What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-08 compared with 2021-02-25 · 344 added, 352 removed, 842 unchanged (45% of the section changed)

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Index to Consolidated Financial Statements

Report of PricewaterhouseCoopers LLP-Independent Registered Public Accounting Firm

Report of PricewaterhouseCoopers LLP-Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Balance Sheets as of December 31, 2021 and 2020

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Fluidigm Corporation and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, of comprehensive loss, of stockholders’ equity, and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We have audited the consolidated financial statements, including the related notes and financial statement schedule, of Fluidigm Corporation and its subsidiaries (the “Company”) as listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for revenue from contracts with customers in 2018.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company has incurred significant losses in each fiscal year since its inception and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinions

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A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting

includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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National Institutes of Health (NIH) Contract Accounting

As described in Notes 2 and 4 to the consolidated financial statements, in September 2020, the Company executed a definitive contract with the National Institutes of Health (NIH) for a project under the NIH Rapid Acceleration of Diagnostics (RADx) program, which has a total value of up to $34.0 million upon the achievement of certain conditional milestones.

As there is no authoritative guidance under U.S.

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Management has elected to record the grants received as deferred income with grant proceeds recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received.

With the NIH contract, this occurs when either each milestone has been accepted by NIH or management concludes the conditions of the grant have been substantially met.

As of December 31, 2020, a total $23.9 million has been recorded as deferred gran t income.

The principal considerations for our determination that performing procedures relating to the NIH contract accounting is a critical audit matter are (i) the significant judgment by management when determining the applicable accounting model and determining which milestones are reasonably assured, including consideration of conditional contract provisions and NIH termination rights;

and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to the accounting policy selection and assumptions associated with conclusions of which milestones are reasonably assured.

With the NIH contract, this occurred when either each milestone was accepted by NIH or management concluded the conditions of the grant were substantially met.

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

As of December 31, 2021, a total of $21.7 million has been recorded as deferred grant income, and during 2021 $7.1 million in other income associated with grant milestone receipts in excess of expected total costs under the grant was recorded.

and (ii) the significant audit effort and subjectivity in performing procedures and evaluating audit evidence related to the accounting policy selection, application, classification and recognition of excess grant proceeds recorded in other non-operating income.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the NIH contract, including controls over the determination of the appropriate accounting model, and which grant milestones met the reasonable assurance criteria for recognition.

These procedures also included, among others (i) reading the executed agreement and correspondence with NIH, (ii) evaluating compliance with the contract requirements, including conditional provisions and NIH termination rights, (iii) evaluating management’s accounting analysis, and (iv) evaluating the assumptions associated with recognition of deferred income for milestones determined to be reasonably assured by management.

These procedures included testing the effectiveness of controls relating to the NIH contract, including controls over the determination of the appropriate accounting model, which grant milestones are met, and classification of costs and other non-operating income associated with the NIH contract.

These procedures also included, among others (i) reading the executed agreement and correspondence with NIH, (ii) evaluating compliance with the contract requirements related to milestone

achievement, (iii) evaluating management’s accounting analysis, and (iv) testing the accuracy and evaluating the classification of costs and other non-operating income associated with the NIH contract.

/s/ PricewaterhouseCoopers LLP

San Jose, California

February 25, 2021

March 7, 2022

We have served as the Company’s auditor since 2015.

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Cash and cash equivalents $ 28,451 $ 68,520

Short-term investments — 36,978

Accounts receivable (net of allowances of $ 356 and $ 6 , at December 31, 2020 and 2019, respectively)

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

18,320 25,423

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Operating lease liabilities, current 3,053 2,973

Other accrued liabilities 14,794 8,873

Deferred revenue, current 11,947 13,475

Deferred grant income, current 3,535 2,912

Other accrued liabilities 8,673 11,882

Advances under revolving credit agreement, current 6,838 —

Total current liabilities 49,568 54,249

Term loan, net 10,049 —

Convertible notes, net 54,160 54,224

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Interest expense ( 3,823 ) ( 3,572 ) ( 4,279 )

Surplus funding from NIH Contract 7,140 — —

Loss from extinguishment of debt ( 9 ) — ( 12,020 )

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Shares Amount

Balance at December 31, 2017 38,787 $ 39 $ 531,666 $ ( 574 ) $ ( 500,196 ) $ 30,935

Market offering 9,373 9 59,084 — — 59,093

Issuance of restricted stock, net of shares withheld for taxes, and other 886 1 ( 379 ) — — ( 378 )

Issuance of common stock from option exercises 40 — 208 — — 208

Issuance of common stock under ESPP 252 — 1,203 — — 1,203

Conversion option on convertible debt 29,357 29,357

Conversion cost related to conversion option on convertible debt — — ( 557 ) — — ( 557 )

Cumulative-effect on new accounting standards for Topic 606 Revenue — — — — 358 358

Stock-based compensation expense 11,023 — 11,023

Net loss — — — — ( 59,013 ) ( 59,013 )

Other comprehensive income (loss), net of taxes — — — ( 113 ) — ( 113 )

Balance at December 31, 2018 49,338 49 631,605 ( 687 ) ( 558,851 ) 72,116

Balance as of December 31, 2018 49,338 $ 49 $ 631,605 $ ( 687 ) $ ( 558,851 ) $ 72,116

Issuance of common stock on bond conversion 19,460 19 133,280 — — 133,299

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Other comprehensive income (loss), net of taxes — — — 105 — 105

Balance at December 31, 2019 69,956 70 777,765 ( 582 ) ( 623,641 ) 153,612

Balance as of December 31, 2019 69,956 70 777,765 ( 582 ) ( 623,641 ) 153,612

Issuance of common stock from at-the-market offering, net of commissions 2,480 2 20,224 — — 20,226

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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 2,047 2 ( 1,795 ) — — ( 1,793 )

Issuance of common stock under ESPP 292 — 1,285 — — 1,285

Issuance of common stock from option exercises 37 — 209 — — 209

Stock-based compensation expense — — 16,101 — — 16,101

Net loss — — — — ( 59,237 ) ( 59,237 )

Other comprehensive income (loss), net of taxes — — — ( 1,019 ) — ( 1,019 )

Balance as of December 31, 2021 76,919 $ 77 $ 831,424 $ ( 907 ) $ ( 735,998 ) $ 94,596

See accompanying notes

FLUIDIGM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

Year Ended December 31,

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Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 4,014 4,605 5,372

Stock-based compensation expense 16,101 14,451 11,393

Amortization of developed technology 11,918 11,910 11,200

Depreciation and amortization 3,653 4,014 4,605

Provision for excess and obsolete inventory 2,293 1,614 1,807

Lease amortization 497 2,017 ( 516 )

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Loss on disposal of property and equipment 12 212 89

Provision for excess and obsolete inventory 1,614 1,807 1,090

Other non-cash items 2 426 200

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Accounts payable 1,281 3,356 787

Accrued compensation and related benefits ( 8,721 ) 8,627 ( 9,310 )

Deferred revenue ( 3,208 ) 2,111 2,129

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Proceeds from maturities of investments — 31,800 25,600

Purchases of property and equipment ( 12,717 ) ( 2,531 ) ( 372 )

Purchases of property and equipment, net ( 13,264 ) ( 12,717 ) ( 2,531 )

Net cash provided by (used in) investing activities ( 11,946 ) 39,975 ( 39,301 )

Financing activities

Proceeds from term loan 10,000 — —

Proceeds from advances under revolving credit agreement 6,838 — —

Proceeds from issuance of common stock, net of commissions — 20,226 —

Proceeds from debt issuance — 55,000 —

Proceeds from 2019 Notes issuance — — 55,000

Repayment of long-term debt ( 501 ) — ( 51,826 )

Payments of debt and equity issuance cost ( 684 ) ( 1,888 ) ( 2,862 )

Payments of debt and equity issuance costs ( 79 ) ( 684 ) ( 1,888 )

Proceeds from exercise of stock options 209 451 1,058

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Net increase (decrease) in cash, cash equivalents and restricted cash ( 40,069 ) 45,800 ( 71,665 )

Cash, cash equivalents and restricted cash at beginning of period 23,736 95,401 58,056

Cash, cash equivalents and restricted cash at end of period $ 69,536 $ 23,736 $ 95,401

Cash and cash equivalents and restricted cash at beginning of period 69,536 23,736 95,401

Cash and cash equivalents and restricted cash at end of period $ 29,467 $ 69,536 $ 23,736

Supplemental disclosures of cash flow information

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Basis of Presentation and Consolidation

The accompanying consolidated financial statements have been prepared in conformity with U.S.

generally accepted accounting principles (U.S.

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

As of December 31, 2020, we had wholly owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, the United Kingdom, China, Germany and Norway.

The accompanying consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern and meet its obligations when they become due over the twelve-month period subsequent to the date the financial statements were issued.

The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities and reported expenses that may be necessary if we were unable to continue as a going concern.

For this annual report, we performed an assessment to determine whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for at least the twelve-month period following the date the financial statements were issued.

Since our inception, we have incurred significant operating losses and generated negative cash flows from operations.

We have historically funded our operations primarily through the issuance of common stock and debt.

We believe that our current level of cash and cash equivalents, together with committed financing facilities, are not sufficient to fund ongoing operations for at least the twelve-month period after the financial statements were issued.

The existence of these conditions raises substantial doubt about the Company's ability to continue as a going concern for the twelve-month period following the date the financial statements were issued.

Our ability to continue as a going concern is dependent upon our success in obtaining additional equity or debt financing, attaining further operating efficiencies, reducing expenditures and ultimately, generating significant revenue growth.

We are evaluating strategies to obtain the required additional funding for future operations, including the potential consummation of the $ 225 million investment in Fluidigm disclosed in Note 18 Subsequent Events (the Private Placement Issuance), which is contingent on stockholder approval and satisfaction of customary closing conditions.

In the event the proposed investment does not occur, we would need to obtain the required additional funding for future operations from alternative sources.

These sources may include, but are not limited to, equity financing, debt or other financing arrangements, and restructuring of operations to grow revenues and decrease expenses.

Our plans to raise additional capital, including our ability to consummate the Private Placement Issuance, or take the other actions to address the doubt regarding our ability to continue as a going concern, may not be successful.

There can be no assurance that we would be able to obtain additional liquidity when needed or under acceptable terms, if at all.

The accompanying financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

The consolidated financial statements include the accounts of our wholly owned subsidiaries.

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

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

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All intercompany transactions and balances have been eliminated in consolidation.

Certain prior period amounts in the consolidated balance sheet and statements of cash flows were reclassified to conform with the current period presentation.

Certain prior period amounts in the consolidated balance sheet and statements of cash flows were reclassified to conform to 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.

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The full extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will depend on numerous evolving factors including, but not limited to, the magnitude and duration of the pandemic, the extent to which it will impact worldwide macroeconomic conditions, including the speed of recovery, and governmental and business reactions to the pandemic.

We assessed certain accounting matters that generally require consideration of forecasted financial information, including the unknown impact of COVID-19 as of December 31, 2020.

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

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.

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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

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Service revenue is primarily derived from the sale of instrument service contracts, repairs, installation, training and other specialized product support services.

We also generate revenue from development agreements, license and royalty agreements and grants.

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 adopted ASU 2014-09 Revenue from Contracts with Customers (Topic 606) on January 1, 2018, using the modified retrospective method applied to those contracts with unrecognized revenue on the adoption date.

We recognize revenue based on the amount of consideration we expect to receive in exchange for the goods and services we transfer to the customer.

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Development Revenue

The Company has entered and may continue to enter into development agreements with third parties that provide for up-front and periodic milestone payments.

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.

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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.

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.

In arrangements where we satisfy performance obligation(s) over time, we recognize development revenue using an input method that determines the extent of our progress toward completion by comparing the actual costs incurred to the total expected cost.

As part of the accounting for these arrangements, we develop estimates and assumptions that require judgment to determine the transaction price and progress towards completion.

We review these estimates at the end of each reporting period using the best available information, revise the estimates as necessary, and recognize revenue commensurate with our progress toward completion.

We may also generate revenue from development or collaboration agreements that do not include upfront or milestone-based payments.

For these type of arrangements, we generally recognize revenue over time as the development services are provided.

Other Revenue

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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.

In March 2020, we entered into an agreement to settle intellectual property infringement claims, under which we received a $ 3.5 million payment in exchange for a perpetual license to certain Fluidigm intellectual property.

The settlement was accounted for as a multiple-element arrangement.

Accordingly, $ 3.1 million of the proceeds was recognized as license revenue and $ 0.4 million was offset against legal costs.

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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.

We generally provide a one-year warranty on our instruments and establish a liability for the estimated cost of the obligation at the time the product is shipped.

We periodically review our warranty liability and record adjustments based on specific terms provided to customers and our overall historical experience with usage.

This expense is recorded as a component of cost of product revenue in the consolidated statements of operations.

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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.

Significant judgment is required when interpreting commercial terms in sales agreements and determining when control of goods and services passes to the customer.

Judgment is also required when identifying performance obligations, estimating SSP and allocating purchase consideration in agreements that include multiple performance obligations.

Any material changes created by errors in judgment could have a material effect on our operating results and overall financial condition.

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The cost of securities sold, or the amount reclassified out of accumulated other comprehensive income into earnings is based on the specific-identification method.

Accounts Receivable

Accounts Receivable, net

Trade accounts receivable are recorded at net invoice value.

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

No single customer represented more than 10% of total revenue for 2020, 2019, or 2018, and no single customer represented more than 10% of total accounts receivable at December 31, 2020, or 2019.

No customer represented more than 10% of total revenue for 2021, 2020, or 2019, and no customer had an outstanding trade receivable balance that represented more than 10% of total billed accounts receivables at December 31, 2021, or 2020.

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

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We regularly review inventory for excess and obsolete products and components.

Provisions for slow-moving, excess, and obsolete inventories are recorded when required to reduce inventory values to their estimated net realizable values based on product life cycle, development plans, product expiration, and quality issues.

Property and Equipment

Significant judgment is required in determining provisions for slow-moving, excess, and obsolete inventories which are recorded when required to reduce inventory values to their estimated net realizable values based on product life cycle, development plans, product expiration, and quality issues

Property and Equipment, net

Property and equipment, including leasehold improvements, are stated at cost less accumulated depreciation.

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computer equipment and software, three to four years ;

laboratory and manufacturing equipment, two to five years ;

laboratory and manufacturing equipment, two to seven years ;

and office furniture and fixtures, five years .

Depreciation expense for the years ended December 31, 2021, 2020, and 2019 was $ 2.8 million, $ 3.1 million, and $ 3.6 million, respectively.

We adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) on January 1, 2019 using the modified retrospective method.

In accordance with Topic 842, we determine if an arrangement is a lease, or contains a lease, at inception.

Operating leases are included in operating lease right-of-use (ROU) assets, net and current and non-current operating lease liabilities in our consolidated balance sheets.

ROU assets represent our right-to-use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement.

Operating leases are included in operating lease right-of-use (ROU) assets and operating lease liabilities in our consolidated balance sheets.

assets represent our right-to-use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date.

As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a term similar to the lease arrangement at the commencement date.

Significant judgment is required in determining the incremental collateralized borrowing rate.

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The results of businesses acquired in a business combination are included in our consolidated financial statements from the date of acquisition.

We allocate the purchase price, which is the sum of the consideration provided in a business combination, to the identifiable assets and liabilities of the acquired business at their acquisition date fair values.

The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill.

We allocated 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.

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The cost of identifiable intangible assets with finite lives is generally amortized on a straight-line basis over the assets’ respective estimated useful lives.

Judgment is needed to assess the factors that could indicate an impairment of intangible assets.

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.

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If the carrying value of the reporting unit exceeds its fair value, then an impairment loss equal to the difference would be recorded to goodwill.

There were no indicators of impairment in 2020.

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

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If impairment is indicated, we estimate the asset’s fair value using future discounted cash flows associated with the use of the asset and adjust the carrying value of the asset accordingly.

In the fourth quarter of 2019, we recognized an impairment charge of $ 0.4 million on patents and licenses that were not used in then current products and were not expected to be used in future product offerings.

We did no t recognize any impairment of intangibles for 2021 or 2020.

In 2019, we recognized an impairment charge of $ 0.4 million on patents and licenses that were not used in the current products and were not expected to be used in future product offerings.

Deferred Grant Income

In September 2020, we executed a definitive contract with the National Institutes of Health (NIH) for a project under the NIH Rapid Acceleration of Diagnostics (RADx) program.

The definitive contract, which amended the letter contract we entered into with the NIH in July 2020 (collectively, the NIH Contract), has a total value of up to $ 34.0 million upon the achievement of certain milestones.

Proceeds from the NIH Contract will be used primarily to expand production capacity.

Accounting for the NIH Contract does not fall under ASC 606, Revenue from Contracts with Customers, as the NIH will not benefit directly from our expansion or product development.

The definitive contract, which amended the letter contract we entered into with NIH in July 2020 (collectively, the NIH Contract), has a total value of up to $ 34.0 million upon the achievement of certain milestones which were achieved and accepted by the NIH as of December 31, 2021.

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

Accounting for the NIH Contract does not fall under ASC 606, Revenue from Contracts with Customers, as NIH will not benefit directly from our expansion or product development.

As there is no authoritative guidance under U.S.

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Under IAS 20, grant proceeds are recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received.

With the NIH Contract, this occurs when either each milestone has been accepted by NIH or management concludes the conditions of the grant have been substantially met.

Deferred income related to production capacity expansion will be amortized over the period of depreciation for the related assets as a reduction of depreciation expense.

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

Convertible Notes

With the NIH Contract, this occurred when either each milestone was accepted by NIH or management concluded the conditions of the grant were substantially met.

Deferred grant income related to production capacity expansion is being amortized over the period of depreciation for the related assets as a reduction of depreciation expense.

Grant income related to reimbursement of operating costs 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 are recorded in other non-operating income.

Term Loan, net

On August 2, 2021, we entered into a Fourth Agreement 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 up to $ 10.0 million (Term Loan Facility).

As of December 31, 2021, the Term Loan Facility was fully drawn.

Interest is payable monthly and principal balances are required to be repaid in 24 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 term loan through the expected maturity 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 are 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.

Amortization of the debt issuance costs and accretion of the final payment are reflected in interest expense.

Convertible Note s, net

In February 2014, we closed an underwritten public offering of $ 201.3 million aggregate principal amount of our 2.75 % Senior Convertible Notes due 2034 (2014 Notes).

In March 2018, we entered into separate privately negotiated transactions with certain holders of our 2014 Notes to exchange $ 150.0 million in aggregate principal amount of the 2014 Notes for our 2.75 % Exchange Convertible Senior Notes due 2034 (2018 Notes).

As the 2018 Notes were convertible, at our election, into cash, shares of our common stock, or a combination of cash and shares of our common stock, we accounted for the 2018 Notes under the cash conversion guidance in ASC 470, whereby the embedded conversion option in the 2018 Notes was separated and accounted for in equity.

The embedded conversion option value was calculated as the difference between (i) the total fair value of the 2018 Notes and (ii) the fair value of a similar debt instrument excluding the embedded conversion option.

We determined an embedded conversion option value of $ 29.3 million for the 2018 Notes, which was recorded in additional paid-in-capital and which reduced the carrying value of the 2018 Notes.

The resulting discount on the 2018 Notes was amortized over the expected term of the 2018 Notes, using the effective interest method through the first note holder put date of February 6, 2023.

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

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We determined the fair value of the 2018 Notes using valuation techniques that required us to make assumptions related to the implied discount rate.

In November 2019, we closed a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of $ 55.0 million aggregate principal amount of our 5.25 % Senior Convertible Notes due 2024 (2019 Notes).

The majority of the issuance proceeds were used to retire approximately $ 50.2 million of aggregate principal amount of our 2014 Notes, leaving approximately $ 1.1 million of aggregate principal amount of our 2014 Notes outstanding.

In November 2019, we closed a private placement for $ 55.0 million aggregate principal amount of our 5.25 % Senior Convertible Notes due 2024 (2019 Notes).

The majority of the issuance proceeds were used to retire approximately $ 50.2 million of aggregate principal amount of our 2014 Notes.

We recorded a loss of $ 3.0 million on the extinguishment of the 2014 Notes in the fourth quarter of 2019.

This amount represented the difference between the fair value of the 2019 Notes used to extinguish the debt and the carrying value of the 2014 Notes, including unamortized debt issuance costs.

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

For the 2014, 2018 and 2019 Notes, offering-related costs, including underwriting costs, were capitalized as debt issuance costs, recorded as an offset to the carrying value of the related Notes, and are amortized over the expected term of the related Notes using the effective interest method.

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 those notes, representing the difference between the price paid to extinguish the 2014 Notes and their carrying value, including unamortized debt issuance costs.

Offering-related costs, including underwriting costs, on the 2014 Notes and 2019 Notes were capitalized as debt issuance costs, recorded as an offset to the carrying value of the related Notes, and are amortized over the expected term of the related Notes using the effective interest method.

See Note 9 fo r a detailed discussion of the accounting treatment of the transactions and additional information.

Fair Value of Financial Instruments

Our financial instruments consist primarily of cash and cash equivalents, restricted cash, investments, accounts receivable, accounts payable, and convertible notes.

Our cash equivalents, restricted cash, investments, accounts receivable, and accounts payable generally have short maturity or payment periods.

Our financial instruments consist primarily of cash and cash equivalents, restricted cash, investments, accounts receivable, accounts payable, advances on our revolving credit agreement, a term loan and convertible notes.

Our cash equivalents, restricted cash, accounts receivable, accounts payable and advances under our revolving credit agreement generally have short maturity or payment periods.

Accordingly, their carrying values approximated their fair values at December 31, 2021 and 2020.

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This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

Our cash equivalents, which include money market funds and investments in treasury securities are classified as Level I because they are valued using quoted market prices.

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

The estimated fair values for these securities

represent Level III valuations because a fair value for these securities cannot be determined by using readily observable inputs or measures, such as market prices.

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

Our cash equivalents, which include money market funds are classified as Level I because they are valued using quoted market prices.

Our term loan and our convertible notes, which are not regularly traded, are both classified as Level III since their values cannot be determined by using readily observable inputs or measures, such as market prices.

Significant judgment is needed in valuing Level III items.

Fair value of the term loan was estimated using a discounted cash flow approach and current market interest rate data for similar loans and fair values of the convertible debt were estimated using pricing models and risk-adjusted value ranges for the convertible notes.

Research and Development

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Stock-Based Compensation

We account for stock options, restricted stock units (RSU) and performance stock units (PSU) granted to employees and directors and stock purchases under ESPP based on the fair value of the awards at the date of grant.

We recognize compensation costs for all stock-based awards, including stock options, RSUs, PSUs and stock purchased under our ESPP, based on the grant date fair value of the award.

We recognize stock-based compensation expense on a straight-line basis over the requisite service periods for non-performance-based awards.

For performance-based stock awards, stock-based compensation expense is recognized over the requisite service period when the achievement of each individual performance goal becomes probable.

For RSUs, fair value is measured based on the closing fair market value of our common stock on the date of grant.

For PSUs with a market condition, we use a Monte Carlo simulation pricing model to incorporate the market condition effects at our grant date.

The Monte Carlo pricing model requires inputs which are subjective and generally requires judgment by us.

For PSUs with performance conditions, stock-based compensation expense is recognized over the requisite service period when the achievement of each individual performance goal becomes probable.

The fair value of options and stock purchases under ESPP on the grant date is estimated using the Black-Scholes option-pricing model, which requires the use of certain subjective assumptions, including expected term, volatility, risk-free interest rate and the fair value of our common stock.

These assumptions generally require judgment.

We determine the expected volatility based on our historical stock price volatility generally commensurate with the estimated expected term of the stock awards.

The expected term of an award is based on historical forfeiture experience, exercise activity, and the terms and conditions of the stock awards.

The risk-free interest rate is based on the U.S.

Treasury yield in effect at the time of grant for

zero coupon U.S.

Treasury notes with maturities approximately equal to each grant’s expected term.

We account for forfeitures as they occur.

We use the asset and liability method to account for income taxes.

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2021 2020 2019

Stock options, restricted stock units and performance stock units 7,507 5,189 4,354

2019 Convertible Notes 18,966 18,966 —

2019 Convertible Notes potential make-whole shares 837 3,182 —

Stock options, restricted stock units and performance stock awards 7,975 7,507 5,189

2019 Convertible Notes 18,966 18,966 18,966

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Adoption of New Accounting Guidance

In August 2018, the U.S.-based Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-15-Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), which establishes new guidance on the accounting for costs incurred to implement a cloud computing arrangement that is considered a service arrangement.

The new guidance requires the capitalization of such costs, aligning it with the accounting for costs associated with developing or obtaining internal-use software.

The new guidance became effective for fiscal years beginning after December 15, 2019.

The adoption of the new guidance did not have a significant impact on our financial results.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.

The ASU eliminates the requirement for an entity to calculate the implied fair value of goodwill to measure a goodwill impairment charge.

Instead, an entity performs its annual, or interim, goodwill impairment testing by comparing the fair value of a reporting unit with its carrying amount and recording an impairment charge for the amount by which the carrying amount exceeds the fair value.

The ASU became effective for annual and interim goodwill impairment testing performed for our fiscal year beginning January 1, 2020.

The adoption of the new guidance did not have a significant impact on our financial results.

The FASB issued two ASUs related to financial instruments – credit losses.

The ASUs issued were:

(1) in June 2016, ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, and (2) in November 2018, ASU 2018-19-Codification Improvements to Topic 326, Financial Instruments-Credit Losses.

ASU 2016-13 is intended to improve financial reporting by requiring more timely recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.

ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the lease standard.

These ASUs were effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted.

The modified retrospective method is required upon adoption.

The adoption of the new guidance resulted in an adjustment of approximately $ 0.1 million to reduce the accumulated deficit component of stockholders’ equity and decrease current assets by the same amount in our consolidated balance sheet.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06 Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

The amendment to this ASU reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification, which is expected to result in more convertible instruments being accounted for as a single unit, rather than being bifurcated between debt and equity.

The new guidance is effective for fiscal years beginning after December 15, 2021.

We are currently evaluating the impact of adoption on our consolidated financial statements.

In November 2019, the FASB issued ASU 2019-12-Income Taxes (Topic 740):

I n November 2019, the FASB issued ASU 2019-12-Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

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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 Contracts in an Entity’s Own Equity.

The amendments in this update reduce 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.

The adoption of the new guidance is not expected to have a significant impact on our financial results.

In November 2021, the FASB issued ASU 2021-10 Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance.

The amendment is effective for annual periods beginning after December 15, 2021.

The amendment establishes financial disclosure requirements for business entities that receive government assistance that they account for by analogizing to a grant or contribution model because there is no specific authoritative guidance under U.S.GAAP that applies to the transaction.

Entities that receive this type of assistance should include the following information in their annual report:

(1) the nature of the transaction, (2) the significant terms and conditions, (3) the accounting treatment, (4) the line items on the balance sheet and income statement that are affected along with (5) the respective amounts that have been recorded.

We are currently evaluating the impact the new standard will have on the disclosures included in our consolidated financial statements.

Business Combination

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Developed technology was valued using a discounted cash flow model for which the most sensitive assumption was revenue growth rate.

There have been no measurement period adjustments recognized since the acquisition date.

There were no measurement period adjustments recognized since the acquisition date.

Non-tax deductible goodwill of $ 2.2 million was calculated as the purchase price less the fair value of the net assets acquired as follows (in thousands):

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Goodwill acquired on acquisition $ 2,220

In September 2020, we executed a contract with the NIH (the NIH Contract) for a project under the RADx program.

The RADx program provides grants to support a range of new lab-based and point-of-care tests that could significantly increase the number, type and availability of COVID-19 tests.

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

Proceeds from the NIH Contract will be used primarily to expand production capacity and, to a lesser extent, to offset applicable operating expenses.

We expect to complete the contract in 2021.

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

In the event of termination for convenience, Fluidigm will be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges.

In the event of termination for cause due to our default, NIH is not liable for supplies or services not accepted.

If we fail to deliver within the time specified in the contract and the delay is due to Fluidigm’s fault or negligence, we are required to pay liquidated damages in the amount of 33 % of the amount(s) already disbursed to date under the contract within six months from the date of termination.

We do not currently expect to pay any liquidated damages and are in compliance with the terms of the contract.

We are working with the NIH continuously to ensure we are in compliance with the contract requirements and milestones.

The following table summarizes the activity under the NIH Contract through December 31, 2020 (in thousands):

Total grant proceeds reasonably assured $ 25,436

Amounts applied against research and development expenses 1,488

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.

As of December 31, 2021, we have achieved the required milestones and have received the total NIH Contract value of $ 34.0 million.

Proceeds from the NIH Contract have been and will be used primarily for capital expenditures to expand production capacity and, to a lesser extent, to offset applicable operating costs.

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

The following tables summarize the activity under the NIH Contract through December 31, 2021 and 2020 (in thousands):

Year Ended December 31,

Cumulative cash receipts from milestones achieved $ 34,016 $ 25,436

Cumulative amounts applied against operating costs (excluding depreciation) ( 4,522 ) ( 1,488 )

Cumulative amounts applied against depreciation expense for assets placed in service ( 703 ) —

Cumulative amounts recognized as non-operating income ( 7,140 ) —

Total deferred grant income $ 21,651 $ 23,948

Short-term deferred grant income $ 2,912

Long-term deferred grant income 21,036

Assets placed in service, gross $ 16,890 $ —

Construction-in-progress 3,909 9,652

Cumulative amounts applied against depreciation expense ( 703 ) —

Carrying value of property and equipment, net 20,096 9,652

Estimated future operating costs, excluding depreciation — 2,912

Estimated future capital expenditures 1,555 11,384

Total deferred grant income $ 21,651 $ 23,948

Funding received $ 25,436

Short-term deferred grant income represents future research and development costs expected to be funded by the NIH Contract over the next year, and it is included in other accrued liabilities on the balance sheet at December 31, 2020.

The long-term deferred grant income represents the portion of the funding received in 2020 attributable to manufacturing capacity expansion, of which we have incurred $ 10.2 million of capital expenditures through December 31, 2020.

The majority of this amount is included in construction-in-progress, which is included in property and equipment, net in the consolidated balance sheet as of December 31, 2020 (see Note 8).

Deferred grant income, current $ 3,535 $ 2,912

Deferred grant income, non-current 18,116 21,036

Total deferred grant income $ 21,651 $ 23,948

D eferred grant income, current is included in other accrued liabilities on the balance sheets at December 31, 2021 and 2020 and represents amounts expected to be applied against costs over the next twelve months.

Deferred grant, non-current includes depreciation expense on capital expenditure amounts which will be amortized in later periods.

At December 31, 2020, deferred grant income included amounts expected to be applied against 2021 operating costs as well as future depreciation.

At December 31, 2021, deferred grant income includes amounts related to future depreciation on capital expenditures placed or to be placed in service.

We expect to spend $ 22.4 million on capital expenditures associated with the NIH Contract.

We have incurred $ 20.8 million of capital expenditures through December 31, 2021, of which assets valued at $ 16.9 million have been placed in service, while the remaining $ 3.9 million is included in construction-in-progress (See Note 8).

We expect to place the remaining equipment in service in the first half of 2022.

Development Agreement

Effective March 31, 2020, we signed an OEM Supply and Development Agreement (Development Agreement) with a customer.

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

The Development Agreement provides up-front and periodic milestone payments of up to $ 11.7 million during the development stage.

The development stage is expected to last approximately one year from the date of the agreement.

We recognized $ 8.8 million of development revenue from this agreement for the year ended December 31, 2020.

Under the Development Agreement, Fluidigm developed products based on its 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 on-going annual payments of $ 0.4 million for sustaining efforts.

We recognized $ 2.4 million and $ 8.8 million of development revenue from this agreement for the years ended December 31, 2021 and 2020, respectively.

Disaggregation of Revenue

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

In the first quarter of 2020, we recognized $ 2.2 million (Euro 2.0 million) of goodwill from the InstruNor acquisition and $ 5.4 million (Euro 4.9 million) of developed technology (see Note 3).

In the first quarter of 2020, we recognize d $ 2.2 million (Eu ro 2.0 million) of goodwill from the InstruNor acquisition and $ 5.4 million (Euro 4.9 million) of developed technology (see Note 3).

As the goodwill and developed technology from the InstruNor acquisition are recorded in the functional currency of our European operations, which is the Euro, these balances are revalued each period and the U.S.

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

During the first quarter of fiscal 2020, the Company assessed whether the current and potential future impact of the COVID-19 pandemic represented an event which necessitated an impairment review.

During the first quarter of fiscal 2020, we assessed whether the current and potential future impact of the COVID-19 pandemic represented an event which necessitated an impairment review.

No impairment was recorded as a result of the quantitative assessment performed.

In addition, the Company performed its annual impairment assessment and there were no indicators of impairment identified.

In addition, the Company performed its annual impairment assessment as of December 31, 2021 and 2020 and there were no indicators of impairment identified.

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

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December 31, 2021

Gross Amount Accumulated Amortization and Translation Net Weighted-Average Amortization Period

Gross Amount Accumulated Amortization Net Weighted-Average Amortization Period

Developed technology $ 117,503 $ ( 89,576 ) $ 27,927 9.9 years

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December 31, 2020

Gross Amount Accumulated Amortization and Translation Net Weighted-Average Amortization Period

Gross Amount Accumulated Amortization Net Weighted-Average Amortization Period

Developed technology $ 117,658 $ ( 77,452 ) $ 40,206 9.9 years

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Total cash, cash equivalents, and restricted cash $ 29,467 $ 69,536

Short-term restricted cash of approximately $ 16 th ousand is included in prepaid expenses and other current assets, and $ 1.0 million of non-current restricted cash is included in other non-current assets in the consolidated balance sheet as of December 31, 2020.

Inventories, net

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Property and equipment, net $ 28,034 $ 17,531

The majority of the amounts included in construction-in-progress are related to the NIH Contract (see Note 4).

Accrued Compensation and Related Benefits

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Ending balance $ 1,170 $ 1,663

Convertible Notes and Credit Facility

2014 Senior Convertible Notes (2014 Notes)

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

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

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In March 2018, we entered into separate privately negotiated transactions with certain holders of our 2014 Notes to exchange $ 150.0 million in aggregate principal amount of the 2014 Notes for 2018 Notes, leaving $ 51.3 million of aggregate principal amount of 2014 Notes outstanding.

As of the closing of the 2018 Notes on March 12, 2018, the estimated fair value was $ 145.5 million.

The difference between the $ 150.0 million aggregate principal amount of the 2018 Notes and its fair value

was being amortized over the expected term of the 2018 Notes using the effective interest method through the first note holder put date of February 6, 2023.

The 2018 Notes accrued interest at a rate of 2.75 %, payable semi-annually in arrears on February 1 and August 1 of each year.

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

The initial conversion rate of the 2018 Notes was 126.9438 shares of our common stock, par value $ 0.001 per share, per $1,000 principal amount of the 2018 Notes (which is equivalent to an initial conversion price of approximately $ 7.88 per share).

The conversion rate was subject to adjustment upon the occurrence of certain specified events.

Those certain specified events included holders who convert their 2018 Notes voluntarily prior to our exercise of the issuer's conversion option described below or in connection with a make-whole fundamental change prior to February 6, 2023, entitling the holders, under certain circumstances, to a make-whole premium in the form of an increase in the conversion rate determined by reference to a make-whole table set forth in the indenture governing the 2018 Notes.

Offering-related costs for the 2018 Notes were approximately $ 2.8 million.

Offering-related costs of $ 2.2 million were capitalized as debt issuance costs, recorded as an offset to the carrying value of the 2018 Notes, and were being amortized over the expected term of the 2018 Notes using the effective interest method through the first note holder put date of February 6, 2023.

The effective interest rate on the 2018 Notes was 12.3 %.

Offering-related costs of $ 0.6 million were accounted for as equity issuance costs, recorded as an offset to additional paid-in capital, and were not subject to amortization.

Offering-related costs were allocated between debt and equity in the same proportion as the allocation of the 2018 Notes between debt and equity.

In the first quarter of 2019, we received notices from holders of the 2018 Notes electing to voluntarily convert approximately $ 138.1 million in aggregate principal amount of the 2018 Notes.

In February 2019, we notified trustee U.S.

Bank National Association of our intention to exercise our issuer’s conversion option with respect to the remaining approximately $ 11.9 million in aggregate principal amount of 2018 Notes.

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

We recognized a loss of $ 9.0 million on the retirement of the 2018 Notes, which represents the difference between the fair value of the bonds retired and their carrying costs.

The net impact on equity was $ 133.3 million and represents the fair value of the bonds retired.

The 2018 Notes accrued interest at a rate of 2.75 %, payable semi-annually.

The 2018 Notes were scheduled 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 notes were retired.

We recognized a loss of $ 9.0 million on the conversion of 2018 Notes, which was included in loss on extinguishment of debt in 2019.

This amount represents the difference between the fair value of the bonds converted and the carrying value of the bonds at the time of conversion.

2019 Senior Convertible Notes (2019 Notes)

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

$ 51.8 million of the proceeds of the 2019 Notes were used to retire $ 50.2 million aggregate principal amount of our 2014 Notes, leaving $ 1.1 million of the 2014 Notes outstanding.

We accounted for the transaction as an extinguishment of debt due to the significance of the change in value of the embedded conversion option, resulting in a $ 3.0 million loss.

$ 51.8 million of the proceeds of the 2019 Notes were used to retire $ 50.2 million aggregate principal amount of our 2014 Notes.

We recognized a loss of $ 3.0 million on the exchange of the 2014 Notes for the 2019 Notes.

The loss on extinguishment of debt was calculated as the difference between the reacquisition price (i.e., the fair value of the principal amount of 2019 Notes) and the net carrying value of the 2014 Notes exchanged.

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Unamortized debt issuance cost ( 2 ) ( 4 )

$ 1,059 $ 1,057

Net carrying value of 2014 Notes $ 568 $ 1,059

5.25 % 2019 Notes due 2024

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Unamortized debt issuance cost ( 1,408 ) ( 1,835 )

$ 53,165 $ 52,764

Net carrying value of 2019 Notes $ 53,592 $ 53,165

Net carrying value of all Notes $ 54,160 $ 54,224

2018 Revolving Credit Facility

On August 2, 2018, we entered into a revolving credit facility with Silicon Valley Bank (Revolving Credit Facility) in an aggregate principal amount of up to the lesser of (i) $ 15.0 million (Maximum Amount) or (ii) the sum of (a) 85 % of our eligible receivables and (b) 50 % of our eligible inventory, in each case, subject to certain limitations (Borrowing Base), provided that the amount of eligible inventory that may be counted towards the Borrowing Base shall be subject to a cap as set forth in the Revolving Credit Facility.

Subject to the level of this Borrowing Base, we may make and repay borrowings from time to time until the maturity of the Revolving Credit Facility.

The Borrowing Base as of December 31, 2020 under the Revolving Credit Facility was $ 15.0 million.

There were no borrowings outstanding under the Revolving Credit Facility at December 31, 2020.

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

Until an amendment in April 2020, the Revolving Credit Facility was set to mature on August 2, 2020.

The interest rate on outstanding loans under the Revolving Credit Facility was the greater of (i) prime rate plus 0.50 % or (ii) 5.50 %.

Interest on any outstanding loans is due and payable monthly and the principal balance is due at maturity though loans can be prepaid at any time without penalty.

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

In addition, we pay a quarterly unused revolving line facility fee of 0.75 % per annum on the average unused facility.

The quarterly unused line fee, which was previously based on the Maximum Amount, will now be based on the Borrowing Base.

The annual commitment fee of $ 112,500 is unchanged.

The Revolving Credit Facility contains customary affirmative and negative covenants which, unless waived by the bank, limit our ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets, enter into affiliate transactions, undergo a change of control, or engage in merger and acquisition activity, including merging or consolidating with a third party.

The Revolving Credit Facility also contains customary events of default, subject to customary cure periods for certain defaults, that include, among other things, non-payment defaults, covenant defaults, material judgment defaults, bankruptcy and insolvency defaults, cross-defaults to certain other material indebtedness, and defaults due to inaccuracy of representation and warranties.

Upon an event of default, the lender may declare all or a portion of the outstanding obligations payable by us to be immediately due and payable and exercise other rights and remedies provided for under the Revolving Credit Facility.

During the existence of an event of default, interest on the obligations under the Revolving Credit Facility could be increased to 5.0 % above the otherwise applicable rate of interest.

We were in compliance with all the terms and conditions of the Revolving Credit Facility as of December 31, 2020.

Revolving Credit Facility and Term Loan, net

On August 2, 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.

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

As of December 31, 2021, the Borrowing Base of the Revolving Credit Facility was $ 9.4 million, of which we had borrowed $ 6.8 million, leaving $ 2.5 million available.

As of December 31, 2021 the Term Loan Facility was fully drawn.

The interest rate on the Term Loan Facility is the greater of 4 % or a floating per annum rate equal to three quarters of one percentage points ( 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 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 was 6.3 % as of December 31, 2021.

The carrying values of our term loan and advances under the Credit Facility, and the maximum amount available under the Credit Facility are as follows (in thousands):

Principal amount $ 10,000 $ —

End of term fee accretion 79 —

Unamortized debt issuance cost ( 30 ) —

Net carrying value of term loan $ 10,049 $ —

Credit Facility

Borrowing Base $ 9,368 $ 15,000

Carrying value of advances under revolving credit agreement $ 6,838 $ —

We have operating leases for buildings, equipment and vehicles.

Existing leases have remaining terms of less than one year to ten years .

Existing leases have remaining terms of less than one year to eight years .

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

Operating lease right-of-use assets, net, consisted of the following (in thousands):

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

December 31, 2021 December 31, 2020

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Weighted average remaining lease term (in years) 7.7 years 8.6 years

Weighted average discount rate 11.9 % 5.0 %

A new operating lease for our corporate headquarters in South San Francisco, California commenced in March 2020.

We recorded a ROU asset of $ 35.7 million at the inception of the lease and an operating lease liability of $ 35.3 million.

The lease term is approximately ten years .

Future minimum lease payments over the life of the lease were discounted at a rate of 12.6 %, which was our estimated incremental collateralized borrowing rate for the term of the lease at the inception of the lease.

Weighted average discount rate per annum 11.7 % 11.9 %

The following table presents the components of lease expense for the year-ended December 31, 2021 and 2020, respectively (in thousands):

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December 31, 2021

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

Cash $ 47,818 $ — $ — $ 47,818 $ 47,818 $ — $ —

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

Cash and money market funds $ 28,451 $ — $ — $ 28,451 $ 28,451 $ —

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

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

Available-for-sale:

Money market funds $ 20,702 $ — $ — $ 20,702 $ 20,702 $ — $ —

Subtotal $ 20,702 $ — $ — $ 20,702 $ 20,702 $ — $ —

Total $ 69,536 $ — $ — $ 69,536 $ 68,520 $ — $ 1,016

Total cash, cash equivalents and restricted cash $ 29,467 $ — $ — $ 29,467 $ 28,451 $ 1,016

December 31, 2020

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

Cash $ 16,614 $ — $ — $ 16,614 $ 16,614 $ — $ —

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 $ —

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

Total cash and restricted cash $ 18,689 $ — $ — $ 18,689 $ 16,614 $ — $ 2,075

Available-for-sale:

Money market funds $ 5,047 $ — $ — $ 5,047 $ 5,047 $ — $ —

treasury securities 36,942 36 — 36,978 — 36,978 —

Subtotal $ 41,989 $ 36 $ — $ 42,025 $ 5,047 $ 36,978 $ —

Total $ 60,678 $ 36 $ — $ 60,714 $ 21,661 $ 36,978 $ 2,075

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

Cash and cash equivalents are Level I measurements.

There were no transfers between Level I and Level II measurements, and no changes in the valuation techniques used during the years ended December 31, 2021, and 2020.

Based on an evaluation of securities that were in a loss position, we did not recognize any other-than-temporary impairment charges for the years ended December 31, 2020, 2019, and 2018.

None of our investments have been in a continuous loss position for more than 12 months.

We concluded that the declines in market value of our available-for-sale securities investment portfolio were temporary in nature and did not consider any of our investments to be other-than-temporarily impaired.

Convertible Notes

Our convertible notes are not regularly traded.

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

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 a 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 debt at December 31, 2021 and 2020, respectively (in thousands):

December 31, 2021 December 31, 2020

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2019 Notes 55,000 53,592 81,880 55,000 53,165 117,899

Total $ 56,079 $ 54,224 $ 119,021 $ 56,079 $ 53,821 $ 75,097

Total Notes $ 55,578 $ 54,160 $ 82,481 $ 56,079 $ 54,224 $ 119,021

Term loan, net $ 10,000 $ 10,049 $ 10,113 $ — $ — $ —

Advances under revolving credit agreement $ 6,838 $ 6,838 $ 6,838 $ — $ — $ —

Shareholders’ Equity

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The purchase price was approximately $ 7.2 million, consisting of $ 5.2 million in cash and 485,451 shares of our common stock.

Conversion of 2018 Notes

In the first quarter of 2019, we issued 19,460,260 shares of our common stock in connection with the conversion of our 2018 Notes (see Note 9).

As a result of this issuance of our common stock, we recorded a total of $ 133.3 million of equity, which is equivalent to the fair value of the bonds retired.

No adjustments were made to the initial purchase price allocation.

Common Shares Reserved

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

(in 000s) Securities To Be Issued Upon Exercise Of Options Securities To Be Issued Upon Release Of Restricted Stock and Performance Share Units Number Of Remaining Securities Available For Future Issuance

2009 Equity Incentive Plan 19 — —

In thousands:

Securities To Be Issued Upon Exercise Of Options Securities To Be Issued Upon Release Of Restricted Stock and Performance Share Units at Maximum Number Of Remaining Securities Available For Future Issuance

2011 Equity Incentive Plan 1,429 7,512 3,519

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1,597 7,588 6,152

Included in the securities to be issued upon release of RSUs and PSUs are the maximum number of shares that could be issued for performance share unit awards, which can vest at 0 %- 200 % of the number of awards granted.

The number of shares available for future issuance also reflects PSU awards granted at the maximum number of shares that could be issued under these awards.

Stock-Based Plans

Our board of directors sets the terms, conditions, and restrictions related to our 2017 Employee Stock Purchase Plan (ESPP) and the grant of stock options, RSUs and PSUs awards under our various stock-based plans.

Our board of directors 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 awar ds under our stock-based plans.

Our board of directors determines the number of awards to grant and also sets vesting criteria.

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

In May 2020, we granted 1.8 million retention RSUs that vest over 3 years with 50 % of the RSUs vesting after one year and 25 % of the RSUs vesting each year thereafter.

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

We may grant RSUs with different vesting terms from time to time.

Incentive stock options and non-statutory stock options granted under the 2011 Equity Incentive Plan (2011 Plan) have a term of no more than ten years from the date of grant and an exercise price of at least 100 % of the fair market value of the underlying common stock on the date of grant.

If a participant owns stock representing more than .1 of the voting power of all classes of our stock on the grant date, an incentive stock option awarded to the participant will have a term of no more than five years from the date of grant and an exercise price of at least 1.1 of the fair market value of the underlying common stock on the date of grant.

Generally, options vest at a rate of either 25 % on the first anniversary of the option grant date and ratably each month over the remaining period of 36 months, or ratably each month over 48 months.

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2011 Equity Incentive Plan

On January 28, 2011, our board of directors adopted the 2011 Plan under which incentive stock options, non-statutory stock options, RSUs, stock appreciation rights, performance units, and performance shares may be granted to our employees, directors, and consultants.

In April 2019, our board of directors authorized, and in June 2019, our stockholders approved, the amendment and restatement of the 2011 Plan to make various changes, including increasing the number of shares reserved for issuance by approximately 5.0 million shares and extending the term of the 2011 Plan until April 2029.

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

2009 Equity Incentive Plan

Our 2009 Equity Incentive Plan (the 2009 Plan) terminated on the date the 2011 Plan was adopted.

Options granted, or shares issued under the 2009 Plan that were outstanding on the date the 2011 Plan became effective, remained subject to the terms of the 2009 Plan.

2017 Inducement Award Plan

On January 5, 2017, we adopted the Fluidigm Corporation 2017 Inducement Award Plan (Inducement Plan) and reserved 2 million shares of our common stock for issuance pursuant to equity awards granted under the Inducement Plan.

The Inducement Plan provides for the grant of equity-based awards and its terms are substantially similar to the 2011 Plan.

In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under the Inducement Plan may only be made to individuals not previously our employees or non-employee members of our board of directors (or following such individual's bona fide period of non-employment), as an inducement material to the individual's entry into employment with us or in connection with a merger or acquisition, to the extent permitted by Rule 5635(c)(3) of the Nasdaq Listing Rules.

In June 2019, concurrently with the increase in shares available for grant under the 2011 Plan, the Inducement Plan was terminated such that no further grants could be made thereunder.

Options granted and shares issued under the Inducement Plan that were outstanding when the Inducement Plan was terminated remain outstanding subject to their terms and the terms of the Inducement Plan.

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.

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.

Valuation and Expense Information

We use the Black-Scholes option-pricing model to estimate the fair value of stock options granted under our equity incentive plans.

The weighted average assumptions used to estimate the fair value were as follows:

The weighted average assumptions used to estimate the fair value of options granted were as follows:

Year Ended December 31,

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Weighted-average fair value per share $ 3.73 $ 2.60 $ 7.17

We determine the expected volatility based on our historical stock price volatility generally commensurate with the estimated expected term of the stock awards.

The expected term of an award is based on historical forfeiture experience, exercise activity, and the terms and conditions of the stock awards.

The risk-free interest rate is based on the U.S.

Treasury yield in effect at the time of grant for zero coupon U.S.

Treasury notes with maturities approximately equal to each grant’s expected life.

Each of these inputs is subjective and generally requires significant judgment by us.

The fair value of the underlying common stock is also required to compute the fair value calculation of options and ESPP.

We account for forfeitures as they occur.

We grant stock options at exercise prices not less than the fair value of our common stock at the date of grant.

The fair value of RSUs granted to employees was estimated on the date of grant by multiplying the number of shares granted by the fair market value of our common stock on the grant date.

Activity under the various plans was as follows:

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The intrinsic value of vested and released RSUs is calculated by multiplying the fair market value of our common stock on the vesting date by the number of shares vested.

As of December 31, 2020, the unrecognized compensation costs related to outstanding unvested RSUs under our equity incentive plans were $ 20.0 million.

December 31, 2021, the unrecognized compensation costs related to outstanding unvested RSUs under our equity incentive plans were $ 22.5 million .

We expect to recognize those costs over a weighted average period of 2.5 years.

2018 Retention Bonus Program

Included in the 2018 RSU activity are 379,593 of grants and releases related to a retention bonus program.

As disclosed in our Current Report on Form 8-K filed on February 10, 2017, we previously implemented a company-wide retention bonus incentive program in which our executive officers at the time also participated.

The bonus program provides for the payment of cash bonuses to program participants who were employees at the time the plan was implemented and who remain with Fluidigm through January 1, 2019.

On September 18, 2018, the compensation committee of our board of directors approved an exchange program for our executive officers and for employees resident in the United States and Canada who are retention bonus program participants.

In the exchange program, eligible participants could elect to surrender some or all of their right to receive a cash bonus in exchange for fully vested restricted stock units issued under our 2011 Equity Incentive Plan on the terms described below.

Among other reasons, our compensation committee adopted the exchange program to encourage employee stock ownership and to effectively manage cash resources.

Stock Options :

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Options exercised ( 197 ) $ 5.43 $ 1,198

Option forfeited ( 497 ) $ 16.09

Options forfeited ( 211 ) $ 8.73

Balance at December 31, 2019 2,027 $ 7.78 6.8

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Options exercised ( 100 ) $ 4.84 $ 359

Options forfeited ( 211 ) $ 8.73

Option forfeited ( 409 ) $ 9.22

Balance at December 31, 2020 1,635 $ 7.33 6.2 $ 834

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Options exercised ( 37 ) $ 5.62 $ 25

Option forfeited ( 409 ) $ 9.22

Options forfeited ( 93 ) $ 10.49

Balance at December 31, 2021 1,597 $ 7.08 5.6 $ 82

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Performance-based Awards

Performance Stock Units with Market Conditions.

Beginning in 2018, we granted performance stock units to certain executive officers and senior level employees.

Performance Stock Units with Market Condition

We have granted performance stock units to certain executive officers and senior level employees.

The number of performance stock units ultimately earned under these awards is calculated based on the Total Shareholder Return (TSR) of our common stock as compared to the TSR of a defined group of peer companies during the applicable three-year performance period.

The percentage of performance stock units that vest will depend on our relative position at the end of the performance period and can range from 0 % to 200 % of the number of units granted.

Under FASB ASC Topic 718, the provisions of the performance stock unit awards related to TSR are considered a market condition, and the effects of that market condition are reflected in the grant date fair value of the awards.

We used a Monte Carlo simulation pricing model to incorporate the market condition effects at our grant date.

Based on the performance of our stock relative to our defined group of peer companies for the period 2018 to 2020, PSUs awarded in 2018 vested in 2021 at a rate of 118.6 % of the target.

The performance adjustment in the table below reflects the impact of the above-target performance.

Number of Units (in 000s) Weighted-Average

Grant Date Fair Value per Unit

Balance as at December 31, 2017 — $ —

Balance at December 31, 2018 155 $ 10.09

PSU granted 401 $ 16.90

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PSU granted 396 $ 9.60

Performance adjustment for 2018 awards 21 $ 10.09

PSU released ( 133 ) $ 10.09

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

The PSU awards above include 0.3 million of PSUs awarded in 2019.

Based on the performance of our stock relative to our defined group of peer companies for the period 2019 to 2021, these awards did not meet the minimum target and the shares returned to the 2011 Equity Plan pool in early 2022.

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.

During 2019, we granted performance stock units to a certain employee.

The number of performance stock units that ultimately vest under these awards is dependent on the employee achieving certain discrete operational milestones on or before predetermined measurement dates, the latest of which was December 31, 2021.

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

2017 Employee Stock Purchase Plan

On August 1, 2017, our stockholders approved our 2017 ESPP at the annual meeting of stockholders.

The operational milestones were not met and the awards were cancelled in early 2022.

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 first ESPP offering period began on October 1, 2017 with a shorter offering period ending on November 30, 2017.

Prior to June 2019, our ESPP program had a six-month offering period, with a new period commencing on the first trading day on or after May 31 and November 30 of each year.

Employees were eligible to participate through payroll deductions of up to 10 % of their compensation.

The purchase price at which shares were sold under the ESPP was 85 % of the lower of the fair market value of a share of our common stock on the first day of the offering period or the last day of the offering period.

Effective in June 2019, our ESPP program was amended to offer a twelve-month offering period with two six-month purchase periods beginning on each of May 31 and November 30.

Employees are eligible under the amended program to participate through payroll deductions of up to 15 % of their compensation.

Employees may not purchase more than $ 25 thousand of stock for any calendar year.

Under the updated program, the purchase price at which shares are sold for the first purchase period is 85 % of the lower of the fair market value of a share of our common stock on the first day of the offering period or the last day of the first purchase period.

For the second purchase period, the purchase price at which shares are sold is 85 % of the lower of the fair market value of the common stock on the first day of the offering period and the last day of the offering period.

In the event the fair market value of the common stock at the beginning of the second purchase period is less than the fair market value on the beginning of the offering period, the purchase price for the second offering period is reset to 85 % of the lower of the fair value of the common stock at the beginning of the second purchase period and last day of the offering period.

The offering period of June 1, 2019 to May 31, 2020 had two purchase periods, with one ending November 30, 2019 and the other May 31, 2020.

As the fair market value of the common stock at November 30, 2019 was lower than the fair value of the common stock at the beginning of the offering period, the purchase price for the second purchase period was reset based on the lower of the November 30, 2019 price and May 31, 2019 price.

The resetting of the purchase price is considered to be a modification of the original terms of the award.

Under ASC 718, the incremental fair value based on the difference between the fair value of the modified award and the fair value of the original award immediately before it was modified was approximately $ 0.3 million.

This amount was amortized over the remaining offering period.

In April 2020, our board of directors authorized, and in June 2020, our stockholders approved, an amendment and restatement of the ESPP that increased the number of shares reserved for issuance by an additional 3.0 million shares and made various other changes.

Effective June 2020, our ESPP program was amended to offer a six-month offering period, with a new offering and purchase period commencing on the first trading day on or after May 31 and November 30 of each year.

Employees are eligible under the amended program to participate through payroll deductions of up to 10 % of their compensation.

employees the right to pur chase 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 of the shares sold under the ESPP is 85 % of the lower of fair market value of a share of our common stock on the first day of the offering period or the last day of the offering period.

Shares are sold to employees under the ESPP for 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):

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2021 2020 2019

2018 retention bonus program $ — $ — $ 2,809

Options, restricted stock units and performance share units 13,428 10,555 7,716

Restricted stock units, stock options and performance share units $ 15,470 $ 13,428 $ 10,555

Employee stock purchase plan 631 1,023 838

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Net operating loss expiration ( 2.9 ) ( 3.3 ) —

Executive stock-based compensation ( 1.3 ) — —

Other, net ( 1.5 ) ( 1.1 ) —

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Net deferred tax liability $ ( 4,146 ) $ ( 8,465 )

Deferred tax liability per balance sheet $ ( 4,329 ) $ ( 8,697 )

less deferred tax assets included in other long-term assets 183 232

Net deferred tax liability $ ( 4,146 ) $ ( 8,465 )

We evaluate a number of factors to determine the realizability of our deferred tax assets.

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Assessing the realizability of deferred tax assets is dependent upon several factors including historical financial results.

The net deferred tax assets have been partially offset by a valuation allowance because we have incurred losses since our inception.

The valuation allowance increased by $ 1.1 million and $ 4.0 million during 2020 and 2019, respectively, and increased by $ 6.9 million during 2018.

The changes in valuation allowance during 2020 and 2019 are mainly due to significant taxable losses and an increase in tax attributes.

The changes in valuation allowance during 2019 also includes a release of the valuation allowance against our deferred tax assets in Japan due to achievement of recent profitability and the expectation of future profitability in the jurisdiction, which decreased the valuation allowance by $ 294 thousand in 2019.

The net deferred tax assets have been partially offset by a valuation allowance because we have incurred losses in the U.S.

since our inception.

The valuation allowance increased by $ 9.9

million during 2021 and $ 1.1 million during 2020.

The changes in valuation allowance during 2021 and 2020 are mainly due to taxable losses and an increase in tax attributes.

The valuation allowances of $ 141.1 million and $ 131.2 million as of December 31, 2021 and 2020, respectively, primarily relate to temporary tax differences, net operating losses and research and development credits generated in the current and prior years.

We believe it is more likely than not that U.S.

federal and state of California deferred tax assets relating to temporary differences, net operating losses and research and development credits are not realizable.

As such, full valuation allowances have been applied against the deferred tax assets relating to jurisdictions of the federal U.S.

and the state of California.

federal and state deferred tax assets relating to temporary differences, net operating losses and research and development credits are not realizable.

As such, full valuation allowances have been applied against U.S.

federal and state deferred tax assets.

A reconciliation of the beginning and ending amount of the valuation allowance for the years ended December 31, 2021, 2020, and 2019 is as follows (in thousands):

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As of December 31, 2021, we had net operating loss carryforwards for U.S.

federal income tax purposes of $ 461.6 million, which expire beginning in 2021, and U.S.

federal research and development tax credits of $ 9.6 million, which expire in beginning in 2021 through 2040.

As of December 31, 2020, we had net operating loss carryforwards for state income tax purposes of $ 176.5 million, which expire beginning in 2021 through 2040, and California research and development tax credits of $ 12.5 million, which do not expire.

As of December 31, 2020, we had $ 3.8 million of foreign net operating loss carryforwards which do not expire.

federal income tax purposes of $ 508.2 million, of which $ 1.7 million expire in 2022, and U.S.

federal research and development tax credits of $ 10.0 million, of which $ 0.4 million expire in 2022 and the rest through 2041.

As of December 31, 2021, we had net operating loss carryforwards for state income tax purposes of $ 196.6 million, of which $ 0.4 million expire in 2022 and the rest through 2041, and California research and development tax credits of $ 13.3 million, which do not expire.

As of December 31, 2021, we had foreign net loss carryforwards of $ 3.4 million which can mostly be carried forward indefinitely.

Utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions.

The annual limitation may result in the expiration of net operating losses and credits before utilization.

In 2020, we continued the Section 382 analysis as historically performed through December 31, 2020 and determined that an ownership change did not occur during the current year.

In 2021, we continued the Section 382 analysis as historically performed through December 31, 2021 and, based on the information that was available to us, we do not believe that an ownership change occurred during the current year.

The aggregate changes in the balance of our gross unrecognized tax benefits during 2021, 2020, and 2019 were as follows (in thousands):

December 31, 2018 $ 7,344

Increases in balances related to tax positions during a prior period 155

Increases in balances related to tax positions taken during current period 354

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The uncertain taxes payable are recorded as a long-term liability on the balance sheet.

During 2021, we decreased our balances related to tax positions in the prior period to reflect a payment of $ 0.7 million 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.

As of December 31, 2021, there were $ 0.2 million of unrecognized tax benefits that, if recognized, would affect our effective tax rate.

We do not anticipate that our existing unrecognized tax benefits will significantly increase or decrease within the next 12 months.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law.

The CARES Act includes provisions relating to refundable payroll tax credits, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to the tax depreciation methods for qualified improvement property.

The CARES Act has an immaterial impact on our income taxes.

In accordance with U.S.

GAAP, the Company is allowed to make an accounting policy choice of either (1) treating taxes related to GILTI as a current period expense when incurred, or (2) factoring such amounts into the measurement of deferred taxes.

The Company has treated GILTI related taxes as a current period expense when incurred in the consolidated financial statements.

We file income tax returns in the United States, various states, and certain foreign jurisdictions.

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In 2019, the match was increased to up to $ 3,000 annually.

Employer matching contributions to the 401(k) plan were $ 0.6 million for the years ended December 31, 2020 and 2019, and $ 0.4 million for the year ended December 31, 2018.

Employer matching contributions to the 401(k) plan were $ 0.6 million for the years ended December 31, 2021, 2020, and 2019.

Information About Geographic Areas

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Most of our principal operations, other than manufacturing, and our decision-making functions are located at our corporate headquarters in the United States.

A summary table of our total revenue by geographic areas of our customers and by product and services for the years ended December 31, 2020, 2019 and 2018 is included in Note 6 to the consolidated financial statements.

Sales to customers in the United States represented $ 72.0 million, or 52 %, of total revenues for the year ended December 31, 2020.

Sales to customers in the United States represented $ 43.4 million, or 37 %, of total revenues for the year ended December 31, 2019 and $ 48.1 million, or 43 %, for the year ended December 31, 2018.

Sales to customers in China were less than 10 % of total revenues for the year ended December 31, 2020.

Sales to customers in China represented $ 15.4 million, or 13 %, of total revenues for year ended December 31, 2019, and $ 14.0 million, or 12 %, of total revenues for 2018.

Except for China, no other foreign country or jurisdiction had sales in excess of 10% of our total revenue during the years 2020, 2019 and 2018.

No individual customer represented more than 10% of our t otal revenues for the fiscal years ended December 31, 2020, 2019, and 2018 respectively.

Revenues from our five largest customers were 23 % for the year ended December 31, 2020 and 17 % for both the years ended December 31, 2019 and 2018.

A summary table of our revenue by geographic areas of our customers and by product and services for the years ended December 31, 2021, 2020 and 2019 is included in Note 6 to the consolidated financial statements.

Revenue from customers in the United States represented $ 60.2 million, or 46 %, of total revenues for the year ended December 31, 2021.

Revenue from domestic customers represented $ 72.0 million, or 52 %, of total revenues for the year ended December 31, 2020 and $ 43.4 million, or 37 %, for the year ended December 31, 2019.

Revenue from customers in China were less than 10 % of total revenues for the year ended December 31, 2021 and 2020.

Revenue from customers in China represented $ 15.4 million, or 13 %, of total revenues for the year ended December 31, 2019.

With the exception of China, no other foreign country or jurisdiction had revenue in excess of 10% of our total revenue during the years 2021, 2020 and 2019.

No individual customer represented more than 10% of our t otal revenues for the fiscal years ended December 31, 2021, 2020, and 2019.

Revenues from our five largest customers were 23 % for the both the years ended December 31, 2021 and 2020, and 17 % for 2019.

We had long-lived assets consisting of property and equipment, net of accumulated depreciation, and operating lease ROU assets, net of accumulated amortization, in the following geographic areas for each year presented (in thousands):

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Total $ 65,153 $ 55,645

The increase in the long-lived assets for the United States as of December 31, 2020 compared to the prior year end is due to a new ten-year lease for our South San Francisco headquarters (see Note 10).

The increase in long-lived assets in Singapore is attributable to capital expenditures funded by the NIH Contract (see Note 4).

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As of December 31, 2021, these commitments were approximately $ 22.0 million.

We have entered into several license and patent agreements.

Under these agreements, we pay annual license maintenance fees, non-refundable license issuance fees, and royalties as a percentage of net sales for the sale or sublicense of products using the licensed technology.

Future payments related to these license agreements have not been included in the contractual obligations table above as the period of time over which the future license payments will be required to be made, and the amount of such payments, are indeterminable.

We do not expect the license payments to be material in any particular year.

Indemnifications

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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 intends to file a motion to dismiss the complaint, which motion is currently due to be filed in early April 2021.

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

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.

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 and, on February 14, 2022, the Court granted defendants’ motion and dismissed the second amended complaint with prejudice.

The plaintiff has 30 days following the Court’s entry of judgment to file an appeal.

We believe the claims alleged in the complaint lack merit and, should an appeal be filed, 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.

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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.

Quarterly Results of Operations (Unaudited)

Selected quarterly results of operations for the years ended December 31, 2020 and 2019 are as follows (in thousands, except for per share amounts):

Quarter Second

Quarter Third

Quarter Fourth

Total revenue $ 27,617 $ 26,058 $ 39,861 $ 44,608

Product and service gross profit $ 13,002 $ 11,825 $ 20,799 $ 22,079

Net loss $ ( 15,980 ) $ ( 13,015 ) $ ( 5,999 ) $ ( 18,026 )

Net loss per share, basic and diluted $ ( 0.23 ) $ ( 0.18 ) $ ( 0.08 ) $ ( 0.24 )

Quarter Second

Quarter Third

Quarter Fourth

Total revenue $ 30,111 $ 28,196 $ 26,496 $ 32,440

Product and service gross profit $ 16,990 $ 15,363 $ 13,838 $ 17,538

Net loss $ ( 25,465 ) $ ( 13,753 ) $ ( 12,887 ) $ ( 12,685 )

Net loss per share, basic and diluted $ ( 0.44 ) $ ( 0.20 ) $ ( 0.19 ) $ ( 0.18 )

Subsequent Event

On February 19, 2021, we and the National Institutes of Health entered into a modification of the NIH Contract (see Note 4) (the Modification).

The Modification revised the milestones under the NIH Contract to include, in addition to the Advanta Dx SARS-CoV-2 RT-PCR Assay, the development and manufacture of a cartridge-based COVID-19 assay designed to provide a more integrated sample-to-answer workflow.

The Modification also extended the period of performance under the NIH Contract through September 30, 2021.

The Modification did not change the total NIH Contract value of up to approximately $ 34.0 million based upon our achievement of milestones.

On January 23, 2022, we entered into (i) a Loan Agreement (the Casdin Loan Agreement) with Casdin Private Growth Equity Fund II, L.P.

and Casdin Partners Master Fund, L.P.

(collectively, Casdin) and (ii) a Loan Agreement (the Viking Loan Agreement, and together with the Casdin Loan Agreement, the Bridge Loan Agreements) with Viking Global Opportunities Illiquid Investments Sub-Master LP and Viking Global Opportunities Drawdown (Aggregator) LP (collectively, Viking and, together with Casdin, the Purchasers and each, a Purchaser).

Each Bridge Loan Agreement provides for a $ 12.5 million term loan to us (each, a Bridge Loan and collectively, the Bridge Loans).

Subject to approval by our stockholders, upon the issuance of the shares of Series B Preferred Stock (as defined below) pursuant to the Purchase Agreements (as defined below), the Bridge Loans will be automatically converted into shares of Series B-1 Preferred Stock (as defined below) or Series B-2 Preferred Stock (as defined below), as applicable, in accordance with the terms of the Bridge Loan Agreements.

The Bridge Loans were fully drawn on January 24, 2022.

The proceeds of the Bridge Loans may be used for working capital and general corporate purposes.

Also on January 23, 2022, we entered into separate Series B Convertible Preferred Stock Purchase Agreements (the Purchase Agreements) with each of the Purchasers pursuant to which, among other things, at the closing of the transactions contemplated thereby, and on the terms and subject to the conditions set forth therein, including the approval of our stockholders, we will issue and sell an aggregate of $ 225 million of convertible preferred stock, consisting of:

(i) 112,500 shares of our Series B-1 Convertible Preferred Stock, par value $ 0.001 per share (the Series B-1 Preferred Stock), at a purchase price of $ 1,000.00 per share to Casdin, and (ii) 112,500 shares of our Series B-2 Convertible Preferred Stock, par value $ 0.001 per share (the Series B-2 Preferred Stock, and together with the Series B-1 Preferred Stock, the Series B Preferred Stock) at a purchase price of $ 1,000.00 per share to Viking (clauses (i) and (ii), the Preferred Equity Financing, and together with the issuance of shares of Series B Preferred Stock in connection with the conversion of the Bridge Loans, the Private Placement Issuance).

The Series B Preferred Stock to be purchased by Casdin and Viking pursuant to the Purchase Agreements is in addition to any Series B Preferred Stock to be issued upon conversion of outstanding amounts under the Bridge Loan Agreements.

The proceeds of the Preferred Equity Transactions will be used by us for expenses related to the Preferred Equity Transactions, as well as working capital, general corporate purposes and merger and acquisition opportunities that we may identify from time to time.

In connection with the Private Placement Issuance, we will change our name to “Standard BioTools Inc.” and Dr.

Michael Egholm will be appointed as the Company’s President and Chief Executive Officer and as a member of our Board of Directors (the Board), each occurring upon the closing of the transactions contemplated by the Purchase Agreements (Closing).

Egholm will succeed Chris Linthwaite, who will continue as our Chief Executive Officer until the earlier of the Closing or May 15, 2022.

The Closing is subject to customary closing conditions for a transaction of this nature, including approval by our stockholders of the issuance of the Series B Preferred Stock in connection with the Private Placement Issuance.

Each Private Placement Issuance is also conditioned on the substantially contemporaneous consummation of the other Private Placement Issuance.

Our Board has called a special meeting to be held on March 25, 2022 (the Special Meeting) to ask our stockholders to consider, vote upon and approve (i) a proposal to amend our Eighth Amended and Restated Certificate of Incorporation (the Charter) to, among other things, increase the number of shares of common stock, par value $ 0.001 per share, (the Common Stock) that we are authorized to issue from two hundred million ( 200,000,000 ) shares to four hundred million ( 400,000,000 ) shares and to change our name to Standard BioTools Inc.

(together, the Charter Amendment Proposal);

and (ii) to approve the issuance of (A) the Series B-1 Preferred Stock and the Series B-2 Preferred Stock pursuant to the Purchase Agreements, (B) the Series B-1 Preferred Stock and the Series B-2 Preferred Stock issuable pursuant to the terms of the Bridge Loan Agreements and (C) the Common Stock issuable upon the conversion of the Series B Preferred Stock (clauses (A) through (C), the Private Placement Issuance Proposal).

The Private Placement Issuance Proposal is conditioned on the approval of the Charter Amendment Proposal.

The Charter Amendment Proposal is conditioned on the approval of the Private Placement Issuance Proposal.

If both proposals do not receive the requisite vote for approval, neither the Charter Amendment Proposal nor the Private Placement Issuance Proposal will take effect.

The parties have agreed that they will not be obligated to close the Private Placement Issuance if the Charter Amendment Proposal has not been approved at the Special Meeting.

If the Charter Amendment Proposal and the Private Placement Issuance Proposal are not approved by our stockholders at the Special Meeting or the Purchase Agreements are otherwise terminated, then the Bridge Loans will become convertible, at each lender’s option, into Common Stock at an initial conversion rate of 352.1126 shares of Common Stock per $1,000 of conversion amount, subject to the cap set forth in the Bridge Loan Agreements.

The conversion rate is subject to customary adjustments as set forth in the Bridge Loan Agreements.

The Bridge Loans bear interest (i) from and including the effective date of the Bridge Loan Agreements to but excluding March 1, 2022, at 10 %, (ii) from and including March 1, 2022 to but excluding June 1, 2022, at 12 %, (iii) from and including June 1, 2022 to but excluding September 1, 2022, at 14 %, and (iv) from and including September 1, 2022 and thereafter, at 16 %.

Interest accrues daily and is payable in kind by adding the accrued interest to the outstanding principal amount on the last date of each month.

The Bridge Loans mature on the 91st calendar day after the latest maturity date of the loans borrowed under our Loan and Security Agreement, dated as of August 2, 2018, with Silicon Valley Bank, and the principal, together with accrued and unpaid interest, is due on the maturity date.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data