What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-07 compared with 2020-11-09 · 206 added, 374 removed, 557 unchanged (51% of the section changed)

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(In thousands)

September 30, December 31,

March 31, December 31,

Current assets:

Cash and cash equivalents $ 49,744 $ 68,520

Short-term investments — 36,978

Accounts receivable (net of allowances of $ 324 and $ 6 , at September 30, 2020 and December 31, 2019, respectively)

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

15,412 25,423

Grant receivable 7,456 —

Inventories 19,560 13,884

Inventories, net 21,892 19,689

Prepaid expenses and other current assets 9,279 4,031

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Stockholders’ equity:

Preferred stock, $ 0.001 par value, 10,000 shares authorized, no shares issued and outstanding at either September 30, 2020 or December 31, 2019

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

Common stock:

$ 0.001 par value, 200,000 shares authorized at September 30, 2020 and December 31, 2019;

74,115 and 69,956 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

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

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

Additional paid-in capital 818,776 815,624

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(In thousands, except per share amounts)

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

2020 2019 2020 2019

Three Months Ended March 31,

Product revenue $ 24,728 $ 18,981

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Interest expense ( 887 ) ( 900 )

Loss from extinguishment of debt — — — ( 9,000 )

Other income (expense), net 107 205 ( 248 ) 920

Other expense, net ( 285 ) ( 818 )

Loss before income taxes ( 20,492 ) ( 16,660 )

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(In thousands)

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

2020 2019 2020 2019

Three Months Ended March 31,

Net loss $ ( 18,821 ) $ ( 15,980 )

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Issuance of restricted stock, net of shares withheld for taxes, and other 420 — ( 525 ) — — ( 525 )

Cumulative-effect of new accounting standard for Topic 326 Credit Losses

— — — — ( 100 ) ( 100 )

Stock-based compensation expense — — 3,677 — — 3,677

Acquisition of InstruNor AS 485 1 2,048 — — 2,049

Net loss — — — — ( 18,821 ) ( 18,821 )

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

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

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

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

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

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

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

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

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

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

Equity issuance costs — — ( 180 ) — — ( 180 )

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

Net loss — — — — ( 5,999 ) ( 5,999 )

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

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

See accompanying notes

FLUIDIGM CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

Common Stock Additional

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

Issuance of common stock on bond conversion 19,460 19 133,279 — — 133,298

Issuance of restricted stock, net of shares withheld for taxes, and other 255 — ( 146 ) — — ( 146 )

Issuance of common stock from option exercises 53 — 255 — — 255

Cumulative-effect of new accounting standard for Topic 326 Credit Losses — — — — ( 100 ) ( 100 )

Stock-based compensation expense — — 2,364 — — 2,364

Acquisition of InstruNor AS 485 1 2,048 — — 2,049

Net loss — — — — ( 15,980 ) ( 15,980 )

Other comprehensive income, net of tax — — — 10 — 10

Other comprehensive loss, net of tax — — — ( 303 ) — ( 303 )

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

Issuance of restricted stock, net of shares withheld for taxes, and other 183 — ( 325 ) — — ( 325 )

Issuance of common stock from option exercises 130 — 793 — — 793

Issuance of common stock under ESPP 96 — 641 — — 641

Stock-based compensation expense — — 2,985 — — 2,985

Net loss — — — — ( 13,753 ) ( 13,753 )

Other comprehensive income, net of tax — — — 54 — 54

Balance as of June 30, 2019 69,400 $ 69 $ 771,263 $ ( 623 ) $ ( 598,069 ) $ 172,640

Issuance of restricted stock, net of shares withheld for taxes, and other 149 1 ( 70 ) — — ( 69 )

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

Stock-based compensation expense — — 3,055 — — 3,055

Net loss — — — — ( 12,887 ) ( 12,887 )

Other comprehensive income (loss), net of tax — — — ( 135 ) — ( 135 )

Balance as of September 30, 2019 69,550 $ 70 $ 774,249 $ ( 758 ) $ ( 610,956 ) $ 162,605

See accompanying notes

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(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities

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

Depreciation and amortization 2,988 3,484

Stock-based compensation expense 3,677 2,366

Amortization of developed technology 2,983 2,968

Depreciation and amortization 934 1,092

Amortization of debt discounts, premiums and issuance costs 132 140

Lease amortization 151 380

Loss on extinguishment of debt — 9,000

Provision for excess and obsolete inventory 315 195

Loss on disposal of property and equipment 191 52

Other non-cash items 12 ( 116 )

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Accounts receivable, net 9,843 4,730

Inventories ( 6,773 ) ( 3,672 )

Inventories, net ( 2,896 ) ( 2,280 )

Prepaid expenses and other assets ( 2,763 ) 112

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Acquisition, net of cash acquired — ( 5,154 )

Purchases of investments — ( 52,719 )

Proceeds from RADx grant 11,151 —

Proceeds from sale of investments 5,010 —

Proceeds from NIH Contract 2,000 —

Proceeds from maturities of investments — 23,644

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Financing activities

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

Payment of debt and equity issuance costs ( 509 ) ( 128 )

Proceeds from exercise of stock options 450 1,049

Proceeds from stock issuance from ESPP 645 641

Repayment of long-term debt ( 501 ) —

Payments for taxes related to net share settlement of equity awards and other ( 525 ) ( 146 )

Net cash provided by financing activities 20,425 1,006

Payment of debt issuance costs — ( 357 )

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

Effect of foreign exchange rate fluctuations on cash and cash equivalents 74 ( 331 )

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Cash paid for income taxes, net of refunds $ 1,200 $ 87

Non-cash right-of-use assets and lease liabilities $ — $ 35,465

Asset retirement obligations $ 324 $ 303

See accompanying notes

See accompan ying notes

FLUIDIGM CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

March 31, 2021

Description of Business

Fluidigm Corporation (the Company, Fluidigm, we, our or us) creates, manufactures, and markets technologies and tools for life sciences research, including preparatory and analytical instruments for Mass Cytometry, PCR, Library Prep, Single Cell Genomics, and consumables, including integrated fluidic circuits (IFC), assays, and reagents.

Our focus is on the most pressing needs in translational and clinical research, including infectious disease, cancer, immunology and immunotherapy.

We sell our instruments, consumables and services to academic institutions, clinical laboratories, and contract research organizations, as well as biopharmaceutical, biotechnology, and agricultural biotechnology companies.

Fluidigm Corporation (the Company, Fluidigm, we, our or us) improves life by driving meaningful insights in health and disease.

Our innovative technologies explore the biological complexities of disease to advance human health through research, diagnostics and clinical applications.

We create, manufacture, and market a range of products and services, including instruments, consumables, reagents and software that are used by researchers and clinical labs worldwide.

Our customers are leading academic and government laboratories, as well as pharmaceutical, biotechnology, plant and animal research organizations, and clinical laboratories worldwide.

The Company was formerly known as Mycometrix Corporation and changed its name to Fluidigm Corporation in April 2001.

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Basis of Presentation and Consolidation

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

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

generally accepted accounting principles (U.S.

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

As of September 30, 2020, we had wholly owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, the United Kingdom, China, Germany and Norway.

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

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 condensed consolidated statements of income and condensed consolidated statements of cash flows were reclassified to conform with the current period presentation.

Certain prior period amounts in the condensed consolidated financial statements were reclassified to conform with the current period presentation.

These reclassifications were immaterial and did not affect prior period total assets, total liabilities, stockholders’ equity, total revenue, total costs and expenses, loss from operations or net loss.

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

The condensed consolidated results of operations for the nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year or for any other year or interim period.

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

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

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The preparation of financial statements in accordance with U.S.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

We base our estimates on historical experience and on various other assumptions believed to be reasonable, which together form the basis for making judgments about the carrying values of assets and liabilities.

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

We assessed certain accounting matters that generally require consideration of forecasted financial information in the context of information available to us and the unknown impact of COVID-19 as of September 30, 2020.

We assessed certain accounting matters that generally require consideration of forecasted financial information, including the unknown impact of COVID-19 as of March 31, 2021.

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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We generate revenue primarily from the sale of our products and services.

Product revenue is derived from the sale of instruments and consumables, including IFCs, assays and reagents.

Service revenue is 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.

Product revenue is derived from the sale of instruments and consumables, including integrated fluidic circuits (IFCs), assays and reagents.

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

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

Revenue is reported net of any sales, use and value-added taxes we collect from customers as required by government authorities.

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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 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 may 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.

We also generate revenue from development or collaboration agreements that do not include upfront or milestone-based payments and generally recognize revenue on these types of agreements based on the timing of development activities.

Other Revenue

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We receive grants from various entities to perform research and development activities over contractually defined periods.

Grant revenue is not accounted for under ASC 606 Revenue from Contracts with Customers, as the grant agreement is not with a customer.

As there is no authoritative U.S.

GAAP guidance for grants awarded to for-profit entities, we have applied the guidance in ASC 958 Not-for-Profit Entities by analogy.

Revenue is generally recognized provided that the conditions under which the grants were provided have been met and any remaining performance obligations are perfunctory.

Contract Costs

Incremental sales commission costs incurred to obtain instrument service contracts are capitalized and amortized to selling, general and administrative expense over the life of the contract, which is generally one to three years .

As a practical expedient, we expense sales commissions associated with product support services that are delivered in less than one year as they are incurred.

Sales commissions associated with the sale of products are expensed as they are incurred.

To date, capitalized contract costs have been immaterial.

Product Warranties

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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, determining the transaction price and progress towards completion on development arrangements and estimating the future amount of our warranty obligations.

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.

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

One customer from whom we derived development revenue exceeded 10 % of revenue for the three and nine months ended September 30, 2020.

No other customer represented more than 10% of total revenue for the three and nine months ended September 30, 2020 or 2019.

Including the development revenue, revenues from our five largest customers were 31 % and 25 %

of total revenue for the three months ended September 30, 2020 and 2019, respectively.

Revenues from our five largest customers were 23 % and 20 % of total revenue for the nine months ended September 30, 2020 and 2019, respectively.

There was no single customer that represented more than 10% of total accounts receivable at September 30, 2020, or December 31, 2019.

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

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

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

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

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

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We have taken a portfolio approach for our vehicle leases by country.

Goodwill, Intangible Assets and Other Long-Lived Assets

Business Combinations, Goodwill, Intangible Assets and Other Long-Lived Assets

We have completed acquisitions of businesses in the past and may acquire additional businesses or technologies in the future.

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

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

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

Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies and estimates of future revenue.

Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of net assets acquired.

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

There were no indicators of impairment in 2020 or for the three months ended March 31, 2021.

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

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

The definitive contract, which amended the letter contract we entered

into with the NIH in July 2020 (collectively, the NIH Contract), has a total value of up to $ 34.0 million upon the achievement of certain conditional milestones.

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

of certain conditional milestones.

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

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GAAP on accounting for government assistance to for-profit business entities, we applied International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, by analogy when accounting for the NIH Contract payments to Fluidigm.

The NIH Contract proceeds meet the definition of grants related to assets as the primary condition for the payments is to fund the purchase and construction of longer-term assets to scale up production capacity.

The NIH Contract proceeds used for production capacity expansion meet the definition of grants related to assets as the primary purpose for the payments is to fund the purchase and construction of capital assets to scale up production capacity.

Under IAS 20, government grants related to assets are presented in the statement of financial position either by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset.

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

We record the NIH Contract proceeds as deferred income.

Proceeds used for capital expenditures will be amortized over the period of depreciation for the assets as a reduction of depreciation expense.

Any portion of the proceeds used to reimburse research and development expense are recorded as a reduction of those expenses incurred to date.

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

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

Convertible Notes

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

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

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

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

We recorded a loss of $ 9.0 million on the retirement of the 2018 Notes.

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 February 2014, we closed an underwritten public offering of 2.75 % Senior Convertible Notes due 2034 (2014 Notes).

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

Most 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.

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

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

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

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

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

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

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

The components of accumulated other comprehensive loss, net of tax, for the three and nine months ended September 30, 2020 are as follows (in thousands):

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

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

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

Other comprehensive income (loss) 109 ( 33 ) 76

Ending balance at June 30, 2020 $ ( 812 ) $ 3 $ ( 809 )

Other comprehensive income (loss) 523 ( 3 ) 520

Ending balance at September 30, 2020 $ ( 289 ) $ — $ ( 289 )

Immaterial amounts of unrealized gains and losses have been reclassified into the condensed consolidated statement of operations for the three and nine months ended September 30, 2020 and 2019.

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

Net Loss per Share

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The following potentially dilutive common shares were excluded from the computations of diluted net loss per share for the periods presented because including them would have been anti-dilutive (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Stock options, restricted stock units and performance awards 6,974 6,652

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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.

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

Simplifying the Accounting for Income Taxes.

The amendments in this update improve consistent application of and simplify U.S.

GAAP for Topic 740 by clarifying and amending existing guidance for, among other items, intra-period allocation, reporting tax law changes and losses in interim periods, state and local taxes not fully based on income and recognition of deferred tax liability related to certain transactions.

There is also new guidance related to consolidated group reporting and tax impacts resulting from business combinations.

The new guidance is effective for fiscal years beginning after December 15, 2020.

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

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 is 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 are 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 condensed consolidated balance sheet.

Recent Accounting Pronouncements

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

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

Simplifying the Accounting for Income Taxes.

The amendments in this update improve consistent application of and simplify U.S.

There is also new guidance related to consolidated group reporting and tax impacts resulting from business combinations.

The new guidance is effective for fiscal years beginning after December 15, 2020.

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

Business Combination

On January 17, 2020, we completed the acquisition of all of the outstanding shares of InstruNor AS, a privately held Norwegian company (InstruNor).

InstruNor is a provider of the only fully integrated sample preparation system for flow and mass cytometry.

The acquisition of InstruNor supports our entry into the sample preparation market for cytometry analysis and expands our capabilities to include fully automated sample preparation for flow and mass cytometry.

The value of this technology is reflected in the intangible asset for developed technology.

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

The purchase price of $ 7.2 million included approximately $ 5.2 million in cash and 485,451 shares of our common stock valued at the closing price on the effective date of $ 4.22 .

A summary of the net cash flows is summarized below (in thousands):

January 17, 2020

Cash consideration paid to former equity holders $ 5,165

cash and cash equivalents acquired ( 11 )

Acquisition of InstruNor, net of cash acquired $ 5,154

The acquisition was accounted for in accordance with ASC 805, Business Combinations.

The assets acquired and liabilities assumed were recorded at their estimated fair values at the InstruNor acquisition date.

Goodwill of $ 2.2 million was calculated as the purchase price less the fair value of the net assets acquired as follows (in thousands):

January 17, 2020

Purchase price:

Cash consideration paid on closing to former equity holders $ 5,165

Non-cash consideration common shares 2,049

Total purchase price $ 7,214

Assets acquired:

Cash and cash equivalents $ 11

Accounts receivable 32

Other receivables 13

Inventories, net 153

Developed technology 5,380

Liabilities assumed:

Accounts payable 14

Other current liabilities 15

Deferred tax liability, net 566

Fair value of identifiable net assets acquired $ 4,994

Goodwill acquired on acquisition $ 2,220

In July 2020, we entered into a letter contract with the National Institutes of Health (NIH) for a project under the NIH Rapid Acceleration of Diagnostics (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.

On September 28, 2020, we executed a definitive contract with the NIH as an amendment to the letter contract (collectively, the NIH Contract).

In 2020, we were awarded the NIH Contract under the RADx program to support the expansion of our production capacity and throughput capabilities for COVID-19 testing with our microfluidics technology .

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

Proceeds from the NIH Contract will be used primarily to expand production capacity and product throughput capabilities for COVID-19 testing with Fluidigm microfluidics technology.

We expect to complete the NIH Contract by the end of 2021.

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

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

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

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

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

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

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

The following table summarizes the activity under the NIH Contract through September 30, 2020 (in thousands):

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

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

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

March 31, 2021 December 31, 2020

Total value of milestones reasonably assured $ 29,936 $ 25,436

Amounts applied against research and development expenses 383

Cumulative amounts applied against operating expenses ( 1,951 ) ( 1,488 )

Total deferred grant income $ 27,985 $ 23,948

March 31, 2021 December 31, 2020

Short-term deferred grant income $ 5,818 $ 2,912

Long-term deferred grant income 22,167 21,036

Deferred grant income $ 27,985 $ 23,948

March 31, 2021 December 31, 2020

Total value of milestones reasonably assured $ 29,936 $ 25,436

Funding received 11,151

Grant receivable from RADx $ 7,456

Cumulative funding received ( 27,436 ) ( 25,436 )

Grant receivable from NIH Contract $ 2,500 $ —

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

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

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

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

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

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

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, which is expected to be completed in 2021.

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

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

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

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

Disaggregation of Revenue

The following table presents our revenue for the three and nine months ended September 30, 2020 and 2019, respectively, based on geographic area and by source (in thousands):

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

2020 2019 2020 2019

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

Three Months Ended March 31,

Geographic Markets:

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Total revenue $ 32,794 $ 27,617

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

2020 2019 2020 2019

Three Months Ended March 31,

Instruments $ 7,708 $ 9,471

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Other revenue:

License and royalty revenue — — 3,163 —

License revenue — 3,100

Grant revenue 300 350

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

During the nine months ended September 30, 2020, $ 8.8 million of the opening balance was recognized as revenue and $ 9.9 million of net additional advance payments were received from customers, primarily associated with instrument service contracts.

At September 30, 2020, we reported $ 21.1 million of deferred revenue.

The following table summarizes the expected timing of revenue recognition for unfulfilled performance obligations associated with instrument service contracts that were partially completed at September 30, 2020 (in thousands):

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

At March 31, 2021, we reported $ 21.4 million of deferred revenue.

Fiscal Year Expected Revenue (1)

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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 January 2020, we recognized $ 2.2 million (Euro 2.0 million) of goodwill from the InstruNor acquisition and $ 5.4 million (Euro 4.9 million) of developed technology.

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

dollar value of these assets will fluctuate as foreign exchange rates change.

We are amortizing InstruNor developed technology over 8.0 years.

Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable.

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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.

This assessment included an update of the qualitative and quantitative factors affecting our business.

As a result of this assessment, we determined that a triggering event had occurred and a quantitative impairment test was performed.

As a result of this quantitative analysis, we determined that the fair values of our goodwill and developed technology intangibles were not less than their carrying values and no impairment was recognized.

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

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

September 30, 2020

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

March 31, 2021

Gross Amount Accumulated Amortization Net Weighted-Average Amortization Period

Developed technology $ 117,689 $ ( 80,689 ) $ 37,000 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

Patents and licenses $ 11,274 $ ( 9,256 ) $ 2,018 7.5 years

Total amortization expense for the three months ended September 30, 2020 and 2019 was $ 3.2 million and $ 3.0 million, respectively.

Amortization of intangibles was $ 9.6 million and $ 9.2 million for the nine months ended September 30, 2020 and 2019, respectively.

Based on the carrying value of intangible assets, net, as of September 30, 2020, the amortization expense is expected to be as follows (in thousands):

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

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

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

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Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands):

September 30, 2020 December 31, 2019

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

March 31, 2021 December 31, 2020

Cash and cash equivalents $ 49,744 $ 68,520

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Total cash, cash equivalents and restricted cash $ 50,760 $ 69,536

Short-term restricted cash of approximately $ 15 thousand is included in prepaid expenses and other current assets and $ 1.0 million of non-current restricted cash is included in other non-current assets in the condensed consolidated balance sheet as of September 30, 2020.

Inventories consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands):

September 30, 2020 December 31, 2019

Short-term restricted cash of approximately $ 16 thousand is included in prepaid expenses and other current assets and $ 1.0 million of non-current restricted cash is included in other non-current assets in the condensed consolidated balance sheet as of March 31, 2021.

Inventories, net

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

March 31, 2021 December 31, 2020

Raw materials $ 9,846 $ 8,292

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Finished goods 10,963 10,183

Total inventories $ 19,560 $ 13,884

Total inventories, net $ 21,892 $ 19,689

Property and Equipment, net

Property and equipment consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands):

September 30, 2020 December 31, 2019

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

March 31, 2021 December 31, 2020

Computer equipment and software $ 4,276 $ 4,240

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Property and equipment, net $ 23,784 $ 17,531

Activity for our warranty accrual for the nine months ended September 30, 2020 and 2019, which is included in other accrued liabilities, is summarized below (in thousands):

Nine Months Ended September 30,

Accrued Compensation and Related Benefits

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

March 31, 2021 December 31, 2020

Accrued incentive compensation $ 2,350 $ 7,842

Accrued vacation 3,634 3,367

Accrued payroll taxes and other 2,709 2,578

Accrued compensation and related benefits $ 8,693 $ 13,787

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

Three Months Ended March 31,

Beginning balance $ 1,663 $ 1,390

Accrual for current period warranties 677 912

Accrual (release) for current period warranties ( 150 ) 227

Warranty costs incurred ( 236 ) ( 162 )

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The 2014 Notes will mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2014 Notes.

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

As of September 30, 2020, there is $ 1.1 million aggregate principal of the 2014 Notes outstanding.

Repurchase provisions for the 2014 Notes permit the holders of the 2014 Notes to require us to repurchase all or a portion of their 2014 Notes on each of February 6, 2021, February 6, 2024, and February 6, 2029, at a repurchase price in cash equal to 100 % of the principal amount of the 2014 Notes plus accrued and unpaid interest.

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

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

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

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

2018 Senior Convertible Notes (2018 Notes)

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

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 accrued interest at a rate of 2.75 % payable semi-annually.

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

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 converted 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.

prior to the maturity of the 2018 Notes, we could convert the 2018 Notes, in whole but not in part, into cash, shares of our common stock, or combination thereof, if the closing price of our common stock equaled or exceeded 110 % of the conversion price then in effect for a specified number of days.

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 the 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 the 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 represented the difference between the fair value of the bonds retired and their carrying costs.

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

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

2019 Senior Convertible Notes (2019 Notes)

In November 2019, we issued $ 55.0 million aggregate principal amount of 2019 Notes.

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

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

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

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 in the fourth quarter of 2019.

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

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

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

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

2.75 % 2014 Notes due 2034

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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 September 30, 2020 under the Revolving Credit Facility was $ 15.0 million.

There were no borrowings outstanding under the Revolving Credit Facility at September 30, 2020.

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

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

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 %.

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

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

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

a quarterly unused line fee based on the Borrowing Base.

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

In addition, the interest rate on outstanding loans under the Revolving Credit Facility was reduced by 0.25 %.

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 that, 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 at September 30, 2020.

We have operating leases for buildings, equipment and vehicles.

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

Supplemental balance sheet information related to leases was as follows as of September 30, 2020 and December 31, 2019 (in thousands, except for discount rate and lease term):

September 30, 2020 December 31, 2019

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

March 31, 2021 December 31, 2020

Operating lease right-of-use buildings $ 41,097 $ 41,132

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Weighted average discount rate per annum 12.0 % 11.9 %

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

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

The lease term is approximately ten years .

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

The following table presents the components of lease expense for the three and nine months ended September 30, 2020 and 2019, respectively (in thousands):

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

2020 2019 2020 2019

Operating lease cost (including variable costs) $ 2,501 $ 1,604 $ 7,012 $ 4,660

Variable costs including non-lease component $ 407 $ 748 $ 1,576 $ 2,051

Supplemental Cash Flow Information:

Cash paid for amounts included in the measurement of operating lease liabilities (included in net cash used in operating activities in thousands):

Nine Months Ended September 30,

Operating cash flows from operating leases $ 3,443 $ 3,068

Future minimum lease payments under commenced non-cancelable operating leases, which are as of September 30, 2020 as follows (in thousands):

Fiscal Year Minimum Lease Payments for Operating Leases

2020 (remainder of year) $ 1,802

Thereafter 39,254

Total future minimum payments $ 69,560

imputed interest ( 28,256 )

Total $ 41,304

Fair Value of Financial Instruments

The following tables summarize our cash and available-for-sale securities that were measured at fair value by significant investment category within the fair value hierarchy (in thousands):

September 30, 2020

March 31, 2021

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

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

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

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

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

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

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

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

There were no transfers between Level I and Level II measurements, and no changes in the valuation techniques used, during the nine months ended September 30, 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 nine months ended September 30, 2020 and 2019.

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.

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

Convertible Notes

In 2019, we significantly reduced the amount of our outstanding debt.

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

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

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

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

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

September 30, 2020 December 31, 2019

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

March 31, 2021 December 31, 2020

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

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In March 2020, we entered into an Open Market Sale Agreement (Sale Agreement) with Jefferies LLC (Jefferies) to sell shares of our common stock having aggregate sales proceeds of up to $ 50,000,000 , from time to time, through an “at-the-market” equity offering program under which Jefferies acts as sales agent.

During the third quarter of 2020, we sold 2.5 million shares of our common stock pursuant to the Sale Agreement, for aggregate gross proceeds of $ 20.9 million.

During the third quarter of 2020, we sold 2.5 million shares of our common stock pursuant to the Sale Agreement.

Our net proceeds from the sale of such shares of common stock were approximately $ 20.1 million, after deducting related expenses, including commissions of approximately $ 0.6 million and issuance costs of approximately $ 0.2 million.

InstruNor Acquisition

In January 2020, we completed the acquisition of all of the outstanding shares of InstruNor (see Note 3).

In January 2020, we completed the acquisition of all of the outstanding shares of InstruNor.

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

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 8).

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

At September 30, 2020, we had reserved shares of common stock for future issuance under equity compensation plans as follows:

No measurement period adjustments were made after January 2020 and the purchase price allocation has been finalized.

Common Shares Reserved

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

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

2011 Equity Incentive Plan 1,393 5,199 2,517

2011 Equity Incentive Plan 1,387 5,810 3,057

DVS Sciences Inc.

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1,612 5,362 5,442

The number of shares available for future issuance reflects performance share units at the maximum number of shares that could be issued under these awards.

Stock-Based Plans

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

2009 Equity Incentive Plan and 2017 Inducement Award 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.

In January 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 provided for the grant of equity-based awards on terms substantially similar to the 2011 Plan.

In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under the Inducement Plan were 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.

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.

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.

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

Activity under the various plans was as follows:

Restricted Stock Units :

Number of Units (in 000s) Weighted-Average

Number of Units

(in 000s) Weighted-Average

Grant Date Fair Value per Unit

Balance at December 31, 2020 4,862 $ 4.98

RSU granted 3,642 $ 3.95

RSU released ( 872 ) $ 7.30

RSU forfeited ( 305 ) $ 6.39

Balance as of September 30, 2020 5,016 $ 4.99

As of September 30, 2020, the unrecognized compensation costs related to outstanding unvested RSUs under our equity incentive plans were $ 22.0 million.

RSUs granted 72 $ 4.89

RSUs released ( 368 ) $ 4.84

RSUs forfeited ( 83 ) $ 4.53

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

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

We expect to recognize those costs over a weighted average period of 2.4 years.

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Options forfeited ( 23 ) $ 7.87

Balance as of September 30, 2020 1,626 $ 7.34 6.4 $ 2,514

Vested at September 30, 2020 1,259 $ 7.86 6.0 $ 1,799

Awards expected to vest at September 30, 2020 367 $ 5.56 7.9 $ 715

(1) Aggregate intrinsic value as of September 30, 2020 was calculated as the difference between the closing price per share of our common stock on the last trading day of September 30, 2020, which was $ 7.43 , and the exercise price of the options, multiplied by the number of in-the-money options.

As of September 30, 2020, the unrecognized compensation costs related to outstanding unvested options under our equity incentive plans were $ 1.1 million.

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

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

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

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

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

We expect to recognize those costs over a weighted average period of 1.3 years.

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

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

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

Activity under the TSR-based PSUs is as follows:

Number of Units (in 000s) Weighted-Average

Number of Units

(in 000s) Weighted-Average

Grant Date Fair Value per Unit

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PSU granted —

Performance adjustment for 2018 awards 21

PSU released ( 133 ) $ 10.09

PSU forfeited —

Balance at September 30, 2020 962 $ 9.74

As of September 30, 2020, the unrecognized compensation costs related to these awards were $ 4.6 million.

Balance at March 31, 2021 850 $ 9.69

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

We expect to recognize those costs over a weighted average period of 1.3 years.

Performance Stock Units with Performance Conditions.

During 2019, we also granted a PSU award under which the number of PSUs that ultimately vest is dependent on achieving certain discrete operational milestones between September 30, 2019 and December 31, 2020.

Activity to date under this PSU award is as follows:

Number of Units (in 000s) Weighted-Average

Grant Date Fair Value per Unit

Balance at December 31, 2019 64 $ 7.05

PSU granted — $ —

PSU released ( 4 ) $ 7.05

PSU forfeited ( 12 ) $ 7.05

Balance at September 30, 2020 48 $ 7.05

2017 Employee Stock Purchase Plan

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

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

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

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

2017 Employee Stock Purchase Plan (ESPP)

Our ESPP offers U.S.

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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 were 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 ESPP 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 the last day of the offering period.

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

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.

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.

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

Stock-based Compensation Expense

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

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

2020 2019 2020 2019

Three months ended March 31,

Restricted stock units, stock options and performance share units $ 3,473 $ 2,112

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

We recorded a tax benefit of $ 0.2 million and $ 2.1 million for the three and nine months ended September 30, 2020, respectively.

We recorded a tax benefit of $ 1.2 million and $ 2.3 million for the three and nine months ended September 30, 2019, respectively.

The benefits for all periods were primarily attributable to the tax benefit from the amortization of our acquisition-related deferred tax liabilities partially offset by tax provisions for our foreign operations and state minimum income taxes.

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

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

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

These benefits were partially offset by state minimum income taxes.

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

Federal statutory rate for the nine months ended September 30, 2020 and 2019, respectively, primarily due to maintaining a valuation allowance for most of our deferred tax assets, which primarily consist of net operating loss carryforwards.

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

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

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

For the three and nine months ended September 30, 2020, and 2019, respectively, we did not recognize any material interest or penalties related to uncertain tax positions.

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

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

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

The deferred tax assets have been offset by valuation allowances.

In the future we may release valuation allowances and recognize deferred tax assets in certain of our foreign subsidiaries depending on the achievement of future profitability in the relevant jurisdictions.

Domestic deferred tax assets have been offset by valuation allowances.

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

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The timing of recording a valuation allowance or the reversal of such valuation allowance is subject to objective and subjective factors that cannot be readily predicted in advance.

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 deprecation methods for qualified improvement property.

We are currently analyzing the impact of these changes and therefore, an estimate of the impact on income taxes, if any, is not yet available.

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 three and nine months ended September 30, 2020 and 2019 is included in Note 5 to the condensed consolidated financial statements.

Sales to customers in the United States represented $ 23.3 million, or 58 % of total revenues, and $ 50.7 million, or 54 % of total revenues, for the three and nine months ended September 30, 2020, respectively.

Sales to customers in the United States represented $ 10.5 million, or 40 % of total revenues, and $ 32.9 million, or 39 % of total revenues, for the three and nine months ended September 30, 2019, respectively.

No foreign country or jurisdiction had sales in excess of 10% of total revenues for the three months ended September 30, 2020 and 2019, except for China, which had total revenues of $ 3.9 million, or 15 % of total revenues for the three months ended September 30, 2019.

There was no foreign country or jurisdiction with sales in excess of 10% of our total revenues for the nine months ended September 30, 2020 or 2019, except for China, which had sales of $ 11.4 million, or 13 % of total revenues, for the nine months ended September 30, 2019.

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 $ 3.2 million and $ 6.2 million of development revenue from this agreement in the three and nine months ended September 30, 2020, respectively.

A summary table of our total revenue by geographic areas of our customers and by product and services for the three months ended March 31, 2021 and 2020 is included in Note 5 to the condensed consolidated financial statements.

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

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

Commitments and Contingencies

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In September 2020, a putative class action complaint alleging violations of the federal securities laws was filed against the Company (also naming our Chief Executive Officer and Chief Financial Officer as defendants) in the U.S.

District Court for the Northern District of California.

The complaint 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.

The litigation is in its early stages and the lead plaintiff has not yet been determined.

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

District Court for the Northern District of California (Reena Saintjermain, et al.

Fluidigm Corporation, et al).

The Court appointed a lead plaintiff and lead counsel in December 2020, and an amended complaint was filed on February 19, 2021.

The complaint, as amended, seeks unspecified damages on behalf of a purported class of persons and entities who acquired our common stock between February 7, 2019 and November 5, 2019 and alleges securities laws violations based on statements and alleged omissions made by the Company during such period.

The Company filed a motion to dismiss the complaint on April 5, 2021.

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

From time to time, we may be subject to various legal proceedings and claims arising in the ordinary course of business.

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

What changed 10-Q

Item 1. Financial Statements