STANDARD BIOTOOLS INC. 10-Q

Item 1. Financial Statements FLUIDIGM CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) September 30, December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 29,309 $ 68,520 Accounts receivable (net of allowance of $ 356 at each of September 30, 2021 and December 31, 2020) 13,732 25,423 Inventories, net 24,498 19,689 Prepaid expenses and other current assets 5,926 4,031 Total current assets 73,465 117,663 Property and equipment, net 28,913 17,531 Operating lease right-of-use asset, net 37,698 38,114 Other non-current assets 4,692 4,680 Developed technology, net 30,992 40,206 Goodwill 106,428 106,563 Total assets $ 282,188 $ 324,757 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 10,786 $ 9,220 Accrued compensation and related benefits 8,286 13,787 Operating lease liabilities, current 2,873 2,973 Other accrued liabilities 8,188 11,882 Deferred grant income, current 4,299 2,912 Deferred revenue, current 12,858 13,475 Total current liabilities 47,290 54,249 Term loan, net 9,993 — Convertible notes, net 54,051 54,224 Deferred tax liability 7,229 8,697 Operating lease liabilities, non-current 38,170 38,178 Deferred revenue, non-current 6,034 7,990 Deferred grant income, non-current 19,130 21,036 Other non-current liabilities 954 1,333 Total liabilities 182,851 185,707 Commitments and contingencies Stockholders’ equity: 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 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 76 75 Additional paid-in capital 826,559 815,624 Accumulated other comprehensive loss ( 730 ) 112 Accumulated deficit ( 726,568 ) ( 676,761 ) Total stockholders’ equity 99,337 139,050 Total liabilities and stockholders’ equity $ 282,188 $ 324,757 See accompanying notes 1 FLUIDIGM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue Product revenue $ 21,937 $ 29,210 $ 69,292 $ 65,596 Service revenue 6,016 6,131 18,929 16,457 Development revenue 90 3,180 2,420 6,180 Other revenue 461 1,340 1,675 5,303 Total revenue 28,504 39,861 92,316 93,536 Costs and expenses Cost of product revenue 13,327 12,773 37,720 31,896 Cost of service revenue 1,508 1,769 5,465 4,531 Research and development 9,209 8,128 29,403 25,275 Selling, general and administrative 24,072 22,655 75,928 65,966 Total costs and expenses 48,116 45,325 148,516 127,668 Loss from operations ( 19,612 ) ( 5,464 ) ( 56,200 ) ( 34,132 ) 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 ) Loss before income taxes ( 15,265 ) ( 6,242 ) ( 53,417 ) ( 37,062 ) Income tax benefit 1,422 243 3,609 2,068 Net loss $ ( 13,843 ) $ ( 5,999 ) $ ( 49,808 ) $ ( 34,994 ) Net loss per share, basic and diluted $ ( 0.18 ) $ ( 0.08 ) $ ( 0.66 ) $ ( 0.49 ) Shares used in computing net loss per share, basic and diluted 76,301 72,486 75,494 71,294 See accompanying notes 2 FLUIDIGM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net loss $ ( 13,843 ) $ ( 5,999 ) $ ( 49,808 ) $ ( 34,994 ) Other comprehensive income (loss), net of tax: Foreign currency translation adjustment ( 446 ) 523 ( 842 ) 329 Net change in unrealized gain (loss) on investments — ( 3 ) — ( 36 ) Other comprehensive income (loss), net of tax ( 446 ) 520 ( 842 ) 293 Comprehensive loss $ ( 14,289 ) $ ( 5,479 ) $ ( 50,650 ) $ ( 34,701 ) See accompanying notes 3 FLUIDIGM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) (Unaudited) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance as of December 31, 2020 74,543 $ 75 $ 815,624 $ 112 $ ( 676,761 ) $ 139,050 Issuance of restricted stock, net of shares withheld for taxes, and other 420 — ( 525 ) — — ( 525 ) Stock-based compensation expense — — 3,677 — — 3,677 Net loss — — — — ( 18,821 ) ( 18,821 ) Other comprehensive loss, net of tax — — — ( 443 ) — ( 443 ) 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 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 4 FLUIDIGM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) (Unaudited) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance as of December 31, 2019 69,956 $ 70 $ 777,765 $ ( 582 ) $ ( 623,641 ) $ 153,612 Issuance of restricted stock, net of shares withheld for taxes, and other 255 — ( 146 ) — — ( 146 ) Cumulative-effect of new accounting standard for Topic 326 Credit Losses — — — — ( 100 ) ( 100 ) Stock-based compensation expense — — 2,364 — — 2,364 Acquisition of InstruNor AS 485 1 2,048 — — 2,049 Net loss — — — — ( 15,980 ) ( 15,980 ) Other comprehensive loss, net of tax — — — ( 303 ) — ( 303 ) 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 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 5 FLUIDIGM CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended September 30, 2021 2020 Operating activities Net loss $ ( 49,808 ) $ ( 34,994 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 11,738 10,358 Amortization of developed technology 8,944 8,929 Depreciation and amortization 2,744 2,988 Amortization of debt discounts, premiums and issuance costs 427 415 Lease amortization 380 1,863 Provision for excess and obsolete inventory 1,539 680 Loss on disposal of property and equipment 6 191 Other non-cash items 11 13 Changes in assets and liabilities: Accounts receivable, net 11,438 967 Inventories, net ( 7,467 ) ( 6,773 ) Prepaid expenses and other assets ( 2,720 ) ( 2,395 ) Accounts payable 1,412 4,996 Deferred revenue ( 2,290 ) 1,258 Accrued compensation and related benefits ( 5,394 ) 3,995 Other liabilities ( 8,019 ) ( 4,175 ) Net cash used in operating activities ( 37,059 ) ( 11,684 ) Investing activities Acquisition, net of cash acquired — ( 5,154 ) Proceeds from NIH Contract 2,000 11,151 Proceeds from sale of investments — 5,010 Proceeds from maturities of investments — 31,800 Purchases of property and equipment ( 12,801 ) ( 2,010 ) Net cash provided by (used in) investing activities ( 10,801 ) 40,797 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 under ESPP 685 645 Payments for taxes related to net share settlement of equity awards and other ( 1,695 ) ( 387 ) Payment of debt and equity issuance costs ( 35 ) ( 509 ) Net cash provided by (used in) financing activities 8,662 20,425 Effect of foreign exchange rate fluctuations on cash and cash equivalents ( 13 ) 86 Net increase (decrease) in cash, cash equivalents and restricted cash ( 39,211 ) 49,624 Cash, cash equivalents and restricted cash at beginning of period 69,536 23,736 Cash, cash equivalents and restricted cash at end of period $ 30,325 $ 73,360 Supplemental disclosures of cash flow information Cash paid for interest $ 1,565 $ 86 Cash paid for income taxes, net of refunds $ 1,113 $ 386 Non-cash right-of-use assets and lease liabilities $ 2,241 $ 35,950 Asset retirement obligations $ 702 $ 319 See accompan ying notes 6 FLUIDIGM CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2021 1. Description of Business Fluidigm Corporation (the Company, Fluidigm, we, our or us) improves life by driving meaningful insights in health and disease. Our innovative technologies explore the biological complexities of disease to advance human health through research, diagnostics and clinical applications. We create, manufacture, and market a range of products and services, including instruments, consumables, reagents and software that are used by researchers and clinical labs worldwide. Our customers are leading academic and government laboratories, as well as pharmaceutical, biotechnology, plant and animal research organizations, and clinical laboratories worldwide. The Company was formerly known as Mycometrix Corporation and changed its name to Fluidigm Corporation in April 2001. Fluidigm Corporation was founded in 1999 and is headquartered in South San Francisco, California. 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) and include the accounts of our wholly owned subsidiaries. As of 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. The Singapore subsidiary uses the U.S. dollar as its functional currency. All intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts in the condensed consolidated financial statements were reclassified to conform with the current period presentation. These reclassifications were immaterial and did not affect prior period total assets, total liabilities, stockholders’ equity, total revenue, total costs and expenses, loss from operations or net loss. Unaudited Interim Financial Information The accompanying interim condensed consolidated financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. 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. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions believed to be reasonable, which together form the basis for making judgments about the carrying values of assets and liabilities. The full extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will depend on numerous evolving factors including, but not limited to, the magnitude and duration of the pandemic, the extent to which it will impact worldwide macroeconomic conditions, including the speed of recovery, and governmental and business reactions to the pandemic. We assessed certain accounting matters that generally require consideration of forecasted financial information, including the unknown impact of COVID-19 as of 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. Actual results could differ materially from these estimates and could have a material adverse effect on our condensed consolidated financial statements. 7 Foreign Currency Assets and liabilities of non-U.S. subsidiaries that use the local currency as their functional currency are translated into U.S. dollars at exchange rates in effect on the balance sheet date. 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 We generate revenue primarily from the sale of our products and services. Product revenue is derived from the sale of instruments and consumables, including integrated fluidic circuits (IFCs), assays and reagents. Service revenue is primarily derived from the sale of instrument service contracts, repairs, installation, training and other specialized product support services. We also generate revenue from product development agreements, license and royalty agreements and grants. Revenue is reported net of any sales, use and value-added taxes we collect from customers as required by government authorities. Research and development cost includes costs associated with development and grant revenue. We recognize revenue based on the amount of consideration we expect to receive in exchange for the goods and services we transfer to the customer. Our commercial arrangements typically include multiple distinct products and services, and we allocate revenue to these performance obligations based on their relative standalone selling prices. Standalone selling prices (SSP) are generally determined using observable data from recent transactions. In cases where sufficient data is not available, we estimate a product’s SSP using a cost plus a margin approach or by applying a discount to the product’s list price. Product Revenue We recognize product revenue at the point in time when control of the goods passes to the customer and we have an enforceable right to payment. This generally occurs either when the product is shipped from one of our facilities or when it arrives at the customer’s facility, based on the contractual terms. Customers generally do not have a unilateral right to return products after delivery. Invoices are generally issued at shipment and generally become due in 30 to 60 days. We sometimes perform shipping and handling activities after control of the product passes to the customer. We have made an accounting policy election to account for these activities as product fulfillment activities rather than as separate performance obligations. Service Revenue We recognize revenue from repairs, maintenance, installation, training and other specialized product support services at the point in time the work is completed. Installation and training services are generally billed in advance of service. Repairs and other services are generally billed at the point the work is completed. Revenue associated with instrument service contracts is recognized on a straight-line basis over the life of the agreement, which is generally one to three years . We believe this time-elapsed approach is appropriate for service contracts because we provide services on demand throughout the term of the agreement. Invoices are generally issued in advance of service on a monthly, quarterly, annual or multi-year basis. Payments made in advance of service are reported on our condensed consolidated balance sheet as deferred revenue. Development Revenue We have entered and may continue to enter into development agreements with third parties that provide for up-front and periodic milestone payments. Our development agreements may include more than one performance obligation. At the inception of the contract, we assess whether each obligation represents a separate performance obligation or whether such obligations should be combined as a single performance obligation. The transaction price for each development agreement is determined based on the amount of consideration we expect to be entitled to for satisfying all performance obligations within the agreement. We assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. In arrangements where we satisfy performance obligation(s) over time, we recognize development revenue typically using an input method based on our costs incurred relative to the total expected cost which determines the extent of our progress toward completion. As part of the accounting for these arrangements, we must develop estimates and assumptions that require judgment to determine the transaction price and progress towards completion. We review our estimate of the transaction price and progress toward completion based on the best information available to recognize the cumulative progress toward completion as of the end of each reporting period, and make revisions to such estimates as necessary. 8 We also generate revenue from development or collaboration agreements that do not include upfront or milestone-based payments and generally recognize revenue on these types of agreements based on the timing of development activities. Other Revenue Other revenue consists of license and royalty revenue and grant revenue. We recognize revenue from license agreements when the license is transferred to the customer and the customer is able to use and benefit from the license. For contracts that include sales-based royalties, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied. In March 2020, we entered into an agreement to settle intellectual property infringement claims, in which we received a $ 3.5 million payment in exchange for a perpetual license under certain Fluidigm intellectual property. The settlement is considered a multiple-element arrangement with each element accounted for individually. Accordingly, $ 3.1 million of the proceeds was recognized as license revenue and $ 0.4 million was offset against legal costs. We receive grants from various entities to perform research and development activities over contractually defined periods. Grant revenue is not accounted for under ASC 606 Revenue from Contracts with Customers, as the grant agreement is not with a customer. As there is no authoritative U.S. GAAP guidance for grants awarded to for-profit entities, we have applied the guidance in ASC 958 Not-for-Profit Entities by analogy. Revenue is generally recognized provided that the conditions under which the grants were provided have been met and any remaining performance obligations are perfunctory. Product Warranties We generally provide a one-year warranty on our instruments. We accrue for estimated warranty obligations at the time of product shipment. We periodically review our warranty liability and record adjustments based on the terms of warranties provided to customers, and historical and anticipated warranty claim experience. This expense is recorded as a component of cost of product revenue in the condensed consolidated statements of operations. Significant Judgments Applying the revenue recognition practices discussed above often requires significant judgment. Judgment is required when identifying performance obligations, estimating SSP and allocating purchasing consideration in multi-element arrangements and estimating the future amount of our warranty obligations. Moreover, significant judgment is required when interpreting commercial terms and determining when control of goods and services passes to the customer. Any material changes created by errors in judgment could have a material effect on our operating results and overall financial condition. Accounts Receivable Trade accounts receivable are recorded at net invoice value. We review our exposure to accounts receivable and provide allowances of specific amounts if collectability is no longer reasonably assured based on historical experience and specific customer collection issues. We evaluate such allowances on a regular basis and adjust them as needed. Concentrations of Business and Credit Risk Financial instruments that potentially subject us to credit risk consist of cash, cash equivalents, investments, and accounts receivable. Our cash, cash equivalents, and investments may consist of deposits held with banks, money market funds, and other highly liquid investments that may at times exceed federally insured limits. Cash equivalents and investments are financial instruments that potentially subject us to concentrations of risk. Under our investment policy, we invest primarily in securities issued by the U.S. government. The goals of our investment policy, in order of priority, are as follows: preserve capital, meet liquidity needs, and optimize returns. We generally do not require collateral to support credit sales. To reduce credit risk, we perform credit evaluations of our customers. No 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 9 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. Leases We determine if an arrangement is a lease, or contains a lease, at inception. Operating leases are included in operating lease right-of-use (ROU) assets and current and non-current operating lease liabilities in our condensed consolidated balance sheets. ROU assets represent our right-to-use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use 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. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We elected the short-term lease recognition exemption for all leases that qualify. For those leases that qualify, we will not recognize ROU assets or lease liabilities for leases with an initial lease term of one year or less. We also elected not to separate lease and nonlease components for our building leases. The nonlease components are generally variable in nature and are expected to represent most of our variable lease costs. Variable costs are expensed as incurred. We have taken a portfolio approach for our vehicle leases by country. Business Combinations, Goodwill, Intangible Assets and Other Long-Lived Assets We have completed acquisitions of businesses in the past and may acquire additional businesses or technologies in the future. The results of businesses acquired in a business combination are included in our condensed consolidated financial statements from the date of acquisition. We allocate the purchase price, which is the sum of the consideration provided in a business combination, to the identifiable assets and liabilities of the acquired business at their acquisition date fair values. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies and estimates of future revenue. Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of net assets acquired. Our intangible assets include developed technology, patents and licenses. The cost of identifiable intangible assets with finite lives is generally amortized on a straight-line basis over the assets’ respective estimated useful lives. Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Events or changes in circumstances that could affect the likelihood that we will be required to recognize an impairment charge include, but are not limited to, declines in our stock price or market capitalization, economic downturns and other macroeconomic events, including the current COVID-19 pandemic, declines in our market share or revenues, and an increase in our losses, rapid changes in technology, failure to achieve the benefits of capacity increases and utilization, significant litigation arising out of an acquisition, or other matters. Any impairment charges could have a material adverse effect on our operating results and net asset value in the quarter in which we recognize the impairment charge. In evaluating our goodwill and intangible assets with indefinite lives for indications of impairment, we first conduct an assessment of qualitative factors to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we compare the fair value of our reporting unit to its carrying value. If the fair value of our reporting unit exceeds its carrying value, goodwill is not considered impaired and no further analysis is required. If the carrying value of the reporting unit exceeds its fair value, then an impairment loss equal to the difference would be recorded to goodwill. We did no t recognize any impairment of goodwill for any of the periods presented herein. We evaluate our long-lived assets, including finite-lived intangibles, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If any indicator of impairment exists, we assess the recoverability of the affected long-lived assets by determining whether the carrying value of the asset can be recovered through undiscounted future operating cash flows. If impairment is indicated, we estimate the asset’s fair value using future discounted cash flows associated with the use of the asset and adjust the carrying value of the asset accordingly. We did not recognize any impairment of intangibles for any of the periods presented herein. Deferred Grant Income In September 2020, we executed a definitive contract with the National Institutes of Health (NIH) for a project under the NIH Rapid Acceleration of Diagnostics (RADx) program. The definitive contract, which amended the letter contract we entered 10 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. Accounting for the NIH Contract does not fall under ASC 606, Revenue from Contracts with Customers, as the NIH will not benefit directly from our expansion or product development. As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, we applied International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, by analogy when accounting for the NIH Contract payments to Fluidigm. The NIH Contract proceeds used for production capacity expansion meet the definition of grants related to assets as the primary purpose for the payments is to fund the purchase and construction of capital assets to scale up production capacity. Under IAS 20, government grants related to assets are presented in the statement of financial position either by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset. Either of these two methods of presentation of grants related to assets in financial statements are regarded as acceptable alternatives under IAS 20. We have elected to record the grants received as deferred income using the first method. Under IAS 20, grant proceeds are recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received. With the NIH Contract, this occurs when either each milestone has been accepted by NIH or management concludes the conditions of the grant have been substantially met. Deferred 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. 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. Term Loan 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 In February 2014, we closed an underwritten public offering of 2.75 % Senior Convertible Notes due 2034 (2014 Notes). In November 2019, we closed a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of $ 55.0 million aggregate principal amount of our 5.25 % Senior Convertible Notes due 2024 (2019 Notes). 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 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 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. 11 Comprehensive Loss Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized gains and losses on our investments and foreign currency translation adjustments. Total comprehensive loss for all periods presented has been disclosed in the condensed consolidated statements of comprehensive loss. 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) Ending balance at December 31, 2020 $ 112 $ — $ 112 Other comprehensive income (loss) ( 443 ) — ( 443 ) Ending balance at March 31, 2021 $ ( 331 ) $ — $ ( 331 ) Other comprehensive income (loss) 47 — 47 Ending balance at June 30, 2021 $ ( 284 ) $ — $ ( 284 ) 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 Our basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period. Restricted stock units, performance share units, and stock options to purchase our common stock are considered to be potentially dilutive common shares but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive for all periods presented. The following potentially dilutive common shares were excluded from the computations of diluted net loss per share for the periods presented because including them would have been anti-dilutive (in thousands): Nine Months Ended September 30, 2021 2020 Stock options, restricted stock units and performance awards 8,234 7,652 2019 Convertible Notes 18,966 18,966 2019 Convertible Notes potential make-whole shares 735 826 2014 Convertible Notes 10 19 Total 27,945 27,463 Recent Accounting Changes and Accounting Pronouncements Adoption of New Accounting Guidance In November 2019, the FASB issued ASU 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update improve consistent application of and simplify U.S. GAAP for Topic 740 by clarifying and amending existing guidance for, among other items, intra-period allocation, reporting tax law changes and losses in interim periods, state and local taxes not fully based on income and recognition of deferred tax liability related to certain transactions. There is also new guidance related to consolidated group reporting and tax impacts resulting from business combinations. The new guidance is effective for fiscal years beginning after December 15, 2020. The adoption of the new guidance did not have a significant impact on our financial results. Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06 Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and 12 Contracts in an Entity’s Own Equity. The amendment to this ASU reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification, which is expected to result in more convertible instruments being accounted for as a single unit, rather than being bifurcated between debt and equity. The new guidance is effective for fiscal years beginning after December 15, 2021. We are currently evaluating the impact of adoption on our condensed consolidated financial statements. 3. NIH Contract In 2020, we were awarded the NIH Contract under the RADx program to support the expansion of our production capacity and throughput capabilities for COVID-19 testing with our microfluidics technology. 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 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. In the event of termination for convenience, we will be paid a percentage of the NIH Contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges. In the event of termination for cause due to our default, NIH is not liable for supplies or services not accepted. If we fail to deliver within the time specified in the NIH Contract and the delay is due to Fluidigm’s fault or negligence, we are required to pay liquidated damages in the amount of 33 % of the amount(s) already disbursed to date under the NIH Contract within six months from the date of termination. We are in compliance with the terms of the NIH Contract and do not currently expect to pay any liquidated damages. 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 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 Short-term deferred grant income $ 4,299 $ 2,912 Long-term deferred grant income 19,130 21,036 Deferred grant income $ 23,429 $ 23,948 Total value of milestones reasonably assured $ 32,236 $ 25,436 Cumulative funding received ( 31,736 ) ( 25,436 ) Grant receivable from NIH Contract $ 500 $ — 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 $ 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). 13 4. Development Agreement Effective March 31, 2020, we signed an OEM Supply and Development Agreement (Development Agreement) with a customer. 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. 5. Revenue Disaggregation of Revenue 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 Geographic Markets: Americas $ 13,013 $ 23,653 $ 47,656 $ 52,437 EMEA 10,108 8,837 28,470 23,490 Asia-Pacific 5,383 7,371 16,190 17,609 Total revenue $ 28,504 $ 39,861 $ 92,316 $ 93,536 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Sources: Instruments $ 10,056 $ 12,624 $ 27,943 $ 30,672 Consumables 11,881 16,586 41,349 34,924 Product revenue 21,937 29,210 69,292 65,596 Service revenue 6,016 6,131 18,929 16,457 Development revenue 90 3,180 2,420 6,180 Other revenue: License revenue — — 93 3,163 Grant revenue 461 1,340 1,582 2,140 Total other revenue 461 1,340 1,675 5,303 Total revenue $ 28,504 $ 39,861 $ 92,316 $ 93,536 Performance Obligations We reported $ 21.5 million of deferred revenue on our December 31, 2020 consolidated balance sheet. 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. The following table summarizes the expected timing of revenue recognition for unfulfilled performance obligations associated with instrument service contracts that were partially completed at September 30, 2021 (in thousands): 14 Fiscal Year Expected Revenue (1) 2021 remainder of the year $ 4,473 2022 10,817 2023 5,923 Thereafter 3,707 Total $ 24,920 _______ (1) Expected revenue includes both billed amounts included in deferred revenue and unbilled amounts that are not reflected in our condensed consolidated financial statements and are subject to change if our customers decide to cancel or modify their contracts. Purchase orders for instrument service contracts can generally be canceled before the service period begins without penalty. We apply the practical expedient that permits us not to disclose information about unsatisfied performance obligations for service contracts with an expected term of one year or less. 6. Goodwill and Intangible Assets, net 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 $ 2.3 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. dollar value of these assets will fluctuate as foreign exchange rates change. Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Qualitative assessment includes assessing significant events and circumstances such as our current results, assumptions regarding future performance, strategic initiatives and overall economic factors, including the ongoing global COVID-19 pandemic and macroeconomic developments to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of our reporting unit or intangible assets is less than their carrying value. If indicators of impairment are identified, a quantitative impairment test is performed. 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): September 30, 2021 Gross Amount Accumulated Amortization Net Weighted-Average Amortization Period Developed technology $ 117,622 $ ( 86,630 ) $ 30,992 9.9 years Patents and licenses $ 11,256 $ ( 9,829 ) $ 1,427 7.0 years December 31, 2020 Gross Amount Accumulated Amortization Net Weighted-Average Amortization Period Developed technology $ 117,658 $ ( 77,452 ) $ 40,206 9.9 years Patents and licenses $ 11,256 $ ( 9,238 ) $ 2,018 7.5 years 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. 15 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 2021 remainder of the year $ 2,976 $ 170 $ 3,146 2022 11,903 678 12,581 2023 11,903 572 12,475 2024 2,103 7 2,110 2025 702 — 702 Thereafter 1,405 — 1,405 Total $ 30,992 $ 1,427 $ 32,419 7. Balance Sheet Details Cash, Cash Equivalents and Restricted Cash 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 Restricted cash 1,016 1,016 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 September 30, 2021 and December 31, 2020. Inventories, net 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 Work-in-process 867 1,214 Finished goods 12,120 10,183 Total inventories, net $ 24,498 $ 19,689 16 Property and Equipment, net 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 Laboratory and manufacturing equipment 18,466 18,107 Leasehold improvements 7,696 7,203 Office furniture and fixtures 1,994 1,994 Property and equipment, gross 32,586 31,544 Less accumulated depreciation and amortization ( 25,673 ) ( 23,989 ) Construction-in-progress 22,000 9,976 Property and equipment, net $ 28,913 $ 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 September 30, 2021 and December 31, 2020 (in thousands): September 30, 2021 December 31, 2020 Accrued incentive compensation $ 2,365 $ 7,842 Accrued vacation 3,730 3,367 Accrued payroll taxes and other 2,191 2,578 Accrued compensation and related benefits $ 8,286 $ 13,787 Warranties Accrued warranty is included in other current liabilities on our condensed consolidated balance sheet. 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, 2021 2020 Beginning balance $ 1,663 $ 1,390 Accrual (release) for current period warranties 554 677 Warranty costs incurred ( 713 ) ( 387 ) Ending balance $ 1,504 $ 1,680 8. Convertible Notes and Credit Facility 2014 Senior Convertible Notes (2014 Notes) In February 2014, we closed an underwritten public offering of $ 201.3 million aggregate principal amount of our 2014 Notes. We received $ 195.2 million, net of underwriting discounts, from the issuance of the 2014 Notes and incurred approximately $ 1.1 million in offering-related expenses. The underwriting discount and offering-related expenses are being amortized to interest expense using the effective-interest rate method. The effective interest rate on the 2014 Notes, reflecting the impact of debt discounts and issuance costs, is 3.0 %. The 2014 Notes will mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2014 Notes. Repurchase provisions for the 2014 Notes permit the holders of the 2014 Notes to require us to repurchase all or a portion of their 2014 Notes on each of February 6, 2021, February 6, 2024, and February 6, 2029, at a repurchase price in cash equal to 100 % of the principal amount of the 2014 Notes plus accrued and unpaid interest. 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 income (expense), net in our condensed consolidated statement of operations. 17 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 September 30, 2021, there is $ 0.6 million aggregate principal of the 2014 Notes outstanding. 2018 Senior Convertible Notes (2018 Notes) In March 2018, we entered into separate privately negotiated transactions with certain holders of our 2014 Notes to exchange $ 150.0 million in aggregate principal amount of the 2014 Notes for 2018 Notes, leaving $ 51.3 million of the aggregate principal amount of the 2014 Notes outstanding. The 2018 Notes accrued interest at a rate of 2.75 % payable semi-annually. 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 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 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. 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. The 2019 Notes will mature on December 1, 2024, unless earlier repurchased or converted pursuant to their terms. The 2019 Notes will be convertible at the option of the holder at any point prior to the close of business on the second scheduled trading day preceding the maturity date. The initial conversion rate of the 2019 Notes is 344.8276 shares of the Company’s common stock per $1,000 principal amount of 2019 Notes (which is equivalent to an initial conversion price of approximately $ 2.90 per share). The conversion rate is subject to adjustment upon the occurrence of certain specified events. Those certain specified events include voluntary conversion of the 2019 Notes prior to our exercise of the Issuer’s Conversion Option or in connection with a make-whole fundamental change, entitling the holders, under certain circumstances, to a make-whole premium in the form of an increase in the conversion rate determined by reference to a make-whole table set forth in the indenture governing the 2019 Notes. The conversion rate will not be adjusted for any accrued and unpaid interest. The 2019 Notes will also be convertible at our option upon certain conditions in accordance with the terms of the indenture governing the 2019 Notes. On or after December 1, 2021 to December 1, 2022, if the price of the Company’s common stock has equaled or exceeded 150 % of the conversion price then in effect for a specified number of days (Issuer’s Conversion Option), we may, at our option, elect to convert the 2019 Notes in whole but not in part into shares of the Company, determined in accordance with the terms of the indenture. On or after December 1, 2022, if the price of the Company’s common stock has equaled or exceeded 130 % of the conversion price then in effect for a specified number of days, we may, at our option, elect to convert the 2019 Notes in whole but not in part into shares of the Company, determined in accordance with the terms of the indenture. Offering-related costs for the 2019 Notes were capitalized as debt issuance costs and are recorded as an offset to the carrying value of the 2019 Notes. The debt issuance costs are being amortized over the expected term of the 2019 Notes using the effective interest method through the maturity date of December 1, 2024. The effective interest rate on the 2019 Notes is 6.2 %. 18 The carrying values of the components of the 2014 Notes and the 2019 Notes are as follows (in thousands): September 30, 2021 December 31, 2020 2.75 % 2014 Notes due 2034 Principal amount $ 578 $ 1,079 Unamortized debt discount ( 8 ) ( 16 ) Unamortized debt issuance cost ( 2 ) ( 4 ) Net carrying value of 2014 Notes $ 568 $ 1,059 5.25 % 2019 Notes due 2024 Principal amount $ 55,000 $ 55,000 Unamortized debt issuance cost ( 1,517 ) ( 1,835 ) Net carrying value of 2019 Notes $ 53,483 $ 53,165 Net carrying value of all Notes $ 54,051 $ 54,224 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. 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. 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 $ — 19 9. Leases We have operating leases for buildings, equipment and vehicles. Existing leases have remaining terms of less than one year to ten years . Some leases contain options to extend the lease, usually for up to five years , and termination options. 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 Operating lease right-of-use equipment 85 89 Operating lease right-of-use vehicles 645 679 Total operating lease right-of-use assets, gross 43,972 41,900 Accumulated amortization ( 6,274 ) ( 3,786 ) Total operating lease right-of-use assets, net $ 37,698 $ 38,114 Operating lease liabilities, current $ 2,873 $ 2,973 Operating lease liabilities, non-current 38,170 38,178 Total operating lease liabilities $ 41,043 $ 41,151 Weighted average remaining lease term (in years) 8.0 8.6 Weighted average discount rate per annum 12.0 % 11.9 % 20 10. Fair Value of Financial Instruments The following tables summarize our cash and available-for-sale securities that were measured at fair value by significant investment category within the fair value hierarchy (in thousands): September 30, 2021 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cash and Cash Equivalents Cash- Restricted Assets: Cash and money market funds $ 29,309 $ — $ — $ 29,309 $ 29,309 $ — Cash-restricted 1,016 — — 1,016 — 1,016 Total cash, cash equivalents and restricted cash $ 30,325 $ — $ — $ 30,325 $ 29,309 $ 1,016 December 31, 2020 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cash and Cash Equivalents Cash- Restricted Assets: Cash and money market funds $ 68,520 $ — $ — $ 68,520 $ 68,520 $ — Cash-restricted 1,016 — — 1,016 — 1,016 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 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. The estimated fair values for these securities represent Level III valuations since a fair value for these securities cannot be determined by using readily observable inputs or measures, such as market prices. Fair values were estimated using pricing models and risk-adjusted value ranges. 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 2014 Notes $ 578 $ 568 $ 601 $ 1,079 $ 1,059 $ 1,122 2019 Notes 55,000 53,483 127,331 55,000 53,165 117,899 Total Notes $ 55,578 $ 54,051 $ 127,932 $ 56,079 $ 54,224 $ 119,021 Term loan $ 10,000 $ 9,993 $ 10,037 $ — $ — $ — 21 11. Shareholders’ Equity 2020 At-the-Market Offering In March 2020, we entered into an Open Market Sale Agreement (Sale Agreement) with Jefferies LLC (Jefferies) to sell shares of our common stock having aggregate sales proceeds of up to $ 50,000,000 , from time to time, through an “at-the-market” equity offering program under which Jefferies acts as sales agent. During the third quarter of 2020, we sold 2.5 million shares of our common stock pursuant to the Sale Agreement. Our net proceeds from the sale of such shares of common stock were approximately $ 20.1 million, after deducting related expenses, including commissions of approximately $ 0.6 million and issuance costs of approximately $ 0.2 million. InstruNor Acquisition In January 2020, we completed the acquisition of all of the outstanding shares of InstruNor. The purchase price was approximately $ 7.2 million, consisting of $ 5.2 million in cash and 485,451 shares of our common stock. No measurement period adjustments were made after January 2020 and the purchase price allocation has been finalized. Common Shares Reserved 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 DVS Sciences Inc. 2010 Equity Incentive Plan 10 — — 2017 Inducement Award Plan 159 98 — 2017 Employee Stock Purchase Plan — — 2,786 1,610 6,624 6,332 The number of shares available for future issuance reflects performance share units at the maximum number of shares that could be issued under these awards. 12. Stock-Based Plans Our board of directors sets the terms, conditions, and restrictions related to our 2017 Employee Stock Purchase Plan (ESPP) and the grant of stock options, restricted stock units (RSUs) and performance-based awards under our equity incentive plans. Our board of directors determines the number of awards to grant and also sets vesting criteria. 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. 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. Generally, options vest at a rate of either 25 % on the first anniversary of the option grant date and ratably each month over the remaining period of 36 months, or ratably each month over 48 months. We may grant options with different vesting terms from time to time. For performance-based share awards, our board of directors sets the performance objectives and other vesting provisions in determining the number of shares or value of performance units and performance shares that will be paid out. Such payout will be a function of the extent to which performance objectives or other vesting provisions have been achieved. 2011 Equity Incentive Plan 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 22 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 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: Restricted Stock Units : Number of Units (in 000s) Weighted-Average Grant Date Fair Value per Unit Balance at December 31, 2020 4,862 $ 4.98 RSUs granted 3,171 $ 5.26 RSUs released ( 1,923 ) $ 4.96 RSUs forfeited ( 724 ) $ 4.59 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. Stock Options : Number of Options (000s) Weighted-Average Exercise Price per Option Weighted- Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value (1) in (000s) Balance at December 31, 2020 1,635 $ 7.33 6.2 Options granted 93 $ 5.56 Options exercised ( 37 ) $ 5.71 $ 22 Options forfeited ( 81 ) $ 10.06 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. Performance-based Awards Performance Stock Units with Market Conditions We have granted PSU awards to certain executive officers and senior level employees. The number of PSUs ultimately earned under these awards is calculated based on the Total Shareholder Return (TSR) of our common stock as compared to the TSR of a defined group of peer companies during the applicable three-year performance period. The percentage of 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. We used a Monte Carlo simulation pricing model to incorporate the market condition effects at our grant date. Based on the performance of our stock relative to our defined group of peer companies for the period 2018-2020, PSUs awarded in 2018 vested in 2021 at a rate of 118.6 % of target. The performance adjustment in the table below reflects the impact of the above target performance. 23 Activity under the TSR-based PSUs is as follows: Number of Units (in 000s) Weighted-Average Grant Date Fair Value per Unit Balance at December 31, 2020 962 $ 9.74 PSU granted 396 $ 9.60 Performance adjustment for 2018 awards 21 $ 10.09 PSU released ( 133 ) $ 10.09 PSU forfeited ( 36 ) $ 4.82 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. Performance Stock Units with Performance Conditions. During 2019, we also granted performance stock units to a certain employee. The number of performance stock units that ultimately vest under these awards is dependent on achieving certain discrete operational milestones, the latest of which is December 31, 2021. As of 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) Our ESPP offers U.S. and some non-U.S. employees the right to purchase shares of our common stock. Our ESPP program has a six-month offering period, with a new period commencing on the first trading day on or after May 31 and November 30 of each year. Employees are eligible to participate through payroll deductions of up to 10 % of their compensation. Employees may not purchase more than $ 25 thousand of stock for any calendar year. The purchase price at which shares are sold under the ESPP is 85 % of the lower of the fair market value of a share of our common stock on the first day of the offering period or the last day of the offering period. Stock-based Compensation Expense Total stock-based compensation expense recognized was as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Restricted stock units, stock options and performance share units $ 4,190 $ 4,114 $ 11,229 $ 9,558 Employee stock purchase plan 130 $ 243 509 $ 800 Total stock-based compensation $ 4,320 $ 4,357 $ 11,738 $ 10,358 13. Income Taxes 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, 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. 24 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 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. Assessing the realizability of deferred tax assets is dependent upon several factors including historical financial results and future expected financial results. Domestic deferred tax assets have been offset by valuation allowances. 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 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. The timing of recording a valuation allowance or the reversal of such valuation allowance is subject to objective and subjective factors that cannot be readily predicted in advance. 14. Information About Geographic Areas We operate in one reporting segment that develops, manufacturers and commercializes tools for life sciences research. Our chief executive officer manages our operations and evaluates our financial performance on a consolidated basis. For purposes of allocating resources and evaluating regional financial performance, our chief executive officer reviews separate sales information for the different regions of the world. Our general and administrative expenses and our research and development expenses are not allocated to any specific region. Most of our principal operations, other than manufacturing, and our decision-making functions are located at our corporate headquarters in the United States. A summary table of our 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. 15. Commitments and Contingencies Indemnification From time to time, we have entered into indemnification provisions under certain of our agreements in the ordinary course of business, typically with business partners, customers, and suppliers. Pursuant to these agreements, we may indemnify, hold harmless, and agree to reimburse the indemnified parties on a case-by-case basis for losses suffered or incurred by the indemnified parties in connection with any patent or other intellectual property infringement claim by any third party with respect to our products. The term of these indemnification provisions is generally perpetual from the time of the execution of the agreement. The maximum potential amount of future payments we could be required to make under these indemnification provisions is typically not limited to a specific amount. In addition, we have entered into indemnification agreements with our officers, directors, and certain other employees. With certain exceptions, these agreements provide for indemnification for related expenses including, among others, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. Contingencies In September 2020, a putative class action complaint alleging violations of the federal securities laws was filed against the Company (also naming our Chief Executive Officer and Chief Financial Officer as defendants) in the U.S. District Court for the Northern District of California (Reena Saintjermain, et al. v. Fluidigm Corporation, et al). The Court appointed a lead plaintiff and lead counsel in December 2020, and an amended complaint was filed on February 19, 2021. The complaint, as amended, seeks unspecified damages on behalf of a purported class of persons and entities who acquired our common stock between February 7, 2019 and November 5, 2019 and alleges securities laws violations based on statements and alleged omissions made 25 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. From time to time, we may be subject to various legal proceedings and claims arising in the ordinary course of business. These include disputes and lawsuits related to intellectual property, mergers and acquisitions, licensing, contract law, tax, regulatory, distribution arrangements, employee relations and other matters. Periodically, we review the status of each matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, we accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, we continue to reassess the potential liability related to pending claims and litigation and may revise estimates. 26