What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-05-07 · 150 added, 116 removed, 647 unchanged (29% of the section changed)

3 unchanged sentences

(In thousands)

March 31, December 31,

June 30, December 31,

Current assets:

Cash and cash equivalents $ 30,863 $ 68,520

Accounts receivable (net of allowance of $ 356 at each of March 31, 2021 and December 31, 2020)

Accounts receivable (net of allowance of $ 356 at each of June 30, 2021 and December 31, 2020)

15,666 25,423

14 unchanged sentences

Other accrued liabilities 8,682 11,882

Deferred grant income, current 7,703 2,912

Deferred revenue, current 13,975 13,475

9 unchanged sentences

Stockholders’ equity:

Preferred stock, $ 0.001 par value, 10,000 shares authorized, no shares issued and outstanding at either March 31, 2021 or December 31, 2020

Preferred stock, $ 0.001 par value, 10,000 shares authorized, no shares issued and outstanding at either June 30, 2021 or December 31, 2020

Common stock:

$ 0.001 par value, 200,000 shares authorized at March 31, 2021 and December 31, 2020;

74,963 and 74,543 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

$ 0.001 par value, 200,000 shares authorized at June 30, 2021 and December 31, 2020;

76,166 and 74,543 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 822,383 815,624

7 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Product revenue $ 22,627 $ 17,405 $ 47,355 $ 36,386

11 unchanged sentences

Interest expense ( 896 ) ( 897 ) ( 1,783 ) ( 1,797 )

Other expense, net ( 285 ) ( 818 )

Other income (expense), net 504 463 219 ( 355 )

Loss before income taxes ( 17,660 ) ( 14,160 ) ( 38,152 ) ( 30,820 )

7 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net loss $ ( 17,143 ) $ ( 13,015 ) $ ( 35,964 ) $ ( 28,995 )

21 unchanged sentences

Balance as of March 31, 2021 74,963 $ 75 $ 818,776 $ ( 331 ) $ ( 695,582 ) $ 122,938

Issuance of restricted stock, net of shares withheld for taxes, and other 1,028 1 ( 1,028 ) ( 1,027 )

Issuance of common stock under ESPP 139 — 685 685

Issuance of common stock from option exercises 36 — 209 209

Stock-based compensation expense 3,741 3,741

Net loss ( 17,143 ) ( 17,143 )

Other comprehensive loss, net of tax 47 47

Balance as of June 30, 2021 76,166 $ 76 $ 822,383 $ ( 284 ) $ ( 712,725 ) $ 109,450

Common Stock Additional

13 unchanged sentences

Balance as of March 31, 2020 70,696 $ 71 $ 782,031 $ ( 885 ) $ ( 639,721 ) $ 141,496

Issuance of restricted stock, net of shares withheld for taxes, and other 286 — ( 116 ) — — ( 116 )

Issuance of common stock under ESPP 301 — 645 — — 645

Stock-based compensation expense — — 3,633 — — 3,633

Net loss — — — — ( 13,015 ) ( 13,015 )

Other comprehensive income, net of tax — — — 76 — 76

Balance as of June 30, 2020 71,283 $ 71 $ 786,193 $ ( 809 ) $ ( 652,736 ) $ 132,719

See accompanying notes

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities

7 unchanged sentences

Provision for excess and obsolete inventory 1,248 306

Loss on disposal of property and equipment — 148

Other non-cash items 63 136

5 unchanged sentences

Deferred revenue ( 619 ) 1,965

Accrued compensation and related benefits ( 5,359 ) 1,496

Other liabilities ( 3,884 ) ( 4,292 )

3 unchanged sentences

Proceeds from NIH Contract 2,000 —

Proceeds from sale of investments — 5,011

Proceeds from maturities of investments — 29,400

3 unchanged sentences

Repayment of long-term debt ( 501 ) —

Proceeds from exercise of stock options 209 —

Proceeds from stock issuance from ESPP 685 645

Payments for taxes related to net share settlement of equity awards and other ( 1,552 ) ( 262 )

Payment of debt issuance costs — ( 375 )

Net cash used in financing activities ( 1,026 ) ( 503 )

Net cash provided by (used in) financing activities ( 1,159 ) 8

Effect of foreign exchange rate fluctuations on cash and cash equivalents 162 ( 205 )

10 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

June 30, 2021

Description of Business

10 unchanged sentences

GAAP) and include the accounts of our wholly owned subsidiaries.

As of March 31, 2021, we had wholly owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, Italy, the United Kingdom, China, Germany and Norway.

As of June 30, 2021, we had wholly owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, Italy, the United Kingdom, China, Germany and Norway.

All subsidiaries, except for Singapore, use their local currency as their functional currency.

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The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by U.S.

The condensed consolidated results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year or for any other year or interim period.

The condensed consolidated results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year or for any other year or interim period.

The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes for the year ended December 31, 2020 included in our annual report on Form 10-K, filed with the SEC on February 25, 2021.

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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 March 31, 2021.

We assessed certain accounting matters that generally require consideration of forecasted financial information, including the unknown impact of COVID-19 as of June 30, 2021.

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.

77 unchanged sentences

To reduce credit risk, we perform credit evaluations of our customers.

One customer from whom we derived product revenue exceed ed 10 % of revenue for the three months ended March 31, 2021.

License revenue, recognized as part of a settlement agreement with a party who is not a regular customer, exceeded 10% of total revenue for the three months ended March 31, 2020.

No other customer represented more than 10% of revenue during the three months ended March 31, 2021 or during the same period the previous year.

There were no customers who represented more than 10% of total billed receivables as of March 31, 2021 or December 31, 2020.

One customer from whom we derived product and development revenue exceed ed 10 % of total revenue for the three months ended June 30, 2020 .

No customer represented more than 10% of total revenue for the three months ended June 30, 2021 or for the six months ended June 30, 2021 and 2020.

There were no customers with outstanding trade receivable balances that represented more than 10% of total billed receivables as of June 30, 2021 or December 31, 2020.

Our products include components that are currently procured from a single source or a limited number of sources.

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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.

As most of our leases do not provide an implicit rate, we generally use an incremental collateralized 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.

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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 or for the three months ended March 31, 2021.

We did no t recognize any impairment of goodwill for any of the periods presented herein.

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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.

Deferred grant 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 grant income related to reimbursement of operating expenses is recorded as a reduction of those expenses incurred to date.

Any grant proceeds that exceed the cost of the capital expenditures and expenses expected to be incurred at the completion of the NIH Contract will be reflected in other income.

Convertible Notes

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Total comprehensive loss for all periods presented has been disclosed in the condensed consolidated statements of comprehensive loss.

The components of accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2021 are as follows (in thousands):

The components of accumulated other comprehensive loss, net of tax, for the three and six months ended June 30, 2021 are as follows (in thousands):

Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Investments Accumulated Other Comprehensive Income (Loss)

2 unchanged sentences

Ending balance at March 31, 2021 $ ( 331 ) $ — $ ( 331 )

Immaterial amounts of unrealized gains and losses have been reclassified into the condensed consolidated statement of operations for the three months ended March 31, 2021 and 2020.

Other comprehensive income (loss) 47 — 47

Ending balance at June 30, 2021 $ ( 284 ) $ — $ ( 284 )

Immaterial amounts of unrealized gains and losses have been reclassified into the condensed consolidated statement of operations for the three and six months ended June 30, 2021.

Net Loss per Share

2 unchanged sentences

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):

Three Months Ended March 31,

Six Months Ended June 30,

Stock options, restricted stock units and performance awards 7,944 8,237

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The NIH Contract has a total value of up to $ 34.0 million upon the achievement of certain conditional milestones.

The NIH Contract was modified in February 2021, dividing the remaining milestones into multiple discrete milestones expected to be completed in 2021, with no change to the total grant amount.

The NIH Contract was modified in February 2021 to divide the remaining milestones into multiple discrete milestones, and modified again in May 2021 to change the due dates for some milestones.

The milestones are expected to be completed in 2021 and no change was made to the total grant amount under the 2021 modifications.

Proceeds from the NIH Contract are being used primarily to expand production capacity and, to a lesser extent, to offset related operating expenses.

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We are working with the NIH to ensure we remain in compliance with the requirements and milestones of the NIH Contract.

The following table summarizes the activity under the NIH Contract through March 31, 2021 (in thousands):

March 31, 2021 December 31, 2020

The following table summarizes the activity under the NIH Contract through June 30, 2021 (in thousands):

June 30, 2021 December 31, 2020

Total value of milestones reasonably assured $ 31,436 $ 25,436

1 unchanged sentence

Total deferred grant income $ 28,234 $ 23,948

March 31, 2021 December 31, 2020

Short-term deferred grant income $ 7,703 $ 2,912

1 unchanged sentence

Deferred grant income $ 28,234 $ 23,948

March 31, 2021 December 31, 2020

Total value of milestones reasonably assured $ 31,436 $ 25,436

1 unchanged sentence

Grant receivable from NIH Contract $ 500 $ —

The grant receivable from the NIH Contract is included in prepaid and other current assets on the condensed consolidated balance sheet at March 31, 2021.

Short-term deferred grant income represents future research and development costs expected to be funded by the NIH as well as estimated depreciation expense to be incurred over the next twelve months.

Short-term deferred grant income is included in other accrued liabilities on the condensed consolidated balance sheet at March 31, 2021.

The grant receivable from the NIH Contract is included in prepaid expenses and other current assets on the condensed consolidated balance sheet at June 30, 2021.

Short-term deferred grant income represents amounts expected to be recognized in income over the next twelve months, including estimated depreciation expense.

The long-term deferred grant income includes capital expenditure amounts which will be amortized in later periods.

We have incurred $ 16.1 million of capital expenditures th rough March 31, 2021.

The majority of this amount is included in construction-in-progress, which is included in property and equipment, net in the condensed consolidated balance sheet as of March 31, 2021 (see Note 7).

We expect to incur an aggregate $ 23.0 million of capital expenditures associated with the NIH Contract and have incurred $ 20.1 million of such capital expenditures th rough June 30, 2021.

The majority of this amount is included in construction-in-progress, which is included in property and equipment, net in the condensed consolidated balance sheet as of June 30, 2021 (see Note 7).

Development Agreement

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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, which is expected to be completed in 2021.

We recognized $ 1.5 million of development revenue from this agreement during the three months ended March 31, 2021.

Cumulatively, we have recognized $ 10.3 million of development revenue from this agreement.

Unbilled receivables of $ 2.8 million, which represent revenues recognized in excess of milestones billed through March 31, 2021 , are included in prepaid and other current assets on the condensed consolidated balance sheet at March 31, 2021.

No development revenue was recognized during the three months ended March 31, 2020.

The Development Agreement provides up-front and periodic milestone payments during the development stage, which is expected to be completed in 2021.

We recognized $ 0.9 million and $ 2.3 million of development revenue from this agreement during the three and six months ended June 30, 2021, respectively.

During the three months ended June 30, 2020, we recognized $ 3.0 million of revenue.

Cumulatively, we have recognized $ 11.1 million of development revenue associated with the agreement and expect to recognize another $ 0.1 million upon completion of the Development Agreement.

Unbilled receivables, which represent revenues recognized in excess of milestones billed, totaled $ 2.1 million as of June 30, 2021, and are included in prepaid expenses and other current assets on our condensed consolidated balance sheet .

Disaggregation of Revenue

The following table presents our revenue for the three months ended March 31, 2021 and 2020, respectively, based on geographic area and by source (in thousands):

Three Months Ended March 31,

The following table presents our revenue disaggregated by geographic region and by source for the three and six months ended June 30, 2021 and 2020 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Geographic Markets:

3 unchanged sentences

Total revenue $ 31,018 $ 26,058 $ 63,812 $ 53,675

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Instruments $ 10,179 $ 8,577 $ 17,887 $ 18,048

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Performance Obligations

We reported $ 21.5 million of deferred revenue in our December 31, 2020 consolidated balance sheet.

During the three months ended March 31, 2021, $ 3.9 million of the opening balance was recognized as revenue and $ 3.8 million of net additional advance payments were received from customers, primarily associated with instrument service contracts.

At March 31, 2021, we reported $ 21.4 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 March 31, 2021 (in thousands):

We reported $ 21.5 million of deferred revenue on our December 31, 2020 consolidated balance sheet.

During the six months ended June 30, 2021, $ 7.2 million of the opening balance was recognized as revenue and $ 6.2 million of net additional advance payments were received from customers, primarily associated with instrument service contracts.

At June 30, 2021, we reported $ 20.5 million of deferred revenue.

Fiscal Year Expected Revenue (1)

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Goodwill and Intangible Assets, net

In connection with our acquisition of DVS Sciences, Inc.

in February 2014, we recognized goodwill of $ 104.1 million and $ 112.0 million of developed technology.

In January 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.

In connection with our acquisition of DVS Sciences in February 2014, we recognized $ 104.1 million of goodwill and $ 112.0 million of developed technology.

In connection with our acquisition of InstruNor in January 2020, we recognized $ 2.2 million (Euro 2.0 million) of goodwill and $ 5.4 million (Euro 4.9 million) of developed technology.

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.

3 unchanged sentences

If indicators of impairment are identified, a quantitative impairment test is performed.

There have been no indicators of impairment in the first half of 2021.

Intangible assets also include other patents and licenses, which are included in other non-current assets.

Intangible assets, net, were as follows (in thousands):

March 31, 2021

June 30, 2021

Gross Amount Accumulated Amortization Net Weighted-Average Amortization Period

5 unchanged sentences

Patents and licenses $ 11,256 $ ( 9,238 ) $ 2,018 7.5 years

Total amortization expense for both the three months ended March 31, 2021 and 2020 was $ 3.2 million.

Based on the carrying value of intangible assets, net, as of March 31, 2021, the amortization expense is expected to be as follows (in thousands):

Total amortization expense for both the three and six months ended June 30, 2021 and June 30, 2020 was $ 3.2 million and $ 6.4 million, respectively.

Based on the carrying value of intangible assets as of June 30, 2021, the amortization expense is expected to be as follows (in thousands):

Fiscal Year Developed Technology Amortization Expense Patents and Licenses Amortization Expense Total

8 unchanged sentences

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash consisted of the following as of March 31, 2021 and December 31, 2020 (in thousands):

March 31, 2021 December 31, 2020

Cash, cash equivalents and restricted cash consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

Cash and cash equivalents $ 30,863 $ 68,520

1 unchanged sentence

Total cash, cash equivalents and restricted cash $ 31,879 $ 69,536

Short-term restricted cash of approximately $ 16 thousand 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 condensed consolidated balance sheet as of March 31, 2021.

Inventories, net

Inventories consisted of the following as of March 31, 2021 and December 31, 2020 (in thousands):

March 31, 2021 December 31, 2020

Inventories consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

Raw materials $ 11,009 $ 8,292

3 unchanged sentences

Property and Equipment, net

Property and equipment consisted of the following as of March 31, 2021 and December 31, 2020 (in thousands):

March 31, 2021 December 31, 2020

Property and equipment consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

Computer equipment and software $ 4,306 $ 4,240

6 unchanged sentences

Property and equipment, net $ 27,718 $ 17,531

The majority of the amounts included in construction-in-progress are related to the NIH Contract (see Note 3).

Accrued Compensation and Related Benefits

Accrued compensation and related benefits consisted of the following as of March 31, 2021 and December 31, 2020 (in thousands):

March 31, 2021 December 31, 2020

Accrued compensation and related benefits consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

Accrued incentive compensation $ 2,335 $ 7,842

2 unchanged sentences

Accrued compensation and related benefits $ 8,293 $ 13,787

Activity for our warranty accrual for the three months ended March 31, 2021 and 2020, which is included in other accrued liabilities, is summarized below (in thousands):

Three Months Ended March 31,

Accrued warranty is included in other current liabilities on our condensed consolidated balance sheet.

Activity for our warranty accrual for the six months ended June 30, 2021 and 2020 is summarized below (in thousands):

Six Months Ended June 30,

Beginning balance $ 1,663 $ 1,390

13 unchanged sentences

We have retired the majority of the 2014 Notes through the issuance of the 2018 Notes and 2019 Notes, as discussed below, as well as the February 2021 redemption.

As of March 31, 2021, there is $ 0.6 million aggregate principal of the 2014 Notes outstanding.

As of June 30, 2021, there is $ 0.6 million aggregate principal of the 2014 Notes outstanding.

2018 Senior Convertible Notes (2018 Notes)

6 unchanged sentences

Net proceeds of the offering of the 2019 Notes issuance were $ 52.7 million, after deductions for commissions and other debt issuance costs of approximately $ 2.3

$ 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 aggregate principal value of 2014 Notes outstanding.

The 2019 Notes bear interest at 5.25 % per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2020.

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The carrying values of the components of the 2014 Notes and the 2019 Notes are as follows (in thousands):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

2.75 % 2014 Notes due 2034

11 unchanged sentences

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.

Total availability under the Revolving Credit Facility as of March 31, 2021 was $ 13.2 million.

There were no borrowings outstanding under the Revolving Credit Facility at March 31, 2021.

Total availability under the Revolving Credit Facility as of June 30, 2021 was $ 11.0 million.

There were no borrowings outstanding under the Revolving Credit Facility at June 30, 2021.

The Revolving Credit Facility is collateralized by substantially all our property, other than intellectual property.

1 unchanged sentence

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.

Fees for the Revolving Credit Facility include an annual commitment fee of $ 112,500 and

a quarterly unused line fee based on the Borrowing Base.

Fees for the Revolving Credit Facility include an annual commitment fee of $ 112,500 and a quarterly unused line fee based on the Borrowing Base.

Effective April 21, 2020, the Revolving Credit Facility was amended to extend the maturity date to August 2, 2022.

2 unchanged sentences

Some leases contain options to extend the lease, usually for up to five years , and termination options.

Supplemental balance sheet information related to leases was as follows as of March 31, 2021 and December 31, 2020 (in thousands, except for discount rate and lease term):

March 31, 2021 December 31, 2020

Supplemental balance sheet information related to leases was as follows as of June 30, 2021 and December 31, 2020 (in thousands, except for discount rate and lease term):

June 30, 2021 December 31, 2020

Operating lease right-of-use buildings $ 43,427 $ 41,132

11 unchanged sentences

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):

March 31, 2021

June 30, 2021

Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Cash- Restricted

Cash-unrestricted $ 44,442 $ — $ — $ 44,442 $ 44,442 $ — $ —

Cash and money market funds $ 30,863 $ — $ — $ 30,863 $ 30,863 $ — $ —

Cash-restricted 1,016 — — 1,016 — — 1,016

Total cash $ 45,458 $ — $ — $ 45,458 $ 44,442 $ — $ 1,016

Available-for-sale:

Money market funds $ 5,302 $ — $ — $ 5,302 $ 5,302 $ — $ —

Subtotal $ 5,302 $ — $ — $ 5,302 $ 5,302 $ — $ —

Total $ 50,760 $ — $ — $ 50,760 $ 49,744 $ — $ 1,016

Total cash, cash equivalents and restricted cash $ 31,879 $ — $ — $ 31,879 $ 30,863 $ — $ 1,016

December 31, 2020

Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Cash- Restricted

Cash-unrestricted $ 47,818 $ — $ — $ 47,818 $ 47,818 $ — $ —

Cash and money market funds $ 68,520 $ — $ — $ 68,520 $ 68,520 $ — $ —

Cash-restricted 1,016 — — 1,016 — — 1,016

Total cash $ 48,834 $ — $ — $ 48,834 $ 47,818 $ — $ 1,016

Available-for-sale:

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

There were no transfers between Level I and Level II measurements, and no changes in the valuation techniques used, during the three months ended March 31, 2021.

Total cash, cash equivalents and restricted cash $ 69,536 $ — $ — $ 69,536 $ 68,520 $ — $ 1,016

Cash and cash equivalents are Level 1 measurements.

There were no transfers between Level I and Level II measurements, and no changes in the valuation techniques used, during the six months ended June 30, 2021.

Convertible Notes

2 unchanged sentences

Fair values were estimated using pricing models and risk-adjusted value ranges.

The following table summarizes the par value, carrying value and the estimated fair value of the 2014 and 2019 Notes at March 31, 2021 and December 31, 2020, respectively (in thousands):

March 31, 2021 December 31, 2020

The following table summarizes the par value, carrying value and the estimated fair value of the 2014 and 2019 Notes as of June 30, 2021 and December 31, 2020, respectively (in thousands):

June 30, 2021 December 31, 2020

Par Value Carrying Value Fair Value Par Value Carrying Value Fair Value

12 unchanged sentences

Common Shares Reserved

At March 31, 2021, we had reserved shares of common stock for future issuance under equity compensation plans as follows:

At June 30, 2021, we had reserved shares of common stock for future issuance under equity compensation plans as follows:

(in 000's) 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

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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.

In April 2021, our board of directors authorized an increase of 4.1 million shares reserved for issuance under the 2011 Plan, subject to stockholder approval at our annual meeting of stockholders in May 2021.

In April 2021, our board of directors authorized, and in May

2021, our stockholders approved an increase in the number of shares reserved for issuance under the 2011 Plan of 4.1 million shares.

Activity under the various plans was as follows:

7 unchanged sentences

RSUs forfeited ( 567 ) $ 4.49

Balance as of March 31, 2021 4,483 $ 5.00

As of March 31, 2021, the unrecognized compensation costs related to outstanding unvested RSUs under our equity incentive plans were $ 17.5 million.

Balance as of June 30, 2021 5,072 $ 4.95

As of June 30, 2021, the unrecognized compensation costs related to outstanding unvested RSUs under our equity incentive plans were $ 23.4 million.

We expect to recognize those costs over a weighted average period of 2.8 years.

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Options forfeited ( 58 ) $ 8.48

Balance as of March 31, 2021 1,612 $ 7.32 6.0 $ 192

Vested at March 31, 2021 1,417 $ 7.51 5.8 $ 162

Unvested awards at March 31, 2021 195 $ 5.98 7.6 $ 30

(1) Aggregate intrinsic value as of March 31, 2021 was calculated as the difference between the closing price per share of our common stock on the last trading day of March 31, 2021, which was $ 4.52 , and the exercise price of the options, multiplied by the number of in-the-money options.

As of March 31, 2021, the unrecognized compensation costs related to outstanding unvested options under our equity incentive plans were $ 0.6 million.

Balance as of June 30, 2021 1,634 $ 7.32 6.0 $ 978

Vested at June 30, 2021 1,427 $ 7.38 5.7 $ 898

Unvested awards at June 30, 2021 207 $ 6.15 8.3 $ 80

(1) Aggregate intrinsic value as of June 30, 2021 was calculated as the difference between the closing price per share of our common stock on the last trading day of June 30, 2021, which was $ 6.16 , and the exercise price of the options, multiplied by the number of in-the-money options.

As of June 30, 2021, the unrecognized compensation costs related to outstanding unvested options under our equity incentive plans were $ 0.7 million.

We expect to recognize those costs over a weighted average period of 1.1 years.

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The percentage of PSUs 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.

Under FASB ASC Topic 718, the provisions of the PSU 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.

Under FASB ASC Topic 718, the provisions of the PSU 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.

10 unchanged sentences

PSU forfeited ( 36 ) $ 4.82

Balance at March 31, 2021 850 $ 9.69

As of March 31, 2021, the unrecognized compensation costs related to these awards were $ 3.1 million.

Balance at June 30, 2021 1,210 $ 9.80

As of June 30, 2021, the unrecognized compensation costs related to these awards were $ 6.0 million.

We expect to recognize those costs over a weighted average period of 2 years.

2 unchanged sentences

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 March 31, 2021, there were approximately 29 thousand units of these awards outstanding with a weighted-average grant date fair value of $ 6.46 per unit.

As of June 30, 2021, there were approximately 29 thousand units of these awards outstanding with a weighted-average grant date fair value of $ 6.46 per unit.

2017 Employee Stock Purchase Plan (ESPP)

8 unchanged sentences

Total stock-based compensation expense recognized was as follows (in thousands):

Three months ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Restricted stock units, stock options and performance share units $ 3,566 $ 3,331 $ 7,039 $ 5,443

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Our quarterly provision for income taxes is based on an estimated effective annual income tax rate.

Our quarterly provision for income taxes also includes the tax impact of certain unusual or infrequently occurring items, if any, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur.

We recorded a tax benefit of $ 1.7 million and $ 0.7 million for the three months ended March 31, 2021, and 2020 respectively.

For the first quarter of each of 2021 and 2020, our foreign operations recorded a loss.

The benefits for all periods were primarily attributable to the tax benefits from the amortization of our acquisition-related deferred tax liabilities and tax benefits from our foreign operations.

These benefits were partially offset by state minimum income taxes.

Our quarterly provision for income taxes also includes discrete items, such as changes in valuation allowances or adjustments upon finalization of tax returns as well as infrequently occurring items, if any, including the effects of changes in tax laws or rates, in the interim period in which they occur.

We recorded a tax benefit of $ 0.5 million and $ 1.1 million for the three months ended June 30, 2021 and 2020, respectively.

Higher earnings in our foreign operations in the quarter ended June 30, 2021 compared to the quarter ended June 30, 2020 resulted in higher tax expense for our foreign operations for the three months ended June 30, 2021.

Discrete items primarily related to the finalization of 2020 tax returns offset these higher foreign taxes, contributing $ 1.3 million to the tax benefit for the three months ended June 30, 2021.

For the six months ended June 30, 2021 and 2020, we recorded a tax benefit of $ 2.2 million and $ 1.8 million, respectively.

The increased tax benefit for the six months ended June 30, 2021 compared to the six months ended June 30, 2020 was also attributable to the aforementioned discrete items, partially offset by higher earnings in certain of our foreign operations.

Our tax benefit for income taxes for the periods presented differ from the 21% U.S.

Federal statutory rate for the three months ended March 31, 2021 and 2020, respectively, primarily due to maintaining a valuation allowance for most of our deferred tax assets, which primarily consist of net operating loss carryforwards.

Federal statutory rate primarily due to maintaining a valuation allowance for our domestic deferred tax assets, which primarily consist of net operating loss carryforwards.

Our tax positions are subject to audits by multiple tax jurisdictions.

We believe that we have provided adequate reserves for uncertain tax positions for all tax years still open for assessment.

For the three months ended March 31, 2021, and 2020, respectively, we did not recognize any material interest or penalties related to uncertain tax positions.

For the six months ended June 30, 2021 and 2020, respectively, we did not recognize any material interest or penalties related to uncertain tax positions.

We expect to settle $ 0.8 million of our uncertain tax positions within the next twelve months.

The amount relates to our uncertain tax position in Singapore that we expect to receive a final determination from the local tax jurisdiction in the near future.

Recording deferred tax assets is appropriate when realization of these assets is more likely than not.

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Any release of valuation allowances could have the effect of decreasing the income tax provision in the period the valuation allowance is released.

We continue to monitor the likelihood that we will be able to recover our deferred tax assets, including those for which a valuation allowance is recorded.

We continue to access the likelihood that we will be able to recover our deferred tax assets, including those for which a valuation allowance is recorded.

There can be no assurance that we will generate profits in the future periods enabling us to fully realize our deferred tax assets.

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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 three months ended March 31, 2021 and 2020 is included in Note 5 to the condensed consolidated financial statements.

Sales to customers in the United States represented $ 18.1 million, or 55 % of total revenues, and $ 14.1 million or 51 % of total revenues, for the three months ended March 31, 2021 and 2020, respectively.

No foreign country or jurisdiction had sales in excess of 10% of total revenues for the three months ended March 31, 2021, or 2020.

A summary table of our revenue disaggregated by geographic area and by source for the three and six months ended June 30, 2021 and 2020 is included in Note 5 to the condensed consolidated financial statements.

Revenue from customers in the United States represented $ 15.5 million, or 50 % of total revenues, and $ 13.4 million, or 51 % of total revenues, for the three months ended June 30, 2021 and 2020, respectively.

For the six months ended June 30, 2021 and 2020, revenue from domestic customers totaled $ 33.7 million, or 53 % of total revenues, and $ 27.5 million, or 51 % of total revenues, respectively.

Revenues from customers in China represented $ 2.5 million, or 8 % of total revenues, and $ 3.5 million, or 13 % of total revenues, for the three months ended June 30, 2021 and 2020, respectively.

For the six months ended June 30, 2021 and 2020, revenues from customers in China were less than 10% of total revenues.

With the exception of China, no foreign country had revenue in excess of 10% of total revenues during any of the pe riods presented in this report.

Commitments and Contingencies

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The complaint, as amended, seeks unspecified damages on behalf of a purported class of persons and entities who acquired our common stock between 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 filed a motion to dismiss the complaint on April 5, 2021.

The Company filed a motion to dismiss the complaint on April 5, 2021 and, on August 4,

2021, the Court granted defendants’ motion to dismiss with leave to amend.

We believe the claims alleged in the complaint lack merit and we intend to defend this action vigorously.

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As additional information becomes available, we continue to reassess the potential liability related to pending claims and litigation and may revise estimates.

Subsequent Event

On August 2, 2021, we entered into a Fourth Amendment to Loan and Security Agreement (the Amendment) with Silicon Valley Bank (SVB), which amends the Loan and Security Agreement dated as of August 2, 2018, between the Company and SVB (as amended by the Default Waiver and First Amendment to Loan and Security Agreement dated September 7, 2018, the Second Amendment to Loan and Security Agreement dated November 20, 2019, and the Third Amendment to Loan and Security Agreement dated April 21, 2020, the Credit Agreement).

The Amendment extends the maturity date of our $ 15.0 million Revolving Credit Facility by one year , to August 2, 2023, and also provides for a term loan facility in an aggregate principal amount of $ 10.0 million (Term Loan Facility).

The maturity date of the Term Loan Facility is July 1, 2025, subject to the following condition:

in the event the principal amount of our convertible debt exceeds $ 0.6 million as of June 1, 2024 or if the maturity date of our 2019 Notes has not been extended beyond January 1, 2026 by that date, then the maturity date will be on June 1, 2024.

Upon execution of the Amendment, we drew a term loan advance of $ 5.0 million, with additional term loans of up to $ 5.0 million available subject to customary conditions.

Interest on the term loans accrues on the outstanding principal amount thereof at the greater of (i) a floating per annum rate equal to three quarters of one percentage point ( 0.75 %) above the prime rate (as customarily defined), or (ii) 4.00 %, with a final payment equal to 6.5 % of the original principal amount of each term loan advance due on the earlier of the maturity date of the Term Loan Facility or any earlier date of repayment of a term loan advance.

Interest is payable monthly.

The principal amount of the term loan advances is repayable beginning on August 1, 2023, in twenty-four equal installments of principal plus monthly payments of accrued interest.

The Amendment also added a financial covenant to the Credit Agreement, requiring us to maintain a minimum Adjusted Quick Ratio (as defined) of at least 1.25 to 1.00.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements