (expense):
Interest expense, net		(6,753	)		(7,008	)		(19,537	)		(20,384	)
Other, net		192			1,894			5,423			1,600
Other expense, net		(6,561	)		(5,114	)		(14,114	)		(18,784	)
Loss before income taxes		(28,286	)		(27,471	)		(68,658	)		(78,005	)
Provision for income taxes		(1,471	)		(14	)		(1,503	)		(41	)
Net loss	$	(29,757	)	$	(27,485	)	$	(70,161	)	$	(78,046	)
Other comprehensive income (loss):
Change in fair value of foreign currency cash flow hedges	$	295		$	487		$	571		$	209
Change in unrealized gain on short-term investments		111			148			(372	)		342
Foreign currency gain (loss)		2,031			254			(1,270	)		(771	)
Provision for pension benefit obligation		13			48			40			144
Other comprehensive loss, net		2,450			937			(1,031	)		(76	)
Comprehensive loss	$	(27,307	)	$	(26,548	)	$	(71,192	)	$	(78,122	)
Net loss available to ordinary shareholders - basic and diluted	$	(29,757	)	$	(27,485	)	$	(70,161	)	$	(78,046	)
Loss per share - basic and diluted	$	(0.29	)	$	(0.37	)	$	(0.79	)	$	(1.14	)
Weighted-average shares outstanding - basic and diluted		101,016,040			73,768,845			88,512,823			68,722,475

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

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (unaudited)

(Expressed in thousands of U.S. Dollars — except for share data)

	Ordinary shares				Additional paid in		Accumulated Other Comprehensive			Accumulated			Total Shareholders'
	Shares		Amount		capital		Loss			Deficit			Equity (Deficit)
September 30, 2020		100,965,451	$	540,769	$	35,416	$	(18,636	)	$	(523,839	)	$	33,710
Issue of shares		—		—		—		—			—			—
Issue of shares upon exercise of incentive share options and vesting of RSUs		110,394		50		—		—			—			50
Net loss		—		—		—		—			(29,757	)		(29,757	)
Change in the fair value of foreign currency cash flow hedges		—		—		—		295			—			295
Change in unrealized gain on short-term investments		—		—		—		111			—			111
Foreign currency gain (loss) on:
Long-term investment nature intra-entity balances		—		—		—		(4,692	)		—			(4,692	)
Retranslation of foreign entities		—		—		—		6,723			—			6,723
Provision for pension benefit obligation		—		—		—		13			—			13
Other comprehensive loss		—		—		—		2,450			—			2,450
Stock-based compensation		—		—		1,214		—			—			1,214
December 31, 2020		101,075,845	$	540,819	$	36,630	$	(16,186	)	$	(553,596	)	$	7,667

	Ordinary shares				Additional paid in		Accumulated Other Comprehensive			Accumulated			Total Shareholders'
	Shares		Amount		capital		Loss			Deficit			Equity (Deficit)
March 31, 2020		80,398,326	$	459,931	$	33,132	$	(15,155	)	$	(483,435	)	$	(5,527	)
Issue of shares, net of issue costs of $5,565		20,294,117		80,685		—		—			—			80,685
Issue of shares upon exercise of incentive share options and vesting of RSUs		383,402		203		—		—			—			203
Net loss		—		—		—		—			(70,161	)		(70,161	)
Change in the fair value of foreign currency cash flow hedges		—		—		—		571			—			571
Change in unrealized gain on short-term investments		—		—		—		(372	)		—			(372	)
Foreign currency gain (loss) on:
Long-term investment nature intra-entity balances		—		—		—		(3,848	)		—			(3,848	)
Retranslation of foreign entities		—		—		—		2,578			—			2,578
Provision for pension benefit obligation		—		—		—		40			—			40
Other comprehensive loss		—		—		—		(1,031	)		—			(1,031	)
Stock-based compensation		—		—		3,498		—			—			3,498
December 31, 2020		101,075,845	$	540,819	$	36,630	$	(16,186	)	$	(553,596	)	$	7,667

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

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	Ordinary shares					Additional paid in		Accumulated Other Comprehensive			Accumulated			Total Shareholders'
	Shares		Amount			capital		Loss			Deficit			Equity (Deficit)
September 30, 2019		66,366,706	$	369,335		$	30,844	$	(15,897	)	$	(431,223	)	$	(46,941	)
Issue of shares, net of issue costs of $6,227		13,800,000	$	90,373											90,373
Issue of shares upon exercise of incentive share options and vesting of RSUs		90,240		(22	)		—		—			—			(22	)
Net loss		—		—			—		—			(27,485	)		(27,485	)
Change in the fair value of foreign currency cash flow hedges		—		—			—		487			—			487
Change in unrealized gain on short- term investments		—		—			—		148			—			148
Foreign currency gain (loss) on:
Long-term investment nature intra-entity balances		—		—			—		(7,435	)		—			(7,435	)
Retranslation of foreign entities		—		—			—		7,689			—			7,689
Provision for pension benefit obligation		—		—			—		48			—			48
Other comprehensive loss		—		—			—		937			—			937
Stock-based compensation		—		—			1,196		—			—			1,196
December 31, 2019		80,256,946	$	459,686		$	32,040	$	(14,960	)	$	(458,708	)	$	18,058

	Ordinary shares				Additional paid in		Accumulated Other Comprehensive			Accumulated			Total Shareholders'
	Shares		Amount		capital		Loss			Deficit			Equity (Deficit)
March 31, 2019		65,900,447	$	368,958	$	28,665	$	(14,884	)	$	(381,025	)	$	1,714
Issue of shares, net of issue costs of $6,227		13,800,000		90,373		—		—			—			90,373
Issue of shares upon exercise of incentive share options and vesting of RSUs		556,499		355		—		—			—			355
Net loss		—		—		—		—			(78,046	)		(78,046	)
Change in the fair value of foreign currency cash flow hedges		—		—		—		209			—			209
Change in unrealized gain on short- term investments		—		—		—		342			—			342
Foreign currency gain (loss) on:		—		—		—		—			—			—
Long-term investment nature intra-entity balances		—		—		—		2,972			—			2,972
Retranslation of foreign entities		—		—		—		(3,743	)		—			(3,743	)
Provision for pension benefit obligation		—		—		—		144			—			144
Other comprehensive loss		—		—		—		(76	)		—			(76	)
Stock-based compensation		—		—		3,375		—			—			3,375
Cumulative effect of accounting changes		—		—		—		—			363			363
December 31, 2019		80,256,946	$	459,686	$	32,040	$	(14,960	)	$	(458,708	)	$	18,058

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Expressed in thousands of U.S. Dollars)

	Nine months ended December 31,
	2020			2019
OPERATING ACTIVITIES:
Net loss	$	(70,161	)	$	(78,046	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and loss on disposal of fixed assets		6,484			8,996
Share-based compensation		3,498			3,375
Increase in deferred lease rentals		512			215
Swiss pension obligation		776			551
Amortization of deferred debt issue costs		6,633			7,736
Accrued preference share dividends		788			788
Income taxes		1,503			41
Net change in assets and liabilities:
Trade accounts receivable, net		1,268			(1,638	)
Inventories		(1,218	)		(3,838	)
Accounts payable and accrued liabilities		(3,670	)		(2,268	)
Accrued compensation and benefits		(2,825	)		(268	)
Other assets		(330	)		(406	)
Net cash used in operating activities		(56,742	)		(64,762	)
INVESTING ACTIVITIES:
Increase in short-term investments		(72,247	)		(95,000	)
Realization of short-term investments		57,683			52,700
Purchase of property and equipment		(3,602	)		(3,941	)
Net cash used in investing activities		(18,166	)		(46,241	)
FINANCING ACTIVITIES:
Repayment of finance leases		(491	)		(337	)
Proceeds from drawdown of new debt		—			25,000
Debt issuance costs and fees paid to noteholders		—			(874	)
Proceeds from issuance of ordinary shares and warrants		80,888			90,728
Net cash generated from financing activities		80,397			114,517
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash		(5,982	)		(1,438	)
Change in cash, cash equivalents and restricted cash		(493	)		2,076
Beginning cash, cash equivalents and restricted cash		12,940			11,603
Ending cash, cash equivalents and restricted cash	$	12,447		$	13,679
Supplemental cash flow disclosures:
Income taxes paid	$	—		$	—
Interest paid	$	17,499		$	15,959
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	3,401		$	4,664
Restricted cash		9,046			9,015
Total cash, cash equivalents and restricted cash	$	12,447		$	13,679

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. Dollars — except for share data and per share data, unless otherwise stated)

Note 1. Description of Business and Basis of Presentation

Description of Business

The principal activity of Quotient Limited (the “Company”) and its subsidiaries (the “Group”) is the development, manufacture and sale of products for the global transfusion diagnostics market. Products manufactured by the Group are sold to hospitals, blood banking operations and other diagnostics companies worldwide.

Basis of Presentation

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and are unaudited. In accordance with those rules and regulations, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial position, results of operations, changes in shareholders’ equity and cash flows for the interim periods presented. The March 31, 2020 balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The financial statements should be read in conjunction with the audited consolidated financial statements at and for the year ended March 31, 2020 included in the Company’s Annual Report on Form 10-K for the year then ended. The results of operations for the nine month period ended December 31, 2020 are not necessarily indicative of the results of operations that may be expected for the year ending March 31, 2021 and any future period.

The Company has incurred net losses and negative cash flows from operations in each year since it commenced operations in 2007 and had an accumulated deficit of $553.6 million as of December 31, 2020. At December 31, 2020, the Company had available cash holdings and short-term investments of $134.5 million. The Company’s existing available cash and short-term investment balances are adequate to meet its forecasted cash requirements for the next twelve months and accordingly the financial statements have been prepared on the going concern basis.

In the longer term, the Company expects to fund its operations, including the ongoing development of MosaiQ through successful field trial completion, achievement of required regulatory authorizations and commercialization, from existing available cash and short-term investment balances and the issuance of new equity or debt.

Note 2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes.

On March 11, 2020, the World Health Organization declared the outbreak of a strain of novel coronavirus disease, COVID-19, a global pandemic. The extent to which the COVID-19 pandemic will impact the Company’s business, operations and financial results will depend on future developments and numerous evolving factors, which are highly uncertain and difficult to predict. As of the date of issuance of these unaudited condensed consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to further update estimates, judgments or revise the carrying value of any assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s condensed consolidated financial statements.

- 8 -

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At December 31, 2020 and March 31, 2020, all cash and cash equivalents comprised readily accessible cash balances. Restricted cash comprised $8,700 at both December 31, 2020 and March 31, 2020, held in a cash reserve account pursuant to the indenture governing the Company’s 12% Senior Secured Notes (“the Secured Notes”) and $346 and $317 at December 31, 2020 and March 31, 2020, respectively, held in a restricted account as security for the property rental obligations of the Company’s Swiss subsidiary.

Short-term Investments

Short-term investments represent investments in money-market funds which are valued daily and which have no minimum notice period for withdrawals. The funds are invested in a portfolio of holdings and the creditworthiness requirement for individual investment holdings is a minimum of an A rating from a leading credit-rating agency. The Company records the value of its investment in the funds based on the quoted value of the funds at the balance sheet date. Unrealized gains or losses are recorded in accumulated other comprehensive loss and are transferred to the statement of comprehensive loss when they are realized.

Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. Movements in the allowance for doubtful accounts are recorded in general and administrative expenses. The Company reviews its trade receivables to identify specific customers with known disputes or collectability issues. In addition, the Company maintains an allowance for all other receivables not included in the specific reserve by applying specific rates of projected uncollectible receivables to the various aging categories. In determining these percentages, the Company analyzes its historical collection experience, customer credit-worthiness, current and forecast economic trends and changes in customer payment terms.

Concentration of Credit Risks and Other Uncertainties

The carrying amounts for financial instruments consisting of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities. Derivative instruments, consisting of foreign exchange contracts, and short-term investments are stated at their estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the foreign exchange contracts consist of large financial institutions of high credit standing. The short-term investments are invested in a fund which is invested in a portfolio of holdings and the creditworthiness requirement for individual investment holdings is a minimum of an A rating from a leading credit-rating agency.

The Company’s main financial institutions for banking operations held all of the Company’s cash and cash equivalents as of December 31, 2020 and March 31, 2020. The Company’s accounts receivable are derived from net revenue to customers and distributors located in the United States and other countries. The Company performs credit evaluations of its customers’ financial condition. The Company provides reserves for potential credit losses, but has not experienced significant losses to date. There was one customer whose accounts receivable balance represented 10% or more of total accounts receivable, net, as of December 31, 2020 and March 31, 2020. This customer represented 69% and 70% of the accounts receivable balances as of December 31, 2020 and March 31, 2020, respectively.

The Company currently sells products through its direct sales force and through third-party distributors. There was one customer that accounted for 10% or more of total product sales for the nine month periods ended December 31, 2020 and December 31, 2019. This customer represented 59% and 60% of total product sales for the nine month period ended December 31, 2020 and the nine month period ended December 31, 2019, respectively.

Fair Value of Financial Instruments

The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company’s valuation techniques used to measure fair value maximized the use of observable inputs and minimized the use of unobservable inputs. The fair value hierarchy is based on the following three levels of inputs:

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

•

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

- 9 -

•	Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

See Note 6, “Commitment and Contingencies,” for information and related disclosures regarding the Company’s fair value measurements.

Inventory

Inventory is stated at the lower of standard cost or market, net of reserves. Cost is determined at standard cost, approximating average cost. Allocation of fixed production overheads to conversion costs is based on normal capacity of production. Abnormal amounts of idle facility expense, freight, handling costs and spoilage are expensed as incurred and not included in overhead. Variances between standard cost and actual cost, arising in the production process, are analyzed to determine whether they reflect part of the normal cost of production, and should therefore be reflected as inventory value, or whether they are a period cost and should thus not be included in inventory. Inventory reserves are recorded based upon historic usage, expected future demand and shelf life of the products held in inventory. No stock-based compensation cost was included in inventory as of December 31, 2020 and March 31, 2020.

Property and Equipment

Property, equipment and leasehold improvements are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the related assets as follows:

•	Plant, machinery and equipment—3 to 20 years;

•	Leasehold improvements—the shorter of the lease term or the estimated useful life of the asset.

Repairs and maintenance expenditures, which are not considered improvements and do not extend the useful life of property and equipment, are expensed as incurred.

Intangible Assets

Intangible assets related to product licenses are recorded at cost, less accumulated amortization. Intangible assets related to technology and other intangible assets acquired in acquisitions are recorded at fair value at the date of acquisition, less accumulated amortization. Intangible assets are amortized over their estimated useful lives, on a straight-line basis as follows:

Customer relationships—5 years

Brands associated with acquired cell lines—40 years

Product licenses—10 years

Other intangibles assets—7 years

The Company reviews its intangible assets for impairment and conducts an impairment review when events or circumstances indicate the carrying value of a long-lived asset may be impaired by estimating the future undiscounted cash flows to be derived from an asset to assess whether or not a potential impairment exists. No impairment losses have been recorded in either of the nine month periods ended December 31, 2020 or December 31, 2019.

Revenue Recognition

Revenue is recognized in accordance with ASU 2014-09, Revenue from Contracts with Customers.

Product revenue is recognized at a point in time upon transfer of control of a product to a customer, which is generally at the time of shipment at an amount based on the transaction price. Customers have no right of return except in the case of damaged goods and the Company has not experienced any significant returns of its products. Shipping and handling costs are expensed as incurred and included in cost of product sales.

- 10 -

Revenue is also earned from the provision of development services to a small number of original equipment manufacturer (“OEM”) customers. These development service contracts are reviewed individually to determine the nature of the performance obligations and the associated transaction prices. In recent years, product development revenues have been commensurate with achieving milestones specified in the respective development agreements relating to those products. These milestones may include the approval of new products by the European or U.S. regulatory authorities, which are not within the Company’s control. While there can be no assurance that this will continue to be the case, the milestones have been such that they effectively represent completion of the Company’s performance obligations under a particular part of a development program. Should the Company fail to achieve these milestones the Company would not be entitled under the terms of the development agreements to any compensation for the work undertaken to date. As a result, the milestone-related revenues have been recognized as the contractual milestones are achieved.

Pursuant to an Umbrella Supply Agreement with Ortho-Clinical Diagnostics, Inc. (“Ortho”), the Company executed a product attachment relating to the development of a range of rare antisera products. During the year ended March 31, 2020, the Company recognized milestones totaling $1,050 related to the approval by the FDA of an application submitted during the year ended March 31, 2019, and a further FDA submission and approval related to the use of the products on another of Ortho’s automation platforms. There are no further milestone revenues due under this agreement.

In January 2015, the Company’s subsidiaries, Quotient Suisse and QBD (QS-IP) Limited, entered into a supply and distribution agreement with Ortho related to the commercialization and distribution of certain MosaiQproducts (the "Prior Ortho Agreement"), which the Company terminated effective as of December 27, 2019. Under the terms of the Prior Ortho Agreement, the Company was entitled to receive milestone payments, totaling in aggregate $59.0 million, upon CE-mark and FDA approval, as well as upon the first commercial sale of the relevant MosaiQproducts by Ortho within the European Union, United States and within any country outside of these two regions. In November 2019, Ortho initiated an arbitration proceeding as result of the Company's termination of the Prior Ortho Agreement. See Note 6, "Commitments and Contingencies—Ortho Arbitration and Settlement," for details.

On September 4, 2020, the Company and Ortho entered into a binding letter agreement (the “Letter Agreement”) pursuant to which the Company and Ortho agreed:

•

to confirm the termination of the Prior Ortho Agreement and various related contracts;

•

to end the parties’ disputes regarding the Prior Ortho Agreement by executing mutual releases and terminating their pending arbitration proceeding related to the Prior Ortho Agreement (see Note 6); and

•

to negotiate in good faith, and use their respective reasonable best efforts to execute, a new distribution agreement (the “New Distribution Agreement”) based on the terms set forth in the Letter Agreement, but if for any reason no such definitive agreement is reached, the Letter Agreement will govern the parties’ respective rights and obligations as a binding contract.

Pursuant to the Letter Agreement, Ortho made an initial, non-refundable milestone payment of $7.5 million to the Company on the date of the Letter Agreement.

In the Letter Agreement, the Company and Ortho have agreed that Ortho has the right to distribute, market and sell a dedicated MosaiQ microarray optimized for the patient transfusion diagnostics market (the “MosaiQ IH3 Microarray”) in the European Territory (defined as the European Economic Area plus the United Kingdom and Switzerland) and in the United States, solely for use in testing the immuno-hematological profile of the blood of medical patients in the course of their care or treatment. Ortho’s rights in the two territories each are for one ten-year term commencing on the receipt of specified regulatory approvals in the respective territory. The Company retains the right to distribute, market and sell the immunohematology Microarrays for use in blood donor testing worldwide and in the patient testing market outside of the European Territory and the United States. Ortho’s rights in respect of the MosaiQ IH3 Microarray are exclusive provided it satisfies annual minimum purchase volume requirements in each territory. Ortho also has the non-exclusive right to sell and distribute MosaiQ instruments in the United States and the European Territory for use in testing the immuno-hematological profile of blood of medical patients in the course of their care or treatment. Ortho is required to purchase the MosaiQ IH3 Microarrays, and the instruments, controls and reagents required for their use, only from the Company at specified prices.

In addition to the initial $7.5 million milestone payment, Ortho is required to make up to another $60 million of additional milestone payments upon achievement of certain regulatory milestones and commercial sales benchmarks, including up to $25 million upon the achievement by Ortho of certain cumulative gross revenue hurdles.

The Company has concluded that the initial $7.5 million milestone represents a payment in respect of development work undertaken to date in respect of the MosaiQ IH3 Microarray and accordingly has recognized the revenue in the nine month period ended December 31, 2020.

- 11 -

The Company has also concluded that each of the remaining milestones under the Letter Agreement require significant levels of development work to be undertaken and there is no certainty at the start of the projects that the development work will be successful, these milestones are substantive and, accordingly, the revenue will be recognized when the milestones are achieved.

In the nine month period ended December 31, 2020, revenue recognized from performance obligations related to prior periods was not material. At December 31, 2020 revenues expected to be recognized in future periods related to remaining performance obligations under the Ortho Letter Agreement were as described above. There were no other material revenues to be recognized in future periods related to remaining performance obligations at December 31, 2020.

Research and Development

Research and development expenses consist of costs incurred for company-sponsored and collaborative research and development activities. These costs include direct and research-related overhead expenses. Other than materials assessed as having alternative future uses and which are recognized as prepaid expenses, the Company expenses research and development costs, including products manufactured for research and development purposes and the expenses for research under collaborative agreements, as such costs are incurred. Where government grants are available for the sponsorship of such research, the grant receipt is included as a credit against the related expense.

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of comprehensive loss.

In determining fair value of the stock-based compensation payments, the Company uses the Black–Scholes model and a single option award approach for share options, which requires the input of subjective assumptions. These assumptions include: the fair value of the underlying share, estimating the length of time employees will retain their awards before exercising them (expected term), the estimated volatility of the Company’s ordinary share price over the expected term (expected volatility), risk-free interest rate (interest rate), expected dividends and the number of shares subject to awards that will ultimately not complete their vesting requirements (forfeitures).

Where modifications are made to vesting conditions, the Company considers the nature of the change and accounts for the change in accordance with ASC 715 Compensation – Stock Compensation. The Company determined that certain modifications made during the nine month periods ended December 31, 2020 and December 31, 2019 were type III in nature and accordingly the original compensation expense related to these awards was reversed and the value of the awards was re-measured at the date of the change and was expensed over the vesting period of the awards concerned.

Share Warrants

As of December 31, 2020, the Company had one class of warrants to purchase ordinary shares outstanding, which comprised warrants that were issued in December 2013 and August 2015 in connection with the establishment or increase of the Company’s then existing secured term loan facility. None of these warrants contain any obligation to transfer value and, as such, the issuance of these warrants has been recorded in additional paid in capital as part of shareholders’ (deficit) equity.

Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. A lease is a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment (an identified asset) for a period of time, in exchange for consideration. The Company determines if the contract conveys the right to control the use of an identified asset for a period of time. The Company assesses throughout the period of use whether the Company has both of the following: (1) the right to obtain substantially all of the economic benefits for use of the identified asset, and (2) the right to direct the use of the identified asset. This determination is reassessed if the terms of the contract are changed. The Company also reviews the terms of the lease in accordance with Accounting Standard Update, or ASU, 2016-02 in order to determine whether the lease concerned is a finance or an operating lease. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less.

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For finance leases, an asset is included within property and equipment and a lease liability equal to the present value of the minimum lease payments is included in current or long-term liabilities. Interest expense is recorded over the life of the lease at a constant rate.

Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. The operating lease right-of-use assets also include any lease payments made prior to the commencement date and any initial direct costs incurred, less any lease incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The incremental borrowing rate is determined at lease commencement, or as of April 1, 2019 for operating leases existing upon adoption of ASU 2016-02. The incremental borrowing rate is subsequently reassessed upon modification to the lease arrangement. Operating lease expense is recognized on a straight-line basis over the lease term.

In accordance with the guidance in ASU 2016-02, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Although separation of lease and non-lease components is required, certain practical expedients are available. In particular, entities may elect a practical expedient to not separate lease and non-lease components and instead account for each lease component and the related non-lease component together as a single component. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only. The lease component results in an operating lease right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense.

The finance lease assets and operating lease right-of-use assets are assessed for impairment in accordance with the Company’s accounting policy for long-lived assets.

Derivative Financial Instruments

In the normal course of business, the Company’s financial position is routinely subjected to market risk associated with foreign currency exchange rate fluctuations. The Company’s policy is to mitigate the effect of these exchange rate fluctuations on certain foreign currency denominated business exposures. The Company has a policy that allows the use of derivative financial instruments to hedge foreign currency exchange rate fluctuations on forecasted revenue denominated in foreign currencies. The Company carries derivative financial instruments (derivatives) on the balance sheet at their fair values. The Company does not use derivatives for trading or speculative purposes. The Company does not believe that it is exposed to more than a nominal amount of credit risk in its foreign currency hedges, as counterparties are large, global and well-capitalized financial institutions. To hedge foreign currency risks, the Company uses foreign currency exchange forward contracts, where possible and prudent. These forward contracts are valued using standard valuation formulas with assumptions about future foreign currency exchange rates derived from existing exchange rates, interest rates, and other market factors.

The Company considers its most current forecast in determining the level of foreign currency denominated revenue to hedge as cash flow hedges. The Company combines these forecasts with historical trends to establish the portion of its expected volume to be hedged. The revenue and expenses are hedged and designated as cash flow hedges to protect the Company from exposures to fluctuations in foreign currency exchange rates. If the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge are reclassified from accumulated other comprehensive loss to the consolidated statement of comprehensive loss at that time.

Income Taxes

The Company accounts for income taxes using an asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements, but have not been reflected in taxable income. A valuation allowance is established to reduce deferred tax assets to their estimated realizable value. Therefore, the Company provides a valuation allowance to the extent that is more likely than not that it will generate sufficient taxable income in future periods to realize the benefit of its deferred tax assets. Deferred tax assets and liabilities are classified as noncurrent on the balance sheet.

The Company accounts for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The Company evaluates uncertain tax positions on a quarterly basis and considers various factors, including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit and changes in facts or circumstances related to the tax position.

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Termination and Transition Charges

Termination charges are recognized as a result of actions to restructure operations. Transition charges are recognized as a result of the retirement of senior employees. Such charges are recognized upon meeting certain criteria, including the finalization of committed plans or agreements and discussions with the impacted employees.

Loss Contingencies

Loss contingencies from legal proceedings and claims may occur from contractual and other related matters. Accruals are recognized when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. Gain contingencies are not recognized until realized. Legal fees are expensed as incurred.

Debt Issuance Costs and Royalty Rights

The Company follows the requirements of Accounting Standards Update 2015-03, Interest — Imputation of Interest (Subtopic 835-30) — Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset.

On October 14, 2016, June 29, 2018 and May 15, 2019, the Company issued Secured Notes, and, on December 4, 2018, the Company amended the indenture governing the Secured Notes, which amendments became effective on December 18, 2018. In connection with these issuances and this amendment, the Company entered into royalty rights agreements with the subscribers and the consenting note holders, as applicable, which, as of December 31, 2020, provided for an aggregate amount of royalties payable thereunder of 3.4% of net sales of MosaiQ instruments and consumables made in the donor testing market in the United States and the European Union. All of these royalty rights agreements are treated as sales of future revenues that meet the requirements of Accounting Standards Codification Topic 470 “Debt” (“ASC 470”) to be treated as debt. The future cash outflows under the royalty rights agreements have been combined with the issuance costs (which includes the one-time consent payment of $3.9 million paid to holders of our Secured Notes in December 2018) and interest payable to calculate the effective interest rate of the Secured Notes and is being expensed through interest expense in the consolidated statement of comprehensive loss using the effective interest rate method over the term of the Secured Notes and royalty rights agreements.

Pension Obligation

The Company maintains a pension plan covering employees in Switzerland pursuant to the requirements of Swiss pension law. Certain aspects of the plan require that it be accounted for as a defined benefit plan pursuant to Accounting Standards Codification Topic, 715 Compensation – Retirement Benefits (“ASC 715”). The Company recognizes an asset for the plan’s overfunded status or a liability for the plan’s underfunded status in its consolidated balance sheets. Additionally, the Company measures the plan’s assets and obligations that determine its funded status as of the end of the year and recognizes the change in the funded status within ‘‘Accumulated other comprehensive loss’’. The service cost component of the net periodic benefit cost is disclosed in the same line item as other employee compensation costs arising from services rendered during the period, and the other components are reported separately from the line item that includes the service cost and within interest expense, net in the consolidated statement of comprehensive loss.

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The Company uses an actuarial valuation to determine its pension benefit costs and credits. The amounts calculated depend on a variety of key assumptions, including discount rates and expected return on plan assets. Details of the assumptions used to determine the net funded status are set out in the notes to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2020. The Company’s pension plan assets are assigned to their respective levels in the fair value hierarchy in accordance with the valuation principles described in the ‘‘Fair Value of Financial Instruments’’ section above.

Adoption of New Accounting Standards

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”. The standard, including subsequently issued amendments, requires a financial asset measured on an amortized cost basis, such as accounts receivable, to be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Company adopted ASU 2016-13 on April 1, 2020. The adoption of this standard did not have a material impact on the unaudited condensed consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-14, “Compensation Retirement Benefits - Defined Benefit Plans -General (Subtopic 715-20)” or ASU 2018-14. ASU 2018-14 removes the requirements to disclose the amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over the next fiscal year and other disclosure requirements. In addition, the ASU adds the requirement to disclose an explanation for any significant gains and losses related to changes in the benefit obligation for the period. The ASU is effective for fiscal years ending after December 15, 2020 and will be applied on a retrospective basis to all periods presented. Early adoption is permitted. The Company adopted ASU 2018-14 on April 1, 2020. The adoption of this standard did not have a material impact on the unaudited condensed consolidated financial statements and related disclosures.

Note 3. Intangible Assets

	December 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life
Customer relationships	$	2,687	$	(2,687	)	$	—		—
Brands associated with acquired cell lines		554		(185	)		369	26.9 years
Product licenses		936		(673	)		263	3.0 years
Other intangibles		175		(175	)		—		—
Total	$	4,352	$	(3,720	)	$	632	16.7 years

	March 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Remaining Useful Life
Customer relationships	$	2,436	$	(2,436	)	$	—		—
Brands associated with acquired cell lines		502		(158	)		344	27.4 years
Product licenses		849		(568	)		281	3.3 years
Other intangibles		158		(158	)		—		—
Total	$	3,945	$	(3,320	)	$	625	16.5 years

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Note 4. Debt

Long-term debt comprises:

	December 31, 2020			March 31, 2020
Total debt	$	145,000		$	145,000
Less current portion		24,167			—
	$	120,833		$	145,000
Royalty liability	$	20,886		$	15,473
Deferred debt costs, net of amortization		(6,229	)		(7,449	)
Long-term debt, less current portion	$	135,490		$	153,024

The Company’s debt at December 31, 2020 and March 31, 2020, comprises the Secured Notes. On October 14, 2016, the Company completed the private placement of up to $120 million aggregate principal amount of the Secured Notes and entered into an indenture governing the Secured Notes with the guarantors party thereto and U.S. Bank National Association, a national banking association, as trustee and collateral agent. The Company issued $84 million aggregate principal amount of the Secured Notes on October 14, 2016 and an additional $36 million aggregate principal amount of the Secured Notes on June 29, 2018. On December 18, 2018, the Company also completed certain amendments to the indenture governing the Secured Notes. The amendments included an increase to the aggregate principal amount of Secured Notes that can be issued under the indenture from $120 million to up to $145 million following the European CE Marking of the Company’s initial MosaiQ IH Microarray. On April 30, 2019, the Company was notified that it had received the European CE Marking of the initial MosaiQ IH Microarray and, on May 15, 2019, the Company issued the additional $25 million of Secured Notes.

The obligations of the Company under the indenture and the Secured Notes are unconditionally guaranteed on a secured basis by the guarantors, which include all the Company’s subsidiaries, and the indenture governing the Secured Notes contains customary events of default. The Company and its subsidiaries must also comply with certain customary affirmative and negative covenants, including a requirement to maintain six-months of interest in a cash reserve account maintained with the collateral agent. Upon the occurrence of a Change of Control, subject to certain conditions, or certain Asset Sales (each, as defined in the indenture), holders of the Secured Notes may require the Company to repurchase for cash all or part of their Secured Notes at a repurchase price equal to 101% or 100%, respectively, of the principal amount of the Secured Notes to be repurchased, plus accrued and unpaid interest to the date of repurchase.

The Company paid $8.7 million of the total proceeds of the three issuances into the cash reserve account maintained with the collateral agent under the terms of the indenture, $1.5 million of which related to the third issuance on May 15, 2019.

Interest on the Secured Notes accrues at a rate of 12% per annum and is payable semi-annually on April 15 and October 15 of each year commencing on April 15, 2017. Commencing on April 15, 2021, the Company will also be required to pay an installment of principal of the Secured Notes on each April 15 and October 15 until April 15, 2024 pursuant to a fixed amortization schedule.

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In connection with the three issuances of the Secured Notes as well as the December 2018 amendment of the related indenture, the Company has entered into royalty rights agreements, pursuant to which the Company has agreed to pay 3.4% of the aggregate net sales of MosaiQ instruments and consumables made in the donor testing market in the United States and the European Union. The royalties will be payable beginning on the date that the Company or its affiliates makes its first sale of MosaiQ consumables in the donor testing market in the European Union or the United States and will end on the last day of the calendar quarter in which the eighth anniversary of the first sale date occurs. The royalty rights agreements are treated as sales of future revenues that meet the requirements of Accounting Standards Codification Topic 470 “Debt” to be treated as debt. The future cash outflows under the royalty rights agreements, estimated at $106.4 million at December 31, 2020 and $87.0 at March 31, 2020, have been combined with the Secured Notes issuance costs and interest payable to calculate the effective interest rate of the Secured Notes and will be expensed through interest expenses using the effective interest rate method over the term of the Secured Notes and such royalty rights agreements. Estimating the future cash outflows under the royalty rights agreements requires the Company to make certain estimates and assumptions about future sales of MosaiQ products. These estimates of the magnitude and timing of MosaiQ sales are subject to significant variability due to the current status of development of MosaiQproducts, and thus are subject to significant uncertainty. Therefore, the estimates are likely to change as the Company gains experience of marketing MosaiQ, which may result in future adjustments to the accretion of the interest expense and amortized cost based carrying value of the Secured Notes.

At December 31, 2020, the outstanding debt was repayable as follows:

Within 1 year	$	24,167
Between 1 and 2 years		42,291
Between 2 and 3 years		48,334
Between 3 and 4 years		30,208
Between 4 and 5 years		—
Total debt	$	145,000

Note 5. Consolidated Balance Sheet Detail

Inventory

The following table summarizes inventory by category for the dates presented:

	December 31, 2020		March 31, 2020
Raw materials	$	10,284	$	9,737
Work in progress		10,060		8,522
Finished goods		3,365		2,242
Total inventories	$	23,709	$	20,501

Inventory at December 31, 2020 included $8,038 of raw materials, $5,103 of work in progress and $1,266 of finished goods related to the MosaiQproject. Inventory at March 31, 2020, included $8,093 of raw materials and $4,395 of work in progress and $368 of finished goods related to the MosaiQproject. During the quarter ended December 31, 2020 the Company recorded inventory provisions of $2,015 in respect of certain raw materials and work-in-progress items related to the MosaiQ project following evaluation of further development data and corresponding changes in manufacturing processes.

Property and equipment

The following table summarizes property and equipment by categories for the dates presented:

	December 31, 2020			March 31, 2020
Plant and equipment	$	65,878		$	57,726
Leasehold improvements		34,535			31,395
Total property and equipment		100,413			89,121
Less: accumulated depreciation		(59,519	)		(48,956	)
Total property and equipment, net	$	40,894		$	40,165

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Depreciation expenses were $2,343 and $2,901 in the quarters ended December 31, 2020 and 2019, respectively, and $6,433 and $8,923 in the nine month periods ended December 31, 2020 and 2019, respectively. During the quarter ended June 30, 2020, the Company reassessed the useful economic lives of equipment used in the production line at its facility in Eysins, Switzerland. Based on lower utilization rates than initially estimated, the remaining useful lives of the equipment was increased from 4 years to 6 years. The impact of these changes in remaining useful lives was to reduce the depreciation expenses for the nine month period ended December 31, 2020 by $467.

Accrued compensation and benefits

Accrued compensation and benefits consist of the following:

	December 31, 2020		March 31, 2020
Salary and related benefits	$	262	$	635
Accrued vacation		1,013		521
Accrued payroll taxes		756		1,200
Accrued incentive payments		2,813		3,700
Accrued termination and transition payments		—		1,154
Total accrued compensation and benefits	$	4,844	$	7,210

In the year ended March 31, 2020, the Company incurred termination benefit costs of $1,323 in respect of a restructuring of its operations. The restructuring was completed during the year ended March 31, 2020. In the year ended March 31, 2020 the Company also incurred transition benefit costs of $807 in respect of the transitional arrangements with its former chief financial officer and its former group financial controller. The final payments under these arrangements were made during the quarter ended June 30, 2020.

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:

	December 31, 2020		March 31, 2020
Accrued legal and professional fees	$	728	$	829
Accrued interest		3,718		8,056
Goods received not invoiced		1,772		1,724
Accrued capital expenditure		2,188		1,287
Other accrued expenses		2,945		3,594
Total accrued expenses and other current liabilities	$	11,351	$	15,490

Note 6. Commitments and Contingencies

Hedging arrangements

The Company’s subsidiary in the United Kingdom (“UK”) has entered into three contracts to sell $500 in each calendar month from January 2021 through March 2021 at £1:$1.335, three contracts to sell $500 in each calendar month from April 2021 through June 2021 at £1:$1.2630, three contracts to sell $500 in each calendar month from July 2021 through September 2021 at £1:$1.260, and three contracts to sell $500 in each calendar month from October 2021 through December 2021 at £1:$1.3090, as hedges of its U.S. dollar denominated revenues. The fair values of these contracts in place at December 31, 2020, and similar contracts in place at March 31, 2020, amounted to assets of $344 and liabilities of $227, respectively.

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Fair value measurements

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy:

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Pension plan assets⁽¹⁾	$	—	$	16,131	$	—	$	16,131
Short-term investments⁽²⁾		131,062		—		—		131,062
Foreign currency forward contracts⁽³⁾	$	—	$	344	$	—	$	344
Total assets measured at fair value	$	131,062	$	16,475	$	—	$	147,537

	March 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Pension plan assets⁽¹⁾	$	—	$	12,436	$	—	$	12,436
Short-term investments⁽²⁾		116,871		—		—		116,871
Total assets measured at fair value	$	116,871	$	12,436	$	—	$	129,307

	March 31, 2020
	Level 1		Level 2		Level 3		Total
Liabilities:
Foreign currency forward contracts⁽³⁾	$	—	$	227	$	—	$	227
Total liabilities measured at fair value	$	—	$	227	$	—	$	227

(1)	The fair value of pension plan assets has been determined as the surrender value of the portfolio of active insured employees held within the AXA LLP Foundation Suisse Romande collective investment fund. See Note 10, “Defined Benefit Pension Plans”.

(2)	The fair value of short-term investments has been determined based on the quoted value of the units held in the money market fund at the balance sheet date. See Note 2, “Summary of Significant Accounting Policies – Short-term Investments”.

(3)	The fair value of foreign currency forward contracts has been determined by calculating the present value of future cash flows, estimated using market-based observable inputs including forward and spot exchange rates and interest rate curves obtained from third party market price quotations.

The total unrealized gains on the short-term investments were $638 and $1,154 in the nine month periods ended December 31, 2020 and December 31, 2019, respectively. The amount of these unrealized gains reclassified to earnings were $1,010 and $812 in the nine month periods ended December 31, 2020 and December 31, 2019, respectively.

Ortho Arbitration and Settlement

The Company’s subsidiaries, Quotient Suisse and QBD (QS-IP) Limited were party to the Prior Ortho Agreement with Ortho related to the commercialization and distribution of certain MosaiQ products. See Note 2, “Summary of Significant Accounting Policies—Revenue Recognition,” for information regarding the Prior Ortho Agreement. The Company and an affiliate of Ortho also entered into a subscription agreement pursuant to which the affiliate subscribed for newly issued ordinary shares of the Company and newly issued 7% cumulative redeemable preference shares, of no par value, of the Company for an aggregate subscription price of approximately $25 million.

On November 27, 2019, the Company delivered a notice to Ortho that it had terminated the Prior Ortho Agreement, effective as of December 27, 2019. The Company did not realize any revenue under the Prior Ortho Agreement prior to its termination.

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On or about November 17, 2019, Ortho initiated an arbitration proceeding in which it sought a declaration that the Company did not have the right to terminate the Prior Ortho Agreement, specific performance of certain provisions of the Prior Ortho Agreement, and damages including in respect of the difference in amounts Ortho invested in the Company’s shares and their market value. The Company pursued counterclaims against Ortho, including that it had the right to terminate the Prior Ortho Agreement and damages that included the milestone payments due under the Prior Ortho Agreement (see Note 2, "Summary of Significant Accounting Policies—Revenue Recognition," for details). In addition, on December 20, 2019, the Company entered into an agreement with Ortho pursuant to which it agreed, while the arbitration was pending, not to grant commercialization rights in respect of products that overlapped with Ortho’s rights under the Prior Ortho Agreement without prior written notice to Ortho.

On September 4, 2020, the Company and Ortho entered into the Letter Agreement, pursuant to which the Company and Ortho agreed to confirm the termination of the Prior Ortho Agreement and various related contracts and to end the parties’ disputes regarding the Prior Ortho Agreement by executing mutual releases and terminating their pending arbitration proceeding related to the Prior Ortho Agreement.

The Company and Ortho also agreed to negotiate in good faith, and use their respective reasonable best efforts to execute, the New Distribution Agreement based on the terms set forth in the Letter Agreement, but if for any reason no such definitive agreement is reached, the Letter Agreement will govern the parties’ respective rights and obligations as a binding contract. See Note 2, "Summary of Significant Accounting Policies—Revenue Recognition," for further details regarding the commercial terms included in the Letter Agreement.

Note 7. Ordinary and Preference Shares

Ordinary shares

The Company’s issued and outstanding ordinary shares were as follows:

	Shares Issued and Outstanding
	December 31, 2020		March 31, 2020		Par value
Ordinary shares		101,075,845		80,398,326	$	—
Total		101,075,845		80,398,326	$	—

On September 15, 2020, the Company completed a public offering of 20,294,117 newly issued ordinary shares at $4.25 per share which raised $86.3 million of gross proceeds before underwriting discounts and other offering expenses of $5.6 million.

Preference shares

The Company’s issued and outstanding preference shares consist of the following:

	Shares Issued and Outstanding				Liquidation amount per share
	December 31, 2020		March 31, 2020		December 31, 2020		March 31, 2020
7% Cumulative Redeemable Preference shares		666,665		666,665	$	31.82	$	30.64
Total		666,665		666,665

The 7% Cumulative Redeemable Preference shares were issued to Ortho-Clinical Diagnostics Finco S.A.R.L., an affiliate of Ortho on January 29, 2015 at a subscription price of $22.50 per share. These preference shares are redeemable at the request of the shareholder on the “Redemption Trigger Date” which is currently the date of the eighth anniversary of the date of issue of the preference shares, but the Company may further extend the redemption date in one year increments up to the tenth anniversary of the date of issue. Because the 7% Cumulative Redeemable Preference shares are redeemable at the option of the shareholders, they are shown as a liability in the unaudited condensed consolidated balance sheet.

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Note 8. Share-Based Compensation

The Company records share-based compensation expense in respect of options and restricted share units (“RSUs”) issued under its share incentive plans. Share-based compensation expense amounted to $1,214 and $1,196 in the quarters ended December 31, 2020 and December 31, 2019, respectively, and $3,498 and $3,375 in the nine month periods ended December 31, 2020 and December 31, 2019, respectively.

Share option activity

The following table summarizes share option activity:

	Number of Share Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)
Outstanding — March 31, 2020		1,848,052		$	7.73		70
Granted		258,026			5.38		120
Exercised		(46,464	)		3.58		—
Forfeited		(94,354	)		10.38		—
Outstanding — December 31, 2020		1,965,260		$	7.40		69
Exercisable — December 31, 2020		1,635,538		$	7.74		60

The closing price of the Company’s ordinary shares on the Nasdaq Global Market at December 31, 2020 was $5.21.

The following table summarizes the options granted in the financial year ending March 31, 2021 with their exercise prices, the fair value of ordinary shares as of the applicable grant date, and the intrinsic value, if any:

Grant Date	Number of Options Granted		Exercise Price		Ordinary Shares Fair Value Per Share at Grant Date		Per Share Intrinsic Value of Options
May 24, 2020		60,438	$	7.69	$	7.69	$	4.96
September 1, 2020		45,922	4.81		4.81		3.07
October 29, 2020		81,666		4.55		4.55		2.93
October 30, 2020		70,000	4.72		4.72		3.05

Determining the fair value of share options

The fair value of each grant of share options was determined by the Company using the Black Scholes option pricing model. The total fair value of option awards in the nine month periods ended December 31, 2020 and December 31, 2019 amounted to $889 and $470, respectively.

Assumptions used in the option pricing models are discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.

Expected volatility. The expected volatility was based on the historical share price volatility of the Company’s shares over a period equal to the expected terms of the options.

Fair value of ordinary shares. Since the Company’s initial public offering in April 2014, the fair value of ordinary shares has been based on the share price of the Company’s shares on the Nasdaq Global Market immediately prior to the grant of the options concerned.

Risk-Free Interest Rate. The risk-free interest rate is based on the UK Government 10-year bond yield curve in effect at the time of grant prior to the initial public offering and 10-year U.S. Treasury Stock for awards from April 2014 onwards.

Expected term. The expected term is determined after giving consideration to the contractual terms of the share-based awards, graded vesting schedules ranging from one to three years and expectations of future employee behavior as influenced by changes to the terms of its share-based awards.

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Expected dividend. According to the terms of the awards, the exercise price of the options is adjusted to take into account any dividends paid. As a result, dividends are not required as an input to the model, as these reductions in the share price are offset by a corresponding reduction in exercise price.

A summary of the assumptions applicable to the share options issued in the nine month period ended December 31, 2020 is as follows:

	May 24, 2020			September 1, 2020			October 29, 2020			October 30, 2020
Risk-free interest rate		0.65	%		0.69	%		0.81	%		0.87	%
Expected lives (years)		6			6			6			6
Volatility		74.50	%		73.30	%		74.30	%		74.30	%
Dividend yield		—			—			—			—
Grant date fair value (per share)	$	7.69		$	4.81		$	4.55		$	4.72
Number granted		60,438			45,922			81,666			70,000

A summary of the RSUs in issue at December 31, 2020 is as follows:

Number

of RSUs

Outstanding

Weighted

Average

Remaining

Vesting Period

(Months)

Period in which the

target must be

achieved

RSUs subject to time based vesting

875,387

N/A

RSUs subject to milestone based vesting

118,650

N/A

At December 31, 2020, 875,387 RSUs were subject to time-based vesting and the weighted average remaining vesting period was 12 months. In addition, 118,650 RSUs were subject to vesting based on the achievement of various business milestones related mainly to the development, approval and marketing of MosaiQ.

Note 9. Income Taxes

A reconciliation of the income tax expense at the statutory rate to the provision for income taxes is as follows:

	Quarter ended December 31,					Nine months ended December 31,
	2020		2019			2020			2019
Income tax expense at statutory rate	$	—	$	—		$	—		$	—
Impact of tax uncertainties	$	1,455				$	1,455
Foreign tax rate differential		13		(1,436	)		(1,233	)		(3,035	)
Increase in valuation allowance against deferred tax assets		3		1,450			1,281			3,076
Provision for income tax	$	1,471	$	14		$	1,503		$	41

- 22 -

In connection with the sale and leaseback transaction of the Company’s conventional reagents manufacturing facility, near Edinburgh, Scotland (the “Alan Robb Campus (“ARC”) facility”) that was completed in March 2018, the Company has agreed to transfer tax allowances related to certain other property, plant and equipment to the purchaser of the facility. An election to effect the transfer of these allowances to the purchaser has been made, but due to uncertainty regarding whether the election will be effective, the tax effect of the transfer of the allowances had not previously been recorded in the financial statements. The Company has determined that during the quarter ended December 31, 2020 it is now more likely than not that this election will be effective and accordingly a net deferred tax expense of $1,455 and an equivalent deferred tax liability have been recorded, including associated adjustments to valuation allowances.

Significant components of deferred tax are as follows:

	December 31, 2020			March 31, 2020
Provisions and reserves	$	1,521		$	1,315
Operating lease liability		4,089			3,409
Fixed asset basis difference		—			—
Net operating loss carry forwards		21,293			19,526
Gross deferred tax assets	$	26,903		$	24,250
Fixed asset basis difference	$	(2,237	)	$	(90	)
Operating lease right-of-use assets	$	(4,089	)	$	(3,409	)
Gross deferred tax liabilities	$	(6,326	)	$	(3,499	)
Net deferred tax asset	$	20,577		$	20,751
Valuation allowance		(21,795	)		(20,514	)
Net deferred taxes	$	(1,218	)	$	237

The balance sheet classification of deferred tax is as follows:

	December 31, 2020			March 31, 2020
Net noncurrent deferred tax assets	$	237		$	237
Net noncurrent deferred tax liabilities	$	(1,455	)	$	—
Total	$	(1,218	)	$	237

The following table summarizes the activity related to the Company’s uncertain tax positions (excluding interest and penalties and related tax attributes):

	Quarter ended December 31,				Nine months ended December 31,
	2020		2019		2020		2019
Balance at beginning of period	$	1,216	$	—	$	1,216	$	—
Increases related to current year tax positions		—		—		—		—
Increases related to prior years tax positions		—		—		—		—
Balance at end of period	$	1,216	$	—	$	1,216	$	—

As of December 31, 2020, the Company has an unrecognized benefit of $1,216, that if recognized would be recorded as a component of tax expense. The Company’s unrecognized tax benefits include exposures related to positions taken on income tax returns in all jurisdictions. The Company has interest expense carryforward from March 31, 2017 that potentially would be disqualified as interest expense in the amount of $613. Additionally, the Company has reassessed its transfer pricing policies in certain jurisdictions from 2015 to 2017, the impact of which is $603. In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing authorities and the Company has accrued a liability when it believes it is more likely than not that the tax position claimed on tax returns will not be sustained by the taxing authorities on the technical merits of the position. Changes in the recognition of the liability are reflected in the period in which the change in judgment occurs.

- 23 -

Note 10. Defined Benefit Pension Plans

The Company’s Swiss subsidiary has a fully insured pension plan managed by Swiss Life. The costs of this plan were:

	Quarter ended						Nine months ended
	December 31,						December 31,
	2020			2019			2020			2019
Employer service cost	$	620		$	456		$	1,818		$	1,362
Interest cost		33			31			95			93
Expected return on plan assets		(62	)		(32	)		(183	)		(94	)
Amortization of prior service credit		13			(6	)		40			(17	)
Amortization of net loss		—			54			—			161
Net pension cost	$	604		$	503		$	1,770		$	1,505

The employer contributions for the nine month periods ended December 31, 2020 and December 31, 2019 were $995 and $954, respectively. The estimated employer contributions for the fiscal year ending March 31, 2021 are $1,255.

Note 11. Net Loss Per Share

In accordance with Accounting Standards Codification Topic 260 “Earnings Per Share”, basic earnings available to ordinary shareholders per share is computed based on the weighted average number of ordinary shares outstanding during each period. Diluted earnings available to ordinary shareholders per share is computed based on the weighted average number of ordinary shares outstanding during each period, plus potential ordinary shares considered outstanding during the period, as long as the inclusion of such shares is not anti-dilutive. Potential ordinary shares consist of the incremental ordinary shares issuable upon the exercise of share options (using the treasury shares method), the warrants to acquire ordinary shares and the ordinary shares issuable upon vesting of the RSUs.

The following table sets forth the computation of basic and diluted loss per ordinary share:

	Quarter ended						Nine months ended
	December 31,						December 31,
	2020			2019			2020			2019
Numerator:
Net loss	$	(29,757	)	$	(27,485	)	$	(70,161	)	$	(78,046	)
Net loss available to ordinary shareholders - basic and diluted	$	(29,757	)	$	(27,485	)	$	(70,161	)	$	(78,046	)
Denominator:
Weighted-average shares outstanding - basic and diluted		101,016,040			73,768,845			88,512,823			68,722,475
Loss per share - basic and diluted	$	(0.29	)	$	(0.37	)	$	(0.79	)	$	(1.14	)

The following table sets out the numbers of ordinary shares excluded from the above computation of earnings per share at December 31, 2020 and December 31, 2019 as their inclusion would have been anti-dilutive:

	December 31, 2020		December 31, 2019
Ordinary shares issuable on exercise of options to purchase ordinary shares		1,965,260		1,859,979
Restricted share units awarded		994,037		781,839
Ordinary shares issuable on exercise of warrants at $16.14 per share		111,525		111,525
Ordinary shares issuable on exercise of warrants at $9.375 per share		64,000		64,000
		3,134,822		2,817,343

- 24 -

12. Lease Commitments

The Company has operating lease commitments for real estate and certain equipment in the United States, the United Kingdom, the Republic of Ireland and Switzerland. There are no sublease agreements in place. The Company has finance lease commitments for equipment in the United Kingdom and Switzerland.

The Company leases an 87,200 square foot conventional reagents manufacturing facility, with integrated offices and laboratories, in Edinburgh, Scotland. This lease commenced in March 2018, following completion of a sale and leaseback transaction, and expires in September 2052. Rent is recognized in the consolidated statement of comprehensive loss on a straight-line basis over the lease term. Additionally, the lease required the Company to provide a rent deposit of £3.6 million which amounted to $4.9 million at December 31, 2020 and $4.4 million at March 31, 2020 and is included within other non-current assets in the consolidated balance sheets. In March 2015 the Company signed a five-year lease agreement for its corporate headquarters and MosaiQ manufacturing facility in Eysins, Switzerland. This lease was extended for a further five-year period to March 14, 2025. The Company also leases office space for commercial and development activities under one to three-year lease agreements in Newtown PA, Chapel Hill NC and Dublin, Republic of Ireland.

The operating lease commitments relating to equipment are not material. The finance lease commitments relate to specialized equipment required for manufacturing operations in both Edinburgh, Scotland and Eysins, Switzerland.

Many of the Company’s leases contain options to renew and extend lease terms and options to terminate leases early. Reflected in the right-of-use asset and lease liability on the Company’s balance sheet are the periods provided by renewal and extension options that the Company is reasonably certain to exercise, as well as the periods provided by termination options that the Company is reasonably certain not to exercise. The Company does not have any existing lease agreements with variable lease components.

In calculating the present value of future lease payments, the Company has elected to utilize an incremental borrowing rate based on the remaining lease term at the date of adoption. Incremental borrowing rates are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company has elected to account for each lease component and its associated non-lease component as a single lease component and has allocated all the contract consideration across the lease component only. There are no material non-lease components. As of December 31, 2020, an operating lease right-of-use asset of $22,364 and an operating lease liability of $24,512 (including a current portion of $3,309) were reflected on the condensed consolidated balance sheet. As of March 31, 2020, an operating lease right-of-use asset of $21,493 and an operating lease liability of $22,947 (including a current portion of $3,033) were reflected on the condensed consolidated balance sheet. As of December 31, 2020, the Company had entered into finance leases for the purchase of plant and equipment that had net book values of $1,591. An associated finance lease liability of $1,460 (including a current portion of $878) was reflected on the condensed consolidated balance sheet. As of March 31, 2020, the Company had entered into finance leases for the purchase of plant and equipment that had net book values of $2,216. An associated finance lease liability of $1,715 (including a current portion of $598) was reflected on the condensed consolidated balance sheet.

The elements of lease expense were as follows:

	Quarter ended December 31,				Nine months ended December 31,
	2020		2019		2020		2019
Lease cost
Operating lease cost	$	1,133	$	950	$	3,262	$	2,760
Finance lease cost
Amortization of right-of-use asset		298		230		814		565
Interest on lease liabilities		28		29		99		84
Short-term lease cost		18		18		52		52
Total lease cost	$	1,477	$	1,227	$	4,227	$	3,461

- 25 -

Other information related to leases was as follows:

Supplemental cash flow information

	Nine months ended December 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating leases - operating cash flows	$	2,806	$	2,270
Finance leases - financing cash flows	$	490	$	337
Finance leases - operating cash flows	$	99	$	84
Non-cash leases activity
Right-of-use assets obtained in exchange for new operating lease liabilities	$	56	$	5,160
Right-of-use assets obtained in exchange for new finance lease liabilities	$	130	$	487

Lease term and discount rate

	As of December 31, 2020
Weighted average remaining lease terms (in years)
Operating leases	29.6
Finance leases		1.8
Weighted average discount rate
Operating leases		10.9	%
Finance leases		9.1	%

Future lease payments required under non-cancellable operating leases were as follows:

	December 31, 2020			March 31, 2020
2021 (excluding the nine months ended December 31, 2020)	$	927		$	3,335
2022		3,674			3,319
2023		3,370			3,050
2024		3,360			3,055
2025		3,409			3,105
Thereafter		72,959			66,138
Total lease payments	$	87,699		$	82,002
Less : imputed interest		(63,187	)		(59,055	)
Total operating lease liabilities	$	24,512		$	22,947

Future lease payments required under finance leases were as follows:

	December 31, 2020			March 31, 2020
2021 (excluding the nine months ended December 31, 2020)	$	185		$	720
2022		958			838
2023		423			349
2024		45			7
2025		13			—
Total lease payments	$	1,624		$	1,914
Less : imputed interest		(164	)		(199	)
Total finance lease liabilities	$	1,460		$	1,715

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the corresponding section of our Annual Report on Form 10-K for the year ended March 31, 2020 filed with the SEC on June 12, 2020.

The information set forth and discussed below for the quarters and nine month periods ended December 31, 2020 and December 31, 2019 is derived from the condensed consolidated financial statements included under Part I, Item 1 “Financial Statements” above. The financial information set forth and discussed below is unaudited but includes all adjustments (consisting of normal recurring adjustments) that our management considers necessary for a fair presentation of the financial position and the operating results and cash flows for those periods. Our results of operations for a particular quarter may not be indicative of the results that may be expected for other quarters or the entire year.

In addition to historical financial information, the following discussion contains forward looking statements that reflect our plans, estimates, beliefs and expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report, and our Annual Report on Form 10-K for the year ended March 31, 2020, particularly in “Risk Factors.”

Overview

We were incorporated in Jersey, Channel Islands on January 18, 2012. On February 16, 2012, we acquired the entire issued share capital of Alba Bioscience Limited (or Alba), Quotient Biodiagnostics, Inc. (or QBDI) and QBD (QSIP) Limited (or QSIP) from Quotient Biodiagnostics Group Limited (or QBDG), our predecessor.

Our Business

We are a commercial-stage diagnostics company committed to reducing healthcare costs and improving patient care through the provision of innovative tests within established markets. Our initial focus is on blood grouping and donor disease screening, which is commonly referred to as transfusion diagnostics. Blood grouping involves specific procedures performed at donor or patient testing laboratories to characterize blood, which includes antigen typing and antibody detection. Disease screening involves the screening of donor blood for unwanted pathogens using two different methods, a serological approach (testing for specific antigens or antibodies) and a molecular approach (testing for DNA or RNA).

We have over 35 years of experience developing, manufacturing and commercializing conventional reagent products used for blood grouping within the global transfusion diagnostics market. We are developing MosaiQ, our proprietary technology platform, to better address the comprehensive needs of this large and established market. We believe MosaiQ has the potential to transform transfusion diagnostics, significantly reducing the cost of blood grouping in the donor and patient testing environments, while improving patient outcomes.

In addition, in response to the global COVID-19 pandemic, in May 2020, we completed development of a microarray-based SARS-CoV-2 antibody test for use on the MosaiQ platform. The SARS-CoV-2 antibody test is designed as a serological disease screen specific to COVID-19 antibody detection. The assay detects the Immunoglobulin G (IgG) and Immunoglobulin M (IgM) antibodies directed at SARS-CoV-2. We refer to the SARS-CoV-2 antibody test as the MosaiQ COVID-19 Microarray.

We currently operate as one business segment with 439 employees in the United Kingdom, Switzerland and the United States, as of December 31, 2020. Our principal markets are the United States, Europe and Japan. Based on the location of the customer, revenues outside the United States accounted for 30% of total revenue during the nine month period ended December 31, 2020 and 44% during the nine month period ended December 31, 2019.

We have incurred net losses and negative cash flows from operations in each year since we commenced operations in 2007. As of December 31, 2020, we had an accumulated deficit of $553.6 million. We expect our operating losses to continue for at least the remainder of the financial year ending March 31, 2021 as we continue our investment in the commercialization of MosaiQ. For the nine month period ended December 31, 2020, our total revenue was $33.7 million and our net loss was $70.2 million.

- 27 -

From our incorporation in 2012 to March 31, 2020, we have raised $160.0 million of gross proceeds through the private placement of our ordinary and preference shares and warrants, $346.7 million of gross proceeds from public offerings of our shares and issuances of ordinary shares upon exercise of warrants and $145.0 million of gross proceeds from the issuance of 12% Senior Secured Notes, or the “Secured Notes”.

On September 15, 2020, we completed a public offering of 20,294,117 newly issued ordinary shares at $4.25 per share which raised $86.3 million of gross proceeds before underwriting discounts and other offering expenses of $5.6 million.

As of December 31, 2020, we had available cash, cash equivalents and short-term investments of $134.5 million and $9.0 million of restricted cash held as part of the arrangements relating to our Secured Notes and the lease of our property in Eysins, Switzerland.

Regulatory and Commercial Milestones

You should read the following regulatory and commercial milestones update in conjunction with the discussion included under the sections “Item 1. Business” and “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended March 31, 2020 filed with the SEC on June 12, 2020.

•

Initial European Regulatory Approval – we filed for European regulatory approval for our initial MosaiQ IH Microarray in late September 2018 and were notified of its approval on April 30, 2019. We also filed for European regulatory approval of the initial MosaiQ SDS Microarray in June 2019 and were notified of its approval on February 14, 2020.

•	European and U.S. Hypercare Launch – following the CE mark for our initial MosaiQ IH Microarray, we have commenced and completed hypercare testing with four selected customers.

•

Ongoing Microarray Menu Development – our activities for the expansion of our IH and SDS, testing menus included the completion of the validation and verification, or “V&V”, concordance study for the expanded MosaiQ IH Microarray menu, which we announced in October 2019. The V&V study for the expanded MosaiQ SDS Microarray is planned for the coming months.

•

Field Trials – we commenced field trials for the expanded MosaiQ IH Microarray in Europe in the first quarter of calendar year 2020. These trials were initially suspended due to the COVID-19 pandemic in March 2020, but by the end of May 2020, quarantine and containment measures and restrictions had eased in all three trial locations allowing the work to recommence. However, subsequent governmental restrictions implemented towards the end of 2020 have impacted our ability to conduct these trials, as discussed below. We announced the initial results from these trials in November 2020. Based on our internal performance testing, we subsequently determined to enhance a limited number of the tests on the expanded MosaiQ IH Microarray. The commencement of field trials in the United States for the expanded MosaiQ IH Microarray has also been postponed due to the COVID-19 pandemic. We expect these trials to commence in the second quarter of calendar year 2021. We expect field trials for the expanded MosaiQ SDS Microarray to commence towards the end of calendar year 2021.

•

Ongoing Regulatory Approval Process – we filed for U.S. regulatory approval for our initial MosaiQ SDS Microarray on December 23, 2019. On December 10, 2020, we received a request from the FDA for additional testing data related to specific individual performance characteristics of the assays on this microarray. We anticipate that we will resubmit our filing and receive 510(k) clearance for the initial MosaiQ SDS Microarray during the first half of calendar year 2021. We expect to make the initial European regulatory submissions for our expanded MosaiQ IH Microarray during the second quarter of calendar year 2021, with the U.S. regulatory submissions following in the fourth quarter of calendar year 2021. We expect to receive the CE mark for the expanded MosaiQ IH Microarray by the fourth quarter of calendar year 2021. We expect to make a European regulatory submission for the expanded MosaiQ SDS Microarray in the second quarter of calendar year 2022, with the U.S. regulatory submission following in the second or third quarter of calendar year 2022.

•	Patient IH Microarray – we are developing for Ortho-Clinical Diagnostics Inc. (or Ortho), a dedicated MosaiQ IH Microarray optimized for the patient transfusion market (which we refer to as the MosaiQ IH3 Microarray), and we expect to submit it for CE mark in the first half of calendar year 2022.

COVID-19 Pandemic

You should read the following COVID-19 pandemic update in conjunction with the discussion included under the sections “Item 1. Business” and “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended March 31, 2020 filed with the SEC on June 12, 2020.

- 28 -

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. The governments of each of the major locations in which we operate, the United Kingdom, Switzerland and the United States, have implemented varying measures and restrictions to combat the COVID-19 pandemic.

The restrictions implemented at the beginning of the pandemic directly impacted our on-going clinical trials for our expanded MosaiQ IH Microarray in Europe and the commencement of clinical trials for our expanded MosaiQ IH Microarray in the United States. All external work on these trials was suspended in March 2020 until such time as the existing restrictions in the relevant jurisdictions are removed or moderated. By the end of May 2020, quarantine and containment measures and restrictions had eased in all of the three European trial locations allowing the work to recommence.

In addition, on April 6, 2020, we announced the completion of the development phase of the MosaiQ COVID-19 Microarray, in response to the COVID-19 pandemic. On April 27, 2020, we published the final performance data for the MosaiQ COVID-19 Microarray, achieving 100% sensitivity and 99.8% specificity, and on May 1, 2020, we announced the CE Mark for this Microarray. In addition, in May 2020, we submitted an application to the FDA for an Emergency Use Authorization (EUA) of the MosaiQ COVID-19 Microarray in the United States, and in September 2020, we announced the EUA had been issued by the FDA for this Microarray. We signed the first commercial contract for the sale of the MosaiQ COVID-19 Microarray in May 2020, and we have subsequently entered into nine additional contracts with customers in Europe and the United States. In addition, we developed an enhanced, semi-quantitative MosaiQ COVID-19 Microarray, which has been CE marked as of January 29, 2021 and for which we intend to submit an FDA EUA application in February 2021.

Since October 2020, there has been a widespread increase, or "second wave," in reported infections from COVID-19, including in Europe and the United States. In response, various countries including in Europe have announced the re-imposition of some restrictions on social, business and other activities. Government travel restrictions and lockdowns imposed in response to the second wave seriously affected our operations in Europe and the United Kingdom.

In spite of this widespread increase of COVID-19 infections, the COVID-19 pandemic and the associated restrictions have not had a material adverse impact on our conventional reagent revenues. Customer demand has remained robust since March 31, 2020 and, to date, supply chain disruptions have been minimal. Our manufacturing operations in Edinburgh, Scotland have been adapted to meet social distancing requirements, which impacted our operating costs during the nine month period ended December 31, 2020.

However, the second wave has negatively affected the on-going field trials for our expanded MosaiQ IH Microarray, with travel restrictions and lockdowns making it difficult for relevant teams to spend time on-site and resulting in trials repeatedly stopping and restarting. Furthermore, these restrictions and lockdowns have impacted our research and development activities, slowed down the regulatory approval process and delayed the timing of customer tenders.

The extent to which the COVID-19 pandemic will impact our business, operations and financial results will depend on future developments and numerous evolving factors, which are highly uncertain and difficult to predict.

Revenue

We generate product sales revenue from the sale of conventional reagent products directly to hospitals, donor collection agencies and independent testing laboratories in the United States, the United Kingdom and to distributors in Europe and the rest of the world, and indirectly through sales to our original equipment manufacturer (or OEM) customers. We recognize revenues in the form of product sales when the goods are shipped. Products sold by standing purchase orders as a percentage of product sales revenue were 69% and 71% for the nine month periods ended December 31, 2020 and December 31, 2019, respectively. We also provide product development services to our OEM customers. We recognize revenue from these contractual relationships in the form of product development fees, which are included in other revenues. In addition, during the nine month period ended December 31, 2020, we began to generate sales revenue from the MosaiQ COVID-19 Microarray in Europe and the United States, and our product sales from this microarray were approximately $1 million during this period. Although we anticipate that these product sales will continue for the next three to six months, we believe there is ultimately a limited opportunity for future revenue from our MosaiQ COVID-19 Microarray beyond that timeframe, based on the limited demand for COVID-19 antibody testing that we are observing. For a description of our revenue recognition policies, see “—Critical Accounting Policies and Significant Judgments and Estimates—Revenue Recognition and Accounts Receivable.”

- 29 -

Our revenue is denominated in multiple currencies. Sales in the United States and to certain of our OEM customers are denominated in U.S. Dollars. Sales in Europe and the rest of the world are denominated primarily in U.S. Dollars, Pounds Sterling or Euros. Our expenses are generally denominated in the currencies in which our operations are located, which are primarily in the United Kingdom, Switzerland and the United States. We operate globally and therefore changes in foreign currency exchange rates may become material to us in the future due to factors beyond our control. See “—Quantitative and Qualitative Disclosure About Market Risk—Foreign Currency Exchange Risk.”

Cost of revenue and operating expenses

Cost of revenue consists of direct labor expenses, including employee benefits, overhead expenses, material costs and freight costs, along with the depreciation of manufacturing equipment and leasehold improvements. Our gross profit represents total revenue less the cost of revenue, gross margin represents gross profit expressed as a percentage of total revenue, and gross margin on product sales represents gross margin excluding other revenues as a percentage of revenues excluding other revenues. We expect our overall cost of revenue to increase in absolute U.S. Dollars as we continue to increase our product sales volumes. However, we also believe that we can achieve efficiencies in our manufacturing operations, primarily through increasing production volumes.

Our sales and marketing expenses include costs associated with our sales organization for conventional reagent products, including our direct sales force, as well as our marketing and customer service personnel and the costs of the MosaiQ commercial team. These expenses consist principally of salaries, commissions, bonuses and employee benefits, as well as travel and other costs related to our sales and product marketing activities. We expense all sales and marketing costs as incurred. We expect sales and marketing expense to increase in absolute U.S. Dollars, primarily as a result of commissions on increased product sales in the United States and as we grow the MosaiQ commercial team.

Our research and development expenses include costs associated with performing research, development, field trials and our regulatory activities, as well as production costs incurred in advance of the commercial launch of MosaiQ. Research and development expenses include research personnel-related expenses, fees for contractual and consulting services, travel costs, laboratory supplies and depreciation of laboratory equipment.

We expense all research and development costs as incurred, net of government grants received and tax credits. Our UK subsidiary claims certain tax credits on its research and development expenditures and these are included as an offset to our research and development expenses. Our research and development efforts are focused on developing new products and technologies for the global transfusion diagnostics market. We segregate research and development expenses for the MosaiQ project from expenses for other research and development projects. We do not maintain detailed records of these other costs by activity. We are nearing completion of the initial development of MosaiQ and expect our costs associated with field trials and regulatory approvals will increase at the same time as our development costs decrease. As we move to commercialization of MosaiQ in the donor testing market, we expect our overall research and development expense to decrease.

Our general and administrative expenses include costs for our executive, accounting and finance, legal, corporate development, information technology and human resources functions. We expense all general and administrative expenses as incurred. These expenses consist principally of salaries, bonuses and employee benefits for the personnel performing these functions, including travel costs. These expenses also include share-based compensation, professional service fees (such as audit, tax and legal fees), costs related to our Board of Directors, and general corporate overhead costs, which include depreciation and amortization. We expect our general and administrative expenses to increase as our business develops and also due to the costs of operating as a public company, such as additional legal, accounting and corporate governance expenses, including expenses related to compliance with the Sarbanes-Oxley Act, directors’ and officers’ insurance premiums and investor relations expenses.

Net interest expense consists primarily of interest charges on our Secured Notes and the amortization of debt issuance costs (which includes amortization of the one-time consent payment of $3.9 million paid to holders of our Secured Notes in December 2018), as well as accrued dividends on the 7% cumulative redeemable preference shares issued in January 2015. We amortize debt issuance costs over the life of the instrument and report them as interest expense in our statements of operations. Net interest also includes the expected costs of the royalty rights agreements we entered into in October 2016, June 2018, December 2018 and May 2019 with the purchasers and consenting holders, as applicable, of our Secured Notes. See Note 4, “Debt” and Note 7, “Ordinary and Preference Shares – Preference shares” to our condensed consolidated financial statements included in this Quarterly Report for additional information.

Other income (expense), net consists primarily of exchange fluctuations. These include realized exchange fluctuations resulting from the settlement of transactions in currencies other than the functional currencies of our businesses. Monetary assets and liabilities that are denominated in foreign currencies are measured at the period-end closing rate with resulting unrealized exchange fluctuations. The functional currencies of our legal entities are Pounds Sterling, Swiss Francs and U.S. Dollars depending on the entity.

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As discussed in more detail below, provision for income taxes in the nine month period ended December 31, 2020 reflected the taxes payable on the taxable income of a subsidiary and the resolution of a major tax uncertainty related to the treatment of certain tax depreciation allowances.

Results of Operations

Comparison of the Quarters ended December 31, 2020 and 2019

The following table sets forth, for the periods indicated, the amounts of certain components of our statements of operations and the percentage of total revenue represented by these items, showing period-to-period changes.

	Quarter ended December 31,
	2020						2019						Change
	Amount			% of revenue			Amount			% of revenue			Amount			%
	(in thousands, except percentages)
Revenue:
Product sales	$	8,740			100	%	$	7,636			96	%	$	1,104			14	%
Other revenues		11			0	%		305			4	%		(294	)		-96	%
Total revenue		8,751			100	%		7,941			100	%		810			10	%
Cost of revenue		4,970			57	%		4,532			57	%		438			10	%
Gross profit		3,781			43	%		3,409			43	%		372			11	%
Operating expenses:
Sales and marketing		2,283			26	%		2,290			29	%		(7	)		0	%
Research and development		14,485			166	%		14,160			178	%		325			2	%
General and administrative		8,738			100	%		9,316			117	%		(578	)		-6	%
Total operating expenses		25,506			291	%		25,766			324	%		(260	)		-1	%
Operating loss		(21,725	)		-248	%		(22,357	)		-282	%		632			-3	%
Other income (expense):
Interest expense, net		(6,753	)		-77	%		(7,008	)		-88	%		255			-4	%
Other, net		192			2	%		1,894			24	%		(1,702	)		-90	%
Total other expense, net		(6,561	)		-75	%		(5,114	)		-64	%		(1,447	)		28	%
Loss before income taxes		(28,286	)		-323	%		(27,471	)		-346	%		(815	)		3	%
Provision for income taxes		(1,471	)		—			(14	)		—			(1,457	)		21	%
Net loss	$	(29,757	)		-340	%	$	(27,485	)		-346	%	$	(2,272	)		8	%

- 31 -

Revenue

Total revenue for the quarter ended December 31, 2020 increased by 10% to $8.8 million, compared with $7.9 million for the quarter ended December 31, 2019. Product sales for the quarter ended December 31, 2020 increased by 14% to $8.7 million, compared with $7.6 million for the quarter ended December 31, 2019. The increase in product sales was primarily attributable to growth in product sales to OEM customers, incremental direct sales of conventional reagent products to customers in the United States and sales of the MosaiQ COVID-19 Microarray. Other revenues for the quarter ended December 31, 2020 related to a small development project for an OEM customer. Other revenues in the quarter ended December 31, 2019 arose from the achievement of product development milestones on a development contract, which was completed during the year ended March 31, 2020.

Products sold by standing purchase order were 70% of product sales for the quarter ended December 31, 2020, compared with 72% for the quarter ended December 31, 2019.

The table below sets forth revenue by product group:

	Quarter ended December 31,
	2020					2019					Change
	Amount		% of revenue			Amount		% of revenue			Amount			%
	(in thousands, except percentages)
Revenue:
Product sales - OEM customers	$	5,536		63	%	$	5,071		64	%	$	465			9	%
Product sales - direct customers and distributors	$	2,846		33	%		2,565		32	%		281			11	%
Product sales - MosaiQ		358		4	%		—		0	%		358			100	%
Other revenues		11		0	%		305		4	%		(294	)		-96	%
Total revenue	$	8,751		100	%	$	7,941		100	%	$	810			10	%

OEM Sales. Product sales to OEM customers increased 9% to $5.5 million for the quarter ended December 31, 2020, compared with $5.1 million for the quarter ended December 31, 2019. The increase was due to increased sales to existing customers and the impact of pricing increases.

Direct Sales to Customers and Distributors. Product sales directly to customers and distributors of $2.8 million for the quarter ended December 31, 2020 increased by $0.3 million compared with $2.6 million for the quarter ended December 31, 2019. This increase was due to increased direct sales in the United States which increased to $2.6 million in the quarter ended December 31, 2020 from $2.3 million in the quarter ended December 31, 2019 as a result of growth in sales to existing customers and expansion of our customer base.

MosaiQ Product Sales. MosaiQ sales in the quarter ended December 31, 2020 consisted of revenues from our MosaiQ COVID-19 Microarray. There were no MosaiQ sales in the quarter ended December 31, 2019.

Other Revenues. Other revenues in the quarter ended December 31, 2020 related to a small development project for an OEM customer. Other revenues in the quarter ended December 31, 2019 arose from the achievement of product development milestones on a development contract, which was completed during the year ended March 31, 2020.

Cost of revenue and gross margin

Cost of revenue increased by 10% to $5.0 million for the quarter ended December 31, 2020, compared with $4.5 million for the quarter ended December 31, 2019. The increase in cost of revenue reflected the incremental costs associated with greater sales volumes.

- 32 -

Gross profit on total revenue for the quarter ended December 31, 2020 was $3.8 million, an increase of 11% when compared with $3.4 million for the quarter ended December 31, 2019. The increase was attributable to the increase in gross margin on product sales described below.

Gross profit on product sales, which excludes other revenues, was $3.8 million for the quarter ended December 31, 2020, an increase of 21% when compared with $3.1 million for the quarter ended December 31, 2019. This increase was due to a more favorable product mix and lower levels of material scrapped, in addition to the gross profit on increased sales to existing and new customers. Gross margin on product sales, which excludes other revenues, was 43% for the quarter ended December 31, 2020 compared with 41% for the quarter ended December 31, 2019.

Sales and marketing expenses

Sales and marketing expenses were $2.3 million for the quarter ended December 31, 2020, compared with $2.3 million for the quarter ended December 31, 2019. As a percentage of total revenue, sales and marketing expenses were 26% for the quarter ended December 31, 2020 compared to 29% for the quarter ended December 31, 2019.

Research and development expenses

	Quarter ended December 31,
	2020						2019						Change
	Amount			% of revenue			Amount			% of revenue			Amount			%
	(in thousands, except percentages)
Research and development expenses:
MosaiQ research and development	$	14,214			162	%	$	13,770			173	%	$	444			3	%
Other research and development		397			5	%		474			6	%		(77	)		-16	%
Tax credits		(126	)		-1	%		(84	)		-1	%		(42	)		50	%
Total research and development expenses	$	14,485			166	%	$	14,160			178	%	$	325			2	%

Research and development expenses increased by 2% to $14.5 million for the quarter ended December 31, 2020, compared with $14.2 million for the quarter ended December 31, 2019. During the quarter ended December 31, 2020, we recorded inventory provisions of $2.0 million in respect of certain raw materials and work-in-progress items following evaluation of further development data and corresponding changes in manufacturing processes. These expenses were offset by a $0.5 million decrease in depreciation charges as a result of certain leasehold improvements becoming fully depreciated at the start of the current financial year, as well as the impact of extending the useful economic lives of certain operating equipment. Costs incurred with development partners were also $0.8 million lower during the quarter ended December 31, 2020. This decrease was due to our incurring certain upfront contract charges and material deliveries during the quarter ended December 31, 2019 and there were no corresponding charges in the quarter ended December 31, 2020. In addition, termination benefit costs of $0.4 million were included in quarter ended December 31, 2019. There were no termination benefit costs in the quarter ended December 31, 2020.

General and administrative expenses

General and administrative expenses decreased by 6% to $8.7 million for the quarter ended December 31, 2020, compared with $9.3 million for the quarter ended December 31, 2019. The decreases reflected lower legal expenses related to our now settled dispute with Ortho, offset by higher D&O insurance and other advisory costs. In addition, our general and administrative expenses included termination and transition benefit costs of $0.9 million in the quarter ended December 31, 2019. We recognized $1.2 million of stock compensation expense in the quarter ended December 31, 2020 compared with $1.2 million in the quarter ended December 31, 2019. As a percentage of total revenue, general and administrative expenses were 100% for the quarter ended December 31, 2020 compared to 117% for the quarter ended December 31, 2019.

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Other income (expense)

Net interest expense was $6.8 million for the quarter ended December 31, 2020, compared with $7.0 million for the quarter ended December 31, 2019. Interest expense in the quarters ended December 31, 2020 and December 31, 2019 included $4.4 million of interest charges on our Secured Notes. Interest expense in the quarters ended December 31, 2020 and December 31, 2019 also included amortization of deferred debt issue costs and estimated royalty costs of $2.2 million and $2.6 million, respectively. The decreased expense reflected changes in the royalty cost estimates. Net interest expense also included $0.3 million of dividends accrued on the 7% cumulative redeemable preference shares in each of the quarters ended December 31, 2020 and December 31, 2019. In addition, in the quarter ended December 31, 2020 we realized interest income of $0.1 million on our short-term money market investments compared to $0.3 million for the quarter ended December 31, 2019.

Other, net in the quarter ended December 31, 2020 comprised $0.2 million of foreign exchange gains arising on monetary assets and liabilities denominated in foreign currencies compared to $1.9 million of foreign exchange gains for the quarter ended December 31, 2019.

Provision for income taxes

Provision for income taxes in the quarter ended December 31, 2020 reflected the taxes payable on the taxable income of a subsidiary and the resolution of a major tax uncertainty related to the treatment of tax depreciation allowances, which resulted in a one-time tax charge of $1.5 million.

Comparison of the Nine Month Periods ended December 31, 2020 and 2019

	Nine months ended December 31,
	2020						2019						Change
	Amount			% of revenue			Amount			% of revenue			Amount			%
	(in thousands, except percentages)
Revenue:
Product sales	$	26,207			78	%	$	22,901			96	%	$	3,306			14	%
Other revenues		7,534			22	%		1,055			4	%		6,479			614	%
Total revenue		33,741			100	%		23,956			100	%		9,785			41	%
Cost of revenue		14,883			44	%		13,067			55	%		1,816			14	%
Gross profit		18,858			56	%		10,889			45	%		7,969			73	%
Operating expenses:
Sales and marketing		6,757			20	%		7,123			30	%		(366	)		-5	%
Research and development		38,813			115	%		38,895			162	%		(82	)		0	%
General and administrative		27,832			82	%		24,092			101	%		3,740			16	%
Total operating expenses		73,402			218	%		70,110			293	%		3,292			5	%
Operating (loss)		(54,544	)		-162	%		(59,221	)		-247	%		4,677			-8	%
Other income (expense):
Interest expense, net		(19,537	)		-58	%		(20,384	)		-85	%		847			-4	%
Other, net		5,423			16	%		1,600			7	%		3,823			239	%
Total other expense, net		(14,114	)		-42	%		(18,784	)		-78	%		4,670			-25	%
Loss before income taxes		(68,658	)		-203	%		(78,005	)		-326	%		9,347			-12	%
Provision for income taxes		(1,503	)		-4	%		(41	)		—			(1,462	)		3566	%
Net loss	$	(70,161	)		-208	%	$	(78,046	)		-326	%	$	7,885			-10	%

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Revenue

Total revenue for the nine month period ended December 31, 2020 increased by 41% to $33.7 million, compared with $24.0 million for the nine month period ended December 31, 2019. The increase in total revenue was due to $7.5 million of other revenues arising from the achievement of product development milestones in the nine month period ended December 31, 2020 and an increase of 14% in product sales. Products sold by standing purchase order were 69% of product sales for the nine month period ended December 31, 2020, compared with 71% for the nine month period ended December 31, 2019.

The table below sets forth revenue by product group:

	Nine months ended December 31,
	2020					2019					Change
	Amount		% of revenue			Amount		% of revenue			Amount		%
	(in thousands, except percentages)
Revenue:
Product sales - OEM customers	$	16,754		50	%	$	15,354		64	%	$	1,400		9	%
Product sales - direct customers and distributors		8,417		25	%		7,547		32	%		870		12	%
Product sales - MosaiQ		1,036		3	%		—		0	%		1,036		100	%
Other revenues		7,534		22	%		1,055		4	%		6,479		614	%
Total revenue	$	33,741		100	%	$	23,956		100	%	$	9,785		41	%

OEM Sales. Product sales to OEM customers increased 9% to $16.8 million for the nine month period ended December 31, 2020, compared with $15.4 million for the nine month period ended December 31, 2019. The increase was due to increased sales to existing customers and the impact of recently launched new products.

Direct Sales to Customers and Distributors. Product sales directly to customers and distributors of $8.4 million for the nine month period ended December 31, 2020 increased by $0.9 million compared with $7.5 million for the nine month period ended December 31, 2019. This increase was due to increased direct sales in the United States which increased to $7.6 million in the nine month period ended December 31, 2020 from $6.7 million in the nine month period ended December 31, 2019 as a result of higher sales to existing customers and the expansion of our customer base.

MosaiQ Product Sales. MosaiQ sales in the nine month period ended December 31, 2020 consisted of revenues from our MosaiQ COVID-19 Microarray. There were no MosaiQ sales in the nine month period ended December 31, 2019.

Other Revenues. Other revenues for the nine month period ended December 31, 2020 arose from the recognition of an initial milestone payment of $7.5 million received from Ortho in respect of the development of the MosaiQ IH3 Microarray and a small development project for an OEM customer. Other revenues in the nine month period ended December 31, 2019 arose from the achievement of product development milestones on another development contract, which was completed during the year ended March 31, 2020.

Cost of revenue and gross margin

Cost of revenue increased by 14% to $14.9 million for the nine month period ended December 31, 2020, compared with $13.1 million for the nine month period ended December 31, 2019. The increase in cost of revenue reflected additional costs associated with operating social distancing restrictions and the incremental costs associated with the 14% increase in product sales in the nine month period ended December 31, 2020.

Gross profit on total revenue for the nine month period ended December 31, 2020 was $18.9 million, compared with $10.9 million for the nine month period ended December 31, 2019. The increase was attributable to the $6.5 million increase in other revenues in the nine month period ended December 31, 2020 and the increase in gross margin on product sales described below.

Gross profit on product sales, which excludes other revenues, was $11.3 million for the nine month period ended December 31, 2020 compared with $9.8 million for the nine month period ended December 31, 2019. This increase was due to the gross profit on increased sales to existing and new customers, offset in part by higher costs associated with social distancing requirements. Gross margin on product sales, which excludes other revenues, was 43% for the nine month period ended December 31, 2020 compared with 43% for the nine month period ended December 31, 2019.

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Sales and marketing expenses

Sales and marketing expenses were $6.8 million for the nine month period ended December 31, 2020, compared with $7.1 million for the nine month period ended December 31, 2019. This decrease was attributable to reduced travel expenses and the cancellation of sales conferences due to the COVID-19 pandemic. As a percentage of total revenue, sales and marketing expenses were 20% for the nine month period ended December 31, 2020 compared to 30% for the nine month period ended December 31, 2019.

Research and development expenses

	Nine months ended December 31,
	2020						2019						Change
	Amount			% of revenue			Amount			% of revenue			Amount			%
	(in thousands, except percentages)
Research and development expenses:
MosaiQ research and development	$	37,953			112	%	$	37,536			157	%	$	417			1	%
Other research and development		1,409			4	%		1,609			7	%		(200	)		-12	%
Tax credits		(549	)		-2	%		(250	)		-1	%		(299	)		120	%
Total research and development expenses	$	38,813			115	%	$	38,895			162	%	$	(82	)		0	%

Research and development expenses decreased by $0.1 million to $38.8 million for the nine month period ended December 31, 2020, compared with $38.9 million for the nine month period ended December 31, 2019. Our research and development expenses included expenses of $1.0 million in both the nine month periods ended December 31, 2020 and December 31, 2019 related to the costs of our intellectual property license with TTP. During the nine month period ended December 31, 2020, we recorded inventory provisions of $2.0 million in respect of certain raw materials and work-in-progress items following evaluation of further development data and corresponding changes in manufacturing processes. We also incurred additional development costs for the MosaiQ COVID-19 Microarray and higher employee costs in the nine month period ended December 31, 2020. These expenses were offset by a $2.6 million decrease in depreciation charges as a result of certain leasehold improvements becoming fully depreciated in the nine month period ended December 31, 2020, as well as the impact of extending the useful economic lives of certain operating equipment. In addition, termination benefit costs of $0.4 million were included in the nine month period ended December 31, 2019. There were no termination benefit costs in the nine month period ended December 31, 2020.

General and administrative expenses

General and administrative expenses increased by 16% to $27.8 million for the nine month period ended December 31, 2020, compared with $24.1 million for the nine month period ended December 31, 2019, reflecting additional legal expenses related to our dispute with Ortho, higher advisory fees and higher D&O insurance costs. In addition, our general and administrative expenses included termination and transition benefit costs of $0.9 million in the quarter ended December 31, 2019. We recognized $3.5 million of stock compensation expense in the nine month period ended December 31, 2020 compared with $3.4 million in the nine month period ended December 31, 2019. As a percentage of total revenue, general and administrative expenses were 82% for the nine month period ended December 31, 2020 and 101% for the nine month period ended December 31, 2019.

Other income (expense)

Net interest expense was $19.5 million for the nine month period ended December 31, 2020, compared with $20.4 million for the nine month period ended December 31, 2019. Interest expense in the nine month period ended December 31, 2020 included $13.1 million of interest charges on our Secured Notes compared with $12.8 million in the nine month period ended December 31, 2019. Interest expense in the nine month periods ended December 31, 2020 and December 31, 2019 also included amortization of deferred debt issue costs and estimated royalty costs of $6.6 million and $7.7 million, respectively. The decreased expense reflected changes in the royalty cost estimates. Net interest expense also included $0.8 million of dividends accrued on the 7% cumulative redeemable preference shares in each of the nine month periods ended December 31, 2020 and December 31, 2019. In addition, in the nine month period ended December 31, 2020 we realized interest income of $1.0 million on our short-term money market investments compared with $0.9 million for the nine month period ended December 31, 2019.

Other, net in the nine month period ended December 31, 2020 was comprised of $5.4 million of foreign exchange gains arising on monetary assets and liabilities denominated in foreign currencies compared to $1.6 million of foreign exchange gains for the nine month period ended December 31, 2019.

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Provision for income taxes

Provision for income taxes in the nine month period ended December 31, 2020 reflected the taxes payable on the taxable income of a subsidiary and the resolution of a major tax uncertainty related to the treatment of tax depreciation allowances, which resulted in a one-time tax charge of $1.5 million.

Quarterly Results of Operations

Our quarterly product sales can fluctuate depending upon the shipment cycles for our red blood cell based products, which account for approximately two-thirds of our current product sales. For these products, we typically experience 13 shipping cycles per year. This equates to three shipments of each product per quarter, except for one quarter per year when four shipments occur. In fiscal 2020, the greatest impact of extra product shipments occurred in our first quarter and the greatest impact thus far in fiscal 2021 has also occurred in the first quarter. The timing of shipment of bulk antisera products to our OEM customers may also impact revenues from quarter to quarter. We also experience some seasonality in demand around holiday periods in both Europe and the United States. As a result of these factors, we expect to continue to see seasonality and quarter-to-quarter variations in our product sales. The timing of product development fees included in other revenues is mostly dependent upon the achievement of pre-negotiated project or revenue milestones.

Liquidity and Capital Resources

Since our commencement of operations in 2007, we have incurred net losses and negative cash flows from operations. As of December 31, 2020, we had an accumulated deficit of $553.6 million. During the nine month period ended December 31, 2020, we incurred a net loss of $70.2 million and used $56.7 million of cash in operating activities. As described under results of operations, our use of cash during the nine month period ended December 31, 2020 was primarily attributable to our investment in the development of MosaiQ and corporate costs, including costs related to being a public company.

On September 15, 2020, we completed a public offering of 20,294,117 newly issued ordinary shares at $4.25 per share, which raised $86.3 million of gross proceeds before underwriting discounts and other offering expenses of $5.6 million.

Cash Flows for the Nine Month Periods ended December 31, 2020 and 2019

Operating activities

Net cash used in operating activities was $56.7 million during the nine month period ended December 31, 2020, which included net losses of $70.2 million offset by non-cash items of $20.2 million. Non-cash items were depreciation and amortization expense of $6.5 million, share-based compensation expense of $3.5 million, Swiss pension costs of $0.8 million, amortization of deferred debt issue costs of $6.6 million, accrued preference share dividends of $0.8 million, deferred lease rentals of $0.5 million and deferred income taxes of $1.5 million. We also experienced a net cash outflow of $6.7 million from changes in operating assets and liabilities during the period, consisting of a $2.8 million reduction in accrued compensation and benefits, a $1.2 million increase in inventories and a $0.3 million increase in other assets and a $3.7 million reduction in accounts payable and accrued liabilities, offset by a $1.3 million reduction in accounts receivables.

Net cash used in operating activities was $64.8 million during the nine month period ended December 31, 2019, which included net losses of $78.0 million offset by non-cash items of $21.7 million. Non-cash items were depreciation and amortization expense of $9.0 million, share-based compensation expense of $3.4 million, Swiss pension costs of $0.6 million, amortization of deferred debt issue costs of $7.7 million, and accrued preference share dividends of $0.8 million and deferred lease rentals of $0.2 million. We also experienced a net cash outflow of $8.5 million from changes in operating assets and liabilities during the period, consisting of a $2.3 million reduction in accounts payable and accrued liabilities, a $0.3 million reduction in accrued compensation and benefits, a $1.6 million increase in accounts receivable, a $3.9 million increase in inventories and a $0.4 million increase in other assets.

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Investing activities

Net cash used in investing activities was $18.2 million for the nine month period ended December 31, 2020 compared to $46.2 million for the nine month period ended December 31, 2019. We spent $3.6 million on purchases of property and equipment in the nine month period ended December 31, 2020, which was mainly related to purchasing MosaiQ instruments and investments in our IT infrastructure. Purchases of property and equipment in the nine month period ended December 31, 2019 were $3.9 million, which was mainly related to payments for an additional assembly unit for our MosaiQ manufacturing facility. We also increased our short-term money market investments by $14.6 million in the nine month period ended December 31, 2020, compared with a net increase of $42.3 million for the nine month period ended December 31, 2019.

Financing activities

Net cash provided by financing activities was $80.4 million during the nine month period ended December 31, 2020, consisting of $80.7 million generated from the issuance of ordinary shares on September 15, 2020 and $0.2 million generated from the exercise of share options, offset by $0.5 million of repayments on finance leases. Net cash provided by financing activities was $114.5 million during the nine month ended December 31, 2019, consisting of $24.1 million of net proceeds from the issuance of additional Secured Notes on May 15, 2019, $90.4 million of net proceeds from the issuance of ordinary shares on November 12, 2019 and $0.3 million from the exercise of share options, offset by $0.3 million of repayments on finance leases.

Operating and Capital Expenditure Requirements

We have not achieved profitability on an annual basis since we commenced operations in 2007 and we expect to incur net losses for at least the next fiscal year. As we move towards the commercial launch of MosaiQ in the donor testing market, we expect our operating expenses during the year ended March 31, 2021 to be similar to those of the year ended March 31, 2020, as we continue to invest in growing our customer base, expanding our marketing and distribution channels, completing field trials and regulatory filings, hiring additional employees and investing in other product development opportunities while our development expenditures on MosaiQdecrease.

As of December 31, 2020, we had $134.5 million of available cash, cash equivalents and short-term investments and $9.0 million of restricted cash held as part of the arrangements relating to our Secured Notes and the lease of our property in Eysins, Switzerland.

Our future capital requirements will depend on many factors, including:

•

our progress in developing and commercializing MosaiQ and the cost required to complete development, obtain regulatory approvals and complete our manufacturing scale up;

•

Ortho’s progress in commercializing the MosaiQ IH3 Microarray for the patient testing market;

•

our ability to manufacture and sell our conventional reagent products, including the costs and timing of further expansion of our sales and marketing efforts;

•

the impact of the COVID-19 pandemic on the global economy, our business and our development timeline for MosaiQ;

•

our ability to collect our accounts receivable;

•

our ability to generate cash from operations;

•

any acquisition of businesses or technologies that we may undertake; and

•

our ability to penetrate our existing market and new markets.

We expect to fund our operations, including the ongoing development of MosaiQ through successful field trial completion, achievement of required regulatory authorizations and commercialization from the use of existing available cash and short-term investment balances and the issuance of new equity or debt, and accordingly have prepared our financial statements on the going concern basis. We may also seek to repay, restructure or refinance our existing indebtedness, including with the proceeds from sales of additional equity or debt securities.

Contractual Obligations

Our contractual obligations and commitments were summarized in our Annual Report on Form 10-K for the year ended March 31, 2020.

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Critical Accounting Policies and Significant Judgments and Estimates

We have prepared our condensed consolidated financial statements in accordance with U.S. GAAP. Our preparation of these condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, expenses and related disclosures at the date of the consolidated financial statements, as well as revenue and expenses during the reporting periods. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to our condensed consolidated financial statements included in this Quarterly Report, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements.

Revenue recognition and accounts receivable

Revenue is recognized in accordance with Accounting Standards Update, or ASU, 2014-09, Revenue from Contracts with Customers. Product revenue is recognized at a point in time upon transfer of control of a product to a customer, which is generally at the time of shipment at an amount based on the transaction price. Customers have no right of return except in the case of damaged goods and we have not experienced any significant returns of our products.

We also earn revenue from the provision of development services to a small number of OEM customers. These development service contracts are reviewed individually to determine the nature of the performance obligations and the associated transaction prices. In recent years, our product development revenues have been commensurate with achieving milestones specified in the respective development agreements relating to those products. These milestones may include the approval of new products by the European or U.S. regulatory authorities, which are not within our control. While there can be no assurance that this will continue to be the case, the nature of the milestones has been such that they effectively represent completion of our performance obligations under a particular part of a development program. Should we fail to achieve these milestones, we are not entitled under the terms of the development agreements to any compensation related to the work undertaken to date. As a result, we typically fully recognize milestone-related revenues as the contractual milestones are achieved.

Accounts receivable consist primarily of amounts due from OEM customers, hospitals, donor testing laboratories, and distributors. Accounts receivable are reported net of an allowance for uncollectible accounts, which we also refer to as doubtful accounts. The allowance for doubtful accounts represents a reserve for estimated losses resulting from our inability to collect amounts due from our customers. Direct sales, where we may make many low value sales to a large number of customers, represents a larger risk of doubtful accounts, as opposed to OEM customer sales consisting primarily of a small number of well established businesses with whom we have a long trading history. The collectability of our trade receivables balances is regularly evaluated based on a combination of factors such as the aging profile of our receivables, past history with our customers, changes in customer payment patterns, customer credit-worthiness and any other relevant factors. Based on these assessments, we adjust the reserve for doubtful accounts recorded in our financial statements.

Inventories

We record inventories at the lower of cost (at standard costs, approximating average costs) or market (net realizable value), net of reserves. We record adjustments to inventory based upon historic usage, expected future demand and shelf life of the products held in inventory. We also calculate our inventory value based on the standard cost of each product. This approach requires us to analyze variances arising in the production process to determine whether they reflect part of the normal cost of production, and should therefore be reflected as inventory value, or whether they are a period cost and should thus not be included in inventory.

Income taxes

We account for income taxes under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporary differences between the tax basis of our assets and liabilities and their financial statement reported amounts. In addition, deferred tax assets are recorded for the future benefit of utilizing NOLs and research and development credit carry forwards. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

- 39 -

We follow the accounting guidance for uncertainties in income taxes, which prescribes a recognition threshold and measurement process for recording uncertain tax positions taken, or expected to be taken, in a tax return in the financial statements. Additionally, the guidance also prescribes the derecognition, classification, accounting in interim periods and disclosure requirements for uncertain tax positions. We accrue for the estimated amount of taxes for uncertain tax positions if it is more likely than not that we would be required to pay such additional taxes. An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained.

We did not have any accrued interest or penalties associated with any unrecognized tax positions, and there were no such interest or penalties recognized during the quarter ended December 31, 2020 or in the year ended March 31, 2020.

Stock compensation expense

Stock compensation expense is measured at the grant date based on the fair value of the award and is recognized as an expense in the income statement over the vesting period of the award. The calculation of the stock compensation expense is sensitive to the fair value of the underlying ordinary shares. The fair value of option awards at the grant date is calculated using the Black-Scholes model or other valuation models, which use a number of assumptions to determine the fair value. Details of the assumptions used are set out in the notes to the condensed consolidated financial statements included in this Quarterly Report.

Defined Benefit Pension Obligations

We account for the pension obligations of our Swiss subsidiary as a defined benefit plan under Accounting Standards Codification Topic 715 Compensation – Retirement Benefits, or ASC 715. This requires that an actuarial valuation be performed to determine the funded status of the pension arrangements. The actuarial valuation is based on a number of assumptions, details of which are set out in the notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2020.

Royalty Liability

The royalty rights agreements entered into in connection with the issuances of our Secured Notes and the amendment of the related indenture are treated as sales of future revenues that meet the requirements of Accounting Standards Codification Topic 470 “Debt” to be treated as debt. The estimated future cash outflows under the royalty rights agreements have been combined with the Secured Notes issuance costs and interest payable to calculate the effective interest rate of the Secured Notes and will be expensed through interest expenses using the effective interest rate method over the term of the Secured Notes and royalty rights agreements. Estimating the future cash outflows under the royalty rights agreements requires us to make certain estimates and assumptions about future sales of MosaiQproducts. These estimates of the magnitude and timing of MosaiQ sales are subject to significant variability due to the current status of development of MosaiQproducts, and thus are subject to significant uncertainty. Therefore, the estimates are likely to change as we gain experience of marketing MosaiQ, which may result in future adjustments to the accretion of the interest expense and the amortized cost based carrying value of the Secured Notes.

Leases

At the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the unique facts and circumstances present. A lease is a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment (an identified asset) for a period of time, in exchange for consideration. We determine if the contract conveys the right to control the use of an identified asset for a period of time. We assess throughout the period of use whether we have both of the following: (1) the right to obtain substantially all of the economic benefits for use of the identified asset, and (2) the right to direct the use of the identified asset. This determination is reassessed if the terms of the contract are changed. We also review the terms of the lease in accordance with Accounting Standards Update, or “ASU”, 2016-02, “Leases” in order to determine whether the lease concerned is a finance or an operating lease. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. We have elected not to recognize on the balance sheet leases with terms of one year or less.

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Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. The operating lease right-of-use assets also include any lease payments made prior to the commencement date and any initial direct costs incurred, less any lease incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, we utilize our incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The incremental borrowing rate is determined at lease commencement, or as of April 1, 2019 for operating leases existing upon the adoption of ASU 2016-02. The incremental borrowing rate is subsequently reassessed upon modification to the lease arrangement. Operating lease expense is recognized on a straight-line basis over the lease term.

In accordance with the guidance in ASU 2016-02, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Although separation of lease and non-lease components is required, certain practical expedients are available. In particular, entities may elect a practical expedient to not separate lease and non-lease components and instead account for each lease component and the related non-lease component together as a single component. We have elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only. The lease component results in an operating lease right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense.

The finance lease assets and operating lease right-of-use assets are assessed for impairment in accordance with our accounting policy for long-lived assets.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for any other contractually narrow or limited purpose.

Recent Accounting Pronouncements

Refer to Note 2 to our accompanying unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a discussion of recently issued accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks in the ordinary course of our business. These market risks are principally limited to interest rate fluctuations and foreign currency exchange rate fluctuations.

Interest rate sensitivity

We are exposed to market risk related to changes in interest rates as it impacts our interest income and expense.

Cash, cash equivalents and cash reserve account. At December 31, 2020, we had cash and cash equivalents of $3.4 million and we also held $9.0 million of restricted cash. Our exposure to market risk includes interest income sensitivity, which is impacted by changes in the general level of U.S. and European interest rates. Our cash and cash equivalents and the restricted cash are held in interest-bearing savings accounts and bank accounts. We do not enter into investments for trading or speculative purposes. Due to the current levels of interest rates, we do not believe an immediate one percentage point change in interest rates would have a material effect on the fair market value of our holdings, and therefore we do not expect our operating results or cash flows to be significantly affected by changes in market interest rates.

Secured notes. At December 31, 2020, we had term debt of $145 million outstanding under the Secured Notes. The Secured Notes are fixed-rate instruments and, as a result, a change in market interest rates has no impact on our interest expense incurred or cash flows.

Foreign currency exchange risk

The main currencies that we use for our trading operations are the U.S. Dollar, the Pound Sterling, the Swiss Franc and, to a lesser extent, the Euro. Our meaningful cash balances are held in a mixture of U.S. Dollars, Euros, Pounds Sterling and Swiss Francs. These cash balances may not be the same as the functional currencies of the Quotient entities in which they are held and, as a result, exchange rate fluctuations may result in foreign exchange gains and losses on our income statement.

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We are subject to market risks arising from changes in foreign currency exchange rates between the U.S. Dollar and the Pound Sterling and the U.S. Dollar and the Swiss Franc. Accordingly, fluctuations in the U.S. Dollar versus Pounds Sterling and U.S. Dollar versus the Swiss Franc exchange rate give rise to exchange gains and losses. These gains and losses arise from the conversion of U.S. Dollars and Euros to Pounds Sterling and the retranslation of cash, accounts receivable, intercompany indebtedness and other asset and liability balances. Based on our assets and liabilities held in Pounds Sterling at December 31, 2020, we estimate that a 5% strengthening of the Pound Sterling against the U.S. Dollar would give rise to a gain of approximately $0.8 million and a 5% weakening of the Pound Sterling against the U.S. Dollar would give rise to loss of approximately $0.8 million. Based on our assets and liabilities held in Swiss Francs at December 31, 2020, we estimate that a 5% strengthening of the Swiss Franc against the U.S. Dollar would give rise to a gain of approximately $1.4 million and a 5% weakening of the Swiss Franc against the U.S. Dollar would give rise to loss of approximately $1.4 million.

Most of our revenues are earned in U.S. Dollars, but the costs of our conventional reagent manufacturing operations are payable mainly in Pounds Sterling. We therefore closely monitor the results of our UK operations to address this difference. During the year ended March 31, 2020, the net operating expenses arising in Pounds Sterling from our UK conventional reagent manufacturing operations amounted to $25.8 million. This expenditure was offset by revenues arising in U.S. Dollars and other currencies. We have entered into forward contracts to hedge against the effects of fluctuations in the U.S. Dollar versus the Pounds Sterling exchange rate. The principal value of the hedges related to the results of fiscal year 2021 is $6.0 million and, based on this, a hypothetical instantaneous 5% strengthening of the Pound Sterling against the U.S. Dollar would reduce our net income by $1.0 million in the year ending March 31, 2021 after taking account of the shelter provided by our existing hedging arrangements through March 31, 2021. Similarly, a hypothetical instantaneous 5% weakening of the Pound Sterling against the U.S. Dollar would increase group net income by $1.0 million over the same period.

We do not use financial instruments for trading or other speculative purposes.

Our management does not believe that inflation in past years has had a significant impact on our results from operations. In the event inflation affects our costs in the future, we will offset the effect of inflation and maintain appropriate margins through increased selling prices.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit attributes of possible controls and procedures.

Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2020, due to our identification of a material weakness in internal control over financial reporting as described below, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive and Chief Financial Officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

A material weakness is defined as “a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.”

During the quarter ended September 30, 2020, management identified a material weakness in the design of our internal control over the classification of indebtedness and the consistency of our primary financial statements with the underlying note disclosures. This material weakness also existed at June 30, 2020 and, specifically, resulted in $12,083 thousand of indebtedness being classified as non-current liabilities instead of current liabilities in the condensed consolidated balance sheet as of June 30, 2020, while the correct maturity analysis was presented within the related note disclosure. This error had no impact on the condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in shareholders’ equity, or condensed consolidated statement of cash flows for the quarter ended June 30, 2020, and this error was corrected prior to the issuance of the condensed consolidated financial statements for the quarter ended September 30, 2020.

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Changes in internal control over financial reporting

There were no material changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than noted above and except for the following changes:

In order to remediate the material weakness described above, management has implemented immediate steps with regards to the classification of long-term debt by:

•

Automating compilation of relevant captions of the primary financial statements from the detailed underlying accounting records

•

Strengthening overall disclosure review controls through additional formal review processes

Based on the foregoing process and remediation measures, management believes that the above mentioned control deficiency will be remediated, but the material weakness cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Our subsidiaries, Quotient Suisse and QBD (QS-IP) Limited were party to a distribution and supply agreement with Ortho related to the commercialization and distribution of certain MosaiQ products, which we refer to as the Prior Ortho Agreement. We also entered into a subscription agreement with an affiliate of Ortho pursuant to which the affiliate subscribed for our newly issued ordinary shares and newly issued 7% cumulative redeemable preference shares, of no par value, for an aggregate subscription price of approximately $25 million.

On November 27, 2019, we delivered a notice to Ortho that we had terminated the Prior Ortho Agreement, effective as of December 27, 2019. We had not realized any revenue under the Prior Ortho Agreement prior to its termination.

On or about November 17, 2019, Ortho initiated an arbitration proceeding in which it sought a declaration that we did not have the right to terminate the Prior Ortho Agreement, specific performance of certain provisions of the Prior Ortho Agreement, and damages including in respect of the difference in amounts Ortho invested in our shares and their market value. We pursued counterclaims against Ortho, including that we had the right to terminate the Prior Ortho Agreement and damages that included the milestone payments due under the Prior Ortho Agreement. In addition, on December 20, 2019, we entered into an agreement, or the Ortho Dispute Agreement, with Ortho pursuant to which we agreed, while the arbitration was pending, not to grant commercialization rights in respect of products that overlapped with Ortho’s rights under the Prior Ortho Agreement without prior written notice to Ortho.

On September 4, 2020, we entered into a binding letter agreement with Ortho (or the Letter Agreement) pursuant to which we and Ortho agreed to confirm the termination of the Prior Ortho Agreement and various related contracts and to end the parties’ disputes regarding the Prior Ortho Agreement by executing mutual releases and terminating their pending arbitration proceeding related to the Prior Ortho Agreement.

We also agreed with Ortho to negotiate in good faith, and use our respective reasonable best efforts to execute, a new distribution agreement based on the terms set forth in the Letter Agreement, but if for any reason no such definitive agreement is reached, the Letter Agreement will govern the parties’ respective rights and obligations as a binding contract. See Note 2, "Summary of Significant Accounting Policies—Revenue Recognition" to our condensed consolidated financial statements included in this Quarterly Report for additional information about the Letter Agreement.

We may also be subject to other claims and legal actions arising in the ordinary course of business from time to time.

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Item 1A. Risk Factors

Except as set forth below, there have been no material changes in the risk factors described in Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended March 31, 2020.

Our commercialization plan for MosaiQ in the patient transfusion diagnostics market depends on our distributor relationship with Ortho, and we may enter into additional distribution or sales arrangements in the future that may subject us to similar risks.

We will rely on Ortho to commercialize MosaiQ in the highly fragmented patient transfusion diagnostics market in Europe and the United States. Under our distributor relationship with Ortho, we will develop sell the MosaiQ IH3 Microarray for the patient transfusion market, and Ortho will have the right to distribute, market and sell the MosaiQ IH3 Microarray in Europe and in the United States, solely for use in testing the immuno-hematological profile of the blood of medical patients in the course of their care or treatment. Ortho may not commit sufficient resources to this commercialization arrangement, as MosaiQ may compete for time, attention and resources with Ortho’s internal programs, or Ortho otherwise may not perform its obligations as expected. In addition, Ortho is both a customer and a competitor of our conventional reagent business. If Ortho is unable, or fails, to perform its obligations, there can be no assurance that we will be able to enter into commercialization relationships with other partners with sufficient existing global sales and support infrastructures necessary to successfully commercialize MosaiQ in the patient transfusion diagnostics market in these territories. Any of these risks could delay the commercialization of MosaiQ in the patient transfusion diagnostics market, result in high costs to us or otherwise materially harm our business and adversely affect our future revenues.

We may also enter into additional distribution or sales arrangements to commercialize MosaiQ in other markets. To the extent that we enter into other distribution or sales arrangements, our product revenue is likely to be lower than if we directly market or sell MosaiQ. In addition, any revenue we receive will depend in whole or in part upon the efforts of third parties, which may not be successful and will generally not be within our control. If we are not successful in commercializing MosaiQ through collaborations with one or more third parties, our future product revenue will suffer and we may incur significant additional losses.

We may need to raise additional capital, which may not be available on favorable terms, if at all, and which may cause dilution to shareholders, restrict our operations or adversely affect our ability to operate our business.

We expect to fund our operations in the near-term, including the ongoing development of MosaiQ through successful field trial completion, achievement of required regulatory authorizations and commercialization, from a combination of funding sources, including with available cash and short-term investment balances and the issuance of new equity or debt. Our ability to raise additional capital may be significantly affected by general market conditions, the market price of our ordinary shares, our financial condition, uncertainty about the future commercial success of MosaiQ, regulatory developments, the status and scope of our intellectual property, any ongoing arbitration or litigation, our compliance with applicable laws and regulations and other factors, many of which are outside our control. Furthermore, the indenture governing the Secured Notes contains limitations on our ability to incur debt and issue preferred and/or disqualified stock. Accordingly, we cannot be certain that we will be able to obtain additional financing on favorable terms or at all. If we are unable to obtain needed financing on acceptable terms, or otherwise, we may not be able to implement our business plan, which could have a material adverse effect on our business, financial condition and results of operations, including a decline in the trading price of our ordinary shares. Any additional equity financings could result in additional dilution to our then existing shareholders. In addition, we may enter into additional financings that restrict our operations or adversely affect our ability to operate our business and, if we issue equity, debt or other securities to raise additional capital or restructure or refinance our existing indebtedness, the new equity, debt or other securities may have rights, preferences and privileges senior to those of our existing shareholders.

Recent global economic and political conditions could result in significant changes to legislation, government policies, rules and regulations, which may have a material adverse effect on our business.

The impact of recent political and economic developments in the United States, the United Kingdom and Europe, including the United Kingdom’s exit from the European Union, commonly referred to as “Brexit,” are uncertain. These political and economic developments could result in changes to legislation or reformation of government policies, rules and regulations pertaining to the U.S. healthcare system, tax and trade. Such changes could have a significant impact on our business by increasing the cost of doing business, affecting our ability to sell our products and negatively impacting our profitability. In addition, these developments, or continuing uncertainty surrounding these developments, could result in significant financial market volatility, and could also exacerbate, or result in, a slow-down of growth in global, U.S. and other economies, which could have a material adverse effect on our operating performance and the market price of our ordinary shares.

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In particular, on January 31, 2020, the United Kingdom ceased to be a member state of the European Union and, on December 31, 2020, the United Kingdom ceased to be part of the E.U. single market and customs union, as well as all E.U. policies and international agreements. As a result, the free movement of persons, goods, services and capital between the United Kingdom and the European Union ended, and the European Union and the United Kingdom formed two separate markets and two distinct regulatory and legal spaces. On December 24, 2020, the European Commission reached a trade agreement with the United Kingdom on the terms of its future cooperation with the European Union, which we refer to as the “Trade Agreement”. The Trade Agreement offers U.K. and E.U. companies preferential access to each other's markets, ensuring imported goods will be free of tariffs and quotas; however, economic relations between the United Kingdom and the European Union will now be on more restricted terms than existed previously. In addition, the Trade Agreement sets out certain procedures for approval and recognition of medical products.

Although we cannot predict at this time the full impact that Brexit and the Trade Agreement may have on our business, operations and financial results, we do expect that Brexit will impact our regulatory approval plan for MosaiQ. The European Union is transitioning from the existing European Directive 98/79/EC on in vitro diagnostic medical devices, or the IVDD, to the In Vitro Diagnostic Device Regulation, or the IVDR, which will repeal and replace the IVDD. Unlike the IVDD, which must be implemented into the national laws of the Member States of the European Economic Area, or EEA, the IVDR will be directly applicable in all EEA Member States and is intended to eliminate current differences in the regulation of in vitro diagnostic medical devices among EEA Member States. However, due to Brexit, the United Kingdom will not be subject to the IVDR and has instead introduced its own regulatory framework. As a result, there is a new conformity marking solely for the United Kingdom and, as of January 1, 2021, any new products require a U.K. Conformity Assessed, or UKCA, mark, in addition to a CE mark. However, our existing products will be able to rely on CE marks previously obtained during a transition period that will last until June 30, 2023.

We incur increased costs as a result of being a public company whose ordinary shares are publicly traded in the United States and our management must devote substantial time to public company compliance programs.

As a public company, we have incurred and will continue to incur significant legal, insurance, accounting and other expenses that we did not incur as a private company. We intend to continue to invest resources to comply with evolving laws, regulations and standards, and this investment will result in increased general and administrative expenses and may divert management’s time and attention. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed. Our insurance costs have increased, particularly for directors’ and officers’ liability insurance. Such costs may further increase in the future, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit committee and remuneration committee, and qualified executive officers.

Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, we are required to furnish a report by our management on our internal control over financial reporting on an annual basis, and our management is also required to evaluate our disclosure controls and procedures quarterly. During the quarter ended September 30, 2020, we identified a material weakness in our internal control over financial reporting and concluded that our disclosure controls were not effective as of September 30, 2020 or June 30, 2020. Due to this material weakness, we have also concluded that our disclosure controls were not effective as of December 31, 2020. For additional information, see Part I, Item 4 "Controls and Procedures". We cannot assure you that there will not be additional material weaknesses or significant deficiencies in our internal controls in the future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

On January 29, 2021, we announced the following changes to our management team:

•

Ernest Larnach resigned from his position as our Head of Financial Accounting and Treasury and as our principal accounting officer, effective February 1, 2021.

•

Vittoria Bonasso, age 44, was appointed as our Head of Finance & Group Controller, effective February 1, 2021, and will take on the position of principal accounting officer following an initial on-boarding period.

•

We and Ms. Bonasso have entered into an employment agreement in connection with her appointment as our Head of Finance & Group Controller.

Resignation of Ernest Larnach as our Head of Financial Accounting and Treasury and Principal Accounting Officer

On January 29, 2021, Mr. Larnach, our Head of Financial Accounting and Treasury and our principal accounting officer, notified us of his decision to leave our company to pursue other career opportunities. Effective February 1, 2021, he resigned from his position as our Head of Financial Accounting and Treasury and our principal accounting officer. Following his resignation date, he will serve as our Head of Group Accounting and will continue to support us through the close of the financial year ended March 31, 2021 and the preparation of our Annual Report on Form 10-K until the end of May 2021 to ensure a smooth transition.

Appointment of Vittoria Bonasso as our Head of Finance & Group Controller and Principal Accounting Officer

On February 1, 2021, Ms. Bonasso joined our company as our Head of Finance & Group Controller. Ms. Bonasso brings over 20 years of experience in public accounting and strategic and financial leadership of healthcare and technology businesses. From 2017 to 2020, Ms. Bonasso served as the Director of Global Financial Controlling & Deputy Chief Financial Officer at EHL Group, a company focused on hospitality education. From 2015 to 2016, Ms. Bonasso served as the Director of Europe Group Controller at eBay Inc., where, among others, she oversaw controlling, accounting and financial reporting activities. From 2010 to 2015, Ms. Bonasso held various roles at Stryker Corporation, a medical technologies corporation, most recently as Director of Finance for Eastern Europe, Middle East & Africa (EEMEA), Regional Chief Financial Officer and Member of the Board of Directors and Leadership Team. From 1998 to 2010, Ms. Bonasso held various roles at PricewaterhouseCoopers, most recently as a Senior Manager specialized in managing large and complex audits of listed multinational corporations. Ms. Bonasso, a Canadian and Swiss citizen, holds a degree in Business Administration and a post-graduate superior specialized diploma in Public Accounting, both from HEC Montreal. She is a member of the Chartered Professional Accountants (CPA) of Canada and is a Certified Chartered Accountant.

Ms. Bonasso will be responsible for overseeing accounting, controlling and treasury activities. After an initial on-boarding period, Ms. Bonasso will assume the role of our principal accounting officer no later than June 1, 2021.

With respect to the disclosure required by Item 401(b) of Regulation S-K, there are no arrangements or understandings between Ms. Bonasso and any other person pursuant to which she will assume the role of our principal accounting officer. With respect to the disclosure required by Item 401(d) of Regulation S-K, there are no family relationships between Ms. Bonasso and any of our directors or executive officers. With respect to Item 404(a) of Regulation S-K, except as described herein, there are no relationships or related transactions between Ms. Bonasso and us that would be required to be reported.

In connection with Ms. Bonasso's appointment as Head of Finance & Group Controller, on December 18, 2020, we entered into an employment agreement with Ms. Bonasso, which sets forth the terms and conditions under which Ms. Bonasso will serve in this position. The employment agreement has no specific term and continues until terminated in accordance with the terms therein. Ms. Bonasso's current annual base salary for fiscal year 2021 will be Swiss Francs (CHF) 250,000. Ms. Bonasso's annual base salary will be reviewed by us from time to time.

Both we and Ms. Bonasso must give a minimum of six months’ prior notice to terminate her employment, other than for cause (as provided for in the employment agreement). Ms. Bonasso is obligated to refrain from competition with us and also refrain from soliciting our employees, suppliers or customers for a period of one year after her termination, unless that period is shortened by a period of leave. After notice to terminate has been given by Ms. Bonasso or us, all or part of the duration of the notice period of leave would be counted as part of the non-competition period.

In addition to her salary, Ms. Bonasso is entitled to certain annual allowances and to benefits in accordance with our Swiss pension fund and insurance plans. Ms. Bonasso is eligible for an annual discretionary bonus equal to 25% of her base salary.

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On February 1, 2021, we entered into a change of control agreement with Ms. Bonasso. The purpose of the change of control agreement is to establish certain protections for Ms. Bonasso upon a qualifying termination of her employment in connection with a change of control of our company.

The change of control agreement provides that, if we terminate Ms. Bonasso's employment without "Cause" (as defined in the change of control agreement) or Ms. Bonasso terminates her employment for "Good Reason" (as defined in the change of control agreement) and, in either case, such termination occurs within 24 months following a "Change of Control" (as defined in the change of control agreement), then, subject to Ms. Bonasso executing and delivering to us a release and waiver of claims, she will receive a lump sum payment of the following:

•

any accrued obligations owed to her, which include: (i) any of her annual base salary earned through the effective date of termination that remains unpaid; (ii) any bonus payable with respect to any fiscal year which ended prior to the effective date of her termination of employment, which remains unpaid; and (iii) any expense reimbursement due to her on or prior to the date of termination which remains unpaid to her; and

•

a cash payment equal to 150% of the sum of her base salary plus target annual bonus in effect on the date of termination, without taking into effect any reduction in her annual base salary that may constitute "Good Reason" under the change of control agreement.

In addition, immediately prior to the effective date of termination, 100% of Ms. Bonasso's then outstanding, unvested equity awards, if any, will immediately vest and, if applicable, become exercisable (and any rights of repurchase by us or restriction on sale on Ms. Bonasso's then outstanding equity awards will lapse), and, following the effective date of termination, Ms. Bonasso's then outstanding equity awards, if any, will, if applicable, remain exercisable for a period of 12 months or until the expiration date of the equity award, whichever is the shorter period.

The change of control agreement will expire on February 1, 2024 and will automatically renew for successive one year terms unless our board of directors provides written notice of expiration of the change of control agreement at least 90 days prior to February 1, 2024 or the applicable anniversary thereof.

The above summary descriptions of certain terms contained in the employment agreement and the change of control agreement do not purport to be complete and are qualified in their entirety by reference to the full texts of the employment agreement and the change of control agreement, copies of which are filed as Exhibits 10.1 and 10.2, respectively, hereto.

Item 6. Exhibits

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q:

Exhibit No.		Description

10.1		Employment Agreement, dated December 18, 2020, between Quotient Suisse SA and Vittoria Bonasso

10.2		Change of Control Agreement, dated February 1, 2021, between the Company and Vittoria Bonasso
31.1		Certification of Franz Walt, Chief Executive pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Peter Buhler, Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Franz Walt, Chief Executive pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Peter Buhler, Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		The following financial information from Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2020 filed with the SEC, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) Condensed Consolidated Balance Sheets (unaudited), (ii) Condensed Consolidated Statements of Comprehensive Loss (unaudited), (iii) Condensed Consolidated Statements of Changes in Shareholders’ Deficit (unaudited), (iv) Condensed Consolidated Statements of Cash Flows (unaudited) and (v) Notes to Condensed Consolidated Financial Statements.
104		Cover Page Interactive Data File, formatted in Inline XBRL (included as Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		QUOTIENT LIMITED

Date: February 4, 2021		/s/ Franz Walt
		Franz Walt Chief Executive Officer

Date: February 4, 2021

/s/ Peter Buhler

Peter Buhler

Chief Financial Officer

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Exhibit 10.1

EMPLOYMENT AGREEMENT

BETWEEN

QUOTIENT SUISSE SA

Business Park Terre Bonne

Route de Crassier 13

1262 Eysins

Hereinafter “the Company”

AND

Vittoria Bonasso

Chemin du Petit Penthalaz 7d

1306 Daillens

Switzerland

Hereinafter “the Executive”

Exhibit 10.1

INDEX

1.	DEFINITIONS AND INTERPRETATION	3
2.	APPOINTMENT	4
3.	TERM	4
4.	PROBATIONARY PERIOD	5
5.	DUTIES OF THE EXECUTIVE	5
6.	INTERESTS IN OTHER BUSINESSES	5
7.	HOURS OF WORK	6
8.	PRINCIPAL PLACE OF WORK	6
9.	SALARY	6
10.	ANNUAL BONUS	7
11.	EXPENSES	7
12.	BENEFITS AND PENSION FUND	7
13.	COMPANY CAR/CAR ALLOWANCE	7
14.	HOLIDAYS ENTITLEMENT	8
15.	ILLNESS AND ACCIDENT INSURANCE	8
16.	TERMINATION OF AND SUSPENSION FROM EMPLOYMENT	9
17.	OBLIGATIONS DURING EMPLOYMENT	11
18.	OBLIGATIONS AFTER EMPLOYMENT	13
19.	DISCIPLINARY AND GRIEVANCE PROCEDURE	14
20.	COLLECTIVE AGREEMENTS	14
21.	DEDUCTIONS	14
22.	DATA PROTECTION	14
23.	PROTECTION OF THE EMPLOYEE	15
24.	TRAINING	15
25.	HR POLICIES	16
26.	RELEASES AND WAIVERS	16
27.	ENTIRE AGREEMENT	16
28.	GOVERNING LAW AND JURISDICTION	16

Exhibit 10.1

THIS AGREEMENT is made on December 18^th, 2020

BETWEEN:

QUOTIENT SUISSE SA (company number CHE-167.592.818, Switzerland) whose registered office is at Business Park Terre Bonne, Route de Crassier 13, 1262 Eysins, Switzerland ("the Company") and

Vittoria Bonasso of Chemin du Penthalaz 7d, 1306 Daillens, Switzerland (“the Executive”)

IT IS AGREED as follows:

1.	DEFINITIONS AND INTERPRETATION

1.1.

In this Agreement, unless the context otherwise requires, the following expressions have the following meanings:

"Agreement" means this Agreement (including any schedule or annexure to it and any document referred to in it or in agreed form);

“Associated Company” means any company, which is especially a holding company or subsidiary of the Company or a subsidiary of the Company’s holding Company;

"Board" means the board of directors of the Company from time to time and includes any committee of the Board duly appointed by it;

"Business" means the manufacture and sale of blood-typing reagents and associated technologies and any trade or other commercial activity which is carried on by the Group, or which the Group shall have determined to carry on with a view to profit in the immediate or foreseeable future;

"Confidential Information" any trade secrets or other information which is confidential, commercially sensitive and is not in the public domain relating or belonging to the Group including but not limited to information relating to the business methods, corporate plans, management systems, finances, new business opportunities, research and development projects, marketing or sales of any past, present or future product or service, secret formulae, processes, inventions, designs, knowhow discoveries, technical specifications and other technical information relating to the creation, production or supply of any past, present or future product or service of the Group, lists or details of clients, potential clients or suppliers or the arrangements made with any client or supplier and any information in respect of which the Group owes an obligation of confidentiality to any third party;

"Duties" means the duties of the Executive as set out in Clause 5;

"Employment" means the Executive's employment under this Agreement;

“Group” means the Company and its affiliates;

"Chairman" means any person holding office as Chairman of the Company from time to time, including any person exercising substantially the functions of a Chairman of the Company;

Exhibit 10.1

"Relevant Period" means the period of six months ending with the Termination Date;

"Restricted Business" means any part of the Business in which the Executive shall have been directly concerned in the course of the Employment at any time in the Relevant Period;

"Termination Date" means the date on which the Employment terminates.

1.2.	In this Agreement, unless the context otherwise requires:

1.2.1.

words in the singular include the plural and vice versa and words in one gender include any other gender;

1.2.2.

a reference to a statute or statutory provision includes:

1.2.2.1.

any subordinate legislation made under it; and

1.2.2.2.

any statute or statutory provision which modifies, consolidates, re-enacts or supersedes it;

1.3.	a reference to:

1.3.1.

a "person" includes any individual, firm, body corporate, association or partnership, government or state (whether or not having a separate legal personality);

1.3.2.

clauses and schedules are to clauses and schedules of this Agreement and references to sub clauses and paragraphs are references to sub clauses and paragraphs of the clause or schedule in which they appear; and

1.4.

the table of contents and headings are for convenience only and shall not affect the interpretation of this Agreement.

2.	APPOINTMENT

2.1.

The Company appoints the Executive and the Executive agrees to serve as Head of Finance & Group Controller or in such other capacity as the Company may from time to time require on the terms set out in this Agreement.

2.2.

The Executive warrants that he is free to enter into this Agreement and is not bound by, nor subject to any court order, arrangement, obligation, restriction or undertaking (contractual or otherwise) which prohibits or restricts the Executive from entering into this Agreement or performing the Duties.

2.3.	The Executive shall be employed by Quotient Suisse SA.

TERM

3.1.	The Employment will commence on February 1^st, 2021 and unless terminated in accordance with Clause 16, shall continue until terminated by either party giving to the other not less than 6 months' prior written notice.

3.2.	No employment with a previous employer counts towards the Executives period of continuous employment with the Company.

Exhibit 10.1

4.	PROBATIONARY PERIOD

4.1.	The first three months of your employment shall be considered your probationary period. During this period your employment can be terminated by either party with seven days notice or pay in lieu of notice.

5.	DUTIES OF THE EXECUTIVE

5.1.

The Executive shall carry out such duties as Head of Finance & Group Controller as may be agreed between the Executive and the Company from time to time and exercise the powers consistent with such duties.

5.2.	The Executive shall at all times during the Employment:

5.2.1.

devote the whole of his time, attention, skill and ingenuity during working hours to his duties under this Agreement;

5.2.2.

faithfully and using his best endeavours carry out all work consistent with his position which may be required of him;

5.2.3.

comply with all the Company’s rules, regulations, policies and procedures from time to time in force;

5.2.4.

perform the duties faithfully and diligently;

5.2.5.

obey all lawful and reasonable directions of the Company, observe such restrictions or limitations as may from time to time be imposed by the Company upon the Executive's performance of the duties and implement and abide by any relevant Company policy which may be promulgated or operated in practice from time to time;

5.2.6.

use best endeavours to promote the interests of the Group and shall not do or willingly permit to be done anything which is harmful to those interests; and

5.2.7.

keep the Company fully informed (in writing if so requested) of the Executive's conduct of the business or affairs of the Group and provide such explanations as the Board may require.

6.	INTERESTS IN OTHER BUSINESSES

6.1.

During the Employment the Executive will not, without the prior written consent of the Company, be engaged, concerned or interested in any business or undertaking whatsoever other than the business of the Group (except as the owner for investment in shares and other securities quoted on a public stock exchange and not exceeding 1% of the total issued shares of any company).

6.2.

Notwithstanding clause 6.1, the Executive shall be entitled to devote time to his and other outside interests and business activities but only to the extent that the discharge of his duties under this Agreement is not impaired as a result. The Company shall be entitled to withdraw the consent given by this clause to pursue such activities at any time if it believes that to continue with them would no longer be in the best interests of the Group provided however that in the event the Company withdraws such consent the Executive shall be entitled to fulfil any and all commitments that he has already committed to undertake on dates and times after the time at which consent is withdrawn.

Exhibit 10.1

7.	HOURS OF WORK

7.1.

The Executive's hours of work shall be the Company's normal office hours (40 hours per week) and such further hours as may be necessary for the proper discharge of the Duties. Due to the level of responsibilities and the role, the Executive shall not be entitled to receive any additional remuneration for work outside the Company's normal office hours.

8.	PRINCIPAL PLACE OF WORK

8.1.

The normal place of work is in the Company’s premises in Eysins, Vaud, Switzerland. The Company reserves the right to require the Executive to work temporarily or permanently at/from other locations as the needs of the business require. This flexibility is essential to the smooth running of the business of the Company.

8.2.

The Executive may be required to work at the Company’s premises, Associated Company’s premises or at the premises of any of their respective customers, clients, suppliers, or associates within or out with Switzerland from time to time.

SALARY

9.1.

During the Employment the Company shall pay to the Executive a basic salary of CHF 250’000.-- per annum. Factors influencing the salary determination are the job requirements, the required educational background, experience, individual performance and the local labour market.

You will be paid in thirteen (13) installments on a monthly basis. The 13th instalment will be paid together with the December salary or on a pro rata basis at the end of your employment contract.

In addition, the Company shall pay to the Executive a lunch allowance of CHF 2’016.-- per annum. The lunch allowance will be paid in twelve (12) installments on a monthly basis.

The monthly salary is paid in Swiss Francs, on or around the 27th at the end of each month into the Executive’s designated bank account.

9.2.

The gross salary and any other cash payment is reduced by the Executive’s contributions to the premiums for the social security contributions mandatory under Swiss law, as well as contributions to the pension plan maintained by the Employer.

For Employees that are taxed at source the Company will deduct the relevant Swiss taxes according to the information provided by the Executive. Any tax refund that may be received by the Executive is to be communicated to HR to review any potential refund to Quotient Suisse SA. The Executive is liable for any additional taxes due resulting from any change in tax rate due to change in circumstances that are not communicated in a timely manner. Cross-borders’ employees will be tax withheld from the payments made to you as long as you do not provide us with form 2041-AS exempting you from Swiss tax withholding.

9.3.

Employees will receive a monthly salary statement. It will be the responsibility of Employees to ensure that the Company has been given correct details of Bank Account name, IBAN number and any changes to these details. Any queries in respect thereof should be raised with HR.

Exhibit 10.1

9.4.

The Executive's basic salary shall be reviewed by the Company from time to time. Any increase in the Executive's salary consequent upon such review will be effective from the effective date specified by the Company.

10.	ANNUAL BONUS

10.1.

The Executive may be eligible to receive up to a maximum equivalent of 25% of basic salary.

10.2.

Unless otherwise expressly agreed upon in writing, the payment of such additional bonus is on a discretionary and voluntary basis. The Employees must be in employment with the Company on the date of the bonus payment to be eligible for the payment. The payment of a bonus for several years in a row does not give rise to any right of the employee.

10.3.

If the Company decides to implement an Annual Bonus Scheme, parties will be bound by it. Clause 10.2 will remain valid notwithstanding any bonus scheme. The Company reserves the right to amend the bonus scheme from time to time by its own decision to suit the changing needs of the business. Employees will be informed of any changes to the scheme.

11.

EXPENSES

11.1.

The Company will reimburse Employees for all expenses properly and necessarily incurred by them in the proper performance of their duties, upon receipt of such vouchers or other evidence of actual payment of such expenses as the Company may reasonably require. Details of expenses and subsistence claims procedures are outlined in the Travel & Expense Policy.

11.2.

Any credit card or charge card supplied to the Executive by the Company shall be used solely for expenses incurred by the Executive in carrying out the Duties. Any such card must be returned by the Executive to the Company immediately upon the Company's request.

11.3.

Procedures for claiming of business-related expenses are set out in the Company’s Travel and Expense Policy.

12.	BENEFITS AND PENSION FUND

12.1.

The Executive will become a member of the Company Swiss pension fund and insurance plans. A summary of benefits is available in the Quotient Suisse SA Benefits Brochure and further detailed in the official plans rules which may be amended from time to time. The pension provider may link final coverage to the Executive passing their medical examination, at the cost of the pension provider.

12.2.

The Company has the right to alter, amend, cancel or vary at any time any of its Employee benefits programs. Any amendment of the Pension Funds plan will be subject to the LPP Committee.

13.	COMPANY CAR/CAR ALLOWANCE

13.1.

Subject to the Company Car policy and provided that the Executive holds a current full driving license, he may be entitled to a company car allowance of CHF 16’800.-- per annum.

13.2.

No private fuel allowance is payable.

Exhibit 10.1

13.3.

Further details relating to the Company Car policy will be available from Human Resources.

13.4.

The Executive should note that this is a taxable benefit.

14.	HOLIDAYS ENTITLEMENT

14.1.

The Executive shall be entitled to twenty five (25) paid days per full year. The Company holiday year runs from 1st June to 31st May. If the Executive starts working during the holiday year or if this contract ends before the end of a holiday year the holiday entitlement will be calculated on a pro rata basis.

Holidays must be taken at times convenient to the Company and sufficient notice of intention to take holiday must be given. The Executive shall take their annual vacation by the end of the holiday year and take at least two consecutive weeks together. However a limited number of five (5) days not taken during that year may be transferred to the following holiday year. These days have to be taken before the 30th September.

14.2.

On termination of employment, a payment representing holiday pay will be made by the Company or deducted from the Executive (as appropriate) depending on whether holiday entitlement had been unused or exceeded.

14.3.

After 5 years of service, the Executive will be entitled to two (2) more days of annual holidays. After 10 years of service the Executive will be entitled to an additional two (2) days of holidays.

14.4.

On termination of the Employment the Executive shall be entitled to pay in lieu of any outstanding holiday entitlement and shall be required to repay to the Company any salary received for holiday taken in excess of his actual entitlement.

14.5.

The Company may require the Executive to take any outstanding accrued holiday during a period of notice of termination of the Employment. Other than at the request of, or with the permission of, the Company, the Executive may not take holiday during a period of notice of termination of Employment.

15.	ILLNESS AND ACCIDENT INSURANCE

15.1.

Should the Executive be unable to come to work as a result of an illness or an accident, they must inform the Company without delay in line with the Absence Management Procedure Policy. For such absences lasting for three (3) days or more, the Executive must obtain a medical certificate. In case of a professional or non-professional accident, a claim form needs to be filled in and sent to Human Resources.

15.2.

The Executive is covered by the loss of income insurance for illness and accident of the Company. The Executive receives the terms and conditions of this insurance, that are relevant. The premium is paid 100% by the Employer. The insurance covers 100% of the base salary during the first thirty (30) days and 90% of the based salary as from the thirty first (31) day for up to 700 days. For any case not covered by the insurance, the Executive is entitled to receive the salary according to the relevant legal provisions.

If the employment relationship ends before the end of the daily allowances, the Executive can receive the allowances according to the terms and conditions of the insurance. Any premium due after the end of the employment relationship must be paid by the Executive.

Exhibit 10.1

16.	TERMINATION OF AND SUSPENSION FROM EMPLOYMENT

16.1.

Subject to the remainder of this Clause 16, the Company may terminate the Executive’s employment by serving notice upon him in accordance with Clause 3.

16.2.

The Executive agrees that he will not engage in any competing activity during all or any part of his notice period. Any income received from any activity during the notice period will be deducted from the final salary payment.

16.3.

This Agreement terminates without notice at the end of the month on which the Executive reaches normal retirement age.

16.4.

Immediate dismissal

16.4.1.

The Company may by written notice terminate the Employment without notice or pay in lieu of notice if the Executive:

16.4.1.1.

commits any act of gross misconduct or is guilty of any conduct which may in the reasonable opinion of the Company, bring the Company into disrepute or is calculated or likely prejudicially to affect the interests of the Company, whether or not the conduct occurs during or in the context of the Executive's Employment;

16.4.1.2.

is convicted of any criminal offence punishable with imprisonment; or

16.4.1.3.

commits any act of dishonesty relating to the Company, any of its employees or otherwise;

16.4.1.4.

commits a material breach of the terms and conditions of this Agreement or repeats or continues (after a written warning) any other breach of such terms and conditions, including any failure to carry out the Duties efficiently, diligently or competently;

16.4.1.5.

becomes bankrupt or makes any arrangement or composition with his creditors generally; or

16.4.1.6.

for any other valid reason within the meaning of Article 337 of the Swiss Code of Obligations.

16.5.

Suspension

In order to investigate a complaint against the Executive of misconduct the Company may suspend the Executive on full pay for so long as may be necessary to carry out a proper investigation and hold any appropriate disciplinary hearing.

16.6.

Garden leave

16.6.1.

After notice to terminate the Employment has been given by the Executive or the Company, the Company may for all or part of the duration of the notice period in its absolute discretion:

16.6.1.2.

require the Executive not to perform any of the Duties;

16.6.1.3.

require the Executive not to have any contact with clients of the Company;

Exhibit 10.1

16.6.1.4.

require the Executive not to have any contact with such employees or suppliers of the Company as the Company shall determine;

16.6.1.5.

require the Executive to disclose any attempted contact with him made by any client, employee or supplier with whom the Executive has been required to have no contact pursuant to this clause.

16.6.1.6.

require the Executive to take any accrued holiday entitlement or prohibit the Executive from taking any accrued holiday entitlement except with the prior written approval of the Chief Executive Officer; provided always that throughout the period of any such action and subject to the other provisions of this Agreement the Executive's salary and contractual benefits shall not cease to accrue or be paid.

16.6.2.

The Executive acknowledges that such action taken on the part of the Company shall not constitute a breach of this Agreement of any kind whatsoever nor shall the Executive have any claim against the Company in respect of any such action.

16.6.3.

The Executive acknowledges that during any such period of garden leave, the terms of this Agreement and the obligations owed by the Executive generally to the Company, including without limitation the Executive's duties of good faith and fidelity to the Company shall continue.

16.6.4.

During any such period of garden leave the Executive must not work for any other person or on his own account and shall remain readily contactable and available to work for the Company. Should the Executive fail to be available for work at any time having been requested by the Company to do so, the Executive's right to salary and contractual benefits in respect of such period of non-availability shall be forfeit notwithstanding any other provision of this Agreement.

16.7.

Effect of termination

16.7.1.

On the Termination Date or at any time after notice is given by the Company or the Executive to terminate the Employment, the Executive shall, at the request of the Company resign (without prejudice to any claims which he may have against the Company arising out of the Employment or its termination) from all and any offices which he may hold as a director of the Company or any of its subsidiaries and from all other appointments or offices which he holds as nominee or representative of the Company; and

16.7.2.

If the Executive should fail to do so within 7 days the Company is irrevocably authorised to appoint some person in his name and on his behalf to sign any documents or do any things necessary or requisite to effect such resignation(s).

Exhibit 10.1

17.	OBLIGATIONS DURING EMPLOYMENT

17.1.

Intellectual property

17.1.1.

For the purposes of this Clause 17 the term “IPRs” (Intellectual Property Rights) means any and all patents, trade and service marks, trade and business names, rights in designs, internet domain names, copyrights (including copyright in software), database rights, rights in know-how, utility models and all other intellectual property rights (whether or not any of these is registered or unregistered and including any applications for the grant of any such rights) and all rights or forms of protection having an equivalent or similar effect anywhere in the world.

17.1.2.

If you create, make, author, originate, develop, design, conceive or write (either alone or with others) any works, designs, innovations, inventions, improvements, processes, get-ups or trademarks in the course of your employment with the Company (“Works”):

17.1.2.1.

you will promptly disclose to the Company full details of all and any such Works;

17.1.2.2.

all rights (including, without limitation, all IPRs) in and to such Works shall solely legally and beneficially vest in the Company immediately upon their creation without any payment to you;

17.1.2.3.

The Company will pay you an appropriate compensation for the Works invented by you while performing your employment activity but not during the performance of your contractual duties. The Works made during the performance of your contractual duties will vest in the Company without any payment to you;

17.1.2.4.

you hereby irrevocably and unconditionally waive, in favour of the Company, its licensees and successors in title any and all moral rights conferred on you in relation to the Works (existing or future); and

17.1.2.5.

you will not knowingly do anything, or omit to do anything, to imperil the validity or subsistence of any patent, patent application or invention relating to any of the Works.

17.1.3.

To the extent such rights and IPRs do not so vest in Quotient, you hereby assign to the Company all current and future rights in any IPRs created in any Works.

17.1.4.

You will from time to time, both during your employment under this Agreement and thereafter, at the request and expense of the Company, promptly do all things and execute all documents necessary or desirable to give effect to the provisions of this Clause 17 including, without limitation, all things necessary to obtain and/or maintain patent or other protection in respect of any Works in any part of the world and to vest such rights (including, without limitation, all IPRs) in and to the Works in the Company or the Company’s nominee.

Exhibit 10.1

17.1.5.

For the avoidance of doubt;

the provisions of this Clause 17 will apply to any rights (including, without limitation, any IPRs) in the Works arising in any jurisdiction, and the provisions of this Clause 17 will apply in respect of any jurisdiction to the extent permitted by the directives, statutes, regulations and other laws of any such jurisdiction; and

the provisions of this Clause 17 will apply only to Works made or generated in the course of your employment with the Company and will not apply to any creative writings, designs, innovations, inventions, improvements, processes, get-ups or trademarks not connected, directly or indirectly, with your employment by the Company.

17.2.

Power of attorney

The Executive irrevocably appoints the Company as his attorney in his name and on his behalf to execute documents, to use his name and to do all things which may be necessary or desirable for the Company to obtain for itself or its nominee the full benefit of the provisions of Clause 17 and a certificate in writing signed by any director or the Company Secretary that any instrument or act falls within the authority conferred by this paragraph shall be conclusive evidence that such is the case so far as any third party is concerned.

17.3.

Conflict of interest

17.3.1.

During the Employment, the Executive shall not:

17.3.1.1.

other than in the proper performance of his duties directly or indirectly disclose divulge or communicate to any person or persons whatsoever or make use of any Confidential Information to which you have or may in the course of your employment become aware of relating to the business of the Company.

17.3.1.2.

at any time (whether during or outside normal working hours) take any preparatory steps to become engaged or interested in any capacity whatsoever in any business or venture that is in or is intended to enter into competition with the Business.

17.3.2.

The Executive shall promptly disclose in writing to the Company all his interests (including but not limited to shareholdings and directorships) in any businesses, whether or not of a commercial or business nature.

17.3.3.

The Executive shall not, at any time during the Employment, whether directly or indirectly be employed, engaged or concerned in any capacity whatsoever in the conduct of any activity or business which is similar to or competes with any activity or business carried on by the Company (except as a representative of the Company or with the written consent of the Company).

17.3.4.

The Executive shall, at any time during the Employment or following its termination at the request of the Company return to the Company or, at the Company's request, shall destroy:

Exhibit 10.1

17.3.4.1.

any documents, drawings, designs, computer files or software, visual or audio tapes or other materials containing information (including, without limitation, Confidential Information) relating to the Company's business created by, in the possession of or under the control of the Executive; and

17.3.4.2.

any other property of the Company in his possession or under his control.

17.3.5.

The Executive shall not make or keep or permit any person to make or keep on his behalf any copies or extracts of the items referred to in sub clause 17.3.4 in any medium or form.

18.	OBLIGATIONS AFTER EMPLOYMENT

18.1.

The Executive shall not directly or indirectly, whether on the Executive's own behalf or on behalf of another person:

18.1.1.

for the period of one year following the Termination Date:

18.1.1.1.

so as to compete with the Group in any part of the Restricted Business solicit or entice away or seek to solicit or entice away or deal with any person who was at any time during the Relevant Period a client of the Group with whom:

18.1.1.1.1.

the Executive shall have had material dealings in the course of the Employment at any time in the Relevant Period; or

18.1.1.1.2.

to the Executive's knowledge any employee of the Group who is under the Executive's control shall have had material dealing in the course of their employment with the Group during the Relevant Period;

18.1.1.2.

so as to compete with the Group in any part of the Restricted Business solicit or entice away or seek to solicit or entice away any person who was at the Termination Date negotiating with the Group with a view to dealing with that company as a client and with whom:

18.1.1.2.1.

the Executive shall have had material dealings in the course of the Employment at any time in the Relevant Period; or

18.1.1.2.2.

the Executive's knowledge any employee of the Group who is under the Executive's control shall have had material dealings in the course of their employment with the Group during the Relevant Period;

18.1.1.3.

solicit or entice away or seek to solicit or entice away from the Group any person who is and was at the Termination Date employed or engaged by the Group in any part of the Restricted

Exhibit 10.1

Business in a senior managerial, technical, supervisory, sales, marketing or risk assessment capacity and was a person with whom the Executive had material dealings in the course of the Employment during the Relevant Period; or

18.1.1.4.

so as to compete with the Company in any part of the Restricted Business seek to entice away from the Group or otherwise solicit or interfere with the relationship between the Group and any supplier of such company with whom the Executive shall have had material dealings in the course of the Employment during the Relevant Period;

18.1.2.

at any time after the Termination Date:

18.1.2.1.

induce or seek to induce by any means involving the disclosure or use of Confidential Information any customer to cease dealing with the Group or to restrict or vary the terms upon which it deals with the Company;

18.1.2.2.

be held out or represented by the Executive or any other person, as being in any way connected with or interested in the Group; or

18.1.2.3.

disclose, divulge or communicate to any person or persons whatsoever or make use of any Confidential Information.

18.2.

Any period of Garden Leave served by the Executive pursuant to Clause 16.6 shall reduce the one-year period referred to in Clause 18.1.1 by an equal period of time.

19. DISCIPLINARY AND GRIEVANCE PROCEDURE

19.1.

There are no specific disciplinary rules or procedures applicable to the Executive. Any matters concerning the Executive's unsatisfactory conduct or performance will be dealt with by either the Chief Executive Officer or the President.

19.2.

If the Executive has any grievance relating to his Employment (other than one relating to a disciplinary decision) he should refer such grievance to the Chief Executive Officer or the Head of Human Resources and if the grievance is not resolved by discussion with him it will be referred for resolution to the Board, whose decision shall be final.

20. COLLECTIVE AGREEMENTS

20.1.

There are no collective agreements that affect the terms and conditions of the Executive’s employment.

21. DEDUCTIONS

21.1.

Insofar as the law permits, the Executive consents to the deduction at any time from any salary or other sum due from the Company to the Executive including any payment on termination of employment, of sums owed by the Executive to the Company either by way of a loan, overpaid salary with respect to holiday where the Executive has taken more holiday than his accrued entitlement at the date of termination of employment or expenses.

Exhibit 10.1

22.DATA PROTECTION

22.1.

For the purposes of complying with the Swiss Data Protection legislation including the Swiss Federal Data Protection Act (DPA), the Swiss Federal Data Protection Ordinance (DPO), the Swiss Federal Ordinance on Data Protection Certification (DPCO), or any equivalent legislation, the Executive agrees to provide the Company or any Associated Company with any personal data and sensitive personal data relating to him that either may request and he further consents to the holding and processing (in manual, electronic or any other form) of such data by the Company and/or any Associated Company and/or any agent or third party nominated by the Company and bound by a duty of confidentiality, for the purpose of:

employee related administration;

ii.

processing his file and management of its business;

iii.

compliance with applicable procedures, laws and regulations;

iv.

providing data to external suppliers for the provision and administration of his remuneration and any benefits and any benefits; and/or

to evaluate the efficiency of the Company’s and any Associated Companies’ business systems.

23.PROTECTION OF THE EMPLOYEE

23.1.

The Company respects and aims to protect the physical and mental wellbeing of its Employees. The Company shall take all necessary measures in this regard.

23.2.

The Company has a Health and Safety Policy which applies to all Employees. It operates total smoking ban on its premises and whilst engaged in your duties. Further detail of the Health and Safety Policy and the Smoking internal rules are contained in the Company’s SOP.

Any act or omission on your part which endangers or might endanger the health and safety of yourself or any other person may be regarded as gross misconduct and may result in the termination of your employment with the Company.

23.3.

The Company is an equal opportunity employer. Discrimination on the grounds of sex, race, religion or belief, disability, age, marriage and civil partnership, gender reassignment or sexual orientation will not be tolerated under any circumstances. Employees breaching these regulations will be managed through the Company Disciplinary Policy.

23.4.

The Company does not tolerate violations of personal integrity including physical, psychological and sexual harassment in the workplace.

Any employee who considers that they have been harassed, victimised or discriminated against in any way should raise this with their Line Manager in the first instance or HR if the latest is concerned.

23.5.

Also in the framework of the protection of personality and health, the Company agrees to take all reasonable steps to manage any conflict situation to foster a good working climate. Employees are requested to contact Human Resources to be informed about the procedure to be undertaken.

Exhibit 10.1

The Company reserves the right to take the necessary measures, which may go up to immediate termination of the employment relationship in the event of infringement of this clause.

24.TRAINING

24.1.

Employees may be required to undergo any appropriate training in connection with their employment with the Company. Such training when required is mandatory and the duration of the training counts as working hours.

24.2.

Employees are expected to attend any training sessions which will be arranged from time to time and which are considered to be appropriate and necessary for your role. Training which is deemed essential for the successful execution of your role, especially around health and safety will be provided, and it is expected that all Employees will attend.

25.	HR POLICIES

25.1.

All global/group and local Swiss Human Resources policies are integral part of the employment contract.

26.	RELEASES AND WAIVERS

26.1.

The Company may, in whole or in part, release, compound, compromise, waive or postpone, in its absolute discretion, any liability owed to it or right granted to it in this Agreement by the Executive without in any way prejudicing or affecting its rights in respect of any part of that liability or any other liability or right not so released, compounded, compromised, waived or postponed.

26.2.

No single or partial exercise, or failure or delay in exercising any right, power or remedy by the Company shall constitute a waiver by it of, or impair or preclude any further exercise of, that or any right, power or remedy arising under this Agreement or otherwise.

27.	ENTIRE AGREEMENT

27.1

This Agreement together with any documents referred to in this Agreement sets out the entire agreement and understanding between the parties and supersedes all prior agreements, understandings or arrangements (oral or written) in respect of the employment or engagement of the Executive by the Company. No purported variation of this Agreement shall be effective unless it is in writing and signed by or on behalf of each of the parties. Should one or several provisions of this Agreement prove invalid, in part or in whole, such invalid provision(s) shall not affect the validity of the other provisions in this Agreement. The invalid provision(s) shall be replaced by such provisions that best meet the parties’ intention when agreeing the invalid provision(s) initially.

28.	GOVERNING LAW AND JURISDICTION

28.1.

This Agreement shall be governed by and construed in accordance with the laws of Switzerland.

28.2.

Each of the parties irrevocably submits for all purposes in connection with this Agreement to the exclusive jurisdiction of the courts of Switzerland.

Exhibit 10.1

28.3.

To the extent that this Agreement, the applicable Staff Regulations or any other applicable regulations of the Company do not provide for specific rules, the Swiss Code of Obligations shall apply.

Signed for and on behalf of

Quotient Suisse SA


/s/ Peter Buhler		/s/ Paul Stuart
Peter Bühler		Paul Stuart
Chief Financial Officer		Head of Human Resources

Signed by	/s/ Vittoria Bonasso		Date December 18, 2020
	Vittoria Bonasso

Exhibit 10.2

QUOTIENT LIMITED

CHANGE OF CONTROL AGREEMENT

THIS CHANGE OF CONTROL AGREEMENT (this "Agreement"), is made on this 1st day of February, 2021, by and between QUOTIENT LIMITED, a public no par value limited liability company incorporated in Jersey, Channel Islands, with registered number 109886 (the "Company") and Vittoria Bonasso (the "Employee").

WHEREAS, the Employee serves as an employee of the Company or an Affiliate of the Company; and

WHEREAS, the Company and the Employee desire to enter into this Agreement to establish certain protections for the Employee in the event of Employee's termination of employment under the circumstances described herein; and

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises contained herein, and intending to be bound hereby, the parties agree as follows:

Section 1.Definitions. As used herein:

1.1"Affiliate" means, with respect to any specified Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person; provided that, in any event, any business in which the Company has any direct ownership interest shall be treated as an Affiliate of the Company.

1.2"Base Salary" means, as of any given date, the annual base rate of salary payable to the Employee by the Company; provided, however, that in the case of a resignation by the Employee for the Good Reason described in Section 1.9, "Base Salary" will mean the annual base rate of salary payable to the Employee by the Company as in effect immediately prior to the reduction giving rise to the Good Reason.

1.3"Board" means the Board of Directors of the Company.

1.4"Cause" means (a) gross negligence or willful misconduct by the Employee in the performance of his duties; (b) conviction of or a plea of nolo contendere by the Employee of a felony or act of moral turpitude (or similar local law concepts); or (c) the Employee's fraud, embezzlement or misappropriation relating to material amounts of the Company's assets. The acts or omissions of the Employee shall not be considered to be willful unless he has no reasonable belief that he is acting in the best interests of the Company.

1.5"Change of Control" means:

1.5.1The acquisition, directly or indirectly, in one transaction or a series of related transactions, by any person or group (within the meaning of Section 13(d)(3) of the U.S. Securities Exchange Act of 1934, as amended) of the beneficial ownership of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of all outstanding securities of the Company; provided, however, that a Change of Control shall not result upon such acquisition of beneficial ownership if such acquisition occurs as a result of a public offering of the Company's securities or any financing transaction or series of financing transactions;

1.5.2A merger or consolidation in which the Company is not the surviving entity, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such merger or consolidation hold as a result of holding Company securities prior to such transaction, in the aggregate and in the same proportions, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the surviving entity (or the parent of the surviving entity) immediately after such merger or consolidation;

Exhibit 10.2

1.5.3A reverse merger in which the Company is the surviving entity but in which the holders of the outstanding voting securities of the Company immediately prior to such merger hold, in the aggregate securities possessing less than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the Company or of the acquiring entity immediately after such merger; or

1.5.4The sale, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company, except for a transaction(s) in which the holders of the outstanding voting securities of the Company immediately prior to such transaction(s) receive as a distribution with respect to securities of the Company, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the acquiring entity immediately after such transaction(s).

1.6"Control" (including, with correlative meanings, the terms "Controlled by" and "under common Control with"), as used with respect to any Person, means the direct or indirect possession of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

1.7"Disability" means a condition entitling the Employee to benefits under the Company's long term disability plan, policy or arrangement; provided, however, that if no such plan, policy or arrangement is then maintained by the Company and applicable to the Employee, "Disability" will mean the Employee's inability, by reason of any physical or mental impairment, to substantially perform Employee's regular duties to the Company, as determined by the Board in its sole discretion (after affording the Employee the opportunity to present Employee's case), which inability is reasonably contemplated to continue for at least one year from its commencement and at least 90 days from the date of such determination.

1.8“Equity Award” means any share option, restricted share unit or other equity-based award originally issued by the Company to the Employee prior to the date of a Change of Control (including any replacement equity-based award issued in exchange therefor on or after the date of a Change of Control).

1.9"Good Reason" means the occurrence of any of the following events, without the Employee's written consent, unless such events are fully corrected in all material respects by the Company within thirty (30) days following written notification by the Employee to the Company of the occurrence of one of the reasons set forth below:

1.9.1A reduction in the Employee's rate of the Base Salary;

1.9.2A material diminution in the Employee's titles, authority or duties; or

1.9.3The Company's relocation of the Employee's principal place of employment to a location more than fifty (50) miles from the Employee's current principal place of employment.

In order to terminate for Good Reason, the Employee must provide the Company with written notice describing the event(s) alleged to constitute Good Reason within sixty (60) days after first becoming aware of the occurrence of such event(s), and the Company will have thirty (30) days to cure such event(s) following receipt of such written notice. If such event(s) are not so cured, the Employee must actually provide the Company with written notice of Employee's termination of employment for Good Reason within thirty (30) days following the expiration of the Company's cure period and thereafter Employee must terminate employment immediately following the completion of the applicable notice period. Otherwise, any claim of such circumstances as "Good Reason" will be deemed irrevocably waived by the Employee.

1.10"Person" means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, association, governmental entity, unincorporated entity or other entity.

1.11"Release" means a release substantially identical to the one attached hereto as Exhibit A.

Exhibit 10.2

Section 2.Certain Terminations.

2.1Severance Events Following a Change of Control. If the Employee's employment with the Company ceases within the twenty-four (24) month period following the date of a Change of Control as a result of a termination by the Company without Cause or a resignation by the Employee for Good Reason, then the Employee will be entitled to a lump sum payment of the following:

2.1.1(i) any Base Salary earned through the effective date of termination that remains unpaid, with any such amounts paid on the first regularly scheduled payroll date following the effective date of termination; (ii) any bonus payable with respect to any fiscal year which ended prior to the effective date of the Employee's termination of employment, which remains unpaid, with such amount paid in the first regularly scheduled payroll date following the effective date of termination or, if later, at the same time the bonus would have otherwise been payable to the Employee; and (iii) any expense reimbursement due to the Employee on or prior to the date of such termination which remains unpaid to the Employee, with any such reimbursement being made promptly following the effective date of termination (collectively, the "Accrued Obligations"); and

2.1.2a cash payment equal to 150% of the sum of the Employee's Base Salary plus target annual bonus in effect on the date of termination (without taking into effect any reduction described in Section 1.9.1 above).

In addition, immediately prior to the effective date of termination, 100% of the Employee’s then outstanding, unvested Equity Awards will immediately vest and, if applicable, become exercisable (and any rights of repurchase by the Company or restriction on sale on the Employee's then outstanding Equity Awards will lapse), and, following the effective date of termination, the Employee's then outstanding Equity Awards will, if applicable, remain exercisable for a period of 12 months or until the expiration date of the Equity Award, whichever is the shorter period.

Except as otherwise provided in this Section 2, the Company will have no further liability or obligation by reason of such cessation of employment. The payment described in this Section 2 is in lieu of (and not in addition to) any other severance plan, fund, agreement or other similar arrangement maintained by the Company, including, pursuant to any employment or services agreement between the Company or an Affiliate thereof and the Employee. Notwithstanding any provision of this Agreement, the payment described in Section 2.1.2 is conditioned on the Employee's execution and delivery to the Company of the Release within the period beginning on the first day of the second calendar month immediately following Employee's termination of employment and ending on the last day of such calendar month. The payment described in Section 2.1.2 will be made one month after receipt by the Company of the Release. On and after a Change of Control, subject to the applicable notice period, the Company may terminate Employee without Cause or the Employee may resign for Good Reason in accordance with the provisions of Section 1.9 above.

2.2Other Terminations. If the Employee's employment with the Company ceases for any reason other than as described in Section 2.1 (including but not limited to (a) termination by the Company for Cause, (b) resignation by the Employee without Good Reason, (c) termination as a result of the Employee's Disability, or (d) the Employee's death), then the Company's obligation to the Employee will be limited solely to the payment of The Accrued Obligations, and the Employee's then outstanding Equity Awards will be treated in accordance with the terms of the applicable award agreements. All compensation and benefits will cease at the time of such cessation of employment and, except as otherwise provided by applicable law, the Company will have no further liability or obligation by reason of such termination.

Section 3.Miscellaneous.

3.1Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and Employee and their respective successors, executors, administrators, heirs and/or permitted assigns; provided, however, that neither Employee nor the Company may make any assignments of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party, except that, without such consent, the Company may assign this Agreement to any successor to all or substantially all of its assets and business by means of liquidation, dissolution, merger, consolidation, transfer of assets, or otherwise.

Exhibit 10.2

3.2Governing Law. This Agreement shall be governed by and construed under and according to the laws of Switzerland without regard to its conflict of laws provisions.

3.3Waivers; Separability. The waiver by either party hereto of any right hereunder or any failure to perform or breach by the other party hereto shall not be deemed a waiver of any other right hereunder or any other failure or breach by the other party hereto, whether of the same or a similar nature or otherwise. No waiver shall be deemed to have occurred unless set forth in a writing executed by or on behalf of the waiving party. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

3.4Notices. All notices and communications that are required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when delivered personally or upon mailing by registered or certified mail, postage prepaid, return receipt requested, as follows:

If to the Company, to:

Quotient Limited

PO Box 1075 - JTC House

28 Esplanade

St Helier

Jersey JE4 2QP

Channel Islands

Attn: Chief Executive Officer
E‑mail: to the Company’s Chief Executive Officer’s Company e-mail address on Company’s e-mail address book.

If to Employee, to the address on file with the Company,

or to such other address as may be specified in a notice given by one party to the other party hereunder.

3.5Entire Agreement; Amendments. This Agreement contains the entire agreement and understanding of the parties relating to the provision of severance benefits upon termination in connection with a Change of Control, and merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature relating to that subject.

3.6Withholding. The Company will withhold from any payments due to Employee hereunder, all taxes or other amounts required to be withheld pursuant to any applicable law.

3.7Headings Descriptive. The headings of sections and paragraphs of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

3.8Counterparts and Facsimiles. This Agreement may be executed, including execution by electronic or facsimile signature, in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.

3.9Term of Agreement. This Agreement shall expire, and the Employee will have no rights hereunder, on February 1, 2024 or on each anniversary thereof if and only if the Board provides written notice to the Employee of such expiration at least 90 days prior to February 1,2024 or the applicable anniversary thereof; provided, however, that, notwithstanding the foregoing, the Board shall not be authorized to cause this Agreement to expire, and this Agreement shall not expire, on or after the date of a Change of Control. Notwithstanding anything in this Agreement

Exhibit 10.2

to the contrary, if this Agreement is in effect immediately prior to a Change of Control, thereafter this Agreement shall remain in effect for not less than two years following the date of such Change of Control.

[Signature page follows]

Exhibit 10.2

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.


	QUOTIENT LIMITED

	By:	/s/ Franz Walt
		Name: Franz Walt
		Title: Chief Executive Officer

	/s/ Vittoria Bonasso
	Vittoria Bonasso

Exhibit 10.2

EXHIBIT A

RELEASE AND WAIVER OF CLAIMS

This Release and Waiver of Claims ("Release") is entered into as of this [•] day of [•], 20[•], between QUOTIENT LIMITED and any successor thereto (collectively, the "Company") and [•] (the "Executive").

The Executive and the Company agree as follows:

1.	The employment relationship between the Executive and the Company, or an affiliate of the Company, was terminated on [•] (the "Termination Date").

2.	In accordance with the change of control agreement, dated [•], between the Executive and the Company, as it may be amended from time to time (the "Change of Control Agreement"), the Executive is entitled to receive certain payments and benefits after the Termination Date.

In consideration of the above, the sufficiency of which the Executive hereby acknowledges, the Executive, on behalf of the Executive and the Executive's heirs, executors and assigns, hereby releases and forever discharges the Company and its shareholders, parents, affiliates, subsidiaries, divisions, any and all of its or their current and former directors, officers, employees, agents, and contractors and their heirs and assigns, and any and all employee pension benefit or welfare benefit plans of the Company, including current and former trustees and administrators of such employee pension benefit and welfare benefit plans (the "Released Parties"), from all claims, charges, or demands, in law or in equity, whether known or unknown, which may have existed or which may now exist from the beginning of time to the date of this Release, including, without limitation, any claims the Executive may have arising from or relating to the Executive's employment or termination from employment with the Company and its affiliates.

The Executive acknowledges that the consideration given for this Release is in addition to anything of value to which the Executive is already entitled. If the Executive has not returned the signed Release within the time permitted under the Change of Control Agreement, then the offer of payment set forth in the Change of Control Agreement will expire by its own terms at such time. Except to the extent that Executive is permitted to not disclose information provided to the Securities and Exchange Commission ("SEC") pursuant to Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 15 U.S.C. §78u‑6 and SEC Regulation 21F promulgated thereunder, or to other regulatory government agencies pursuant to similar whistleblower protection laws, Executive agrees that as of the date set forth below, Executive has not reported information to the SEC concerning, and is not aware of, any securities law compliance failure by the Company by any person that has not been reported in writing to Company's Board of Directors.

This Release does not release the Released Parties from (i) any obligations due to the Executive under the Change of Control Agreement, or under this Release, (ii) any vested rights the Executive has under the Company's employee benefit plans in which the Executive participated, (iii) any rights or claims that arise from actions or omissions after the date of execution by the Executive of this Release, (iv) any rights that cannot be waived as a matter of applicable law, or (v) any rights to indemnification the Executive may have under any indemnity agreement, applicable law, the by‑laws, certificate of incorporation, or other constituent document of the Company or any of its affiliates or as an insured under any director's and officer's liability insurance policy now or previously in force.

6.	This Release is not an admission by the Released Parties of any wrongdoing, liability or violation of law.

7.	The Executive waives any right to reinstatement or future employment with the Company following the Executive's separation from the Company.

8.	This Release shall be governed by and construed in accordance with the laws of the Switzerland, without regard to conflicts or laws principles thereof.

9.	This Release and the Change of Control Agreement represent the complete agreement between the Executive and the Company concerning the subject matter in this Release and supersedes all prior agreements or

Exh. A-1

Exhibit 10.2

understandings, written or oral. This Release may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

10.	Each of the sections contained in this Release shall be enforceable independently of every other section in this Release, and the invalidity or unenforceability of any section shall not invalidate or render unenforceable any other section contained in this Release.

11.

The Executive acknowledges that the Executive has carefully read and understands this Release, that the Executive has the right to consult an attorney with respect to its provisions and that this Release has been entered into voluntarily. The Executive acknowledges that no representation, statement, promise, inducement, threat or suggestion has been made by any of the Released Parties to influence the Executive to sign this Release except such statements as are expressly set forth herein or in the Change of Control Agreement.

[The remainder of this page intentionally left blank.]

Exh. A-2

Exhibit 10.2

The parties to this Release have executed this Release as of the day and year first written above.


	QUOTIENT LIMITED

	By:
		Name:
		Title:


	[Executive]

Exh. A-3

Exhibit 31.1

CERTIFICATION

I, Franz Walt, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Quotient Limited;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period for which this report is being prepared;

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 4, 2021		/s/ Franz Walt
		Franz Walt
		Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Peter Buhler, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Quotient Limited;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 4, 2021		/s/ Peter Buhler
		Peter Buhler
		Chief Financial Officer

Exhibit 32.1

CERTIFICATION

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Quotient Limited, a company incorporated under the laws of Jersey, Channel Islands (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report for the quarter ended December 31, 2020 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 4, 2021		/s/ Franz Walt
		Franz Walt
		Chief Executive Officer

This certification is being furnished and not filed, and shall not be incorporated into any document for any purpose, under the Securities Exchange Act of 1934 or the Securities Act of 1933.

Exhibit 32.2

CERTIFICATION

Date: February 4, 2021		/s/ Peter Buhler
		Peter Buhler
		Chief Financial Officer

This certification is being furnished and not filed, and shall not be incorporated into any document for any purpose, under the Securities Exchange Act of 1934 or the Securities Act of 1933.