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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to
_____________________________________________
Commission file number: 001-34180

https://cdn.kscope.io/e3205150fb700bec861809f76c39edca-fldm-20210630_g1.jpg
FLUIDIGM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 77-0513190
State or other jurisdiction of incorporation or organization I.R.S. Employer Identification No.
2 Tower Place, Ste 2000
South San Francisco,
CA
94080
Address of principal executive officesZip Code
Registrant’s telephone number, including area code: (650) 266-6000
_____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareFLDMThe Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of July 31, 2021, there were 76,166,978 shares of the registrant’s common stock, $0.001 par value per share, outstanding.



FLUIDIGM CORPORATION
TABLE OF CONTENTS
  Page
PART I.
FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 67





PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
FLUIDIGM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) 
(Unaudited)
June 30,December 31,
20212020
ASSETS
Current assets:
Cash and cash equivalents$30,863 $68,520 
Accounts receivable (net of allowance of $356 at each of June 30, 2021 and December 31, 2020)
15,666 25,423 
Inventories, net25,074 19,689 
Prepaid expenses and other current assets6,603 4,031 
Total current assets78,206 117,663 
Property and equipment, net27,718 17,531 
Operating lease right-of-use asset, net38,717 38,114 
Other non-current assets4,106 4,680 
Developed technology, net34,082 40,206 
Goodwill106,486 106,563 
Total assets$289,315 $324,757 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$11,224 $9,220 
Accrued compensation and related benefits8,293 13,787 
Operating lease liabilities, current2,971 2,973 
Other accrued liabilities8,682 11,882 
Deferred grant income, current7,703 2,912 
Deferred revenue, current13,975 13,475 
Total current liabilities52,848 54,249 
Convertible notes, net53,943 54,224 
Deferred tax liability6,700 8,697 
Operating lease liabilities, non-current39,061 38,178 
Deferred revenue, non-current6,506 7,990 
Deferred grant income, non-current20,531 21,036 
Other non-current liabilities276 1,333 
Total liabilities179,865 185,707 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000 shares authorized, no shares issued and outstanding at either June 30, 2021 or December 31, 2020
  
Common stock: $0.001 par value, 200,000 shares authorized at June 30, 2021 and December 31, 2020; 76,166 and 74,543 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
76 75 
Additional paid-in capital822,383 815,624 
Accumulated other comprehensive loss(284)112 
Accumulated deficit(712,725)(676,761)
Total stockholders’ equity109,450 139,050 
Total liabilities and stockholders’ equity$289,315 $324,757 
See accompanying notes
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FLUIDIGM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Revenue:
Product revenue$22,627 $17,405 $47,355 $36,386 
Service revenue6,627 5,140 12,913 10,326 
Development revenue850 3,000 2,330 3,000 
Other revenue914 513 1,214 3,963 
Total revenue31,018 26,058 63,812 53,675 
Costs and expenses:
Cost of product revenue12,730 9,483 24,393 19,123 
Cost of service revenue1,867 1,237 3,957 2,762 
Research and development9,441 8,448 20,194 17,147 
Selling, general and administrative24,248 20,616 51,856 43,311 
Total costs and expenses48,286 39,784 100,400 82,343 
Loss from operations(17,268)(13,726)(36,588)(28,668)
Interest expense(896)(897)(1,783)(1,797)
Other income (expense), net504 463 219 (355)
Loss before income taxes(17,660)(14,160)(38,152)(30,820)
Income tax benefit517 1,145 2,188 1,825 
Net loss$(17,143)$(13,015)$(35,964)$(28,995)
Net loss per share, basic and diluted$(0.23)$(0.18)$(0.48)$(0.41)
Shares used in computing net loss per share, basic and diluted75,452 70,916 75,084 70,691 
See accompanying notes
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FLUIDIGM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)

 
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net loss$(17,143)$(13,015)$(35,964)$(28,995)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment47 109 (396)(194)
Net change in unrealized gain (loss) on investments (33) (33)
Other comprehensive income (loss), net of tax47 76 (396)(227)
Comprehensive loss$(17,096)$(12,939)$(36,360)$(29,222)
See accompanying notes
3


FLUIDIGM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)

 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
 SharesAmount
Balance as of December 31, 202074,543 $75 $815,624 $112 $(676,761)$139,050 
Issuance of restricted stock, net of shares withheld for taxes, and other420 — (525)— — (525)
Stock-based compensation expense— — 3,677 — — 3,677 
Net loss— — — — (18,821)(18,821)
Other comprehensive loss, net of tax— — — (443)— (443)
Balance as of March 31, 202174,963 $75 $818,776 $(331)$(695,582)$122,938 
Issuance of restricted stock, net of shares withheld for taxes, and other1,028 1 (1,028)(1,027)
Issuance of common stock under ESPP139 — 685 685 
Issuance of common stock from option exercises36 — 209 209 
Stock-based compensation expense3,741 3,741 
Net loss(17,143)(17,143)
Other comprehensive loss, net of tax47 47 
Balance as of June 30, 202176,166 $76 $822,383 $(284)$(712,725)$109,450 
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
 SharesAmount
Balance as of December 31, 201969,956 $70 $777,765 $(582)$(623,641)$153,612 
Issuance of restricted stock, net of shares withheld for taxes, and other255 — (146)— — (146)
Cumulative-effect of new accounting standard for Topic 326 Credit Losses— — — — (100)(100)
Stock-based compensation expense— — 2,364 — — 2,364 
Acquisition of InstruNor AS485 1 2,048 — — 2,049 
Net loss— — — — (15,980)(15,980)
Other comprehensive loss, net of tax— — — (303)— (303)
Balance as of March 31, 202070,696 $71 $782,031 $(885)$(639,721)$141,496 
Issuance of restricted stock, net of shares withheld for taxes, and other286 — (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, 202071,283 $71 $786,193 $(809)$(652,736)$132,719 
See accompanying notes
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FLUIDIGM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 30,
 20212020
Operating activities
Net loss$(35,964)$(28,995)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense7,418 6,000 
Amortization of developed technology5,965 5,936 
Depreciation and amortization1,851 2,016 
Amortization of debt discounts, premiums and issuance costs 211 275 
Lease amortization265 1,331 
Provision for excess and obsolete inventory1,248 306 
Loss on disposal of property and equipment 148 
Other non-cash items63 136 
Changes in assets and liabilities:
Accounts receivable, net9,419 9,055 
Inventories, net(7,489)(4,892)
Prepaid expenses and other assets(2,593)(706)
Accounts payable1,903 3,136 
Deferred revenue(619)1,965 
Accrued compensation and related benefits(5,359)1,496 
Other liabilities(3,884)(4,292)
Net cash used in operating activities(27,565)(7,085)
Investing activities
Acquisition, net of cash acquired (5,154)
Proceeds from NIH Contract2,000  
Proceeds from sale of investments 5,011 
Proceeds from maturities of investments 29,400 
Purchases of property and equipment(11,095)(1,671)
Net cash provided by (used in) investing activities(9,095)27,586 
Financing activities
Repayment of long-term debt(501) 
Proceeds from exercise of stock options209  
Proceeds from stock issuance from ESPP685 645 
Payments for taxes related to net share settlement of equity awards and other(1,552)(262)
Payment of debt issuance costs (375)
Net cash provided by (used in) financing activities(1,159)8 
Effect of foreign exchange rate fluctuations on cash and cash equivalents162 (205)
Net increase (decrease) in cash, cash equivalents and restricted cash(37,657)20,304 
Cash, cash equivalents and restricted cash at beginning of period69,536 23,736 
Cash, cash equivalents and restricted cash at end of period$31,879 $44,040 
Supplemental disclosures of cash flow information
Cash paid for interest$1,520 $1,531 
Cash paid for income taxes, net of refunds$1,418 $194 
Non-cash right-of-use assets and lease liabilities$2,241 $36,039 
Asset retirement obligations$703 $316 
See accompanying notes
5


FLUIDIGM CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2021
1. Description of Business
Fluidigm Corporation (the Company, Fluidigm, we, our or us) improves life by driving meaningful insights in health and disease. Our innovative technologies explore the biological complexities of disease to advance human health through research, diagnostics and clinical applications. We create, manufacture, and market a range of products and services, including instruments, consumables, reagents and software that are used by researchers and clinical labs worldwide. Our customers are leading academic and government laboratories, as well as pharmaceutical, biotechnology, plant and animal research organizations, and clinical laboratories worldwide. The Company was formerly known as Mycometrix Corporation and changed its name to Fluidigm Corporation in April 2001. Fluidigm Corporation was founded in 1999 and is headquartered in South San Francisco, California.
2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) and include the accounts of our wholly owned subsidiaries. As of June 30, 2021, we had wholly owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, Italy, the United Kingdom, China, Germany and Norway. All subsidiaries, except for Singapore, use their local currency as their functional currency. The Singapore subsidiary uses the U.S. dollar as its functional currency. All intercompany transactions and balances have been eliminated in consolidation.
Certain prior period amounts in the condensed consolidated financial statements were reclassified to conform with the current period presentation. These reclassifications were immaterial and did not affect prior period total assets, total liabilities, stockholders’ equity, total revenue, total costs and expenses, loss from operations or net loss.
Unaudited Interim Financial Information
The accompanying interim condensed consolidated financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented.
The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The condensed consolidated results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year or for any other year or interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes for the year ended December 31, 2020 included in our annual report on Form 10-K, filed with the SEC on February 25, 2021.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions believed to be reasonable, which together form the basis for making judgments about the carrying values of assets and liabilities. The full extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will depend on numerous evolving factors including, but not limited to, the magnitude and duration of the pandemic, the extent to which it will impact worldwide macroeconomic conditions, including the speed of recovery, and governmental and business reactions to the pandemic. We assessed certain accounting matters that generally require consideration of forecasted financial information, including the unknown impact of COVID-19 as of June 30, 2021. These accounting matters included, but were not limited to, our allowance for doubtful accounts and credit losses, inventory and related reserves and the carrying value of goodwill and other long-lived assets. Actual results could differ materially from these estimates and could have a material adverse effect on our condensed consolidated financial statements.
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Foreign Currency
Assets and liabilities of non-U.S. subsidiaries that use the local currency as their functional currency are translated into U.S. dollars at exchange rates in effect on the balance sheet date. The adjustments resulting from the foreign currency translations are recorded in accumulated other comprehensive loss, a separate component of stockholders’ equity. Income and expense accounts are translated at monthly average exchange rates during the year.
Revenue Recognition
We generate revenue primarily from the sale of our products and services. Product revenue is derived from the sale of instruments and consumables, including integrated fluidic circuits (IFCs), assays and reagents. Service revenue is primarily derived from the sale of instrument service contracts, repairs, installation, training and other specialized product support services. We also generate revenue from product development agreements, license and royalty agreements and grants. Revenue is reported net of any sales, use and value-added taxes we collect from customers as required by government authorities. Research and development cost includes costs associated with development and grant revenue.
We recognize revenue based on the amount of consideration we expect to receive in exchange for the goods and services we transfer to the customer. Our commercial arrangements typically include multiple distinct products and services, and we allocate revenue to these performance obligations based on their relative standalone selling prices. Standalone selling prices (SSP) are generally determined using observable data from recent transactions. In cases where sufficient data is not available, we estimate a product’s SSP using a cost plus a margin approach or by applying a discount to the product’s list price.
Product Revenue
We recognize product revenue at the point in time when control of the goods passes to the customer and we have an enforceable right to payment. This generally occurs either when the product is shipped from one of our facilities or when it arrives at the customer’s facility, based on the contractual terms. Customers generally do not have a unilateral right to return products after delivery. Invoices are generally issued at shipment and generally become due in 30 to 60 days.
We sometimes perform shipping and handling activities after control of the product passes to the customer. We have made an accounting policy election to account for these activities as product fulfillment activities rather than as separate performance obligations.
Service Revenue
We recognize revenue from repairs, maintenance, installation, training and other specialized product support services at the point in time the work is completed. Installation and training services are generally billed in advance of service. Repairs and other services are generally billed at the point the work is completed.
Revenue associated with instrument service contracts is recognized on a straight-line basis over the life of the agreement, which is generally one to three years. We believe this time-elapsed approach is appropriate for service contracts because we provide services on demand throughout the term of the agreement. Invoices are generally issued in advance of service on a monthly, quarterly, annual or multi-year basis. Payments made in advance of service are reported on our condensed consolidated balance sheet as deferred revenue.
Development Revenue
We have entered and may continue to enter into development agreements with third parties that provide for up-front and periodic milestone payments. Our development agreements may include more than one performance obligation. At the inception of the contract, we assess whether each obligation represents a separate performance obligation or whether such obligations should be combined as a single performance obligation. The transaction price for each development agreement is determined based on the amount of consideration we expect to be entitled to for satisfying all performance obligations within the agreement.
We assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. In arrangements where we satisfy performance obligation(s) over time, we recognize development revenue typically using an input method based on our costs incurred relative to the total expected cost which determines the extent of our progress toward completion. As part of the accounting for these arrangements, we must develop estimates and assumptions that require judgment to determine the transaction price and progress towards completion. We review our estimate of the transaction price and progress toward completion based on the best information available to recognize the cumulative progress toward completion as of the end of each reporting period, and make revisions to such estimates as necessary.
7


We also generate revenue from development or collaboration agreements that do not include upfront or milestone-based payments and generally recognize revenue on these types of agreements based on the timing of development activities.
Other Revenue
Other revenue consists of license and royalty revenue and grant revenue. We recognize revenue from license agreements when the license is transferred to the customer and the customer is able to use and benefit from the license. For contracts that include sales-based royalties, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied.

In March 2020, we entered into an agreement to settle intellectual property infringement claims, in which we received a $3.5 million payment in exchange for a perpetual license under certain Fluidigm intellectual property. The settlement is considered a multiple-element arrangement with each element accounted for individually. Accordingly, $3.1 million of the proceeds was recognized as license revenue and $0.4 million was offset against legal costs.

We receive grants from various entities to perform research and development activities over contractually defined periods. Grant revenue is not accounted for under ASC 606 Revenue from Contracts with Customers, as the grant agreement is not with a customer. As there is no authoritative U.S. GAAP guidance for grants awarded to for-profit entities, we have applied the guidance in ASC 958 Not-for-Profit Entities by analogy. Revenue is generally recognized provided that the conditions under which the grants were provided have been met and any remaining performance obligations are perfunctory.
Product Warranties
We generally provide a one-year warranty on our instruments. We accrue for estimated warranty obligations at the time of product shipment. We periodically review our warranty liability and record adjustments based on the terms of warranties provided to customers, and historical and anticipated warranty claim experience. This expense is recorded as a component of cost of product revenue in the condensed consolidated statements of operations.
Significant Judgments
Applying the revenue recognition practices discussed above often requires significant judgment. Judgment is required when identifying performance obligations, estimating SSP and allocating purchasing consideration in multi-element arrangements and estimating the future amount of our warranty obligations. Moreover, significant judgment is required when interpreting commercial terms and determining when control of goods and services passes to the customer. Any material changes created by errors in judgment could have a material effect on our operating results and overall financial condition.
Accounts Receivable
Trade accounts receivable are recorded at net invoice value. We review our exposure to accounts receivable and provide allowances of specific amounts if collectability is no longer reasonably assured based on historical experience and specific customer collection issues. We evaluate such allowances on a regular basis and adjust them as needed.
Concentrations of Business and Credit Risk
Financial instruments that potentially subject us to credit risk consist of cash, cash equivalents, investments, and accounts receivable. Our cash, cash equivalents, and investments may consist of deposits held with banks, money market funds, and other highly liquid investments that may at times exceed federally insured limits. Cash equivalents and investments are financial instruments that potentially subject us to concentrations of risk. Under our investment policy, we invest primarily in securities issued by the U.S. government. The goals of our investment policy, in order of priority, are as follows: preserve capital, meet liquidity needs, and optimize returns.
We generally do not require collateral to support credit sales. To reduce credit risk, we perform credit evaluations of our customers. One customer from whom we derived product and development revenue exceeded 10% of total revenue for the three months ended June 30, 2020. No customer represented more than 10% of total revenue for the three months ended June 30, 2021 or for the six months ended June 30, 2021 and 2020. There were no customers with outstanding trade receivable balances that represented more than 10% of total billed receivables as of June 30, 2021 or December 31, 2020.
Our products include components that are currently procured from a single source or a limited number of sources. We believe that other vendors would be able to provide similar components; however, the qualification of such vendors may require start-up time. In order to mitigate any adverse impacts from a disruption of supply, we attempt to maintain an adequate supply of critical limited-source components.
8


Leases
We determine if an arrangement is a lease, or contains a lease, at inception. Operating leases are included in operating lease right-of-use (ROU) assets and current and non-current operating lease liabilities in our condensed consolidated balance sheets. ROU assets represent our right-to-use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use an incremental collateralized borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. Significant judgment is required in determining the incremental collateralized borrowing rate. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
We elected the short-term lease recognition exemption for all leases that qualify. For those leases that qualify, we will not recognize ROU assets or lease liabilities for leases with an initial lease term of one year or less. We also elected not to separate lease and nonlease components for our building leases. The nonlease components are generally variable in nature and are expected to represent most of our variable lease costs. Variable costs are expensed as incurred. We have taken a portfolio approach for our vehicle leases by country.
Business Combinations, Goodwill, Intangible Assets and Other Long-Lived Assets
We have completed acquisitions of businesses in the past and may acquire additional businesses or technologies in the future. The results of businesses acquired in a business combination are included in our condensed consolidated financial statements from the date of acquisition. We allocate the purchase price, which is the sum of the consideration provided in a business combination, to the identifiable assets and liabilities of the acquired business at their acquisition date fair values. 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. Our intangible assets include developed technology, patents and licenses. The cost of identifiable intangible assets with finite lives is generally amortized on a straight-line basis over the assets’ respective estimated useful lives.
Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Events or changes in circumstances that could affect the likelihood that we will be required to recognize an impairment charge include, but are not limited to, declines in our stock price or market capitalization, economic downturns and other macroeconomic events, including the current COVID-19 pandemic, declines in our market share or revenues, and an increase in our losses, rapid changes in technology, failure to achieve the benefits of capacity increases and utilization, significant litigation arising out of an acquisition, or other matters. Any impairment charges could have a material adverse effect on our operating results and net asset value in the quarter in which we recognize the impairment charge.
In evaluating our goodwill and intangible assets with indefinite lives for indications of impairment, we first conduct an assessment of qualitative factors to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we compare the fair value of our reporting unit to its carrying value. If the fair value of our reporting unit exceeds its carrying value, goodwill is not considered impaired and no further analysis is required. If the carrying value of the reporting unit exceeds its fair value, then an impairment loss equal to the difference would be recorded to goodwill. We did not recognize any impairment of goodwill for any of the periods presented herein.
We evaluate our long-lived assets, including finite-lived intangibles, for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If any indicator of impairment exists, we assess the recoverability of the affected long-lived assets by determining whether the carrying value of the asset can be recovered through undiscounted future operating cash flows. If impairment is indicated, we estimate the asset’s fair value using future discounted cash flows associated with the use of the asset and adjust the carrying value of the asset accordingly. We did not recognize any impairment of intangibles for any of the periods presented herein.
Deferred Grant Income
In September 2020, we executed a definitive contract with the National Institutes of Health (NIH) for a project under the NIH Rapid Acceleration of Diagnostics (RADx) program. The definitive contract, which amended the letter contract we entered into with the NIH in July 2020 (collectively, the NIH Contract), has a total value of up to $34.0 million upon the achievement
9


of certain conditional milestones. Proceeds from the NIH Contract will be used primarily to expand production capacity and product throughput capabilities.
Accounting for the NIH Contract does not fall under ASC 606, Revenue from Contracts with Customers, as the NIH will not benefit directly from our expansion or product development. As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, we applied International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, by analogy when accounting for the NIH Contract payments to Fluidigm.
The NIH Contract proceeds used for production capacity expansion meet the definition of grants related to assets as the primary purpose for the payments is to fund the purchase and construction of capital assets to scale up production capacity. Under IAS 20, government grants related to assets are presented in the statement of financial position either by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset. Either of these two methods of presentation of grants related to assets in financial statements are regarded as acceptable alternatives under IAS 20. We have elected to record the grants received as deferred income using the first method.
Under IAS 20, grant proceeds are recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received. With the NIH Contract, this occurs when either each milestone has been accepted by NIH or management concludes the conditions of the grant have been substantially met. Deferred grant income related to production capacity expansion will be amortized over the period of depreciation for the related assets as a reduction of depreciation expense. Deferred grant income related to reimbursement of operating expenses is recorded as a reduction of those expenses incurred to date. Any grant proceeds that exceed the cost of the capital expenditures and expenses expected to be incurred at the completion of the NIH Contract will be reflected in other income.
Convertible Notes
In February 2014, we closed an underwritten public offering of 2.75% Senior Convertible Notes due 2034 (2014 Notes). In November 2019, we closed a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of $55.0 million aggregate principal amount of our 5.25% Senior Convertible Notes due 2024 (2019 Notes). As the 2014 Notes and 2019 Notes do not provide for a cash conversion feature, the 2014 Notes and the 2019 Notes are recorded as debt in their entirety in accordance with ASC 470. Offering-related costs, including underwriting costs, were capitalized as debt issuance costs, recorded as an offset to the carrying value of the related 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.
Comprehensive Loss
Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized gains and losses on our investments and foreign currency translation adjustments. Total comprehensive loss for all periods presented has been disclosed in the condensed consolidated statements of comprehensive loss.
The components of accumulated other comprehensive loss, net of tax, for the three and six months ended June 30, 2021 are as follows (in thousands):
Foreign Currency Translation AdjustmentUnrealized Gain (Loss) on InvestmentsAccumulated Other Comprehensive Income (Loss)
Ending balance at December 31, 2020$112 $ $112 
Other comprehensive income (loss)(443) (443)
Ending balance at March 31, 2021$(331)$ $(331)
Other comprehensive income (loss)47 — 47 
Ending balance at June 30, 2021$(284)$ $(284)

10



Immaterial amounts of unrealized gains and losses have been reclassified into the condensed consolidated statement of operations for the three and six months ended June 30, 2021.
Net Loss per Share
Our basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period. Restricted stock units, performance share units, and stock options to purchase our common stock are considered to be potentially dilutive common shares but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive for all periods presented.
The following potentially dilutive common shares were excluded from the computations of diluted net loss per share for the periods presented because including them would have been anti-dilutive (in thousands):
 Six Months Ended June 30,
 20212020
Stock options, restricted stock units and performance awards7,944 8,237 
2019 Convertible Notes18,966 18,966 
2019 Convertible Notes potential make-whole shares809 2,412 
2014 Convertible Notes10 19 
Total27,729 29,634 
Recent Accounting Changes and Accounting Pronouncements
Adoption of New Accounting Guidance
In November 2019, the FASB issued ASU 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update improve consistent application of and simplify U.S. GAAP for Topic 740 by clarifying and amending existing guidance for, among other items, intra-period allocation, reporting tax law changes and losses in interim periods, state and local taxes not fully based on income and recognition of deferred tax liability related to certain transactions. There is also new guidance related to consolidated group reporting and tax impacts resulting from business combinations. The new guidance is effective for fiscal years beginning after December 15, 2020. The adoption of the new guidance did not have a significant impact on our financial results.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06 Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendment to this ASU reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification, which is expected to result in more convertible instruments being accounted for as a single unit, rather than being bifurcated between debt and equity. The new guidance is effective for fiscal years beginning after December 15, 2021. We are currently evaluating the impact of adoption on our condensed consolidated financial statements.
3. NIH Contract
In 2020, we were awarded the NIH Contract under the RADx program to support the expansion of our production capacity and throughput capabilities for COVID-19 testing with our microfluidics technology. The NIH Contract has a total value of up to $34.0 million upon the achievement of certain conditional milestones. The NIH Contract was modified in February 2021 to divide the remaining milestones into multiple discrete milestones, and modified again in May 2021 to change the due dates for some milestones. The milestones are expected to be completed in 2021 and no change was made to the total grant amount under the 2021 modifications. Proceeds from the NIH Contract are being used primarily to expand production capacity and, to a lesser extent, to offset related operating expenses.
The NIH has the right to terminate the NIH Contract for convenience. In the event of termination for convenience, we will be paid a percentage of the NIH Contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges. In the event of termination for cause due to our default, NIH is not liable for supplies or services not accepted.
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If we fail to deliver within the time specified in the NIH Contract and the delay is due to Fluidigm’s fault or negligence, we are required to pay liquidated damages in the amount of 33% of the amount(s) already disbursed to date under the NIH Contract within six months from the date of termination. We are in compliance with the terms of the NIH Contract and do not currently expect to pay any liquidated damages. We are working with the NIH to ensure we remain in compliance with the requirements and milestones of the NIH Contract.
The following table summarizes the activity under the NIH Contract through June 30, 2021 (in thousands):
June 30, 2021December 31, 2020
Total value of milestones reasonably assured$31,436 $25,436 
Cumulative amounts applied against operating expenses(3,202)(1,488)
Total deferred grant income$28,234 $23,948 
Short-term deferred grant income$7,703 $2,912 
Long-term deferred grant income20,531 21,036 
Deferred grant income$28,234 $23,948 
Total value of milestones reasonably assured$31,436 $25,436 
Cumulative funding received(30,936)(25,436)
Grant receivable from NIH Contract$500 $ 
The grant receivable from the NIH Contract is included in prepaid expenses and other current assets on the condensed consolidated balance sheet at June 30, 2021. Short-term deferred grant income represents amounts expected to be recognized in income over the next twelve months, including estimated depreciation expense. The long-term deferred grant income includes capital expenditure amounts which will be amortized in later periods.
We expect to incur an aggregate $23.0 million of capital expenditures associated with the NIH Contract and have incurred $20.1 million of such capital expenditures through June 30, 2021. The majority of this amount is included in construction-in-progress, which is included in property and equipment, net in the condensed consolidated balance sheet as of June 30, 2021 (see Note 7).
4. Development Agreement
Effective March 31, 2020, we signed an OEM Supply and Development Agreement (Development Agreement) with a customer. Under the Development Agreement, Fluidigm will develop products based on our microfluidics technology. The Development Agreement provides up-front and periodic milestone payments during the development stage, which is expected to be completed in 2021. We recognized $0.9 million and $2.3 million of development revenue from this agreement during the three and six months ended June 30, 2021, respectively. During the three months ended June 30, 2020, we recognized $3.0 million of revenue. Cumulatively, we have recognized $11.1 million of development revenue associated with the agreement and expect to recognize another $0.1 million upon completion of the Development Agreement. Unbilled receivables, which represent revenues recognized in excess of milestones billed, totaled $2.1 million as of June 30, 2021, and are included in prepaid expenses and other current assets on our condensed consolidated balance sheet.

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5. Revenue
Disaggregation of Revenue
The following table presents our revenue disaggregated by geographic region and by source for the three and six months ended June 30, 2021 and 2020 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Geographic Markets:
Americas$16,120 $13,940 $34,643 $28,784 
EMEA9,220 6,557 18,362 14,653 
Asia-Pacific5,678 5,561 10,807 10,238 
Total revenue$31,018 $26,058 $63,812 $53,675 
Three Months Ended June 30,Six Months Ended June 30,
202120202021 2020
Sources:
Instruments$10,179 $8,577 $17,887 $18,048 
Consumables12,448 8,828 29,468 18,338 
Product revenue22,627 17,405 47,355 36,386 
Service revenue6,627 5,140 12,913 10,326 
Development revenue850 3,000 2,330 3,000 
Other revenue:
  License revenue93 63 93 3,163 
  Grant revenue821 450 1,121 800 
Total other revenue914 513 1,214 3,963 
Total revenue$31,018 $26,058 $63,812 $53,675 

Performance Obligations
We reported $21.5 million of deferred revenue on our December 31, 2020 consolidated balance sheet. During the six months ended June 30, 2021, $7.2 million of the opening balance was recognized as revenue and $6.2 million of net additional advance payments were received from customers, primarily associated with instrument service contracts. At June 30, 2021, we reported $20.5 million of deferred revenue.
The following table summarizes the expected timing of revenue recognition for unfulfilled performance obligations associated with instrument service contracts that were partially completed at June 30, 2021 (in thousands):
Fiscal Year
Expected Revenue (1)
2021 remainder of the year$8,079 
20228,918 
20234,879 
Thereafter2,869 
Total$24,745 
_______
(1) Expected revenue includes both billed amounts included in deferred revenue and unbilled amounts that are not reflected in our condensed consolidated financial statements and are subject to change if our customers decide to cancel or modify their contracts. Purchase orders for instrument service contracts can generally be canceled before the service period begins without penalty.
We apply the practical expedient that permits us not to disclose information about unsatisfied performance obligations for service contracts with an expected term of one year or less.
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6. Goodwill and Intangible Assets, net
In connection with our acquisition of DVS Sciences in February 2014, we recognized $104.1 million of goodwill and $112.0 million of developed technology. In connection with our acquisition of InstruNor in January 2020, we recognized $2.2 million (Euro 2.0 million) of goodwill and $5.4 million (Euro 4.9 million) of developed technology. As the goodwill and developed technology from the InstruNor acquisition are recorded in the functional currency of our European operations, which is the Euro, these balances are revalued each period and the U.S. dollar value of these assets will fluctuate as foreign exchange rates change.
Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Qualitative assessment includes assessing significant events and circumstances such as our current results, assumptions regarding future performance, strategic initiatives and overall economic factors, including the ongoing global COVID-19 pandemic and macroeconomic developments to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of our reporting unit or intangible assets is less than their carrying value. If indicators of impairment are identified, a quantitative impairment test is performed. There have been no indicators of impairment in the first half of 2021.
Intangible assets also include other patents and licenses, which are included in other non-current assets. Intangible assets, net, were as follows (in thousands):
June 30, 2021
Gross AmountAccumulated AmortizationNetWeighted-Average Amortization Period
Developed technology$117,762 $(83,680)$34,082 9.9 years
Patents and licenses$11,260 $(9,662)$1,598 7.0 years
December 31, 2020
Gross AmountAccumulated AmortizationNetWeighted-Average Amortization Period
Developed technology$117,658 $(77,452)$40,206 9.9 years
Patents and licenses$11,256 $(9,238)$2,018 7.5 years
Total amortization expense for both the three and six months ended June 30, 2021 and June 30, 2020 was $3.2 million and $6.4 million, respectively.
Based on the carrying value of intangible assets as of June 30, 2021, the amortization expense is expected to be as follows (in thousands):
Fiscal YearDeveloped Technology Amortization ExpensePatents and Licenses Amortization ExpenseTotal
2021 remainder of the year$5,960 $340 $6,300 
202211,920 678 12,598 
202311,920 572 12,492 
20242,120 8 2,128 
2025720  720 
Thereafter1,442  1,442 
Total$34,082 $1,598 $35,680 

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7. Balance Sheet Details
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):
June 30, 2021December 31, 2020
Cash and cash equivalents$30,863 $68,520 
Restricted cash1,016 1,016 
Total cash, cash equivalents and restricted cash$31,879 $69,536 
Short-term restricted cash of approximately $16 thousand is included in prepaid expenses and other current assets and $1.0 million of non-current restricted cash is included in other non-current assets in the condensed consolidated balance sheet as of June 30, 2021.
Inventories, net
Inventories consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):
June 30, 2021December 31, 2020
Raw materials$11,009 $8,292 
Work-in-process973 1,214 
Finished goods13,092 10,183 
Total inventories, net$25,074 $19,689 

Property and Equipment, net

Property and equipment consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):
June 30, 2021December 31, 2020
Computer equipment and software$4,306 $4,240 
Laboratory and manufacturing equipment18,406 18,107 
Leasehold improvements7,788 7,203 
Office furniture and fixtures2,031 1,994 
Property and equipment, gross32,531 31,544 
Less accumulated depreciation and amortization(25,331)(23,989)
Construction-in-progress20,518 9,976 
Property and equipment, net$27,718 $17,531 
 
The majority of the amounts included in construction-in-progress are related to the NIH Contract (see Note 3).
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Accrued Compensation and Related Benefits
Accrued compensation and related benefits consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):
June 30, 2021December 31, 2020
Accrued incentive compensation$2,335 $7,842 
Accrued vacation3,744 3,367 
Accrued payroll taxes and other2,214 2,578 
Accrued compensation and related benefits$8,293 $13,787 
Warranties
Accrued warranty is included in other current liabilities on our condensed consolidated balance sheet. Activity for our warranty accrual for the six months ended June 30, 2021 and 2020 is summarized below (in thousands):
Six Months Ended June 30,
20212020
Beginning balance$1,663 $1,390 
Accrual (release) for current period warranties220 419 
Warranty costs incurred(522)(277)
Ending balance$1,361 $1,532 

8. Convertible Notes and Credit Facility
2014 Senior Convertible Notes (2014 Notes)
In February 2014, we closed an underwritten public offering of $201.3 million aggregate principal amount of our 2014 Notes. We received $195.2 million, net of underwriting discounts, from the issuance of the 2014 Notes and incurred approximately $1.1 million in offering-related expenses. The underwriting discount and offering-related expenses are being amortized to interest expense using the effective-interest rate method. The effective interest rate on the 2014 Notes, reflecting the impact of debt discounts and issuance costs, is 3.0%. The 2014 Notes will mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2014 Notes. Repurchase provisions for the 2014 Notes permit the holders of the 2014 Notes to require us to repurchase all or a portion of their 2014 Notes on each of February 6, 2021, February 6, 2024, and February 6, 2029, at a repurchase price in cash equal to 100% of the principal amount of the 2014 Notes plus accrued and unpaid interest. On February 6, 2021, holders of $0.5 million of the 2014 Notes required us to repurchase their notes in accordance with this provision. We recorded a loss of $9 thousand on the extinguishment of these notes, which is included in other expense, net in our condensed consolidated statement of operations.
We have retired the majority of the 2014 Notes through the issuance of the 2018 Notes and 2019 Notes, as discussed below, as well as the February 2021 redemption. As of June 30, 2021, there is $0.6 million aggregate principal of the 2014 Notes outstanding.
2018 Senior Convertible Notes (2018 Notes)
In March 2018, we entered into separate privately negotiated transactions with certain holders of our 2014 Notes to exchange $150.0 million in aggregate principal amount of the 2014 Notes for 2018 Notes, leaving $51.3 million of the aggregate principal amount of the 2014 Notes outstanding. The 2018 Notes accrued interest at a rate of 2.75% payable semi-annually. The 2018 Notes were set to mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the indenture governing the 2018 Notes. In the first quarter of 2019, $150.0 million of the 2018 Notes were converted into 19.5 million shares of our common stock and the 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
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million. $51.8 million of the proceeds of the 2019 Notes were used to retire $50.2 million aggregate principal amount of our 2014 Notes, leaving $1.1 million of aggregate principal value of 2014 Notes then outstanding.
The 2