STANDARD BIOTOOLS INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Page Report of PricewaterhouseCoopers LLP-Independent Registered Public Accounting Firm 64 Consolidated Balance Sheets as of December 31, 20 20 and 201 9 66 Consolidated Statements of Operations for the years ended December 31, 20 20 , 201 9 and 201 8 67 Consolidated Statements of Comprehensive Loss for the years ended December 31, 20 20 , 201 9 and 201 8 68 Consolidated Statements of Stockholders' Equity for the years ended December 31, 20 20 , 201 9 and 201 8 69 Consolidated Statements of Cash Flows for the years ended December 31, 20 20 , 201 9 and 201 8 70 Notes to Consolidated Financial Statements 71 Financial Statement Schedule Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 20 20 , 201 9 and 201 8 102 63 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Fluidigm Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Fluidigm Corporation and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, of comprehensive loss, of stockholders’ equity, and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Changes in Accounting Principles As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for revenue from contracts with customers in 2018. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting 64 includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. National Institutes of Health (NIH) Contract Accounting As described in Notes 2 and 4 to the consolidated financial statements, in September 2020, the Company executed a definitive contract with the National Institutes of Health (NIH) for a project under the NIH Rapid Acceleration of Diagnostics (RADx) program, which has a total value of up to $34.0 million upon the achievement of certain conditional milestones. As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, management applied International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance by analogy when accounting for the NIH contract payments to the Company. Management has elected to record the grants received as deferred income with grant proceeds recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received. With the NIH contract, this occurs when either each milestone has been accepted by NIH or management concludes the conditions of the grant have been substantially met. As of December 31, 2020, a total $23.9 million has been recorded as deferred gran t income. The principal considerations for our determination that performing procedures relating to the NIH contract accounting is a critical audit matter are (i) the significant judgment by management when determining the applicable accounting model and determining which milestones are reasonably assured, including consideration of conditional contract provisions and NIH termination rights; and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the accounting policy selection and assumptions associated with conclusions of which milestones are reasonably assured. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the NIH contract, including controls over the determination of the appropriate accounting model, and which grant milestones met the reasonable assurance criteria for recognition. These procedures also included, among others (i) reading the executed agreement and correspondence with NIH, (ii) evaluating compliance with the contract requirements, including conditional provisions and NIH termination rights, (iii) evaluating management’s accounting analysis, and (iv) evaluating the assumptions associated with recognition of deferred income for milestones determined to be reasonably assured by management. /s/ PricewaterhouseCoopers LLP San Jose, California February 25, 2021 We have served as the Company’s auditor since 2015. 65 FLUIDIGM CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) December 31, 2020 2019 ASSETS Current assets: Cash and cash equivalents $ 68,520 $ 21,661 Short-term investments — 36,978 Accounts receivable (net of allowances of $ 356 and $ 6 , at December 31, 2020 and 2019, respectively) 25,423 18,981 Inventories, net 19,689 13,884 Prepaid expenses and other current assets 4,031 4,592 Total current assets 117,663 96,096 Property and equipment, net 17,531 8,056 Operating lease right-of-use asset, net 38,114 4,860 Other non-current assets 4,680 5,492 Developed technology, net 40,206 46,200 Goodwill 106,563 104,108 Total assets $ 324,757 $ 264,812 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 9,220 $ 5,152 Accrued compensation and related benefits 13,787 5,160 Operating lease liabilities, current 2,973 1,833 Other accrued liabilities 14,794 8,873 Deferred revenue, current 13,475 11,803 Total current liabilities 54,249 32,821 Convertible notes, net 54,224 53,821 Deferred tax liability 8,697 11,494 Operating lease liabilities, non-current 38,178 4,323 Deferred revenue, non-current 7,990 8,168 Deferred grant income, non-current 21,036 — Other non-current liabilities 1,333 573 Total liabilities 185,707 111,200 Commitments and contingencies (Note 17) Stockholders’ equity: Preferred stock, $ 0.001 par value, 10,000 shares authorized, no shares issued and outstanding at either December 31, 2020 or 2019 — — Common stock: $ 0.001 par value, 200,000 shares authorized at December 31, 2020 and 2019; 74,543 and 69,956 shares issued and outstanding at December 31, 2020 and 2019, respectively 75 70 Additional paid-in capital 815,624 777,765 Accumulated other comprehensive loss 112 ( 582 ) Accumulated deficit ( 676,761 ) ( 623,641 ) Total stockholders’ equity 139,050 153,612 Total liabilities and stockholders’ equity $ 324,757 $ 264,812 See accompanying notes 66 FLUIDIGM CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Year Ended December 31, 2020 2019 2018 Revenue: Product revenue $ 99,944 $ 95,416 $ 93,650 Service revenue 22,579 21,277 19,314 Development revenue 8,865 — — Other revenue 6,756 550 — Total revenue 138,144 117,243 112,964 Costs and expenses: Cost of product revenue 47,527 45,461 44,861 Cost of service revenue 7,291 7,503 6,454 Research and development 36,461 31,640 30,030 Selling, general and administrative 97,901 84,478 79,783 Total costs and expenses 189,180 169,082 161,128 Loss from operations ( 51,036 ) ( 51,839 ) ( 48,164 ) Interest expense ( 3,572 ) ( 4,279 ) ( 13,893 ) Loss from extinguishment of debt — ( 12,020 ) — Other income, net 507 1,433 637 Loss before income taxes ( 54,101 ) ( 66,705 ) ( 61,420 ) Income tax benefit 1,081 1,915 2,407 Net loss $ ( 53,020 ) $ ( 64,790 ) $ ( 59,013 ) Net loss per share, basic and diluted $ ( 0.74 ) $ ( 0.97 ) $ ( 1.49 ) Shares used in computing net loss per share, basic and diluted 72,044 66,779 39,652 See accompanying notes 67 FLUIDIGM CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands) Year Ended December 31, 2020 2019 2018 Net loss $ ( 53,020 ) $ ( 64,790 ) $ ( 59,013 ) Other comprehensive income (loss), net of tax Foreign currency translation adjustment 730 69 ( 112 ) Net change in unrealized gain (loss) on investments ( 36 ) 36 ( 1 ) Other comprehensive income (loss), net of tax 694 105 ( 113 ) Comprehensive loss $ ( 52,326 ) $ ( 64,685 ) $ ( 59,126 ) See accompanying notes 68 FLUIDIGM CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance at December 31, 2017 38,787 $ 39 $ 531,666 $ ( 574 ) $ ( 500,196 ) $ 30,935 Market offering 9,373 9 59,084 — — 59,093 Issuance of restricted stock, net of shares withheld for taxes, and other 886 1 ( 379 ) — — ( 378 ) Issuance of common stock from option exercises 40 — 208 — — 208 Issuance of common stock under ESPP 252 — 1,203 — — 1,203 Conversion option on convertible debt 29,357 29,357 Conversion cost related to conversion option on convertible debt — — ( 557 ) — — ( 557 ) Cumulative-effect on new accounting standards for Topic 606 Revenue — — — — 358 358 Stock-based compensation expense 11,023 — 11,023 Net loss — — — — ( 59,013 ) ( 59,013 ) Other comprehensive income (loss), net of taxes — — — ( 113 ) — ( 113 ) Balance at December 31, 2018 49,338 49 631,605 ( 687 ) ( 558,851 ) 72,116 Issuance of common stock on bond conversion 19,460 19 133,280 — — 133,299 Issuance of restricted stock, net of shares withheld for taxes, and other 666 1 ( 601 ) — — ( 600 ) Issuance of common stock from option exercises 195 — 1,058 — — 1,058 Issuance of common stock under ESPP 297 1 1,074 — — 1,075 Stock-based compensation expense — 11,349 — — 11,349 Net loss — — — — ( 64,790 ) ( 64,790 ) Other comprehensive income (loss), net of taxes — — — 105 — 105 Balance at December 31, 2019 69,956 70 777,765 ( 582 ) ( 623,641 ) 153,612 Issuance of common stock from at-the-market offering, net of commissions 2,480 2 20,224 — — 20,226 Issuance of restricted stock, net of shares withheld for taxes, and other 1,050 1 ( 460 ) — — ( 459 ) Issuance of common stock under ESPP 476 1 1,322 — — 1,323 Issuance of common stock from stock option exercises 96 — 451 — — 451 Equity issuance costs — — ( 176 ) — — ( 176 ) Cumulative effect of new accounting standard for Topic 326 Credit Losses — — — — ( 100 ) ( 100 ) Stock-based compensation expense — — 14,450 — — 14,450 Acquisition of InstruNor AS 485 1 2,048 — — 2,049 Net loss — — — — ( 53,020 ) ( 53,020 ) Other comprehensive income (loss), net of taxes — — — 694 — 694 Balance as of December 31, 2020 74,543 $ 75 $ 815,624 $ 112 $ ( 676,761 ) $ 139,050 See accompanying notes 69 FLUIDIGM CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2020 2019 2018 Operating activities Net loss $ ( 53,020 ) $ ( 64,790 ) $ ( 59,013 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 4,014 4,605 5,372 Stock-based compensation expense 14,451 11,393 11,023 Amortization of developed technology 11,910 11,200 11,200 Lease amortization 2,017 ( 516 ) — Amortization of debt discounts, premiums and issuance costs 545 1,936 8,379 Impairment of intangible asset — 443 — Loss from extinguishment of debt — 12,020 — Loss on disposal of property and equipment 212 89 141 Provision for excess and obsolete inventory 1,614 1,807 1,090 Other non-cash items 426 200 175 Changes in assets and liabilities: Accounts receivable, net ( 7,628 ) ( 2,075 ) ( 1,788 ) Inventories, net ( 8,636 ) ( 3,047 ) 398 Prepaid expenses and other assets ( 877 ) ( 1,400 ) 178 Accounts payable 3,356 787 ( 294 ) Deferred revenue 2,111 2,129 2,574 Other liabilities 14,088 ( 9,991 ) ( 4,636 ) Net cash used in operating activities ( 15,417 ) ( 35,210 ) ( 25,201 ) Investing activities Proceeds from NIH Contract 21,036 — — Acquisition, net of cash acquired ( 5,154 ) — — Purchases of investments — ( 62,370 ) ( 1,450 ) Proceeds from sale of investments 5,010 — — Proceeds from maturities of investments 31,800 25,600 6,541 Purchases of property and equipment ( 12,717 ) ( 2,531 ) ( 372 ) Net cash provided by (used in) investing activities 39,975 ( 39,301 ) 4,719 Financing activities Proceeds from issuance of common stock, net of commissions 20,226 — 59,469 Proceeds from debt issuance — 55,000 — Repayment of long-term debt — ( 51,826 ) — Payments of debt and equity issuance cost ( 684 ) ( 1,888 ) ( 2,862 ) Proceeds from exercise of stock options 451 1,058 208 Proceeds from stock issuance from ESPP 1,323 1,075 1,203 Payments for taxes related to net share settlement of equity awards and other ( 459 ) ( 629 ) ( 358 ) Net cash provided by financing activities 20,857 2,790 57,660 Effect of foreign exchange rate fluctuations on cash and cash equivalents 385 56 167 Net increase (decrease) in cash, cash equivalents and restricted cash 45,800 ( 71,665 ) 37,345 Cash, cash equivalents and restricted cash at beginning of period 23,736 95,401 58,056 Cash, cash equivalents and restricted cash at end of period $ 69,536 $ 23,736 $ 95,401 Supplemental disclosures of cash flow information Cash paid for interest $ 3,089 $ 3,542 $ 5,534 Cash paid for income taxes, net of refunds $ 521 $ 205 $ 321 Non-cash right-of-use assets and lease liabilities $ 36,225 $ 10,402 $ 0 Unpaid debt and equity issuance costs $ — $ 534 $ 375 Asset retirement obligations $ 325 $ 312 $ 314 See accompanying notes 70 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020 1. Description of Business Fluidigm Corporation (the Company, Fluidigm, we, our or us) improves life by driving meaningful insights in health and disease. Our innovative technologies explore the biological complexities of disease to advance human health through research, diagnostics and clinical applications. We create, manufacture, and market a range of products and services, including instruments, consumables, reagents and software that are used by researchers and clinical labs worldwide. Our customers are leading academic and government laboratories, as well as pharmaceutical, biotechnology, plant and animal research organizations, and clinical laboratories worldwide. The Company was formerly known as Mycometrix Corporation and changed its name to Fluidigm Corporation in April 2001. Fluidigm Corporation was founded in 1999 and is headquartered in South San Francisco, California. 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) and include the accounts of our wholly owned subsidiaries. As of December 31, 2020, we had wholly owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, the United Kingdom, China, Germany and Norway. All subsidiaries, except for Singapore, use their local currency as their functional currency. The Singapore subsidiary uses the U.S. dollar as its functional currency. All intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts in the consolidated balance sheet and statements of cash flows were reclassified to conform with the current period presentation. These reclassifications were immaterial and did not affect prior period total assets, total liabilities, stockholders' equity, total revenue, total costs and expenses, loss from operations or net loss. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions believed to be reasonable, which together form the basis for making judgments about the carrying values of assets and liabilities. The full extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will depend on numerous evolving factors including, but not limited to, the magnitude and duration of the pandemic, the extent to which it will impact worldwide macroeconomic conditions, including the speed of recovery, and governmental and business reactions to the pandemic. We assessed certain accounting matters that generally require consideration of forecasted financial information, including the unknown impact of COVID-19 as of December 31, 2020. These accounting matters included, but were not limited to, our allowance for doubtful accounts and credit losses, inventory and related reserves and the carrying value of goodwill and other long-lived assets. Actual results could differ materially from these estimates and could have a material adverse effect on our consolidated financial statements. Foreign Currency Assets and liabilities of non-U.S. subsidiaries that use the local currency as their functional currency are translated into U.S. dollars at exchange rates in effect on the balance sheet date. The adjustments resulting from the foreign currency translations are recorded in accumulated other comprehensive loss, a separate component of stockholders’ equity. Income and expense accounts are translated at monthly average exchange rates during the year. 71 Revenue Recognition We generate revenue primarily from the sale of our products and services. Product revenue is derived from the sale of instruments and consumables, including IFCs, assays and reagents. Service revenue is primarily derived from the sale of instrument service contracts, repairs, installation, training and other specialized product support services. We also generate revenue from development agreements, license and royalty agreements and grants. Revenue is reported net of any sales, use and value-added taxes we collect from customers as required by government authorities. Research and development cost includes costs associated with development and grant revenue. We adopted ASU 2014-09 Revenue from Contracts with Customers (Topic 606) on January 1, 2018, using the modified retrospective method applied to those contracts with unrecognized revenue on the adoption date. We recognize revenue based on the amount of consideration we expect to receive in exchange for the goods and services we transfer to the customer. Our commercial arrangements typically include multiple distinct products and services, and we allocate revenue to these performance obligations based on their relative standalone selling prices. Standalone selling prices (SSP) are generally determined using observable data from recent transactions. In cases where sufficient data is not available, we estimate a product’s SSP using a cost plus a margin approach or by applying a discount to the product’s list price. Product Revenue We recognize product revenue at the point in time when control of the goods passes to the customer and we have an enforceable right to payment. This generally occurs either when the product is shipped from one of our facilities or when it arrives at the customer’s facility, based on the contractual terms. Customers generally do not have a unilateral right to return products after delivery. Invoices are generally issued at shipment and generally become due in 30 to 60 days. We sometimes perform shipping and handling activities after control of the product passes to the customer. We have made an accounting policy election to account for these activities as product fulfillment activities rather than as separate performance obligations. Service Revenue We recognize revenue from repairs, maintenance, installation, training and other specialized product support services at the point in time the work is completed. Installation and training services are generally billed in advance of service. Repairs and other services are generally billed at the point the work is completed. Revenue associated with instrument service contracts is recognized on a straight-line basis over the life of the agreement, which is generally one to three years . We believe this time-elapsed approach is appropriate for service contracts because we provide services on demand throughout the term of the agreement. Invoices are generally issued in advance of service on a monthly, quarterly, annual or multi-year basis. Payments made in advance of service are reported on our consolidated balance sheet as deferred revenue. Development Revenue The Company has entered and may continue to enter into development agreements with third parties that provide for up-front and periodic milestone payments. Our development agreements may include more than one performance obligation. At the inception of the contract, we assess whether each obligation represents a separate performance obligation or whether such obligations should be combined as a single performance obligation. The transaction price for each development agreement is determined based on the amount of consideration we expect to be entitled to for satisfying all performance obligations within the agreement. We assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. In arrangements where we satisfy performance obligation(s) over time, we recognize development revenue typically using an input method based on our costs incurred relative to the total expected cost which determines the extent of our progress toward completion. As part of the accounting for these arrangements, we must develop estimates and assumptions that require judgment to determine the transaction price and progress towards completion. We review our estimate of the transaction price and progress toward completion based on the best information available to recognize the cumulative progress toward completion as of the end of each reporting period, and make revisions to such estimates as necessary. 72 We also generate revenue from development or collaboration agreements that do not include upfront or milestone-based payments and generally recognize revenue on these types of agreements based on the timing of development activities. Other Revenue Other revenue consists of license and royalty revenue and grant revenue. We recognize revenue from license agreements when the license is transferred to the customer and the customer is able to use and benefit from the license. For contracts that include sales-based royalties, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied. In March 2020, we entered into an agreement to settle intellectual property infringement claims, in which we received a $ 3.5 million payment in exchange for a perpetual license under certain Fluidigm intellectual property. The settlement is considered a multiple-element arrangement with each element accounted for individually. Accordingly, $ 3.1 million of the proceeds was recognized as license revenue and $ 0.4 million was offset against legal costs. We receive grants from various entities to perform research and development activities over contractually defined periods. Grant revenue is not accounted for under ASC 606 Revenue from Contracts with Customers, as the grant agreement is not with a customer. As there is no authoritative U.S. GAAP guidance for grants awarded to for-profit entities, we have applied the guidance in ASC 958 Not-for-Profit Entities by analogy. Revenue is generally recognized provided that the conditions under which the grants were provided have been met and any remaining performance obligations are perfunctory. Product Warranties We generally provide a one-year warranty on our instruments. We accrue for estimated warranty obligations at the time of product shipment. We periodically review our warranty liability and record adjustments based on the terms of warranties provided to customers, and historical and anticipated warranty claim experience. This expense is recorded as a component of cost of product revenue in the consolidated statements of operations. Significant Judgments Applying the revenue recognition practices discussed above often requires significant judgment. Judgment is required when identifying performance obligations, estimating SSP and allocating purchasing consideration in multi-element arrangements and estimating the future amount of our warranty obligations. Moreover, significant judgment is required when interpreting commercial terms and determining when control of goods and services passes to the customer. Any material changes created by errors in judgment could have a material effect on our operating results and overall financial condition. Cash and Cash Equivalents We consider all highly liquid financial instruments with maturities at the time of purchase of three months or less to be cash equivalents. Cash and cash equivalents may consist of cash on deposit with banks, money market funds, and notes from government-sponsored agencies. Investments Short-term investments are comprised of notes from government-sponsored agencies that mature within one year. All investments are recorded at estimated fair value. Any unrealized gains and losses from investments are reported in accumulated other comprehensive loss, a separate component of stockholders’ equity. We evaluate our investments to assess whether investments with unrealized loss positions are other-than-temporarily impaired. An investment is considered to be other-than-temporarily impaired if the impairment is related to deterioration in credit risk or if it is likely that we will sell the securities before the recovery of their cost basis. No investment has been assessed as other than temporarily impaired, and realized gains and losses were immaterial during the years presented. The cost of securities sold, or the amount reclassified out of accumulated other comprehensive income into earnings is based on the specific-identification method. Accounts Receivable Trade accounts receivable are recorded at net invoice value. We review our exposure to accounts receivable and provide allowances of specific amounts if collectability is no longer reasonably assured based on historical experience and specific customer collection issues. We evaluate such allowances on a regular basis and adjust them as needed. 73 Concentrations of Business and Credit Risk Financial instruments that potentially subject us to credit risk consist of cash, cash equivalents, investments, and accounts receivable. Our cash, cash equivalents, and investments may consist of deposits held with banks, money market funds, and other highly liquid investments that may at times exceed federally insured limits. Cash equivalents and investments are financial instruments that potentially subject us to concentrations of risk. Under our investment policy, we invest primarily in securities issued by the U.S. government. The goals of our investment policy, in order of priority, are as follows: preserve capital, meet liquidity needs, and optimize returns. We generally do not require collateral to support credit sales. To reduce credit risk, we perform credit evaluations of our customers. No single customer represented more than 10% of total revenue for 2020, 2019, or 2018, and no single customer represented more than 10% of total accounts receivable at December 31, 2020, or 2019. Our products include components that are currently procured from a single source or a limited number of sources. We believe that other vendors would be able to provide similar components; however, the qualification of such vendors may require start-up time. In order to mitigate any adverse impacts from a disruption of supply, we attempt to maintain an adequate supply of critical limited-source components. Inventories, net Inventories are stated at the lower of cost (on a first-in, first-out basis) or net realizable value. Inventory costs include direct materials, direct labor, and normal manufacturing overhead. We regularly review inventory for excess and obsolete products and components. Provisions for slow-moving, excess, and obsolete inventories are recorded when required to reduce inventory values to their estimated net realizable values based on product life cycle, development plans, product expiration, and quality issues. Property and Equipment Property and equipment, including leasehold improvements, are stated at cost less accumulated depreciation. Accumulated depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the estimated useful lives of the assets or the remaining term of the lease, whichever is shorter. The estimated useful lives of our property and equipment are generally as follows: computer equipment and software, three to four years ; laboratory and manufacturing equipment, two to five years ; and office furniture and fixtures, five years . Depreciation expense for the years ended December 31, 2020, 2019, and 2018 was $ 3.1 million, $ 3.6 million, and $ 4.2 million, respectively. Leases We adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) on January 1, 2019 using the modified retrospective method. In accordance with Topic 842, we determine if an arrangement is a lease, or contains a lease, at inception. Operating leases are included in operating lease right-of-use (ROU) assets, net and current and non-current operating lease liabilities in our consolidated balance sheets. ROU assets represent our right-to-use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. Significant judgment is required in determining the incremental collateralized borrowing rate. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We elected the short-term lease recognition exemption for all leases that qualify. For those leases that qualify, we will not recognize ROU assets or lease liabilities for leases with an initial lease term of one year or less. We also elected not to separate lease and nonlease components for our building leases. The nonlease components are generally variable in nature and are expected to represent most of our variable lease costs. Variable costs are expensed as incurred. We have taken a portfolio approach for our vehicle leases by country. 74 Business Combinations, Goodwill, Intangible Assets and Other Long-Lived Assets We have completed acquisitions of businesses in the past and may acquire additional businesses or technologies in the future. The results of businesses acquired in a business combination are included in our consolidated financial statements from the date of acquisition. We allocate the purchase price, which is the sum of the consideration provided in a business combination, to the identifiable assets and liabilities of the acquired business at their acquisition date fair values. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies and estimates of future revenue. Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of net assets acquired. Our intangible assets include developed technology, patents and licenses. The cost of identifiable intangible assets with finite lives is generally amortized on a straight-line basis over the assets’ respective estimated useful lives. Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Events or changes in circumstances that could affect the likelihood that we will be required to recognize an impairment charge include, but are not limited to, declines in our stock price or market capitalization, economic downturns and other macroeconomic events, including the current COVID-19 pandemic, declines in our market share or revenues, and an increase in our losses, rapid changes in technology, failure to achieve the benefits of capacity increases and utilization, significant litigation arising out of an acquisition, or other matters. Any impairment charges could have a material adverse effect on our operating results and net asset value in the quarter in which we recognize the impairment charge. In evaluating our goodwill and intangible assets with indefinite lives for indications of impairment, we first conduct an assessment of qualitative factors to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we compare the fair value of our reporting unit to its carrying value. If the fair value of our reporting unit exceeds its carrying value, goodwill is not considered impaired and no further analysis is required. If the carrying value of the reporting unit exceeds its fair value, then an impairment loss equal to the difference would be recorded to goodwill. There were no indicators of impairment in 2020. We did no t recognize any impairment of goodwill for any of the periods presented herein. We evaluate our long-lived assets, including finite-lived intangibles, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If any indicator of impairment exists, we assess the recoverability of the affected long-lived assets by determining whether the carrying value of the asset can be recovered through undiscounted future operating cash flows. If impairment is indicated, we estimate the asset’s fair value using future discounted cash flows associated with the use of the asset and adjust the carrying value of the asset accordingly. In the fourth quarter of 2019, we recognized an impairment charge of $ 0.4 million on patents and licenses that were not used in then current products and were not expected to be used in future product offerings. Deferred Grant Income In September 2020, we executed a definitive contract with the National Institutes of Health (NIH) for a project under the NIH Rapid Acceleration of Diagnostics (RADx) program. The definitive contract, which amended the letter contract we entered into with the NIH in July 2020 (collectively, the NIH Contract), has a total value of up to $ 34.0 million upon the achievement of certain milestones. Proceeds from the NIH Contract will be used primarily to expand production capacity. Accounting for the NIH Contract does not fall under ASC 606, Revenue from Contracts with Customers, as the NIH will not benefit directly from our expansion or product development. As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, we applied International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, by analogy when accounting for the NIH Contract payments to Fluidigm. The NIH Contract proceeds used for production capacity expansion meet the definition of grants related to assets as the primary purpose for the payments is to fund the purchase and construction of capital assets to scale up production capacity. Under IAS 20, government grants related to assets are presented in the statement of financial position either by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset. Either of these two methods of presentation of grants related to assets in financial statements are regarded as acceptable alternatives under IAS 20. We have elected to record the grants received as deferred income using the first method. 75 Under IAS 20, grant proceeds are recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received. With the NIH Contract, this occurs when either each milestone has been accepted by NIH or management concludes the conditions of the grant have been substantially met. Deferred income related to production capacity expansion will be amortized over the period of depreciation for the related assets as a reduction of depreciation expense. Deferred income related to reimbursement of operating expenses is recorded as a reduction of those expenses incurred to date. Convertible Notes In February 2014, we closed an underwritten public offering of $ 201.3 million aggregate principal amount of our 2.75 % Senior Convertible Notes due 2034 (2014 Notes). In March 2018, we entered into separate privately negotiated transactions with certain holders of our 2014 Notes to exchange $ 150.0 million in aggregate principal amount of the 2014 Notes for our 2.75 % Exchange Convertible Senior Notes due 2034 (2018 Notes). As the 2018 Notes were convertible, at our election, into cash, shares of our common stock, or a combination of cash and shares of our common stock, we accounted for the 2018 Notes under the cash conversion guidance in ASC 470, whereby the embedded conversion option in the 2018 Notes was separated and accounted for in equity. The embedded conversion option value was calculated as the difference between (i) the total fair value of the 2018 Notes and (ii) the fair value of a similar debt instrument excluding the embedded conversion option. We determined an embedded conversion option value of $ 29.3 million for the 2018 Notes, which was recorded in additional paid-in-capital and which reduced the carrying value of the 2018 Notes. The resulting discount on the 2018 Notes was amortized over the expected term of the 2018 Notes, using the effective interest method through the first note holder put date of February 6, 2023. In the first quarter of 2019, the 2018 Notes were converted into 19.5 million shares of our common stock and the 2018 Notes were retired. We recorded a loss of $ 9.0 million on the retirement of the 2018 Notes at conversion in the first quarter of 2019. We determined the fair value of the 2018 Notes using valuation techniques that required us to make assumptions related to the implied discount rate. In November 2019, we closed a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of $ 55.0 million aggregate principal amount of our 5.25 % Senior Convertible Notes due 2024 (2019 Notes). The majority of the issuance proceeds were used to retire approximately $ 50.2 million of aggregate principal amount of our 2014 Notes, leaving approximately $ 1.1 million of aggregate principal amount of our 2014 Notes outstanding. We recorded a loss of $ 3.0 million on the extinguishment of the 2014 Notes in the fourth quarter of 2019. This amount represented the difference between the fair value of the 2019 Notes used to extinguish the debt and the carrying value of the 2014 Notes, including unamortized debt issuance costs. As the 2019 Notes do not provide a cash conversion feature, the 2019 Notes are recorded as debt in their entirety in accordance with ASC 470. For the 2014, 2018 and 2019 Notes, offering-related costs, including underwriting costs, were capitalized as debt issuance costs, recorded as an offset to the carrying value of the related Notes, and are amortized over the expected term of the related Notes using the effective interest method. See Note 9 fo r a detailed discussion of the accounting treatment of the transactions and additional information. Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, restricted cash, investments, accounts receivable, accounts payable, and convertible notes. Our cash equivalents, restricted cash, investments, accounts receivable, and accounts payable generally have short maturity or payment periods. Accordingly, their carrying values approximated their fair values at December 31, 2020 and 2019. The convertible notes are presented at their carrying value, with fair value disclosures made in Note 11. As a basis for considering fair value, we follow a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level I: observable inputs such as quoted prices in active markets; Level II: inputs other than quoted prices in active markets that are observable either directly or indirectly; and Level III: unobservable inputs for which there is little or no market data, which requires us to develop our own assumptions. This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Our cash equivalents, which include money market funds and investments in treasury securities are classified as Level I because they are valued using quoted market prices. Our convertible notes are not regularly traded and it is difficult to estimate a reliable and accurate market price for these securities. The estimated fair values for these securities 76 represent Level III valuations because a fair value for these securities cannot be determined by using readily observable inputs or measures, such as market prices. Fair values were estimated using pricing models and risk-adjusted value ranges. Research and Development We recognize research and development expenses in the period incurred. Research and development expenses consist of personnel costs, independent contractor costs, prototype and materials expenses, allocated facilities and information technology expenses, and related overhead expenses. Advertising Costs We expense advertising costs as incurred. We incurred advertising costs of $ 1.6 million, $ 3.4 million and $ 2.2 million during 2020, 2019, and 2018, respectively. Stock-Based Compensation We account for stock options, restricted stock units (RSU) and performance stock units (PSU) granted to employees and directors and stock purchases under ESPP based on the fair value of the awards at the date of grant. We recognize stock-based compensation expense on a straight-line basis over the requisite service periods for non-performance-based awards. For performance-based stock awards, stock-based compensation expense is recognized over the requisite service period when the achievement of each individual performance goal becomes probable. Income Taxes We use the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are provided when the expected realization of deferred tax assets does not meet a “more likely than not” criterion. We make estimates and judgments about our future taxable income that are based on assumptions that are consistent with our plans and estimates. Should the actual amounts differ from our estimates, the amount of our valuation allowance could be materially impacted. Changes in these estimates may result in significant increases or decreases to our tax provision in a period in which such estimates are changed, which in turn would affect net income or loss. We recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Any interest and penalties related to uncertain tax positions are reflected in the income tax provision. Comprehensive Loss Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized gains and losses on our investments and foreign currency translation adjustments. Total comprehensive loss for all periods presented has been disclosed in the consolidated statements of comprehensive loss. The components of accumulated other comprehensive loss, net of tax, for the years ended December 31, 2020, 2019, and 2018 are as follows (in thousands): Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Investments Accumulated Other Comprehensive Income (Loss) Ending balance at December 31, 2018 $ ( 687 ) $ — $ ( 687 ) Change during the year 69 36 105 Ending balance at December 31, 2019 ( 618 ) 36 ( 582 ) Change during the year 730 ( 36 ) 694 Ending balance at December 31, 2020 $ 112 $ — $ 112 77 Immaterial amounts of unrealized gains and losses have been reclassified into the consolidated statement of operations for the years ended December 31, 2020, 2019 and 2018. Net Loss per Share Our basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period. Restricted stock units, performance share units, and stock options to purchase our common stock are considered to be potentially dilutive common shares but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive for all periods presented. The following potentially dilutive common shares were excluded from the computations of diluted net loss per share for the periods presented because including them would have been anti-dilutive (in thousands): December 31, 2020 2019 2018 Stock options, restricted stock units and performance stock units 7,507 5,189 4,354 2019 Convertible Notes 18,966 18,966 — 2019 Convertible Notes potential make-whole shares 837 3,182 — 2018 Convertible Notes — — 19,035 2018 Convertible Notes potential make-whole shares — — 757 2014 Convertible Notes 19 19 916 Total 27,329 27,356 25,062 Recent Accounting Changes and Accounting Pronouncements Adoption of New Accounting Guidance In August 2018, the U.S.-based Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-15-Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), which establishes new guidance on the accounting for costs incurred to implement a cloud computing arrangement that is considered a service arrangement. The new guidance requires the capitalization of such costs, aligning it with the accounting for costs associated with developing or obtaining internal-use software. The new guidance became effective for fiscal years beginning after December 15, 2019. The adoption of the new guidance did not have a significant impact on our financial results. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU eliminates the requirement for an entity to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, an entity performs its annual, or interim, goodwill impairment testing by comparing the fair value of a reporting unit with its carrying amount and recording an impairment charge for the amount by which the carrying amount exceeds the fair value. The ASU became effective for annual and interim goodwill impairment testing performed for our fiscal year beginning January 1, 2020. The adoption of the new guidance did not have a significant impact on our financial results. The FASB issued two ASUs related to financial instruments – credit losses. The ASUs issued were: (1) in June 2016, ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and (2) in November 2018, ASU 2018-19-Codification Improvements to Topic 326, Financial Instruments-Credit Losses. ASU 2016-13 is intended to improve financial reporting by requiring more timely recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the lease standard. These ASUs were effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted. The modified retrospective method is required upon adoption. The adoption of the new guidance resulted in an adjustment of approximately $ 0.1 million to reduce the accumulated deficit component of stockholders’ equity and decrease current assets by the same amount in our consolidated balance sheet. 78 Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06 Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendment to this ASU reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification, which is expected to result in more convertible instruments being accounted for as a single unit, rather than being bifurcated between debt and equity. The new guidance is effective for fiscal years beginning after December 15, 2021. We are currently evaluating the impact of adoption on our consolidated financial statements. In November 2019, the FASB issued ASU 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update improve consistent application of and simplify U.S. GAAP for Topic 740 by clarifying and amending existing guidance for, among other items, intra-period allocation, reporting tax law changes and losses in interim periods, state and local taxes not fully based on income and recognition of deferred tax liability related to certain transactions. There is also new guidance related to consolidated group reporting and tax impacts resulting from business combinations. The new guidance is effective for fiscal years beginning after December 15, 2020. The adoption of the new guidance is not expected to have a significant impact on our financial results. 3. Business Combination On January 17, 2020, we completed the acquisition of all of the outstanding shares of InstruNor AS, a privately held Norwegian company (InstruNor). InstruNor is a provider of the only fully integrated sample preparation system for flow and mass cytometry. The acquisition of InstruNor supports our entry into the sample preparation market for cytometry analysis and expands our capabilities to include fully automated sample preparation for flow and mass cytometry. The purchase price of $ 7.2 million included approximately $ 5.2 million in cash and 485,451 shares of our common stock valued at the closing price on the effective date of $ 4.22 . The acquisition was accounted for in accordance with ASC 805, Business Combinations. The assets acquired and liabilities assumed were recorded at their estimated fair values at the InstruNor acquisition date. Developed technology was valued using a discounted cash flow model for which the most sensitive assumption was revenue growth rate. There have been no measurement period adjustments recognized since the acquisition date. Non-tax deductible goodwill of $ 2.2 million was calculated as the purchase price less the fair value of the net assets acquired as follows (in thousands): Purchase price: Cash consideration paid on closing to former equity holders $ 5,165 Non-cash consideration common shares 2,049 Total purchase price $ 7,214 Assets acquired: Cash and cash equivalents $ 11 Accounts receivable 32 Other receivables 13 Inventories, net 153 Developed technology 5,380 Liabilities assumed: Accounts payable 14 Other current liabilities 15 Deferred tax liability, net 566 Fair value of identifiable net assets acquired $ 4,994 Goodwill acquired on acquisition $ 2,220 79 4. NIH Contract In September 2020, we executed a contract with the NIH (the NIH Contract) for a project under the RADx program. The RADx program provides grants to support a range of new lab-based and point-of-care tests that could significantly increase the number, type and availability of COVID-19 tests. The NIH Contract has a total value of up to $ 34.0 million upon the achievement of certain milestones. Proceeds from the NIH Contract will be used primarily to expand production capacity and, to a lesser extent, to offset applicable operating expenses. We expect to complete the contract in 2021. The NIH has the right to terminate the contract for convenience. In the event of termination for convenience, Fluidigm will be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges. In the event of termination for cause due to our default, NIH is not liable for supplies or services not accepted. If we fail to deliver within the time specified in the contract and the delay is due to Fluidigm’s fault or negligence, we are required to pay liquidated damages in the amount of 33 % of the amount(s) already disbursed to date under the contract within six months from the date of termination. We do not currently expect to pay any liquidated damages and are in compliance with the terms of the contract. We are working with the NIH continuously to ensure we are in compliance with the contract requirements and milestones. The following table summarizes the activity under the NIH Contract through December 31, 2020 (in thousands): Total grant proceeds reasonably assured $ 25,436 Amounts applied against research and development expenses 1,488 Total deferred grant income $ 23,948 Short-term deferred grant income $ 2,912 Long-term deferred grant income 21,036 Total deferred grant income $ 23,948 Funding received $ 25,436 Short-term deferred grant income represents future research and development costs expected to be funded by the NIH Contract over the next year, and it is included in other accrued liabilities on the balance sheet at December 31, 2020. The long-term deferred grant income represents the portion of the funding received in 2020 attributable to manufacturing capacity expansion, of which we have incurred $ 10.2 million of capital expenditures through December 31, 2020. The majority of this amount is included in construction-in-progress, which is included in property and equipment, net in the consolidated balance sheet as of December 31, 2020 (see Note 8). 5. Development Agreement Effective March 31, 2020, we signed an OEM Supply and Development Agreement (Development Agreement) with a customer. Under the Development Agreement, Fluidigm will develop products based on our microfluidics technology. The Development Agreement provides up-front and periodic milestone payments of up to $ 11.7 million during the development stage. The development stage is expected to last approximately one year from the date of the agreement. We recognized $ 8.8 million of development revenue from this agreement for the year ended December 31, 2020. 80 6. Revenue Disaggregation of Revenue The following table presents our revenue for the year ended December 31, 2020, 2019, and 2018, respectively, based on geographic area and by source (in thousands): Year Ended December 31, 2020 2019 2018 Geographic Markets: Americas $ 74,586 $ 47,016 $ 51,172 EMEA 37,776 40,024 36,617 Asia-Pacific 25,782 30,203 25,175 Total $ 138,144 $ 117,243 $ 112,964 Year Ended December 31, 2020 2019 2018 Source: Instruments $ 45,536 $ 50,004 $ 45,491 Consumables 54,408 45,412 48,159 Product revenue 99,944 95,416 93,650 Service revenue 22,579 21,277 19,314 Development revenue 8,865 — — Other revenue: License and royalty revenue 3,163 — — Grant revenue 3,593 550 — Total other revenue 6,756 550 — Total $ 138,144 $ 117,243 $ 112,964 Unfulfilled Performance Obligations We reported $ 20.0 million of deferred revenue on our December 31, 2019 consolidated balance sheet. During the twelve months ended December 31, 2020, $ 10.7 million of the opening balance was recognized as revenue and $ 12.2 million of net additional advance payments were received from customers, primarily associated with instrument service contracts. At December 31, 2020, we reported $ 21.5 million of deferred revenue. The following table summarizes the expected timing of revenue recognition for unfulfilled performance obligations associated with instrument service contracts that were partially completed at December 31, 2020 (in thousands): Fiscal Year Expected Revenue (1) 2021 $ 12,492 2022 6,734 2023 3,285 Thereafter 1,634 Total $ 24,145 _ _______________________ ______ (1) Expected revenue includes both billed amounts included in deferred revenue and unbilled amounts that are not reflected in our consolidated financial statements and are subject to change if our customers decide to cancel or modify their contracts. Purchase orders for instrument service contracts can generally be canceled before the service period begins without penalty. 81 We apply the practical expedient that permits us to not disclose information about unsatisfied performance obligations for service contracts with an expected term of one year or less. 7. Goodwill and Intangible Assets, net In connection with our acquisition of DVS in February 2014, we recognized goodwill of $ 104.1 million and $ 117.7 million of developed technology. In the first quarter of 2020, we recognized $ 2.2 million (Euro 2.0 million) of goodwill from the InstruNor acquisition and $ 5.4 million (Euro 4.9 million) of developed technology (see Note 3). As the goodwill and developed technology from the InstruNor acquisition are recorded in the functional currency of our European operations, which is the Euro, these balances are revalued each period and the U.S. dollar value of these assets will fluctuate as foreign exchange rates change. We are amortizing InstruNor developed technology over 8.0 years. Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Qualitative assessment includes assessing significant events and circumstances such as our current results, assumptions regarding future performance, strategic initiatives and overall economic factors, including the ongoing global COVID-19 pandemic and macroeconomic developments to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of our reporting unit or intangible assets is less than their carrying value. If indicators of impairment are identified, a quantitative impairment test is performed. During the first quarter of fiscal 2020, the Company assessed whether the current and potential future impact of the COVID-19 pandemic represented an event which necessitated an impairment review. No impairment was recorded as a result of the quantitative assessment performed. In addition, the Company performed its annual impairment assessment and there were no indicators of impairment identified. Intangible assets also include other patents and licenses, which are included in other non-current assets. Intangible assets, net, were as follows (in thousands): December 31, 2020 Gross Amount Accumulated Amortization and Translation Net Weighted-Average Amortization Period Developed technology $ 117,658 $ ( 77,452 ) $ 40,206 9.9 years Patents and licenses $ 11,256 $ ( 9,238 ) $ 2,018 7.5 years December 31, 2019 Gross Amount Accumulated Amortization and Translation Net Weighted-Average Amortization Period Developed technology $ 112,000 $ ( 65,800 ) $ 46,200 10.0 years Patents and licenses $ 11,274 $ ( 8,342 ) $ 2,932 7.8 years Total amortization expense for the years ended December 31, 2020, December 31, 2019, and December 31, 2018 was $ 12.8 million, $ 12.2 million and $ 12.3 million, respectively. 82 Based on the carrying value of intangible assets, net, as of December 31, 2020, the annual amortization expense is expected to be as follows (in thousands): Fiscal Year Developed Technology Amortization Expense Patents and Licenses Amortization Expense Total 2021 $ 11,944 $ 761 $ 12,705 2022 11,944 678 12,622 2023 11,944 572 12,516 2024 2,144 7 2,151 2025 744 — 744 Thereafter 1,486 — 1,486 Total $ 40,206 $ 2,018 $ 42,224 8. Balance Sheet Details Cash, Cash Equivalents and Restricted Cash Cash, cash equivalents and restricted cash consisted of the following as of December 31, 2020 and 2019 (in thousands): December 31, 2020 2019 Cash and cash equivalents $ 68,520 $ 21,661 Restricted cash 1,016 2,075 Total cash, cash equivalents, and restricted cash $ 69,536 $ 23,736 Short-term restricted cash of approximately $ 16 th ousand is included in prepaid expenses and other current assets, and $ 1.0 million of non-current restricted cash is included in other non-current assets in the consolidated balance sheet as of December 31, 2020. Inventories, net Inventories, net consisted of the following as of December 31, 2020 and 2019 (in thousands): December 31, 2020 2019 Raw materials $ 8,292 $ 6,133 Work-in-process 1,214 659 Finished goods 10,183 7,092 Total inventories, net $ 19,689 $ 13,884 Property and Equipment, net Property and equipment, net consisted of the following as of December 31, 2020 and 2019 (in thousands): 83 December 31, 2020 2019 Computer equipment and software $ 4,240 $ 3,997 Laboratory and manufacturing equipment 18,107 19,325 Leasehold improvements 7,203 7,788 Office, furniture and fixtures 1,994 1,824 Property and equipment, gross 31,544 32,934 Less accumulated depreciation and amortization ( 23,989 ) ( 24,954 ) Construction-in-progress 9,976 76 Property and equipment, net $ 17,531 $ 8,056 Accrued Compensation and Related Benefits Accrued compensation and related benefits consisted of the following as of December 31, 2020 and 2019 (in thousands): Year Ended December 31, 2020 2019 Accrued incentive compensation $ 7,842 $ 1,589 Accrued vacation 3,367 2,249 Accrued payroll taxes and other 2,578 1,322 Accrued compensation and related benefits $ 13,787 $ 5,160 Warranties Activity for our warranty accrual for the years ended December 31, 2020 and 2019, which is included in other accrued liabilities, is summarized below (in thousands): Year Ended December 31, 2020 2019 Beginning balance $ 1,390 $ 863 Accrual for current period warranties 1,028 1,386 Warranty costs incurred ( 755 ) ( 859 ) Ending balance $ 1,663 $ 1,390 9. Convertible Notes and Credit Facility 2014 Senior Convertible Notes (2014 Notes) In February 2014, we closed an underwritten public offering of $ 201.3 million aggregate principal amount of our 2014 Notes. We received $ 195.2 million, net of underwriting discounts, from the issuance of the 2014 Notes and incurred approximately $ 1.1 million in offering-related expenses. The underwriting discount and offering-related expenses are being amortized to interest expense using the effective-interest rate method. The effective interest rate on the 2014 Notes, reflecting the impact of debt discounts and issuance costs, is approximately 3.0 %. The 2014 Notes will mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2014 Notes. Holders may require us to repurchase all or a portion of their 2014 Notes on each of February 6, 2021, February 6, 2024, and February 6, 2029, at a repurchase price in cash equal to 100 % of the principal amount of the 2014 Notes plus accrued and unpaid interest. We have retired the majority of the 2014 Notes through the issuance of the 2018 Notes and 2019 Notes, as discussed below. As of December 31, 2020, there was $ 1.1 million aggregate principal of the 2014 Notes outstanding. 2018 Senior Convertible Notes (2018 Notes) In March 2018, we entered into separate privately negotiated transactions with certain holders of our 2014 Notes to exchange $ 150.0 million in aggregate principal amount of the 2014 Notes for 2018 Notes, leaving $ 51.3 million of aggregate principal amount of 2014 Notes outstanding. As of the closing of the 2018 Notes on March 12, 2018, the estimated fair value was $ 145.5 million. The difference between the $ 150.0 million aggregate principal amount of the 2018 Notes and its fair value 84 was being amortized over the expected term of the 2018 Notes using the effective interest method through the first note holder put date of February 6, 2023. The 2018 Notes accrued interest at a rate of 2.75 %, payable semi-annually in arrears on February 1 and August 1 of each year. The 2018 Notes were to mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the indenture governing the 2018 Notes. The initial conversion rate of the 2018 Notes was 126.9438 shares of our common stock, par value $ 0.001 per share, per $1,000 principal amount of the 2018 Notes (which is equivalent to an initial conversion price of approximately $ 7.88 per share). The conversion rate was subject to adjustment upon the occurrence of certain specified events. Those certain specified events included holders who convert their 2018 Notes voluntarily prior to our exercise of the issuer's conversion option described below or in connection with a make-whole fundamental change prior to February 6, 2023, entitling the holders, under certain circumstances, to a make-whole premium in the form of an increase in the conversion rate determined by reference to a make-whole table set forth in the indenture governing the 2018 Notes. Offering-related costs for the 2018 Notes were approximately $ 2.8 million. Offering-related costs of $ 2.2 million were capitalized as debt issuance costs, recorded as an offset to the carrying value of the 2018 Notes, and were being amortized over the expected term of the 2018 Notes using the effective interest method through the first note holder put date of February 6, 2023. The effective interest rate on the 2018 Notes was 12.3 %. Offering-related costs of $ 0.6 million were accounted for as equity issuance costs, recorded as an offset to additional paid-in capital, and were not subject to amortization. Offering-related costs were allocated between debt and equity in the same proportion as the allocation of the 2018 Notes between debt and equity. In the first quarter of 2019, we received notices from holders of the 2018 Notes electing to voluntarily convert approximately $ 138.1 million in aggregate principal amount of the 2018 Notes. In February 2019, we notified trustee U.S. Bank National Association of our intention to exercise our issuer’s conversion option with respect to the remaining approximately $ 11.9 million in aggregate principal amount of 2018 Notes. In total, $ 150.0 million of the 2018 Notes were converted into 19.5 million shares of our common stock and the bonds were retired. We recognized a loss of $ 9.0 million on the retirement of the 2018 Notes, which represents the difference between the fair value of the bonds retired and their carrying costs. The net impact on equity was $ 133.3 million and represents the fair value of the bonds retired. 2019 Senior Convertible Notes (2019 Notes) In November 2019, we issued $ 55.0 million aggregate principal amount of 2019 Notes. Net proceeds of the 2019 Notes issuance were $ 52.7 million, after deductions for commissions and other debt issuance costs. $ 51.8 million of the proceeds of the 2019 Notes were used to retire $ 50.2 million aggregate principal amount of our 2014 Notes, leaving $ 1.1 million of the 2014 Notes outstanding. We accounted for the transaction as an extinguishment of debt due to the significance of the change in value of the embedded conversion option, resulting in a $ 3.0 million loss. The loss on extinguishment of debt was calculated as the difference between the reacquisition price (i.e., the fair value of the principal amount of 2019 Notes) and the net carrying value of the 2014 Notes exchanged. The 2019 Notes bear interest at 5.25 % per annum, payable semiannually on June 1 and December 1 of each year, beginning on June 1, 2020. The Notes will mature on December 1, 2024, unless earlier repurchased or converted pursuant to their terms. The 2019 Notes will be convertible at the option of the holder at any point prior to the close of business on the second scheduled trading day preceding the maturity date. The initial conversion rate of the Notes is 344.8276 shares of the Company’s common stock per $1,000 principal amount of 2019 Notes (which is equivalent to an initial conversion price of approximately $ 2.90 per share). The conversion rate is subject to adjustment upon the occurrence of certain specified events. Those certain specified events include voluntary conversion of the 2019 Notes prior to our exercise of the Issuer’s Conversion Option or in connection with a make-whole fundamental change, entitling the holders, under certain circumstances, to a make-whole premium in the form of an increase in the conversion rate determined by reference to a make-whole table set forth in the indenture governing the 2019 Notes. The conversion rate will not be adjusted for any accrued and unpaid interest. The 2019 Notes will also be convertible at our option upon certain conditions in accordance with the terms of the indenture governing the 2019 Notes. On or after December 1, 2021 to December 1, 2022, if the price of the Company’s common stock has equaled or exceeded 150 % of the Conversion Price then in effect for a specified number of days (Issuer’s Conversion Option), we may, at our option, elect to convert the 2019 Notes in whole but not in part into shares of the Company, determined in accordance with the terms of the indenture. On or after December 1, 2022, if the price of the Company’s common stock has equaled or exceeded 130 % of the Conversion Price then in effect for a specified number of days, we may, at our option, elect to convert the 2019 Notes in whole but not in part into shares of the Company, determined in accordance with the terms of the indenture. 85 Offering-related costs for the 2019 Notes were capitalized as debt issuance costs and are recorded as an offset to the carrying value of the 2019 Notes. The debt issuance costs are amortized over the expected term of the 2019 Notes using the effective interest method through the maturity date of December 1, 2024. The effective rate on the 2019 Notes is 6.2 %. The carrying values of the components of the 2014 Notes and 2019 Notes are as follows (in thousands): December 31, 2020 2019 2.75 % 2014 Notes due 2034 Principal amount $ 1,079 $ 1,079 Unamortized debt discount ( 16 ) ( 18 ) Unamortized debt issuance cost ( 4 ) ( 4 ) $ 1,059 $ 1,057 5.25 % 2019 Notes due 2024 Principal amount $ 55,000 $ 55,000 Unamortized debt issuance cost ( 1,835 ) ( 2,236 ) $ 53,165 $ 52,764 Net carrying value of all Notes $ 54,224 $ 53,821 2018 Revolving Credit Facility On August 2, 2018, we entered into a revolving credit facility with Silicon Valley Bank (Revolving Credit Facility) in an aggregate principal amount of up to the lesser of (i) $ 15.0 million (Maximum Amount) or (ii) the sum of (a) 85 % of our eligible receivables and (b) 50 % of our eligible inventory, in each case, subject to certain limitations (Borrowing Base), provided that the amount of eligible inventory that may be counted towards the Borrowing Base shall be subject to a cap as set forth in the Revolving Credit Facility. Subject to the level of this Borrowing Base, we may make and repay borrowings from time to time until the maturity of the Revolving Credit Facility. The Borrowing Base as of December 31, 2020 under the Revolving Credit Facility was $ 15.0 million. There were no borrowings outstanding under the Revolving Credit Facility at December 31, 2020. The Revolving Credit Facility is collateralized by substantially all our property, other than intellectual property. Until an amendment in April 2020, the Revolving Credit Facility was set to mature on August 2, 2020. The interest rate on outstanding loans under the Revolving Credit Facility was the greater of (i) prime rate plus 0.50 % or (ii) 5.50 %. Interest on any outstanding loans is due and payable monthly and the principal balance is due at maturity though loans can be prepaid at any time without penalty. Effective April 21, 2020, the Revolving Credit Facility was amended to extend the maturity date to August 2, 2022. In addition, we pay a quarterly unused revolving line facility fee of 0.75 % per annum on the average unused facility. The quarterly unused line fee, which was previously based on the Maximum Amount, will now be based on the Borrowing Base. The annual commitment fee of $ 112,500 is unchanged. The Revolving Credit Facility contains customary affirmative and negative covenants which, unless waived by the bank, limit our ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets, enter into affiliate transactions, undergo a change of control, or engage in merger and acquisition activity, including merging or consolidating with a third party. The Revolving Credit Facility also contains customary events of default, subject to customary cure periods for certain defaults, that include, among other things, non-payment defaults, covenant defaults, material judgment defaults, bankruptcy and insolvency defaults, cross-defaults to certain other material indebtedness, and defaults due to inaccuracy of representation and warranties. Upon an event of default, the lender may declare all or a portion of the outstanding obligations payable by us to be immediately due and payable and exercise other rights and remedies provided for under the Revolving Credit Facility. During the existence of an event of default, interest on the obligations under the Revolving Credit Facility could be increased to 5.0 % above the otherwise applicable rate of interest. We were in compliance with all the terms and conditions of the Revolving Credit Facility as of December 31, 2020. 10. Leases We have operating leases for buildings, equipment and vehicles. Existing leases have remaining terms of less than one year to ten years . Some leases contain options to extend the lease, usually for up to five years , and termination options. 86 Operating lease right-of-use assets, net, consisted of the following (in thousands): December 31, 2020 December 31, 2019 Operating lease right-of-use buildings $ 41,132 $ 6,234 Operating lease right-of-use equipment 89 69 Operating lease right-of-use vehicles 679 355 Total operating lease right-of-use assets, gross 41,900 6,658 Accumulated amortization ( 3,786 ) ( 1,798 ) Total operating lease right-of-use assets, net $ 38,114 $ 4,860 Operating lease liabilities, current $ 2,973 $ 1,833 Operating lease liabilities, non-current 38,178 4,323 Total operating lease liabilities $ 41,151 $ 6,156 Weighted average remaining lease term (in years) 8.6 years 4.7 years Weighted average discount rate 11.9 % 5.0 % A new operating lease for our corporate headquarters in South San Francisco, California commenced in March 2020. We recorded a ROU asset of $ 35.7 million at the inception of the lease and an operating lease liability of $ 35.3 million. The lease term is approximately ten years . Future minimum lease payments over the life of the lease were discounted at a rate of 12.6 %, which was our estimated incremental collateralized borrowing rate for the term of the lease at the inception of the lease. The following table presents the components of lease expense for the year-ended December 31, 2020 and 2019, respectively (in thousands): (in thousands) Twelve months ended December 31, 2020 Twelve months ended December 31, 2019 Operating lease cost (including variable costs) $ 9,682 $ 6,093 Variable costs including non-lease component $ 2,336 $ 2,624 Supplemental information: Cash paid for amounts included in the measurement of operating lease liabilities (included in net cash used in operating activities) Operating cash flows from operating leases $ 5,265 $ 4,008 87 Future minimum lease payments under commenced non-cancelable operating leases are as of December 31, 2020 as follows (in thousands): Fiscal Year Minimum Lease Payments for Operating Leases 2021 $ 7,565 2022 7,161 2023 7,044 2024 7,196 2025 7,398 Thereafter 31,908 Total future minimum payments $ 68,272 Less: imputed interest ( 27,121 ) Total $ 41,151 88 11. Fair Value of Financial Instruments The following tables summarize our cash and available-for-sale securities that were measured at fair value by significant investment category within the fair value hierarchy (in thousands): December 31, 2020 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Restricted Cash Assets: Cash $ 47,818 $ — $ — $ 47,818 $ 47,818 $ — $ — Cash-restricted 1,016 — — 1,016 — — 1,016 Total cash and restricted cash $ 48,834 $ — $ — $ 48,834 $ 47,818 $ — $ 1,016 Available-for-sale: Level I: Money market funds $ 20,702 $ — $ — $ 20,702 $ 20,702 $ — $ — Subtotal $ 20,702 $ — $ — $ 20,702 $ 20,702 $ — $ — Total $ 69,536 $ — $ — $ 69,536 $ 68,520 $ — $ 1,016 December, 31, 2019 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Restricted Cash Assets: Cash $ 16,614 $ — $ — $ 16,614 $ 16,614 $ — $ — Cash-restricted 2,075 — — 2,075 — — 2,075 Total cash and restricted cash $ 18,689 $ — $ — $ 18,689 $ 16,614 $ — $ 2,075 Available-for-sale: Level I: Money market funds $ 5,047 $ — $ — $ 5,047 $ 5,047 $ — $ — U.S. treasury securities 36,942 36 — 36,978 — 36,978 — Subtotal $ 41,989 $ 36 $ — $ 42,025 $ 5,047 $ 36,978 $ — Total $ 60,678 $ 36 $ — $ 60,714 $ 21,661 $ 36,978 $ 2,075 There were no transfers between Level I and Level II measurements, and no changes in the valuation techniques used during the years ended December 31, 2020, and 2019. Based on an evaluation of securities that were in a loss position, we did not recognize any other-than-temporary impairment charges for the years ended December 31, 2020, 2019, and 2018. None of our investments have been in a continuous loss position for more than 12 months. We concluded that the declines in market value of our available-for-sale securities investment portfolio were temporary in nature and did not consider any of our investments to be other-than-temporarily impaired. Convertible Notes The estimated fair values for these securities represent Level III valuations since a fair value for these securities cannot be determined by using readily observable inputs or measures, such as market prices. Fair values were estimated using pricing models and risk-adjusted value ranges. 89 The following table summarizes the par value, carrying value and the estimated fair value of the 2014 and 2019 Notes at December 31, 2020 and 2019, respectively (in thousands): December 31, 2020 December 31, 2019 Par Value Carrying Value Fair Value Par Value Carrying Value Fair Value 2014 Notes $ 1,079 $ 1,059 $ 1,122 $ 1,079 $ 1,057 $ 1,122 2019 Notes 55,000 53,165 117,899 55,000 52,764 73,975 Total $ 56,079 $ 54,224 $ 119,021 $ 56,079 $ 53,821 $ 75,097 12. Shareholders’ Equity 2020 At-the-Market Offering In March 2020, we entered into an Open Market Sale Agreement (Sale Agreement) with Jefferies LLC (Jefferies) to sell shares of our common stock having aggregate sales proceeds of up to $ 50 million, from time to time, through an “at-the-market” equity offering program under which Jefferies acts as sales agent. During the third quarter of 2020, we sold 2.5 million shares of our common stock pursuant to the Sale Agreement, for aggregate gross proceeds of $ 20.9 million. Our net proceeds from the sale of such shares of common stock were approximately $ 20.1 million, after deducting related expenses, including commissions of approximately $ 0.6 million and issuance costs of approximately $ 0.2 million. InstruNor Acquisition In January 2020, we completed the acquisition of all of the outstanding shares of InstruNor (see Note 3). The purchase price was approximately $ 7.2 million, consisting of $ 5.2 million in cash and 485,451 shares of our common stock. Conversion of 2018 Notes In the first quarter of 2019, we issued 19,460,260 shares of our common stock in connection with the conversion of our 2018 Notes (see Note 9). As a result of this issuance of our common stock, we recorded a total of $ 133.3 million of equity, which is equivalent to the fair value of the bonds retired. At December 31, 2020, we had reserved shares of common stock for future issuance under equity compensation plans as follows: (in 000s) Securities To Be Issued Upon Exercise Of Options Securities To Be Issued Upon Release Of Restricted Stock and Performance Share Units Number Of Remaining Securities Available For Future Issuance 2009 Equity Incentive Plan 19 — — 2011 Equity Incentive Plan 1,397 5,685 3,273 DVS Sciences Inc. 2010 Equity Incentive Plan 12 — — 2017 Inducement Award Plan 207 187 — 2017 Employee Stock Purchase Plan — — 2,925 1,635 5,872 6,198 13. Stock-Based Plans Our board of directors sets the terms, conditions, and restrictions related to our 2017 Employee Stock Purchase Plan (ESPP) and the grant of stock options, RSUs and PSUs awards under our various stock-based plans. Our board of directors determines the number of awards to grant and also sets vesting criteria. 90 Generally, RSUs vest on a quarterly basis over a period of four years from the date of grant at a rate of 25 % on the first anniversary of the grant date and ratably each quarter over the remaining 12 quarters, or ratably over 16 quarters, both subject to the employees’ continued employment. In May 2020, we granted 1.8 million retention RSUs that vest over 3 years with 50 % of the RSUs vesting after one year and 25 % of the RSUs vesting each year thereafter. Incentive stock options and non-statutory stock options granted under the 2011 Equity Incentive Plan (2011 Plan) have a term of no more than ten years from the date of grant and an exercise price of at least 100 % of the fair market value of the underlying common stock on the date of grant. If a participant owns stock representing more than .1 of the voting power of all classes of our stock on the grant date, an incentive stock option awarded to the participant will have a term of no more than five years from the date of grant and an exercise price of at least 1.1 of the fair market value of the underlying common stock on the date of grant. Generally, options vest at a rate of either .25 on the first anniversary of the option grant date and ratably each month over the remaining period of 36 months, or ratably each month over 48 months. We may grant options with different vesting terms from time to time. For performance-based share awards, our board of directors sets the performance objectives and other vesting provisions in determining the number of shares or value of performance units and performance shares that will be paid out. Such payout will be a function of the extent to which performance objectives or other vesting provisions have been achieved. 2011 Equity Incentive Plan On January 28, 2011, our board of directors adopted the 2011 Plan under which incentive stock options, non-statutory stock options, RSUs, stock appreciation rights, performance units, and performance shares may be granted to our employees, directors, and consultants. In April 2019, our board of directors authorized, and in June 2019, our stockholders approved, the amendment and restatement of the 2011 Plan to make various changes, including increasing the number of shares reserved for issuance by approximately 5.0 million shares and extending the term of the 2011 Plan until April 2029. In May 2020, our board of directors authorized, and in June 2020, our stockholders approved, an increase in the number of shares reserved for issuance under the 2011 Plan of 1.4 million shares. 2009 Equity Incentive Plan Our 2009 Equity Incentive Plan (the 2009 Plan) terminated on the date the 2011 Plan was adopted. Options granted, or shares issued under the 2009 Plan that were outstanding on the date the 2011 Plan became effective, remained subject to the terms of the 2009 Plan. 2017 Inducement Award Plan On January 5, 2017, we adopted the Fluidigm Corporation 2017 Inducement Award Plan (Inducement Plan) and reserved 2 million shares of our common stock for issuance pursuant to equity awards granted under the Inducement Plan. The Inducement Plan provides for the grant of equity-based awards and its terms are substantially similar to the 2011 Plan. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under the Inducement Plan may only be made to individuals not previously our employees or non-employee members of our board of directors (or following such individual's bona fide period of non-employment), as an inducement material to the individual's entry into employment with us or in connection with a merger or acquisition, to the extent permitted by Rule 5635(c)(3) of the Nasdaq Listing Rules. In June 2019, concurrently with the increase in shares available for grant under the 2011 Plan, the Inducement Plan was terminated such that no further grants could be made thereunder. Options granted and shares issued under the Inducement Plan that were outstanding when the Inducement Plan was terminated remain outstanding subject to their terms and the terms of the Inducement Plan. 91 Valuation and Expense Information We use the Black-Scholes option-pricing model to estimate the fair value of stock options granted under our equity incentive plans. The weighted average assumptions used to estimate the fair value were as follows: Year Ended December 31, 2020 2019 2018 Stock options Weighted average expected volatility 79.0 % 69.5 % 68.4 % Weighted average expected term 3.8 years 4.3 years 4.7 years Weighted average risk-free interest rate 2.6 % 1.9 % 2.7 % Dividend yield — — — Weighted-average fair value per share $ 2.60 $ 7.17 $ 3.45 We determine the expected volatility based on our historical stock price volatility generally commensurate with the estimated expected term of the stock awards. The expected term of an award is based on historical forfeiture experience, exercise activity, and the terms and conditions of the stock awards. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to each grant’s expected life. Each of these inputs is subjective and generally requires significant judgment by us. The fair value of the underlying common stock is also required to compute the fair value calculation of options and ESPP. We account for forfeitures as they occur. We grant stock options at exercise prices not less than the fair value of our common stock at the date of grant. The fair value of RSUs granted to employees was estimated on the date of grant by multiplying the number of shares granted by the fair market value of our common stock on the grant date. Activity under the various plans was as follows: Restricted Stock Units : Number of Units (in 000s) Weighted-Average Grant Date Fair Value per Unit Balance at December 31, 2017 1,168 $ 8.55 RSU granted 1,822 $ 5.98 RSU released ( 945 ) $ 9.63 RSU forfeited ( 233 ) $ 8.50 Balance at December 31, 2018 1,812 $ 7.09 RSU granted 1,808 $ 8.08 RSU released ( 730 ) $ 8.06 RSU forfeited ( 339 ) $ 7.80 Balance at December 31, 2019 2,551 $ 7.43 RSU granted 3,788 $ 4.06 RSU released ( 1,139 ) $ 7.04 RSU forfeited ( 338 ) $ 6.24 Balance at December 31, 2020 4,862 $ 4.98 The total intrinsic value of RSUs vested and released during the year ended December 31, 2020, 2019 and 2018 were approximately $ 8.0 million, $ 5.8 million and $ 6.8 million, respectively. The intrinsic value of vested and released RSUs is calculated by multiplying the fair market value of our common stock on the vesting date by the number of shares vested. As of December 31, 2020, the unrecognized compensation costs related to outstanding unvested RSUs under our equity incentive plans were $ 20.0 million. We expect to recognize those costs over a weighted average period of 2.6 years. 92 2018 Retention Bonus Program Included in the 2018 RSU activity are 379,593 of grants and releases related to a retention bonus program. As disclosed in our Current Report on Form 8-K filed on February 10, 2017, we previously implemented a company-wide retention bonus incentive program in which our executive officers at the time also participated. The bonus program provides for the payment of cash bonuses to program participants who were employees at the time the plan was implemented and who remain with Fluidigm through January 1, 2019. On September 18, 2018, the compensation committee of our board of directors approved an exchange program for our executive officers and for employees resident in the United States and Canada who are retention bonus program participants. In the exchange program, eligible participants could elect to surrender some or all of their right to receive a cash bonus in exchange for fully vested restricted stock units issued under our 2011 Equity Incentive Plan on the terms described below. Among other reasons, our compensation committee adopted the exchange program to encourage employee stock ownership and to effectively manage cash resources. Stock Options : Number of Options (in 000s) Weighted-Average Exercise Price per Option Weighted- Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value(1) in (000s) Balance at December 31, 2017 2,164 $ 10.41 6.6 Options granted 758 $ 6.05 Options exercised ( 40 ) $ 5.24 $ 81 Option forfeited ( 497 ) $ 16.09 Balance at December 31, 2018 2,385 $ 7.56 7.8 Options granted 50 $ 13.08 Options exercised ( 197 ) $ 5.43 $ 1,198 Options forfeited ( 211 ) $ 8.73 Balance at December 31, 2019 2,027 $ 7.78 6.8 Options granted 117 $ 4.05 Options exercised ( 100 ) $ 4.84 $ 359 Option forfeited ( 409 ) $ 9.22 Balance at December 31, 2020 1,635 $ 7.33 6.2 $ 834 Vested at December 31, 2020 1,358 $ 7.66 5.9 $ 644 Unvested awards at December 31, 2020 277 $ 5.71 7.8 $ 190 _________________________ (1) Aggregate intrinsic value as of December 31, 2020 was calculated as the difference between the closing price per share of our common stock on the last trading day of 2020, which was $ 6.00 , and the exercise price of the options, multiplied by the number of in-the-money options. As of December 31, 2020, the unrecognized compensation costs related to outstanding unvested options under our equity incentive plans were $ 0.8 million. We expect to recognize those costs over a weighted average period of 1.4 years. Performance-based Awards Performance Stock Units with Market Conditions. Beginning in 2018, we granted performance stock units to certain executive officers and senior level employees. The number of performance stock units ultimately earned under these awards is calculated based on the Total Shareholder Return (TSR) of our common stock as compared to the TSR of a defined group of peer companies during the applicable three-year performance period. The percentage of performance stock units that vest will depend on our relative position at the end of the performance period and can range from 0 % to 200 % of the number of units granted. 93 Under FASB ASC Topic 718, the provisions of the performance stock unit awards related to TSR are considered a market condition, and the effects of that market condition are reflected in the grant date fair value of the awards. We used a Monte Carlo simulation pricing model to incorporate the market condition effects at our grant date. Number of Units (in 000s) Weighted-Average Grant Date Fair Value per Unit Balance as at December 31, 2017 — $ — PSU granted 167 $ 10.09 PSU released — — PSU forfeited ( 12 ) $ 10.09 Balance at December 31, 2018 155 $ 10.09 PSU granted 401 $ 16.90 PSU released — — PSU forfeited ( 9 ) $ 10.09 Balance at December 31, 2019 547 $ 15.09 PSU granted 509 $ 4.82 PSU released — — PSU forfeited ( 94 ) $ 14.26 Balance at December 31, 2020 962 $ 9.74 As of December 31, 2020, the unrecognized compensation costs related to these awards were $ 3.8 million. We expect to recognize those costs over a weighted average period of 1.4 years. Performance Stock Units with Performance Conditions. During 2019, we also granted performance stock units to a certain employee. The number of performance stock units that ultimately vest under these awards is dependent on achieving certain discrete operational milestones, the latest of which is December 31, 2021. As of December 31, 2020, there were approximately 48 thousand units of these awards outstanding with a weighted-average grant date fair value of $ 6.46 per unit. 2017 Employee Stock Purchase Plan On August 1, 2017, our stockholders approved our 2017 ESPP at the annual meeting of stockholders. Our ESPP offers U.S. and some non-U.S. employees the right to purchase shares of our common stock. Our first ESPP offering period began on October 1, 2017 with a shorter offering period ending on November 30, 2017. Prior to June 2019, our ESPP program had a six-month offering period, with a new period commencing on the first trading day on or after May 31 and November 30 of each year. Employees were eligible to participate through payroll deductions of up to 10 % of their compensation. The purchase price at which shares were sold under the ESPP was 85 % of the lower of the fair market value of a share of our common stock on the first day of the offering period or the last day of the offering period. Effective in June 2019, our ESPP program was amended to offer a twelve-month offering period with two six-month purchase periods beginning on each of May 31 and November 30. Employees are eligible under the amended program to participate through payroll deductions of up to 15 % of their compensation. Employees may not purchase more than $ 25 thousand of stock for any calendar year. Under the updated program, the purchase price at which shares are sold for the first purchase period is 85 % of the lower of the fair market value of a share of our common stock on the first day of the offering period or the last day of the first purchase period. For the second purchase period, the purchase price at which shares are sold is 85 % of the lower of the fair market value of the common stock on the first day of the offering period and the last day of the offering period. In the event the fair market value of the common stock at the beginning of the second purchase period is less than the fair market value on the beginning of the offering period, the purchase price for the second offering period is reset to 85 % of the lower of the fair value of the common stock at the beginning of the second purchase period and last day of the offering period. 94 The offering period of June 1, 2019 to May 31, 2020 had two purchase periods, with one ending November 30, 2019 and the other May 31, 2020. As the fair market value of the common stock at November 30, 2019 was lower than the fair value of the common stock at the beginning of the offering period, the purchase price for the second purchase period was reset based on the lower of the November 30, 2019 price and May 31, 2019 price. The resetting of the purchase price is considered to be a modification of the original terms of the award. Under ASC 718, the incremental fair value based on the difference between the fair value of the modified award and the fair value of the original award immediately before it was modified was approximately $ 0.3 million. This amount was amortized over the remaining offering period. In April 2020, our board of directors authorized, and in June 2020, our stockholders approved, an amendment and restatement of the ESPP that increased the number of shares reserved for issuance by an additional 3.0 million shares and made various other changes. Effective June 2020, our ESPP program was amended to offer a six-month offering period, with a new offering and purchase period commencing on the first trading day on or after May 31 and November 30 of each year. Employees are eligible under the amended program to participate through payroll deductions of up to 10 % of their compensation. Employees may not purchase more than $ 25 thousand of stock for any calendar year. The purchase price of the shares sold under the ESPP is 85 % of the lower of fair market value of a share of our common stock on the first day of the offering period or the last day of the offering period. Total stock-based compensation expense recognized was as follows (in thousands): For the Year Ended December 31, 2020 2019 2018 2018 retention bonus program $ — $ — $ 2,809 Options, restricted stock units and performance share units 13,428 10,555 7,716 Employee stock purchase plan 1,023 838 498 Total stock-based compensation $ 14,451 $ 11,393 $ 11,023 14. Income Taxes Our loss before income taxes consists of the following (in thousands): Year Ended December 31, 2020 2019 2018 Domestic $ ( 46,277 ) $ ( 59,900 ) $ ( 47,600 ) International ( 7,824 ) ( 6,805 ) ( 13,820 ) Loss before income taxes $ ( 54,101 ) $ ( 66,705 ) $ ( 61,420 ) Significant components of our benefit for income taxes are as follows (in thousands): Year Ended December 31, 2020 2019 2018 Current: Federal $ — $ — $ ( 27 ) State ( 31 ) ( 31 ) ( 19 ) Foreign ( 2,314 ) ( 568 ) ( 32 ) Total current tax (expense) benefit ( 2,345 ) ( 599 ) ( 78 ) Deferred: State — — — Foreign 3,426 2,514 2,485 Total deferred benefit 3,426 2,514 2,485 Total benefit for income taxes $ 1,081 $ 1,915 $ 2,407 95 Reconciliation of income taxes at the statutory rate to the benefit from income taxes recorded in the statements of operations is as follows: Year Ended December 31, 2020 2019 2018 Tax benefit at federal statutory rate 21.0 % 21.0 % 21.0 % State tax expense, net of federal benefit 1.7 0.9 2.3 Foreign tax benefit (expense) ( 0.9 ) ( 0.1 ) ( 1.1 ) Change in valuation allowance ( 11.4 ) ( 6.0 ) ( 19.2 ) Federal research and development credit 1.1 0.7 1.5 Unrecognized tax benefit ( 0.1 ) ( 0.1 ) ( 0.2 ) Non-deductible interest/premium ( 1.1 ) ( 7.9 ) — Global Intangible Low-Tax Income (GILTI) ( 3.9 ) ( 5.6 ) — Net operating loss expiration ( 3.3 ) — — Other, net ( 1.1 ) — ( 0.4 ) Effective tax rate 2.0 % 2.9 % 3.9 % At December 31, 2017, we changed our permanent reinvestment assertion and will not permanently reinvest our foreign earnings outside the United States. The cash generated from some of our foreign subsidiaries may be used domestically to fund operations. Any domestic, foreign withholding tax and state taxes that may be due upon future repatriation of earnings is not expected to be significant. Significant components of our deferred tax assets and liabilities are as follows (in thousands): December 31, 2020 2019 Deferred tax assets: Net operating loss carryforwards $ 103,948 $ 105,702 Reserves and accruals 5,242 3,567 Depreciation and amortization 3,656 3,715 Tax credit carryforwards 18,268 17,267 Stock-based compensation 3,168 2,501 Right-of-use lease liability 9,451 1,097 Total gross deferred tax assets 143,733 133,849 Valuation allowance on deferred tax assets ( 131,232 ) ( 130,084 ) Total deferred tax assets, net of valuation allowance 12,501 3,765 Deferred tax liabilities: Fixed assets and intangibles ( 12,272 ) ( 14,183 ) Right-of-use asset ( 8,694 ) ( 783 ) Total deferred tax liabilities ( 20,966 ) ( 14,966 ) Net deferred tax liability $ ( 8,465 ) $ ( 11,201 ) We evaluate a number of factors to determine the realizability of our deferred tax assets. Recognition of deferred tax assets is appropriate when realization of these assets is more likely than not. Assessing the realizability of deferred tax assets is dependent upon several factors including historical financial results. The net deferred tax assets have been partially offset by a valuation allowance because we have incurred losses since our inception. The valuation allowance increased by $ 1.1 million and $ 4.0 million during 2020 and 2019, respectively, and increased by $ 6.9 million during 2018. The changes in valuation allowance during 2020 and 2019 are mainly due to significant taxable losses and an increase in tax attributes. The changes in valuation allowance during 2019 also includes a release of the valuation allowance against our deferred tax assets in Japan due to achievement of recent profitability and the expectation of future profitability in the jurisdiction, which decreased the valuation allowance by $ 294 thousand in 2019. 96 The valuation allowances of $ 131.2 million and $ 130.1 million as of December 31, 2020 and 2019, respectively, primarily relate to temporary tax differences, net operating losses and research and development credits generated in the current and prior years. We believe it is more likely than not that U.S. federal and state of California deferred tax assets relating to temporary differences, net operating losses and research and development credits are not realizable. As such, full valuation allowances have been applied against the deferred tax assets relating to jurisdictions of the federal U.S. and the state of California. A reconciliation of the beginning and ending amount of the valuation allowance for the years ended December 31, 2020, 2019, and 2018 is as follows (in thousands): Valuation Allowance December 31, 2017 $ 119,228 Charges to earnings — Charges to other accounts 6,880 December 31, 2018 126,108 Charges to earnings — Charges to other accounts 3,976 December 31, 2019 130,084 Charges to earnings — Charges to other accounts 1,142 December 31, 2020 $ 131,226 As of December 31, 2020, we had net operating loss carryforwards for U.S. federal income tax purposes of $ 461.6 million, which expire beginning in 2021, and U.S. federal research and development tax credits of $ 9.6 million, which expire in beginning in 2021 through 2040. As of December 31, 2020, we had net operating loss carryforwards for state income tax purposes of $ 176.5 million, which expire beginning in 2021 through 2040, and California research and development tax credits of $ 12.5 million, which do not expire. As of December 31, 2020, we had $ 3.8 million of foreign net operating loss carryforwards which do not expire. Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. In 2020, we continued the Section 382 analysis as historically performed through December 31, 2020 and determined that an ownership change did not occur during the current year. 97 The aggregate changes in the balance of our gross unrecognized tax benefits during 2020, 2019, and 2018 were as follows (in thousands): December 31, 2017 $ 7,317 Increases in balances related to tax positions taken during current period 255 Decreases in balances related to tax positions taken during prior period ( 228 ) December 31, 2018 7,344 Increases in balances related to tax positions during a prior period 155 Increases in balances related to tax positions taken during current period 354 Decreases in balances related to tax positions taken during prior period ( 20 ) December 31, 2019 7,833 Increases in balances related to tax positions during a prior period 756 Increases in balances related to tax positions taken during current period 441 Decreases in balances related to tax positions taken during prior period ( 144 ) December 31, 2020 $ 8,886 Accrued interest and penalties related to unrecognized tax benefits were included in the income tax provision and are immaterial as of December 31, 2020 and 2019. The uncertain taxes payable are recorded as a long-term liability on the balance sheet. As of December 31, 2020, there were $ 1.6 million of unrecognized tax benefits that, if recognized, would affect our effective tax rate. We do not anticipate that our existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law. The CARES Act includes provisions relating to refundable payroll tax credits, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to the tax depreciation methods for qualified improvement property. The CARES Act has an immaterial impact on our income taxes. We file income tax returns in the United States, various states, and certain foreign jurisdictions. As a result of net operating loss carryforwards, all of our tax years are open to federal and state examination in the United States. Tax years from 2012 are open to examination in various foreign countries. 15. Employee Benefit Plans We sponsor a 401(k) savings plan for our employees in the United States that stipulates that eligible employees may elect to contribute to the plan, subject to certain limitations, up to the lesser of 90 % of eligible compensation or the maximum amount allowed by the U.S. Internal Revenue Service. In 2015, we implemented a match formula of 100 % up to $ 2,000 annually, following a 4-year vesting schedule. In 2019, the match was increased to up to $ 3,000 annually. Employer matching contributions to the 401(k) plan were $ 0.6 million for the years ended December 31, 2020 and 2019, and $ 0.4 million for the year ended December 31, 2018. 16. Information About Geographic Areas We operate in one reporting segment that creates, manufactures, and markets a range of products and services, including instruments, consumables, reagents and software that are used by researchers and clinical labs worldwide. Our chief executive officer manages our operations and evaluates our financial performance on a consolidated basis. For purposes of allocating resources and evaluating regional financial performance, our chief executive officer reviews separate sales information for the different regions of the world. Our general and administrative expenses and our research and development expenses are not allocated to an y specific region. Most of our principal operations, other than manufacturing, and our decision-making functions are located at our corporate headquarters in the United States. A summary table of our total revenue by geographic areas of our customers and by product and services for the years ended December 31, 2020, 2019 and 2018 is included in Note 6 to the consolidated financial statements. 98 Sales to customers in the United States represented $ 72.0 million, or 52 %, of total revenues for the year ended December 31, 2020. Sales to customers in the United States represented $ 43.4 million, or 37 %, of total revenues for the year ended December 31, 2019 and $ 48.1 million, or 43 %, for the year ended December 31, 2018. Sales to customers in China were less than 10 % of total revenues for the year ended December 31, 2020. Sales to customers in China represented $ 15.4 million, or 13 %, of total revenues for year ended December 31, 2019, and $ 14.0 million, or 12 %, of total revenues for 2018. Except for China, no other foreign country or jurisdiction had sales in excess of 10% of our total revenue during the years 2020, 2019 and 2018. No individual customer represented more than 10% of our t otal revenues for the fiscal years ended December 31, 2020, 2019, and 2018 respectively. Revenues from our five largest customers were 23 % for the year ended December 31, 2020 and 17 % for both the years ended December 31, 2019 and 2018. We had long-lived assets consisting of property and equipment, net of accumulated depreciation, and operating lease ROU assets, net of accumulated amortization in the following geographic areas for each year presented (in thousands): December 31, 2020 2019 United States $ 35,188 $ 907 Singapore 12,195 3,618 Canada 6,456 7,474 Asia-Pacific 1,048 243 EMEA 758 674 Total $ 55,645 $ 12,916 The increase in the long-lived assets for the United States as of December 31, 2020 compared to the prior year end is due to a new ten-year lease for our South San Francisco headquarters (see Note 10). The increase in long-lived assets in Singapore is attributable to capital expenditures funded by the NIH Contract (see Note 4). 17. Commitments and Contingencies Commitments In the normal course of business, we enter into various contractual and legally binding purchase commitments. As of December 31, 2020, these commitments were approximately $ 12.9 million. Indemnifications From time to time, we have entered into indemnification provisions under certain of our agreements in the ordinary course of business, typically with business partners, customers, and suppliers. Pursuant to these agreements, we may indemnify, hold harmless, and agree to reimburse the indemnified parties on a case-by-case basis for losses suffered or incurred by the indemnified parties in connection with any patent or other intellectual property infringement claim by any third party with respect to our products. The term of these indemnification provisions is generally perpetual from the time of the execution of the agreement. The maximum potential amount of future payments we could be required to make under these indemnification provisions is typically not limited to a specific amount. In addition, we have entered into indemnification agreements with our officers, directors, and certain other employees. With certain exceptions, these agreements provide for indemnification for related expenses including, among others, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. Contingencies In September 2020, a putative class action complaint alleging violations of the federal securities laws was filed against the Company (also naming our Chief Executive Officer and Chief Financial Officer as defendants) in the U.S. District Court for the Northern District of California (Reena Saintjermain, et al. v. Fluidigm Corporation, et al). The Court appointed a lead plaintiff and lead counsel in December 2020, and an amended complaint was filed on February 19, 2021. The complaint, as amended, seeks unspecified damages on behalf of a purported class of persons and entities who acquired our common stock between 99 February 7, 2019 and November 5, 2019 and alleges securities laws violations based on statements and alleged omissions made by the Company during such period. The Company intends to file a motion to dismiss the complaint, which motion is currently due to be filed in early April 2021. We believe the claims alleged in the complaint lack merit and we intend to defend this action vigorously. From time to time, we may be subject to various legal proceedings and claims arising in the ordinary course of business. These include disputes and lawsuits related to intellectual property, mergers and acquisitions, licensing, contract law, tax, regulatory, distribution arrangements, employee relations and other matters. Periodically, we review the status of each matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, we accrue a liability for the estimated loss. We have not recorded any such liabilities. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, we continue to reassess the potential liability related to pending claims and litigation and may revise estimates. 18. Quarterly Results of Operations (Unaudited) Selected quarterly results of operations for the years ended December 31, 2020 and 2019 are as follows (in thousands, except for per share amounts): 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Total revenue $ 27,617 $ 26,058 $ 39,861 $ 44,608 Product and service gross profit $ 13,002 $ 11,825 $ 20,799 $ 22,079 Net loss $ ( 15,980 ) $ ( 13,015 ) $ ( 5,999 ) $ ( 18,026 ) Net loss per share, basic and diluted $ ( 0.23 ) $ ( 0.18 ) $ ( 0.08 ) $ ( 0.24 ) 2019 First Quarter Second Quarter Third Quarter Fourth Quarter Total revenue $ 30,111 $ 28,196 $ 26,496 $ 32,440 Product and service gross profit $ 16,990 $ 15,363 $ 13,838 $ 17,538 Net loss $ ( 25,465 ) $ ( 13,753 ) $ ( 12,887 ) $ ( 12,685 ) Net loss per share, basic and diluted $ ( 0.44 ) $ ( 0.20 ) $ ( 0.19 ) $ ( 0.18 ) 19. Subsequent Event On February 19, 2021, we and the National Institutes of Health entered into a modification of the NIH Contract (see Note 4) (the Modification). The Modification revised the milestones under the NIH Contract to include, in addition to the Advanta Dx SARS-CoV-2 RT-PCR Assay, the development and manufacture of a cartridge-based COVID-19 assay designed to provide a more integrated sample-to-answer workflow. The Modification also extended the period of performance under the NIH Contract through September 30, 2021. The Modification did not change the total NIH Contract value of up to approximately $ 34.0 million based upon our achievement of milestones. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.