What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-06 · 181 added, 136 removed, 661 unchanged (32% of the section changed)

3 unchanged sentences

(In thousands)

June 30, December 31,

September 30, December 31,

Current assets:

Cash and cash equivalents $ 29,309 $ 68,520

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

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

13,732 25,423

17 unchanged sentences

Total current liabilities 47,290 54,249

Term loan, net 9,993 —

Convertible notes, net 54,051 54,224

7 unchanged sentences

Stockholders’ equity:

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

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

Common stock:

$ 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

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

76,485 and 74,543 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 826,559 815,624

7 unchanged sentences

(In thousands, except per share amounts)

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

12 unchanged sentences

Interest expense ( 968 ) ( 885 ) ( 2,751 ) ( 2,682 )

Surplus funding from NIH contract 5,000 — 5,000 —

Other income (expense), net 315 107 534 ( 248 )

8 unchanged sentences

(In thousands)

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

29 unchanged sentences

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

Issuance of restricted stock, net of shares withheld for taxes, and other 318 — ( 143 ) — — ( 143 )

Issuance of common stock from option exercises 1 — ( 1 ) — — ( 1 )

Stock-based compensation expense — — 4,320 — — 4,320

Net loss — — — — ( 13,843 ) ( 13,843 )

Other comprehensive loss, net of tax — — — ( 446 ) — ( 446 )

Balance as of September 30, 2021 76,485 $ 76 $ 826,559 $ ( 730 ) $ ( 726,568 ) $ 99,337

FLUIDIGM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

Common Stock Additional

19 unchanged sentences

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

Issuance of restricted stock, net of shares withheld for taxes, and other 258 1 ( 124 ) — — ( 123 )

Issuance of common stock from option exercises 94 — 450 — — 450

Issuance of common stock from at-the-market offering, net of issuance costs 2,480 2 20,226 — — 20,228

Equity issuance cost — — ( 180 ) — — ( 180 )

Stock-based compensation expense — — 4,358 — — 4,358

Net loss — — — — ( 5,999 ) ( 5,999 )

Other comprehensive income, net of tax — — — 520 — 520

Balance as of September 30, 2020 74,115 $ 74 $ 810,923 $ ( 289 ) $ ( 658,735 ) $ 151,973

See accompanying notes

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities

26 unchanged sentences

Financing activities

Proceeds from term loan 10,000 —

Proceeds from issuance of common stock from at-the-market offering, net of commissions — 20,226

Repayment of long-term debt ( 501 ) —

Proceeds from exercise of stock options 208 450

Proceeds from stock issuance from ESPP 685 645

Proceeds from stock issuance under ESPP 685 645

Payments for taxes related to net share settlement of equity awards and other ( 1,695 ) ( 387 )

Payment of debt issuance costs — ( 375 )

Payment of debt and equity issuance costs ( 35 ) ( 509 )

Net cash provided by (used in) financing activities 8,662 20,425

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021

September 30, 2021

Description of Business

10 unchanged sentences

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

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.

As of September 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.

7 unchanged sentences

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 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 condensed consolidated results of operations for the three and nine months ended September 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.

4 unchanged sentences

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 June 30, 2021.

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

4 unchanged sentences

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.

The adjustments resulting from the foreign currency translations are recorded in accumulated other comprehensive loss, a separate component of stockholders’ equity.

Revenue Recognition

69 unchanged sentences

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

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.

No customer represented more than 10% of total revenue for either the three or nine months ended September 30, 2021 .

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

One customer had an outstanding trade receivable balance that represented more than 10% of total billed receivables as of September 30, 2021 .

No customer had an outstanding trade receivable balance that represented more than 10% of total billed receivables as of December 31, 2020.

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.

however, the qualification of such vendors may require

start-up ti me.

In order to mitigate any adverse impacts from a disruption of supply, we attempt to maintain an adequate supply of critical limited-source components.

16 unchanged sentences

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.

16 unchanged sentences

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 conditional milestones.

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 conditional milestones.

Proceeds from the NIH Contract will be used primarily to expand production capacity and product throughput capabilities.

10 unchanged sentences

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.

Grant proceeds that exceed the cost of the capital expenditures and expenses expected to be incurred under the NIH Contract are reflected in other non-operating income.

On August 2, 2021, we entered into a Fourth Amendment to our Loan and Security Agreement (the Amendment) with Silicon Valley Bank.

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

As of September 30, 2021, the balance outstanding on the Term Loan Facility was $ 10.0 million.

Interest is payable monthly and principal balances are required to be repaid in twenty-four equal monthly installments beginning on August 1, 2023.

In addition, a final payment equal to 6.5 % of the original principal amount of each advance is due on the earlier of the maturity date or the date the advance is repaid.

The final payment is being accreted to the carrying value of the loan through the expected maturity date of July 1, 2025 using the effective interest method.

Debt issuance costs were recorded as an offset to the carrying value of the loan and will be amortized over the expected term using the effective interest method.

The carrying value of the term loan includes the outstanding principal amount and the cumulative accreted final payment, less unamortized debt issuance costs.

The amortization of debt issuance costs and accretion of the final payment are reflected in periodic interest expense.

Convertible Notes

2 unchanged sentences

As the 2014 Notes and 2019 Notes do not provide for a cash conversion feature, the 2014 Notes and the 2019 Notes are recorded as debt in their entirety in accordance with ASC 470.

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.

Offering-related costs, including underwriting costs, were capitalized as debt issuance costs, recorded as an offset to the carrying value of the related convertible notes, and are amortized over the expected term of the related convertible notes using the effective interest method.

As provided by the indenture governing the 2014 Notes, in February 2021, holders of $ 0.5 million of the 2014 Notes required us to repurchase their notes at 100 % of the principal amount plus accrued and unpaid interest.

We recorded a loss of $ 9 thousand on the extinguishment of these notes, representing the difference between the price paid to extinguish the 2014 Notes and their carrying value, including unamortized debt issuance costs.

The loss is included in other expense, net on the condensed consolidated statement of operations.

The loss is included in other income (expense), net on the condensed consolidated statement of operations.

See Note 8 for a detailed discussion of the accounting treatment of the transactions and additional information.

3 unchanged sentences

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 and six months ended June 30, 2021 are as follows (in thousands):

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

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

4 unchanged sentences

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.

Other comprehensive income (loss) ( 446 ) — ( 446 )

Ending balance at September 30, 2021 $ ( 730 ) $ — $ ( 730 )

Immaterial amounts of unrealized gains and losses have been reclassified into the condensed consolidated statement of operations for the three and nine months ended September 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):

Six Months Ended June 30,

Nine Months Ended September 30,

Stock options, restricted stock units and performance awards 8,234 7,652

14 unchanged sentences

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.

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.

3 unchanged sentences

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 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.

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

The amendments did not affect the total contract award amount.

The remaining milestones are due to be completed by the end of 2021.

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

Proceeds in excess of amounts expected to be spent for capital expenditures and operating expenses are recognized in other non-operating income.

The NIH has the right to terminate the NIH Contract for convenience.

4 unchanged sentences

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 June 30, 2021 (in thousands):

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

Total value of milestones reasonably assured $ 32,236 $ 25,436

Cumulative amounts applied against operating expenses ( 3,807 ) ( 1,488 )

Cumulative amounts recognized as other income ( 5,000 ) —

Total deferred grant income $ 23,429 $ 23,948

5 unchanged sentences

Grant receivable from NIH Contract $ 500 $ —

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.

Any grant receivable balance from the NIH Contract is included in prepaid expenses and other current assets on the condensed consolidated balance sheet.

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 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).

We expect to incur an aggregate $ 23.0 million of capital expenditures associated with the NIH Contract and have incurred $ 21.6 million of such capital expenditures th rough September 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 September 30, 2021 (see Note 7).

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 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 .

Under the Development Agreement, Fluidigm developed products based on our microfluidics technology.

The Development Agreement provided for up-front and periodic milestone payments during the development stage, which was completed in the third quarter of 2021, and ongoing annual payments of $ 0.4 million for sustaining efforts.

We recognized $ 0.1 million and $ 2.4 million of development revenue from this agreement during the three and nine months ended September 30, 2021, respectively.

During the three and nine months ended September 30, 2020, we recognized $ 3.2 million and $ 6.2 million of revenue, respectively.

Cumulatively, we have recognized $ 11.2 million of development revenue associated with the agreement.

Disaggregation of Revenue

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,

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

Total revenue $ 28,504 $ 39,861 $ 92,316 $ 93,536

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

11 unchanged sentences

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.

The following table summarizes the expected timing of revenue recognition for unfulfilled performance obligations associated with instrument service contracts that were partially completed at June 30, 2021 (in thousands):

During the nine months ended September 30, 2021, $ 9.7 million of the opening balance was recognized as revenue and $ 7.1 million of net additional advance payments were received from customers, primarily associated with instrument service contracts.

At September 30, 2021, we reported $ 18.9 million of deferred revenue.

Fiscal Year Expected Revenue (1)

13 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.

There have been no indicators of impairment in 2021 during the nine months ended September 30, 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):

June 30, 2021

September 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 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):

Total amortization expense for the three months ended September 30, 2021 and 2020 was $ 3.1 million and $ 3.2 million, respectively.

Total amortization expense for the nine months ended September 30, 2021 and 2020 was $ 9.5 million and $ 9.6 million, respectively.

Based on the carrying value of intangible assets as of September 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 June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

Cash and cash equivalents $ 29,309 $ 68,520

1 unchanged sentence

Total cash, cash equivalents and restricted cash $ 30,325 $ 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 June 30, 2021.

Inventories, net

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

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

Raw materials $ 11,511 $ 8,292

3 unchanged sentences

Property and Equipment, net

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

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

Computer equipment and software $ 4,430 $ 4,240

8 unchanged sentences

Accrued Compensation and Related Benefits

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

September 30, 2021 December 31, 2020

Accrued incentive compensation $ 2,365 $ 7,842

3 unchanged sentences

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,

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

Nine Months Ended September 30,

Beginning balance $ 1,663 $ 1,390

11 unchanged sentences

On February 6, 2021, holders of $ 0.5 million of the 2014 Notes required us to repurchase their notes in accordance with this provision.

We recorded a loss of $ 9 thousand on the extinguishment of these notes, which is included in other expense, net in our condensed consolidated statement of operations.

We recorded a loss of $ 9 thousand on the extinguishment of these notes, which is included in other income (expense), net in our condensed consolidated statement of operations.

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

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

2018 Senior Convertible Notes (2018 Notes)

2 unchanged sentences

The 2018 Notes were set to mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the indenture governing the 2018 Notes.

In the first quarter of 2019, $ 150.0 million of the 2018 Notes were converted into 19.5 million shares of our common stock and the bonds were retired.

In the first quarter of 2019, $ 150.0 million of the 2018 Notes were converted into 19.5 million shares of our common stock and the 2018 Notes were 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 offering of the 2019 Notes issuance were $ 52.7 million, after deductions for commissions and other debt issuance costs of approximately $ 2.3

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 million.

$ 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 then outstanding.

13 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

2.75 % 2014 Notes due 2034

2 unchanged sentences

Unamortized debt issuance cost ( 2 ) ( 4 )

Net carrying value of 2014 Notes

$ 568 $ 1,059

2 unchanged sentences

Unamortized debt issuance cost ( 1,517 ) ( 1,835 )

$ 53,376 $ 53,165

Net carrying value of 2019 Notes $ 53,483 $ 53,165

Net carrying value of all Notes $ 54,051 $ 54,224

2018 Revolving Credit Facility

Revolving Credit Facility and Term Loan Facility

In August 2018, we entered into a revolving credit facility with Silicon Valley Bank (as amended, the 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.

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.

The interest rate on outstanding loans under the Revolving Credit Facility is the greater of (i) prime rate plus 0.50 % or (ii) 5.25 %.

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.

On August 2, 2021, we amended our Revolving Credit Facility to extend the maturity date to August 2, 2023 and to provide for a new $ 10.0 million Term Loan Facility (the Term Loan Facility and, together with the Revolving Credit Facility, the Credit Facility).

The stated maturity date of the Term Loan Facility is July 1, 2025.

However, if 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 June 1, 2024, then the maturity date of the Term Loan Facility will be June 1, 2024.

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

The Credit Facility also includes a financial covenant that requires us to maintain a minimum Adjusted Quick Ratio, as defined in the agreement, of at least 1.25 to 1.00.

The interest rate on advances made under the Revolving Credit Facility is the greater of (i) prime rate plus 0.50 % or (ii) 5.25 %.

Interest on any outstanding advance 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.

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

Total availability under the Revolving Credit Facility as of September 30, 2021 was $ 10.3 million.

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

As of September 30, 2021, the balance outstanding on the Term Loan Facility was $ 10.0 million.

The interest rate on the Term Loan Facility is the greater of 4.0 % or a floating per annum rate equal to three quarters of one percentage point ( 0.75 )% above the prime rate.

Interest on any outstanding term loan advances is due and payable monthly.

In addition to the monthly interest payments, a final payment equal to 6.5 % of the original principal amount of each advance is due on the earlier of the maturity date or the date the advance is repaid.

Principal balances are required to be repaid in twenty-four equal monthly installments beginning on August 1, 2023.

The effective interest rate on the Term Loan Facility, reflecting the impact of debt issuance costs, the end-of-term fee and expected timing of principal repayment is 6.3 % as of September 30, 2021.

The carrying value of our term loan is as follows (in thousands):

September 30, 2021 December 31, 2020

Principal amount $ 10,000 $ —

End of term fee accretion 26 —

Unamortized debt issuance cost ( 33 ) —

Net carrying value of term loan $ 9,993 $ —

We have operating leases for buildings, equipment and vehicles.

1 unchanged sentence

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 June 30, 2021 and December 31, 2020 (in thousands, except for discount rate and lease term):

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

Operating lease right-of-use buildings $ 43,242 $ 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):

June 30, 2021

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

September 30, 2021

Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cash and Cash Equivalents Cash- Restricted

Cash and money market funds $ 29,309 $ — $ — $ 29,309 $ 29,309 $ —

2 unchanged sentences

December 31, 2020

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

Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cash and Cash Equivalents Cash- Restricted

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

2 unchanged sentences

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

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

Convertible Notes and Term Loan Facility

Our convertible notes are not regularly traded and it is difficult to estimate a reliable and accurate market price for these securities.

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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 as of June 30, 2021 and December 31, 2020, respectively (in thousands):

June 30, 2021 December 31, 2020

The estimated fair value of our term loan also represents a Level III valuation since the value cannot be determined by using readily observable inputs or measures, such as market prices.

The fair value of our term loan was estimated using a discounted cash flows approach and current market interest rate data for similar loans.

The following table summarizes the par value, carrying value and the estimated fair value of our convertible notes and term loan as of September 30, 2021 and December 31, 2020, respectively (in thousands):

September 30, 2021 December 31, 2020

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

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2019 Notes 55,000 53,483 127,331 55,000 53,165 117,899

Total $ 55,578 $ 53,943 $ 120,843 $ 56,079 $ 54,224 $ 119,021

Total Notes $ 55,578 $ 54,051 $ 127,932 $ 56,079 $ 54,224 $ 119,021

Term loan $ 10,000 $ 9,993 $ 10,037 $ — $ — $ —

Shareholders’ Equity

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Common Shares Reserved

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

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

in thousands 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

2011 Equity Incentive Plan 1,441 6,526 3,546

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In general, RSUs vest on a quarterly basis over a period of four years from the date of grant at a rate of either 25 % on the first anniversary of the grant date and ratably each quarter over the remaining 12 quarters, or ratably each quarter over 16 quarters, subject to the employees’ continued employment.

In May 2020, we granted 1.8 million retention RSUs that vest over three 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 our 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 10 % 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 110 % 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.

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2011 Equity Incentive Plan

In January 2011, our board of directors adopted the 2011 Plan under which incentive stock options, non-statutory stock options, RSUs, stock appreciation rights, performance stock units (PSUs), and performance shares may be granted to our employees, directors, and consultants.

employees, directors, and consultants.

In April 2019, our board of directors authorized, and in June 2019, our stockholders approved an 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.

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.

In May 2020, our board of directors authorized, and in June 2020, our stockholders approved, an increase of 1.4 million in the number of shares reserved for issuance under the 2011 Plan.

In April 2021, our board of directors authorized, and in May 2021, our stockholders approved, an additional increase of 4.1 million in the number of shares reserved for issuance under the 2011 Plan.

Activity under the various plans was as follows:

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RSUs forfeited ( 724 ) $ 4.59

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.

Balance as of September 30, 2021 5,386 $ 5.20

As of September 30, 2021, the unrecognized compensation costs related to outstanding unvested RSUs under our equity incentive plans were $ 25.3 million.

We expect to recognize those costs over a weighted average period of 2.7 years.

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Options forfeited ( 81 ) $ 10.06

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.

Balance as of September 30, 2021 1,610 $ 7.13 5.8 $ 1,473

Vested at September 30, 2021 1,459 $ 7.23 5.6 $ 1,374

Unvested awards at September 30, 2021 151 $ 6.19 8.1 $ 99

(1) Aggregate intrinsic value as of September 30, 2021 was calculated as the difference between the closing price per share of our common stock on the last trading day of September 30, 2021, which was $ 6.59 , and the exercise price of the options, multiplied by the number of in-the-money options.

As of September 30, 2021, the unrecognized compensation costs related to outstanding unvested options under our equity incentive plans were $ 0.5 million.

We expect to recognize those costs over a weighted average period of 0.9 years.

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PSU forfeited ( 36 ) $ 4.82

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.

Balance at September 30, 2021 1,210 $ 9.80

As of September 30, 2021, the unrecognized compensation costs related to these awards were $ 4.9 million.

We expect to recognize those costs over a weighted average period of 1.8 years.

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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 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.

As of September 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)

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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

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, such as the effects of changes in tax laws or rates, in the interim period in which they occur.

We recorded a tax benefit of $ 1.4 million and $ 0.2 million for the three months ended September 30, 2021 and 2020, respectively.

Higher losses in our foreign operations in the quarter ended September 30, 2021 compared to the quarter ended September 30, 2020 resulted in higher tax benefit for our foreign operations for the three months ended September 30, 2021 compared to the prior year period.

For the nine months ended September 30, 2021 and 2020, we recorded a tax benefit of $ 3.6 million and $ 2.1 million, respectively.

The increased tax benefit for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily attributable to discrete items, and to a lesser extent, higher losses and the corresponding tax benefit in certain parts of our foreign operations.

Our tax benefit for the periods presented in this report differs from the 21% U.S.

Federal statutory rate principally because we maintain 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 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.

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

Other accrued liabilities on our condensed consolidated balance sheet as of September 30, 2021 includes $ 0.8 million of tax reserves related to our uncertain tax position in Singapore.

We received a final determination from the tax authorities in October 2021 and paid the amounts accrued.

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 access 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 assess 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 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.

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

Revenue from customers in the United States represented $ 12.0 million, or 42 % of total revenues, and $ 23.3 million, or 58 % of total revenues, for the three months ended September 30, 2021 and 2020, respectively.

For the nine months ended September 30, 2021 and 2020, revenue from domestic customers totaled $ 45.6 million, or 49 % of total revenues, and $ 50.7 million, or 54 % of total revenues, respectively.

Revenues from customers in China represented $ 3.2 million, or 11 % of total revenues, and $ 3.7 million, or 9 % of total revenues, for the three months ended September 30, 2021 and 2020, respectively.

For the nine months ended September 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.

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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 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 and, on August 4,

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

by the Company during such period.

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.

A second amended complaint was filed on September 14, 2021.

The Company filed a motion to dismiss the second amended complaint on October 29, 2021.

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