STANDARD BIOTOOLS INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read together with our condensed consolidated financial statements and the notes to those statements included elsewhere in this Form 10-Q. This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act, that are based on our management’s beliefs and assumptions and on information currently available to our management. The forward-looking statements are contained principally in the section entitled “Risk Factors” and this Management’s Discussion and Analysis of Financial Condition and Results of Operations. Forward-looking statements include information concerning our possible or assumed future cash flow, revenue, sources of revenue and results of operations, cost of product revenue and product margin, operating and other expenses, unit sales and the selling prices of our products, business strategies, financing plans, expansion of our business, competitive position, industry environment, potential growth opportunities, market growth expectations, and the effects of competition and public health crises (including the COVID-19 pandemic) on our business. Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in Part II, Item 1A, “Risk Factors,” elsewhere in this quarterly report on Form 10-Q, and in our annual report on Form 10-K filed with the Securities and Exchange Commission (SEC). Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Form 10-Q. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. You should read this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. Fluidigm®, the Fluidigm logo, Access Array™, Advanta™, Biomark™, Bringing new insights to life™, C1™, Callisto™, Cell-ID™, CyTOF®, D3™, Delta Gene™, Direct™, Dynamic Array™, EP1™, EQ™, FC1™, Flex Six™, Helios™, High-Precision 96.96 Genotyping™, HTI™, Hyperion™, IMC™, Imaging Mass Cytometry™, Immune Profiling Assay™, Juno™, Maxpar®, MCD™, MSL®, Nanoflex™, Open App™, Pathsetter™, Polaris™, qdPCR 37K™, Script Builder™, Script Hub™, Singular™, SNP Trace™, and SNP Type™ are trademarks or registered trademarks of Fluidigm Corporation. Other service marks, trademarks and trade names referred to in this quarterly report on Form 10-Q are the property of their respective owners. ___________________________ Unless the context requires otherwise, references in this Form 10-Q to “Fluidigm,” the “Company,” “we,” “us,” and “our” refer to Fluidigm Corporation and its subsidiaries. Overview Fluidigm 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. Together with our customers, we strive to increase the quality of life for all. We distribute our systems through our direct sales force and support organizations located in North America, Europe, and Asia-Pacific, and through distributors or sales agents in several European, Latin American, Middle Eastern, and Asia-Pacific countries. Our manufacturing operations are located in Singapore and Canada. Our facility in Singapore manufactures our microfluidics instruments, which are assembled by our contract manufacturer located within our Singapore facility. All of our microfluidic products are fabricated at our Singapore facility. Our mass cytometry instruments, assays and reagents are manufactured at our facility in Canada. We also use U.S.-based third-party contract manufacturers for reagent manufacturing. Our total revenue for the three months ended March 31, 2021 was $32.8 million compared to $27.6 million for the three months ended March 31, 2020. Our total revenue was $138.1 million in 2020 and $117.2 million in 2019. We have incurred significant net losses since our inception in 1999 and, as of March 31, 2021, our accumulated deficit was $695.6 million. 25 Recent Developments The COVID-19 pandemic has given us an opportunity to demonstrate our product capabilities for diagnostics markets and build new accounts, while at the same time accessing a variety of external funding sources to support product development and innovation. Our response to the pandemic has driven more innovation, exposure of our products to new customers around the world, and increased consumables sales. As vaccines for the coronavirus have become available and the perceived threat of the pandemic recedes, the demand for our COVID-19 testing products has slowed, resulting in a corresponding decline in COVID-19 testing revenue in the first quarter of 2021, compared to the fourth quarter of 2020. As a result of these recent trends and ensuing uncertainties around COVID-19 testing, we now expect our revenue related to COVID-19 testing to further decline in each of the subsequent quarters in 2021 and have lowered our revenue expectations for this year. We expect the improving outlook on our base business (excluding COVID-19 revenues) to partially offset the effect of this decline but at the same time, we are also focused on cost containment and margin improvement and continue to look for alternative, cost-effective funding sources for new product development while mitigating cash usage. Despite the uncertainties around the demand for COVID-19 testing products, Fluidigm continues to remain focused on growing its business across multiple applications. To date, our solutions span the spectrum from discovery to diagnostics, and we see an avenue for our products to move deeper into clinical applications. We remain focused on bringing leading solutions, with a best-in-class value, throughput and accuracy, to our customers and the market. For additional information on the various risks posed by the COVID-19 pandemic, refer to Part II, Item 1A. Risk Factors of this Form 10-Q. Critical Accounting Policies, Significant Judgments and Estimates Our condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. 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 evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. Recent Accounting Changes and Accounting Pronouncements Adoption of New Accounting Guidance In November 2019, the FASB issued ASU 2019-12 Income Taxes (Topic 740)-Simplifying the Accounting for Income Taxes. The amendments in this update improve consistent application of and simplify GAAP for Topic 740 by clarifying and amending existing guidance for, among other items, intra-period allocation, reporting tax law changes and losses in interim periods, state and local taxes not fully based on income and recognition of deferred tax liability related to certain transactions. There is also new guidance related to consolidated group reporting and tax impacts resulting from business combinations. The new guidance is effective for fiscal years beginning after December 15, 2020. The adoption of the new guidance did not have a significant impact on our financial results. Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06 Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendment to this ASU reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification, which is expected to result in more convertible instruments being accounted for as a single unit, rather than being bifurcated between debt and equity. The new guidance is effective for fiscal years beginning after December 15, 2021. We are currently evaluating the impact of adoption on our condensed consolidated financial statements. 26 Results of Operations The following table presents our historical condensed consolidated statements of operations data for the three months ended March 31, 2021 and 2020, and as a percentage of total revenue for the respective periods (in thousands): Three Months Ended March 31, 2021 2020 Revenue: Total revenue $ 32,794 100 % $ 27,617 100 % Costs and expenses: Cost of product revenue 11,663 35 9,640 35 Cost of service revenue 2,090 6 1,525 6 Research and development 10,753 34 8,699 31 Selling, general and administrative 27,608 84 22,695 82 Total costs and expenses 52,114 159 42,559 154 Loss from operations (19,320) (59) (14,942) (54) Interest expense (887) (2) (900) (3) Other expense, net (285) (1) (818) (3) Loss before income taxes (20,492) (62) (16,660) (60) Income tax benefit 1,671 5 680 2 Net loss $ (18,821) (57) % $ (15,980) (58) % Revenue We generate revenue primarily from sales of our products and services, development agreements, license and royalty agreements, and grants. Our product revenue consists of sales of instruments and consumables. Consumables revenue are largely driven by the size of our installed base of instruments and the annual level of pull-through per instrument. Service revenue is linked to the sales and active installed base of our instruments as our service revenue primarily consists of post-warranty service contracts, preventive maintenance plans, instrument parts, installation and training. We sell our products to leading academic and government laboratories, as well as pharmaceutical, biotechnology, clinical, plant and animal research organizations and clinical laboratories worldwide. Development Revenue . 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 be completed in the second half of 2021. We recognized $1.5 million of development revenue from this agreement in the three months ended March 31, 2021 and cumulatively $10.3 million. We recognize revenue under the Development Agreement using an input method based on our costs incurred relative to the total expected cost which determines the extent of our progress toward satisfaction of our obligations under the agreement. Costs associated with the Development Agreement are recorded in research and development expense in the condensed consolidated statement of operations. Grant Revenue . We receive grants to perform research and development activities over contractually defined periods. Grant revenue in the current year is attributable to a grant agreement entered into in the second half of 2019, which is expected to end in the first half of 2021. Costs associated with grant agreements are recorded in research and development expense in the condensed consolidated statement of operations. License and Royalty Revenue . 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 of our intellectual property. The settlement is considered a multiple-element arrangement with each element accounted for individually. Accordingly, $3.1 million of the proceeds was recognized as license revenue and $0.4 million was offset against legal costs. One customer exceeded 10% of total 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 revenue for the three months ended March 31, 2020. No other customer represented more than 10% of total revenue for the three months ended March 31, 2021 or 27 2020. Revenues from our five largest customers were 27% of total revenue for the three months ended March 31, 2021 and, excluding the license agreement mentioned above, 15% of revenue for the three months ended March 31, 2020. There was no customer who represented more than 10% of total billed receivables as of March 31, 2021 and December 31, 2020. The following table presents our revenue by source for the three months ended March 31, 2021 and 2020, and as a percentage of total revenue for the respective periods (in thousands): Three Months Ended March 31, Year-over-Year Change 2021 2020 Revenue: Instruments $ 7,708 24 % $ 9,471 34 % (19) % Consumables 17,020 52 9,510 34 79 % Product revenue 24,728 76 18,981 68 30 % Service revenue 6,286 19 5,186 20 21 % Product and service revenue 31,014 95 24,167 88 28 % Development revenue 1,480 4 — — NA Grant revenue 300 1 350 1 (14) % License revenue — — 3,100 11 % (100) % Total revenue $ 32,794 100 % $ 27,617 100 % 19 % The following table presents our total revenue by geographic area of our customers and as a percentage of total revenue for the three months ended March 31, 2021 and 2020 (in thousands): Three Months Ended March 31, Year-over-Year Change 2021 2020 Americas $ 18,523 56 % $ 14,844 54 % 25 % EMEA 9,142 28 8,096 29 13 % Asia-Pacific 5,129 16 4,677 17 10 % Total revenue $ 32,794 100 % $ 27,617 100 % 19 % The Americas revenue includes revenue generated in the United States of $18.1 million and $14.1 million 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 and 2020. Total revenue . Total revenue increased by $5.2 million or 19%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020, driven primarily by higher product, service and development revenue, partially offset by lower license revenue. Product revenue increased primarily due to COVID-19-related applications which resulted in higher sales of microfluidics consumables. Americas revenues increased by $3.7 million, or 25%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. This increase includes $5.4 million of higher product and service revenue driven primarily by COVID-19-related opportunities. Americas revenues for the three months ended March 31, 2021 also includes $1.5 million of development revenue and $0.3 million of grant revenue. For the three months ended March 31, 2020, Americas revenues included $3.1 million of license revenue as part of a litigation settlement. In Asia Pacific, higher sales of microfluidics products and mass cytometry consumables were partially offset by lower sales of mass cytometry instruments. Increases in EMEA revenues reflect higher mass cytometry product and service revenues due to stronger instrument placements. A stronger Euro contributed 7 of the 13 percentage point increase in EMEA’s revenue during the three months ended March 31, 2021 and 2 of 28 the 19 percentage point increase in total revenues for the three months ended March 31, 2021 compared to the same period in 2020. Product and Service Revenue . The following tables present the split of product and service revenue between mass cytometry and microfluidic product categories and as a percentage of the respective category’s total product and service revenue for the respective periods presented (in thousands): Three Months Ended March 31, Year-over-Year Change 2021 2020 Mass cytometry: Instruments $ 4,965 35 % $ 7,548 50 % (34) % Consumables 4,575 33 % 3,903 27 % 17 % Total product revenue 9,540 68 % 11,451 77 % (17) % Service revenue 4,482 32 % 3,511 23 % 28 % Total product and service revenue $ 14,022 100 % $ 14,962 100 % (6) % Three Months Ended March 31, Year-over Year Change 2021 2020 Microfluidics: Instruments $ 2,743 16 % $ 1,923 21 % 43 % Consumables 12,445 73 % 5,607 61 % 122 % Total product revenue 15,188 89 % 7,530 82 % 102 % Service revenue 1,804 11 % 1,675 18 % 8 % Total product and service revenue $ 16,992 100 % $ 9,205 100 % 85 % Higher microfluidics instrument revenue was attributable to higher unit sales of Biomark and Juno instruments. Higher microfluidics consumables revenue was driven by increases in COVID-19 tests. Mass cytometry revenue was lower due to lower instrument volumes, and to a lesser extent, lower average unit selling prices, partially offset by higher consumables sales. We expect the average selling prices of our products to fluctuate over time based on market conditions, product mix, and currency fluctuations. Service plan revenues, which are recognized over the life of the service agreement and are not activity-dependent, drove nearly half of the increase in service revenues. As more customers were open during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, we are also seeing increases in parts and repair-related service revenues. Product and Service Cost, Gross Profit, and Margin Cost of product revenue includes manufacturing costs incurred in the production process, including component materials, labor and overhead, installation, packaging, and delivery costs. In addition, cost of product revenue includes amortization of developed technology and intangibles, royalty costs for licensed technologies included in our products, warranty, provisions for slow-moving and obsolete inventory, and stock-based compensation expense. Our cost of product revenue and related product margin may fluctuate depending on the capacity utilization of our manufacturing facilities in response to market conditions and the demand for our products. Cost of service revenue includes direct labor hours, overhead, and instrument parts. Our cost of service revenue and related service margin may fluctuate depending on the variability in material and labor costs of servicing instruments. 29 The following table presents our product and service cost, product and service gross profit and product and service margin for the three months ended March 31, 2021 and 2020 (in thousands): Three Months Ended March 31, Year-over-Year Change 2021 2020 Cost of product revenue $ 11,663 $ 9,640 21 % Cost of service revenue 2,090 1,525 37 % Cost of product and service revenue $ 13,753 $ 11,165 23 % Product and service gross profit $ 17,261 $ 13,002 33 % Product and service margin 55.7 % 53.8 % 1.9 ppt Product and service margin increased by 1.9 percentage points for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. Fixed depreciation and amortization costs on a higher revenue base positively impacted margins by 2.8 percentage points. This favorability was partially offset by lower average selling prices of mass cytometry instruments, and product mix, which included lower margin microfluidics instruments. Operating Expenses The following table presents our operating expenses for the three months ended March 31, 2021 and 2020 (in thousands): Three Months Ended March 31, Year-over-Year Change 2021 2020 Research and development $ 10,753 $ 8,699 24 % Selling, general and administrative 27,608 22,695 22 % Total $ 38,361 $ 31,394 22 % Research and Development Research and development expense consists primarily of compensation-related costs, product development and material expenses, and other allocated facilities and information technology expenses. Our research and development efforts have focused primarily on enhancing our technologies and supporting development and commercialization of new and existing products and services. Research and development expense also includes costs incurred in conjunction with research grants and development arrangements. We have made substantial investments in research and development since our inception and expect to continue to do so. Research and development expense increased by $2.1 million, or 24%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. Compensation and benefit costs increased by $1.0 million, primarily due to cost attributable to higher headcount and annual merit increases. Consulting costs and laboratory supplies increased by $0.6 million and $0.3 million, respectively, due to development and grant projects. Stock based compensation costs also increased by $0.2 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to retention awards granted in the second quarter of 2020. We believe our continued investment in research and development is essential to our long-term competitive position and these expenses may increase in future periods. Selling, General and Administrative Selling, general and administrative expense consists primarily of personnel costs for our sales and marketing, business development, finance, legal, human resources, information technology, and general management, as well as professional services, such as legal and accounting services. Selling, general and administrative expense increased by $4.9 million, or 22%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. Salaries and benefits costs increased by $1.4 million in the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to increased headcount and annual merit increases. Commission and incentive compensation costs increased by $1.3 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. Facilities costs increased by approximately $0.6 million for the 30 three months ended March 31, 2021 compared to the three months ended March 31, 2020, reflecting higher lease costs associated with a lease on our new corporate headquarters which commenced in March 2020. Stock-based compensation costs increased by $1.1 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to retention awards granted in the second quarter of 2020. Higher litigation-related expenses were offset by lower travel costs. Interest Expense and Other Expense, Net The following table presents these items for the three months ended March 31, 2021 and 2020 (in thousands): Three Months Ended March 31, Year-over-Year Change 2020 2019 Interest expense $ (887) $ (900) (1) % Other expense, net (285) (818) (65) % Total $ (1,172) $ (1,718) (32) % Interest expense consists primarily of interest on our convertible debt. Other expense, net of $0.3 million for the three months ended March 31, 2021 is primarily attributable to $0.4 million of foreign exchange losses, partially offset by interest income. Other expense, net for the three months ended March 31, 2021 also includes a $9 thousand loss on the repurchase of the 2014 Notes. Other expense, net of $0.8 million for the three months ended March 31, 2020 includes $1.0 million of foreign exchange losses partially offset by $0.2 million of interest income. Income Tax Benefit Our tax provision is generally driven by three components: (i) tax provision from our foreign operations, (ii) tax benefits from the amortization of acquisition-related intangible assets, and (iii) discrete items, such as changes in valuation allowances or adjustments upon finalization of tax returns. Depending on the relative value of these components, we can have either a tax benefit or expense for any given period. We recorded a tax benefit of $1.7 million, for an effective tax rate of 8.2%, for the three months ended March 31, 2021. For the three months ended March 31, 2020, we recorded a tax benefit of $0.7 million for an effective tax rate of 4.1%. The benefit increased for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 due to higher pre-tax losses from our foreign operations compared to the same period last year. Liquidity and Capital Resources Sources of Liquidity As of March 31, 2021, our principal sources of liquidity consisted of $49.7 million of cash and cash equivalents, as well as $1.0 million of restricted cash and $13.2 million of availability under our Revolving Credit Facility. The following table presents our cash flow summary for the three months ended March 31, 2021 and 2020 (in thousands): Three Months Ended March 31, 2021 2020 Cash flow summary: Net cash used in operating activities $ (12,901) $ (4,295) Net cash provided by (used in) investing activities (4,923) 17,460 Net cash used in financing activities (1,026) (503) Effect of foreign exchange rate fluctuations on cash and cash equivalents 74 (331) Net increase (decrease) in cash, cash equivalents and restricted cash $ (18,776) $ 12,331 Net Cash Used in Operating Activities We derive cash flows from operations primarily from cash collected from the sale of our products and services, and license agreements and grants. Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses and working capital to support our business. We have historically experienced negative cash flows from operating activities as we have expanded our business and built our infrastructure domestically and internationally. 31 Net cash used in operating activities in the three months ended March 31, 2021 was $12.9 million and consisted of net loss of $18.8 million, adjusted for non-cash items of $8.2 million and cash used in assets and liabilities, net, of $2.3 million. Non-cash items included stock-based compensation expense of $3.7 million, amortization of developed technology of $3.0 million, depreciation and amortization of $0.9 million, a provision for excess and obsolete inventory of $0.3 million, lease amortization of $0.2 million, and a variety of smaller items. The cash used in assets and liabilities, net was primarily due to a decrease of other liabilities of $10.0 million, an increase in prepaid expenses and other assets of $2.8 million, and an increase of inventories, net of $2.9 million. These uses of funds were partially offset by a decrease in accounts receivable, net, of $9.8 million, an increase in accounts payable of $3.4 million, and an increase in deferred revenue of $0.2 million. Net cash used in operating activities for the three months ended March 31, 2020 was $4.3 million and consisted of net loss of $16.0 million, adjusted for non-cash items of $7.0 million, and cash provided by assets and liabilities, net, of $4.7 million. Non-cash items primarily included an amortization of developed technology of $3.0 million, stock-based compensation expense of $2.4 million, depreciation and amortization of $1.1 million, lease amortization of $0.4 million, and a variety of smaller items. The cash provided by assets and liabilities, net was primarily due to a decrease in accounts receivable, net of $4.7 million, an increase in accounts payable of $3.1 million, and an increase in deferred revenue of $1.0 million, partially offset by an increase of inventory, net of $2.3 million and a decrease in other liabilities of $2.1 million. Net Cash Provided by (Used in) Investing Activities Our primary investing activities consist of purchases, sales, and maturities of our short-term investments and to a much lesser extent, capital expenditures for manufacturing, laboratory, computer equipment and software to support our infrastructure and work force. We expect to continue to incur costs for capital expenditures to expand capacity under the NIH Contract, improve manufacturing efficiencies and strengthen information technology and network security, as well as capital expenditures incurred in moving our corporate headquarters in 2020. However, we may choose to decrease or defer certain capital expenditures and development activities, while further optimizing our organization. Net cash used in investing activities in the three months ended March 31, 2021 was $4.9 million. Capital expenditures of $6.9 million were incurred primarily to expand our production in Singapore. We also received proceeds from the NIH Contract of $2.0 million. Net cash provided by investing activities in the three months ended March 31, 2020 was $17.5 million, which was mainly due to proceeds of maturities of investments of $23.6 million, and partially offset by the acquisition of InstruNor AS, net of cash acquired of $5.2 million. Net Cash Used in Financing Activities We used cash in financing activities of $1.0 million during the three months ended March 31, 2021, which was primarily due to the repurchase of $0.5 million of 2014 Notes and payments for income tax withholding related to net share settlement of equity awards of $0.5 million. We used cash in financing activities of $0.5 million during the three months ended March 31, 2020, which was primarily due to payments of debt issuance costs of $0.4 million for the November 2019 issuance of the 2019 Notes. Capital Resources At March 31, 2021 and December 31, 2020, our working capital, excluding deferred revenues and restricted cash, was $57.0 million and $76.9 million, respectively, including cash and cash equivalents of $49.7 million and $68.5 million, respectively. We had no investments as of March 31, 2021 and December 31, 2020. In February 2014, we closed an underwritten public offering of our 2014 Notes. Pursuant to the Indenture governing the 2014 Notes, holders of the 2014 Notes have the right, subject to certain conditions specified in such indenture, to require the Company 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 caused us to repurchase their notes in accordance with this provision leaving $0.6 million of 2014 Notes outstanding. 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 2019 Notes. The 2019 Notes bear interest at 5.25% per annum, payable semiannually on June 1 and December 1 of each year, beginning on June 1, 2020. The Notes will mature on December 1, 2024, unless earlier repurchased or converted pursuant to their terms. The 2019 Notes will be convertible at the option of the holder at any point prior to close of business on the second scheduled trading day preceding the maturity date. The initial conversion rate of the Notes is 344.8276 shares of the Company’s common stock per $1,000 principal amount of 2019 32 Notes (which is equivalent to an initial conversion price of $2.90 per share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid interest. The 2019 Notes will also be convertible at our option upon certain conditions in accordance with the terms of the indenture governing the 2019 Notes. On or after December 1, 2021 to December 1, 2022, if the price of the Company’s common stock has equaled or exceeded 150% of the Conversion Price (as defined in the indenture, currently $2.90, subject to adjustment) for a specified number of days (Issuer’s Conversion Option), we may, at our option, elect to convert the 2019 Notes in whole but not in part into shares of the Company, determined in accordance with the terms of the indenture. On or after December 1, 2022, if the price of the Company’s common stock has equaled or exceeded 130% of the Conversion Price then in effect for a specified number of days, we may, at our option, elect to convert the 2019 Notes in whole but not in part into shares of the Company, determined in accordance with the terms of the indenture. The foregoing summaries of the 2014 Notes and the 2019 Notes are not complete and are qualified in their entirety by the applicable indentures, forms of global notes, and other agreements and documents filed with the SEC. In March 2020, we entered into the Sale Agreement with Jefferies to sell shares of our common stock having aggregate sales proceeds of up to $50,000,000, from time to time, through the ATM equity offering program under which Jefferies acts as sales agent. During the third quarter of 2020, we sold 2.5 million shares of our common stock, pursuant to the Sale Agreement. Our net proceeds were approximately $20.1 million, after deducting related expenses, including commissions of approximately $0.6 million and issuance costs of approximately $0.2 million. On August 2, 2018, we entered into our Revolving Credit Facility with Silicon Valley Bank (SVB), with a maturity date of August 2, 2020. The Revolving Credit Facility is collateralized by substantially all our property, other than intellectual property. The Revolving Credit Facility was amended and extended on April 21, 2020. The amendment extends the maturity date by two years, to August 2, 2022. We also amended the interest rate to be the greater of (i) prime rate (as customarily defined), plus 0.50%, floating, and (ii) 5.25%. Interest on any outstanding loans continues to be due and payable monthly and the principal balance is due at maturity though loans can be prepaid at any time without penalty. Amounts drawn under the Revolving Credit Facility will be used for working capital and general corporate purposes. As of March 31, 2021, total availability under the Revolving Credit Facility was $13.2 million. We currently have no outstanding debt under the Revolving Credit Facility, and we are in compliance with all the terms and conditions of the Revolving Credit Agreement governing the Revolving Credit Facility. See Note 8 to our condensed consolidated financial statements for more information about the Revolving Credit Facility. We believe our existing cash, cash equivalents, and investments will be sufficient to meet our working capital and capital expenditure needs for at least the next 18 months. However, we may experience lower than expected cash generated from operating activities or greater than expected capital expenditures, cost of revenue, or operating expenses, and we may need to raise additional capital to fund our operations, further our research and development activities, or acquire or invest in a business. Our future funding requirements will depend on many factors, including market acceptance of our products, the cost of our research and development activities, the cost of filing and prosecuting patent applications, the cost associated with litigation or disputes relating to intellectual property rights or otherwise, the cost and timing of regulatory clearances or approvals, if any, the cost and timing of establishing additional sales, marketing, and distribution capabilities, the cost and timing of establishing additional technical support capabilities, and the effect of competing technological and market developments. In the future, we may acquire businesses or technologies from third parties, and we may decide to raise additional capital through debt or equity financing to the extent we believe this is necessary to successfully complete these acquisitions. If we require additional funds in the future, we may not be able to obtain such funds on acceptable terms, or at all, and our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to and volatility in the credit and financial markets in the United States and worldwide resulting from the COVID-19 pandemic. If we raise additional funds by issuing equity securities, our stockholders could experience dilution. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any additional debt or equity financing that we raise may contain terms that are not favorable to us or our stockholders. If we do not have, or are not able to obtain, sufficient funds, we may have to delay development or commercialization of our products or license to third parties the rights to commercialize products or technologies that we would otherwise seek to commercialize. We also may have to reduce marketing, customer support, research and development, or other resources devoted to our products. 33 Contractual Obligations and Commitments Our operating lease obligations relate to leases for our current corporate headquarters and leases for manufacturing and office space for our foreign subsidiaries. Please see Note 9 to our condensed consolidated financial statements for a discussion of our lease obligations. Other than as disclosed above, there have been no material changes during the three months ended March 31, 2021 to our contractual obligations disclosed in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our annual report on Form 10-K for the year ended December 31, 2020. Off-Balance Sheet Arrangements Since our inception, we have not had any off-balance sheet arrangements as defined in Item 303(a)(4) of the SEC’s Regulation S-K.