Fluidigm Corporation (FLDM) Q2 2020 Earnings Conference Call August 6, 2020 5:00 PM ET Company Participants Agnes Lee – Vice President-Investor Relations Chris Linthwaite – President and Chief Executive Officer Vikram Jog – Chief Financial Officer Conference Call Participants Sung Ji Nam – BTIG Nathan Treybeck – UBS Steven Mah – Piper Sandler Operator Good afternoon, ladies and gentlemen, and welcome to the Fluidigm Second Quarter 2020 Financial Results Conference Call. At this time, all participants are in ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q2 2020 detail financial position, operations, and cash flows, reflecting decreased revenue, continued net loss, and balance sheet changes from a new lease and acquisition [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Comparison (in thousands) | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $42,965 | $21,661 | | Total current assets | $78,450 | $96,096 | | Goodwill | $106,328 | $104,108 | | Total assets | $282,348 | $264,812 | | **Liabilities & Equity** | | | | Total current liabilities | $38,348 | $32,821 | | Convertible notes, net | $54,013 | $53,821 | | Operating lease liabilities, non-current | $39,139 | $4,323 | | Total liabilities | $149,629 | $111,200 | | Total stockholders' equity | $132,719 | $153,612 | - A significant increase in the operating lease right-of-use asset and corresponding non-current lease liabilities was recorded, rising from approximately **$4.9 million** and **$4.3 million** to **$39.0 million** and **$39.1 million** respectively, primarily due to a new corporate headquarters lease[11](index=11&type=chunk)[108](index=108&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2020 | Q2 2019 | H1 2020 | H1 2019 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $26,058 | $28,196 | $53,675 | $58,307 | | Loss from operations | $(13,726) | $(14,636) | $(28,668) | $(28,842) | | Net loss | $(13,015) | $(13,753) | $(28,995) | $(39,218) | | Net loss per share | $(0.18) | $(0.20) | $(0.41) | $(0.61) | - The company recognized new sources of revenue in 2020, including **$3.0 million** in Development revenue and **$4.0 million** in Other revenue for the six months ended June 30, 2020, which were not present in the same period of 2019[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,085) | $(25,143) | | Net cash provided by (used in) investing activities | $27,586 | $(45,299) | | Net cash provided by financing activities | $8 | $1,187 | | Net increase (decrease) in cash | $20,304 | $(69,280) | | Cash at end of period | $44,040 | $26,121 | - Cash from investing activities was positive in H1 2020 due to **$34.4 million** in proceeds from sales and maturities of investments, partially offset by a **$5.2 million** acquisition, a reversal from H1 2019 which saw a **$44.6 million** purchase of investments[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - On January 17, 2020, the company acquired InstruNor AS for a purchase price of **$7.2 million**, consisting of **$5.2 million** in cash and **$2.0 million** in common stock, resulting in **$2.2 million** of goodwill and **$5.4 million** of developed technology[71](index=71&type=chunk)[73](index=73&type=chunk)[75](index=75&type=chunk) - In March 2020, the company entered into an agreement to settle intellectual property infringement claims, receiving a **$3.5 million** payment, of which **$3.1 million** was recognized as license revenue[42](index=42&type=chunk) - As of June 30, 2020, the company had **$54.0 million** in net carrying value of convertible notes, comprising **$1.1 million** of 2.75% notes due 2034 and **$53.0 million** of 5.25% notes due 2024[100](index=100&type=chunk) - A new operating lease for the corporate headquarters commenced in March 2020, resulting in the recognition of a Right-of-Use (ROU) asset of **$35.7 million** and an operating lease liability of **$35.3 million** over a ten-year term[108](index=108&type=chunk) - Effective March 31, 2020, the company signed an OEM Supply and Development Agreement, expected to provide up to **$11.7 million** in payments, with **$3.0 million** of development revenue recognized from this agreement in Q2 2020[151](index=151&type=chunk) - Subsequent to the quarter end, in July 2020, the company entered into a letter contract with the NIH under the RADx program for COVID-19 testing, with a total proposed budget of up to **$37.0 million** and initial funding access of up to **$12.2 million**[154](index=154&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2020 financial results, noting an **8% revenue decrease** due to COVID-19, partially offset by new revenue streams, expense management, and a new NIH contract, with sufficient liquidity for 18 months [Overview and Recent Developments](index=36&type=section&id=Overview%20and%20Recent%20Developments) - The company's business was significantly impacted by the COVID-19 pandemic, with an estimated **30-40%** of customers closed or at reduced capacity as of June 30, 2020, an improvement from **60-70%** in April 2020[167](index=167&type=chunk) - In response to the pandemic, the company filed for Emergency Use Authorization (EUA) from the FDA for its saliva-based Advanta Dx SARS-CoV-2 Assay in June 2020[168](index=168&type=chunk) - In July 2020, Fluidigm entered into a letter contract with the NIH under the RADx program to expand production capacity for COVID-19 testing, with a total proposed budget of up to **$37.0 million**[170](index=170&type=chunk) - To manage liquidity during the pandemic, the company implemented operating expense reductions, including temporary salary cuts and constrained hiring, and deferred payment of U.S. payroll taxes under the CARES Act[169](index=169&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Revenue by Source - Q2 2020 vs Q2 2019 (in thousands) | Revenue Source | Q2 2020 | Q2 2019 | % Change | | :--- | :--- | :--- | :--- | | Instruments | $8,577 | $12,201 | (30)% | | Consumables | $8,828 | $11,034 | (20)% | | **Product revenue** | **$17,405** | **$23,235** | **(25)%** | | Service revenue | $5,140 | $4,961 | 4% | | Development revenue | $3,000 | $0 | NA | | Other (Grant/License) | $513 | $0 | NA | | **Total revenue** | **$26,058** | **$28,196** | **(8)%** | Revenue by Geography - Q2 2020 vs Q2 2019 (in thousands) | Geography | Q2 2020 | Q2 2019 | % Change | | :--- | :--- | :--- | :--- | | Americas | $13,940 | $11,120 | 25% | | EMEA | $6,557 | $11,217 | (42)% | | Asia-Pacific | $5,561 | $5,859 | (5)% | | **Total revenue** | **$26,058** | **$28,196** | **(8)%** | - The increase in Americas revenue was driven by **$3.0 million** in development revenue and **$0.5 million** in grant revenue, which offset declines in product sales[186](index=186&type=chunk) - Product and service margin decreased by **2.0 percentage points** in Q2 2020 compared to Q2 2019, primarily due to fixed depreciation and amortization costs on a lower revenue base and lower factory utilization[201](index=201&type=chunk) - Selling, general and administrative (SG&A) expenses decreased by **$1.5 million (7%)** in Q2 2020, driven by lower compensation, sales commissions, and a **$1.2 million** reduction in travel expenses, partially offset by a **$1.1 million** increase in facilities costs for the new headquarters[208](index=208&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2020, principal sources of liquidity consisted of **$43.0 million** in cash and cash equivalents and **$2.4 million** in short-term investments[220](index=220&type=chunk) - Net cash used in operating activities for the first six months of 2020 was **$7.1 million**, a significant improvement from the **$25.1 million** used in the same period of 2019[220](index=220&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) - The company has a **$15.0 million** revolving credit facility, which was amended in April 2020 to extend the maturity to August 2022, with **$7.3 million** availability and no borrowings outstanding as of June 30, 2020[237](index=237&type=chunk)[238](index=238&type=chunk) - In March 2020, the company established an "at the market" (ATM) equity offering program to sell up to **$50 million** of common stock, though no shares had been sold under this program as of the report date[239](index=239&type=chunk) - Management believes that existing cash, cash equivalents, and investments will be sufficient to meet working capital and capital expenditure needs for at least the next **18 months**[240](index=240&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are foreign currency and interest rate fluctuations, with a **10% change** in either not materially impacting financial position, and no hedging contracts are currently used - The company's primary market risks are foreign currency exchange and interest rate sensitivity[245](index=245&type=chunk) - A **10%** change in foreign currency exchange rates or interest rates would not have had a material impact on the company's financial position or results of operations for the periods presented[246](index=246&type=chunk)[247](index=247&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2020, the company's disclosure controls and procedures were effective at the reasonable assurance level[251](index=251&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[252](index=252&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, with management believing no pending matters will materially adversely affect its business or financial condition - The company states that it does not currently believe any pending legal matters would have a material adverse effect on its business or financial condition[255](index=255&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including the ongoing adverse effects of the COVID-19 pandemic, a history of net losses, intense competition, reliance on single-source suppliers, and substantial outstanding debt - The COVID-19 pandemic is identified as a primary risk, having significantly and adversely affected business operations, financial position, and cash flows through reduced demand, operational inefficiencies, and supply chain disruptions[258](index=258&type=chunk)[259](index=259&type=chunk) - The company has a history of significant losses, with an accumulated deficit of **$652.7 million** as of June 30, 2020, and may continue to incur substantial losses for the foreseeable future[266](index=266&type=chunk) - The company faces high competition from established life science companies with greater resources and name recognition, such as Illumina, Thermo Fisher Scientific, and Becton, Dickinson and Company[268](index=268&type=chunk)[269](index=269&type=chunk) - There is a risk that the FDA may not grant the Emergency Use Authorization (EUA) for the company's Advanta™ Dx SARS-CoV-2 RT-PCR assay, or could revoke it after issuance, which would require halting commercial distribution[313](index=313&type=chunk) - The company is dependent on single and sole source suppliers for critical components, such as the specialized polymer for IFCs and detectors for Hyperion/Helios systems, making it vulnerable to supply disruptions[297](index=297&type=chunk)[298](index=298&type=chunk) - As of June 30, 2020, the company had significant outstanding debt, including **$55.0 million** of 5.25% convertible senior notes due 2024, which poses risks such as requiring cash flow for interest payments and limiting operational flexibility[362](index=362&type=chunk) [Other Information](index=79&type=section&id=Item%205.%20Other%20Information) On August 4, 2020, the compensation committee approved the 2020 Change of Control and Severance Plan, replacing the prior plan and detailing executive severance benefits - On August 4, 2020, the company's board approved the Fluidigm Corporation 2020 Change of Control and Severance Plan, which replaces the prior plan expiring on August 21, 2020[397](index=397&type=chunk) - Under the new plan, in the event of a qualifying termination following a change of control, the CEO is entitled to **250%** of base salary plus target bonus, **30 months** of COBRA, and **100%** equity vesting acceleration[400](index=400&type=chunk) [Exhibits](index=82&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Open Market Sale Agreement, amended employee stock plans, and the new Change of Control and Severance Plan - Key exhibits filed include the Open Market Sale Agreement with Jefferies, the amended 2017 Employee Stock Purchase Plan, the amended 2011 Equity Incentive Plan, and the new 2020 Change of Control and Severance Plan[407](index=407&type=chunk)

Fluidigm Corporation Q2 2020 August 2020 FLUIDIGM® Forward-looking statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, statements regarding market opportunities and growth rates, access to infectious disease, immuno-oncology and diagnostics markets, expected uses for and advantages of company products, including a COVID-19 assay that is under FDA review, implementation and expected results of st ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section covers financial statements, management's analysis, market risk, and internal controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Q1 2020 financials show revenue decreased to $27.6 million, net loss narrowed to $16.0 million, and assets increased [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, detailing assets, liabilities, and equity as of March 31, 2020 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $34,992 | $21,661 | | Total current assets | $82,433 | $96,096 | | Goodwill | $106,328 | $104,108 | | Total assets | $290,219 | $264,812 | | **Liabilities & Equity** | | | | Total current liabilities | $35,364 | $32,821 | | Convertible notes, net | $53,920 | $53,821 | | Total liabilities | $148,723 | $111,200 | | Total stockholders' equity | $141,496 | $153,612 | - **Total assets increased to $290.2 million** as of March 31, 2020, **from $264.8 million** at December 31, 2019, primarily driven by an increase in operating lease right-of-use assets and goodwill[10](index=10&type=chunk) - **Total liabilities increased to $148.7 million from $111.2 million**, largely due to a significant increase in non-current operating lease liabilities[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net loss for the three months ended March 31, 2020 Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Total revenue | $27,617 | $30,111 | | Loss from operations | $(14,942) | $(14,206) | | Loss from extinguishment of debt | $0 | $(9,000) | | Net loss | $(15,980) | $(25,465) | | Net loss per share, basic and diluted | $(0.23) | $(0.44) | - **Total revenue decreased by 8.3% year-over-year, from $30.1 million in Q1 2019 to $27.6 million in Q1 2020**[13](index=13&type=chunk) - **Net loss significantly narrowed to $16.0 million in Q1 2020 from $25.5 million in Q1 2019**, primarily because the prior-year period included a $9.0 million loss on extinguishment of debt[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities for Q1 2020 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,295) | $(20,130) | | Net cash provided by (used in) investing activities | $17,460 | $(9,757) | | Net cash provided by (used in) financing activities | $(503) | $147 | | Net increase (decrease) in cash | $12,331 | $(29,767) | | Cash at end of period | $36,067 | $65,634 | - **Net cash used in operating activities improved significantly to $4.3 million in Q1 2020 from $20.1 million in Q1 2019**, despite a similar operating loss, mainly due to changes in working capital and the absence of a large non-cash loss on debt extinguishment[20](index=20&type=chunk) - **Investing activities provided $17.5 million in cash**, driven by **$23.6 million in proceeds** from maturities of investments, partially offset by a **$5.2 million acquisition**[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements - On January 17, 2020, the company **acquired InstruNor AS for $7.2 million**, consisting of **$5.2 million in cash** and **$2.0 million in stock**, resulting in **$2.2 million of goodwill**[63](index=63&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - In March 2020, the company **recognized $3.1 million in license revenue** from a settlement agreement for intellectual property infringement claims[34](index=34&type=chunk) - Due to the impact of COVID-19, a quantitative impairment test was performed on goodwill and developed technology intangibles during Q1 2020, with no impairment recognized[74](index=74&type=chunk) - In Q1 2019, the company **retired $150.0 million of its 2018 Convertible Notes** by converting them into **19.5 million shares of common stock**, recognizing a **$9.0 million loss on the extinguishment**[87](index=87&type=chunk) - Subsequent to the quarter end, on April 21, 2020, the company amended its Revolving Credit Facility with Silicon Valley Bank, extending the maturity date by two years to August 2, 2022[148](index=148&type=chunk)[149](index=149&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the 8% year-over-year revenue decline to $27.6 million for Q1 2020, attributing it to the COVID-19 pandemic's impact on customer facility closures, which reduced demand for mass cytometry instruments and consumables. This was partially offset by license revenue and higher microfluidics instrument sales. The gross margin decreased due to fixed costs on lower revenue. Operating expenses remained relatively flat. The net loss narrowed significantly due to the absence of a $9.0 million loss on debt extinguishment recorded in the prior year. The company is actively managing expenses, including salary reductions, in response to the pandemic and believes its liquidity is sufficient for at least the next 18 months [Recent Developments](index=33&type=section&id=Recent%20Developments) Highlights the company's response to COVID-19, including operational adjustments and research contributions - The company is actively responding to the COVID-19 pandemic as a designated essential business, but has experienced a significant slowdown in customer activities due to widespread lab closures[161](index=161&type=chunk)[162](index=162&type=chunk) - Fluidigm's microfluidics and mass cytometry technologies are being used by researchers responding to the pandemic for virus detection and immune profiling[163](index=163&type=chunk) - In response to market uncertainty, the company has implemented operating expense reductions, including salary cuts and constrained hiring[164](index=164&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Analyzes revenue, gross margin, and operating expenses, explaining Q1 2020 financial performance changes Revenue by Source (in thousands) | Source | Q1 2020 | Q1 2019 | Change | | :--- | :--- | :--- | :--- | | Instruments | $9,471 | $12,840 | (26)% | | Consumables | $9,510 | $11,987 | (21)% | | **Product revenue** | **$18,981** | **$24,827** | **(24)%** | | Service revenue | $5,186 | $5,284 | (2)% | | Grant revenue | $350 | $0 | NA | | License revenue | $3,100 | $0 | NA | | **Total revenue** | **$27,617** | **$30,111** | **(8)%** | Revenue by Geography (in thousands) | Geography | Q1 2020 | Q1 2019 | Change | | :--- | :--- | :--- | :--- | | Americas | $14,844 | $12,971 | 14% | | EMEA | $8,096 | $8,156 | (1)% | | Asia-Pacific | $4,677 | $8,984 | (48)% | | **Total revenue** | **$27,617** | **$30,111** | **(8)%** | - **The 8% decrease in total revenue** was driven by COVID-19 related shutdowns of customer facilities, impacting mass cytometry instruments and consumables. The decline was partially offset by **$3.1 million in license revenue**[178](index=178&type=chunk) - **Product and service margin decreased by 2.6 percentage points to 53.8% from 56.4%** year-over-year, due to the impact of fixed costs on a lower revenue base and unfavorable product mix[186](index=186&type=chunk) - **Interest expense decreased by 67% to $0.9 million**, and the prior year included a **$9.0 million loss on extinguishment of debt**, which were the primary drivers for the reduced net loss in Q1 2020[192](index=192&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses cash position, debt, and ability to meet short-term and long-term financial obligations - As of March 31, 2020, principal sources of liquidity consisted of **$35.0 million in cash and cash equivalents**, **$13.5 million in short-term investments**, and **$8.6 million available under the Revolving Credit Facility**[196](index=196&type=chunk) - **Net cash used in operating activities was $4.3 million**, a significant improvement **from $20.1 million** in the prior-year period, primarily due to working capital changes and the absence of non-cash charges related to debt extinguishment[199](index=199&type=chunk)[200](index=200&type=chunk) - The company believes its existing cash, cash equivalents, and investments will be sufficient to meet working capital and capital expenditure needs for at least the next 18 months[215](index=215&type=chunk) - In November 2019, the company **issued $55.0 million of 5.25% convertible senior notes** due 2024 and used most of the proceeds to retire a portion of its 2014 notes, effectively refinancing its debt to a later maturity[209](index=209&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposures are from fluctuations in foreign currency exchange rates and interest rates. Revenue is generally denominated in local currencies, while expenses are primarily in U.S. dollars, Singapore dollars, and Canadian dollars. In Q1 2020, the company recorded a foreign currency loss of $1.0 million. The company does not currently use hedging contracts. Interest rate risk on its cash and investment portfolio is considered not material - The company is exposed to foreign currency exchange risk as international operations expand. For Q1 2020, a **foreign currency loss of $1.0 million** was recorded, compared to a **gain of $45 thousand** in Q1 2019[222](index=222&type=chunk) - Interest rate sensitivity is considered low, as **cash, cash equivalents, and investments of $48.5 million** are held for working capital purposes in short-term instruments. **A 10% change in interest rates** would not have a material impact[223](index=223&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2020, and concluded they were effective at a reasonable assurance level. There were no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2020, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[225](index=225&type=chunk) - No changes occurred in the company's internal control over financial reporting during the first quarter of 2020 that have materially affected, or are reasonably likely to materially affect, these controls[226](index=226&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, other disclosures, and a list of filed exhibits [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal proceedings from time to time in the normal course of business. Management currently believes that the final outcome of any pending matters will not have a material adverse effect on the company's business, financial condition, or cash flows - The company is involved in various legal proceedings in the ordinary course of business but does not currently believe any pending matters will have a material adverse effect on its financial condition or results of operations[230](index=230&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks, with the most immediate being the material adverse effect of the COVID-19 pandemic on operations and financial performance, the extent of which remains unpredictable. Other significant risks include a history of losses, highly competitive markets, reliance on single-source suppliers, potential manufacturing disruptions at its facilities in Singapore and Canada, dependence on customer R&D spending, and the need to protect its intellectual property. Financial risks include stock price volatility, potential dilution from convertible notes, and the need for future capital [Risks Related to Fluidigm's Business and Strategy](index=44&type=section&id=Risks%20Related%20to%20Fluidigm%27s%20Business%20and%20Strategy) Outlines key business risks: COVID-19 impact, historical losses, competition, and supply chain vulnerabilities - The COVID-19 pandemic is having a material adverse effect on operations and financial performance due to reduced customer demand, particularly from academic research labs, and its full impact remains uncertain[233](index=233&type=chunk)[235](index=235&type=chunk) - The company has a history of significant net losses, with an **accumulated deficit of $639.7 million** as of March 31, 2020, and may continue to incur losses for the foreseeable future[242](index=242&type=chunk) - The company faces intense competition from established life science companies with greater resources, and its success depends on achieving market acceptance for its relatively new technologies[244](index=244&type=chunk)[249](index=249&type=chunk) - Manufacturing is concentrated in single facilities (Singapore for genomics/IFCs, Canada for mass cytometry), making the company vulnerable to disruptions from natural disasters, public health crises, or operational issues[264](index=264&type=chunk) - The business relies on single and sole source suppliers for critical components, such as specialized polymers for IFCs and detectors for Helios systems, posing a risk of supply chain interruption[273](index=273&type=chunk)[274](index=274&type=chunk) [Risks Related to Intellectual Property](index=61&type=section&id=Risks%20Related%20to%20Intellectual%20Property) Details risks in protecting proprietary technology, potential litigation, and reliance on third-party licenses - The company's commercial success depends on its ability to protect its proprietary technology through patents and other means, which is uncertain and may not provide a competitive advantage[323](index=323&type=chunk) - The company may be involved in costly and time-intensive lawsuits to enforce its patents or defend against infringement claims from third parties[326](index=326&type=chunk) - Fluidigm depends on technologies licensed from third parties, and the loss of these licenses could prevent the sale of its products. Some licensed technologies are subject to domestic manufacturing requirements due to U.S. government funding, which could pose a risk as manufacturing is currently done in Singapore[331](index=331&type=chunk)[334](index=334&type=chunk) [Risks Related to Our Common Stock](index=64&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) Addresses risks of stock price volatility, anti-takeover provisions, and dilution from convertible notes - The company's stock price may fluctuate significantly due to low trading volume and a high concentration of ownership, with the **top six stockholders controlling approximately 46.3% of outstanding shares** as of year-end 2019[338](index=338&type=chunk)[339](index=339&type=chunk) - Anti-takeover provisions in the company's charter documents and Delaware law could make a potential acquisition more difficult and may prevent stockholders from replacing management[341](index=341&type=chunk) - Conversion of the outstanding 2014 and 2019 Convertible Notes will dilute the ownership interest of existing stockholders and could depress the market price of the common stock[344](index=344&type=chunk) [Item 5. Other Information](index=66&type=section&id=Item%205.%20Other%20Information) No other material information is reported for this period [Item 6. Exhibits](index=67&type=section&id=Item%206.%20Exhibits) Lists all documents filed as exhibits, including certifications and XBRL data - The exhibit list includes certifications from the CEO and CFO as required by the Sarbanes-Oxley Act, as well as XBRL interactive data files[347](index=347&type=chunk)[349](index=349&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 _____________________________________________ Commission file number: 001-34180 FLUIDIGM CORPORATION (Exact name of registrant as specified in its charter) ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of the company's financial performance and condition [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements of Fluidigm Corporation, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue recognition, intangible assets, debt, leases, and fair value measurements [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | ASSETS (September 30, 2019) | Amount ($) | ASSETS (December 31, 2018) | Amount ($) | | :-------------------------- | :--------- | :-------------------------- | :--------- | | Cash and cash equivalents | 25,886 | Cash and cash equivalents | 95,401 | | Short-term investments | 36,875 | Short-term investments | — | | Accounts receivable (net) | 14,014 | Accounts receivable (net) | 16,651 | | Inventories | 14,998 | Inventories | 13,003 | | Total current assets | 96,554 | Total current assets | 127,106 | | Property and equipment, net | 8,396 | Property and equipment, net | 8,825 | | Goodwill | 104,108 | Goodwill | 104,108 | | Total assets | 269,394 | Total assets | 303,647 | | **LIABILITIES & EQUITY** | | **LIABILITIES & EQUITY** | | | Accounts payable | 5,339 | Accounts payable | 4,027 | | Accrued compensation | 8,621 | Accrued compensation | 14,470 | | Total current liabilities | 33,366 | Total current liabilities | 37,582 | | Convertible notes, net | 49,853 | Convertible notes, net | 172,058 | | Total liabilities | 106,789 | Total liabilities | 231,531 | | Total stockholders' equity | 162,605 | Total stockholders' equity | 72,116 | | Total liabilities and stockholders' equity | 269,394 | Total liabilities and stockholders' equity | 303,647 | - Total assets decreased from **$303.6 million** at December 31, 2018, to **$269.4 million** at September 30, 2019, primarily due to a significant reduction in cash and cash equivalents and the conversion of convertible notes[11](index=11&type=chunk) - Total liabilities significantly decreased from **$231.5 million** to **$106.8 million**, largely driven by the conversion of **$150.0 million** of 2018 Convertible Notes into common stock[11](index=11&type=chunk) - Total stockholders' equity more than doubled from **$72.1 million** to **$162.6 million**, primarily due to the issuance of common stock from the conversion of the 2018 Notes[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations (in thousands, except per share) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | YoY Change (%) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | YoY Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Total revenue | $26,496 | $28,963 | (9)% | $84,803 | $80,639 | 5% | | Gross profit | $14,038 | $15,822 | (11)% | $46,391 | $42,838 | 8% | | Loss from operations | $(13,816) | $(11,628) | (19)% | $(42,658) | $(37,046) | (15)% | | Interest expense | $(444) | $(4,019) | 89% | $(3,636) | $(9,824) | 63% | | Loss on extinguishment of debt | — | — | NA | $(9,000) | — | NA | | Net loss | $(12,887) | $(14,750) | 13% | $(52,105) | $(44,238) | (18)% | | Net loss per share, basic & diluted | $(0.19) | $(0.38) | 50% | $(0.79) | $(1.13) | 30% | | Shares used in computing net loss per share | 69,469 | 39,235 | 77% | 65,792 | 39,033 | 69% | - Total revenue decreased by **9%** for the three months ended September 30, 2019, but increased by **5%** for the nine months ended September 30, 2019, compared to the respective prior year periods[13](index=13&type=chunk) - Net loss improved by **13%** for the three months ended September 30, 2019, but worsened by **18%** for the nine months ended September 30, 2019, primarily due to a **$9.0 million** loss on extinguishment of debt in the nine-month period[13](index=13&type=chunk) - Interest expense significantly decreased by **89%** and **63%** for the three and nine months ended September 30, 2019, respectively, due to the retirement of the 2018 Convertible Notes[13](index=13&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the net loss and other comprehensive income or loss components, leading to total comprehensive loss Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :---------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(12,887) | $(14,750) | $(52,105) | $(44,238) | | Foreign currency translation adjustment | $(121) | $(11) | $(122) | $59 | | Net change in unrealized gain (loss) on investments | $(14) | $1 | $51 | $(1) | | Other comprehensive income (loss), net of tax | $(135) | $(10) | $(71) | $58 | | Comprehensive loss | $(13,022) | $(14,760) | $(52,176) | $(44,180) | - Comprehensive loss for the three months ended September 30, 2019, was **$(13.0) million**, an improvement from **$(14.8) million** in the prior year, primarily driven by a lower net loss[16](index=16&type=chunk) - For the nine months ended September 30, 2019, comprehensive loss increased to **$(52.2) million** from **$(44.2) million**, mainly due to the higher net loss[16](index=16&type=chunk) - Foreign currency translation adjustments resulted in losses of **$(121) thousand** and **$(122) thousand** for the three and nine months ended September 30, 2019, respectively, compared to smaller losses or gains in the prior year[16](index=16&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Changes in Stockholders' Equity (in thousands) | Item | Balance as of Dec 31, 2018 | Issuance of common stock on bond conversion | Stock-based compensation expense | Net loss | Other comprehensive income (loss) | Balance as of Sep 30, 2019 | | :-------------------------------- | :------------------------- | :---------------------------------- | :----------------------------- | :------- | :-------------------------------- | :------------------------- | | Common Stock Shares | 49,338 | 19,460 | — | — | — | 69,550 | | Common Stock Amount | $49 | $19 | — | — | — | $70 | | Additional Paid-in Capital | $631,605 | $133,279 | $8,247 | — | — | $774,249 | | Accumulated Other Comprehensive Loss | $(687) | — | — | — | $(71) | $(758) | | Accumulated Deficit | $(558,851) | — | — | $(52,105) | — | $(610,956) | | Total Stockholders' Equity | $72,116 | $133,298 | $8,247 | $(52,105) | $(71) | $162,605 | - Total stockholders' equity increased significantly from **$72.1 million** at December 31, 2018, to **$162.6 million** at September 30, 2019[17](index=17&type=chunk) - The primary driver for the increase in equity was the issuance of **19.5 million** shares of common stock due to the conversion of 2018 Convertible Notes, contributing **$133.3 million** to additional paid-in capital[17](index=17&type=chunk)[94](index=94&type=chunk) - Stock-based compensation expense added **$8.2 million** to additional paid-in capital during the nine months ended September 30, 2019[17](index=17&type=chunk)[111](index=111&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(29,691) | $(24,563) | | Net cash provided by (used in) investing activities | $(38,750) | $4,738 | | Net cash provided by (used in) financing activities | $1,006 | $(2,292) | | Net decrease in cash, cash equivalents and restricted cash | $(67,440) | $(22,227) | | Cash, cash equivalents and restricted cash at end of period | $27,961 | $35,829 | - Net cash used in operating activities increased to **$29.7 million** for the nine months ended September 30, 2019, from **$24.6 million** in the prior year, primarily due to a higher net loss and changes in working capital[21](index=21&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - Investing activities shifted from providing **$4.7 million** in cash in 2018 to using **$38.8 million** in 2019, driven by increased purchases of investments[21](index=21&type=chunk)[177](index=177&type=chunk) - Financing activities provided **$1.0 million** in 2019, a significant improvement from using **$2.3 million** in 2018, mainly due to proceeds from stock option exercises and ESPP, and lower debt issuance costs[21](index=21&type=chunk)[178](index=178&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the significant accounting policies and specific line items within the financial statements [Note 1. Description of Business](index=10&type=section&id=1.%20Description%20of%20Business) This note describes Fluidigm Corporation's business, products, and strategic focus in life science tools - Fluidigm Corporation, reincorporated in Delaware in 2007, develops, manufactures, and markets innovative life science tools, including instruments for Mass Cytometry, PCR, Library Prep, Single Cell Genomics, and related consumables[23](index=23&type=chunk)[24](index=24&type=chunk) - The company focuses on translational and clinical research, particularly in cancer, immunology, and immunotherapy, utilizing proprietary CyTOF® and microfluidics technologies[24](index=24&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and policies used in preparing the financial statements - The financial statements are prepared in conformity with U.S. GAAP, consolidating wholly-owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, the United Kingdom, China, and Germany[25](index=25&type=chunk) - Potentially dilutive common shares, including stock options, RSUs, performance awards, and convertible notes, were excluded from diluted net loss per share calculations as their effect was anti-dilutive[27](index=27&type=chunk)[28](index=28&type=chunk) - Revenue is primarily generated from product sales (instruments, consumables) and service revenue (contracts, repairs, training), recognized when control transfers or over the service period[30](index=30&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - The company adopted ASC 842, Leases, on January 1, 2019, recognizing **$9.2 million** in lease liabilities and **$7.4 million** in ROU assets, with no impact to retained earnings[45](index=45&type=chunk)[46](index=46&type=chunk)[48](index=48&type=chunk) - New accounting guidance being evaluated includes ASU 2018-15 (cloud computing costs), ASU 2017-04 (goodwill impairment simplification), and ASUs 2016-13/2018-19 (credit losses)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) [Note 3. Revenue](index=14&type=section&id=3.%20Revenue) This note disaggregates revenue by geographic market and source, and details deferred revenue and performance obligations Revenue Disaggregation by Geographic Markets (in thousands) | Geographic Market | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Americas | $11,112 | $13,654 | $35,203 | $37,008 | | Europe | $9,092 | $8,783 | $28,465 | $26,365 | | Asia-Pacific | $6,292 | $6,526 | $21,135 | $17,266 | | Total revenue | $26,496 | $28,963 | $84,803 | $80,639 | Revenue Disaggregation by Product, Service and Grant (in thousands) | Revenue Source | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Instruments | $9,159 | $13,890 | $34,200 | $31,831 | | Consumables | $11,507 | $10,352 | $34,528 | $34,665 | | Product revenue | $20,666 | $24,242 | $68,728 | $66,496 | | Service | $5,630 | $4,721 | $15,875 | $14,143 | | Grant | $200 | — | $200 | — | | Total revenue | $26,496 | $28,963 | $84,803 | $80,639 | - Deferred revenue increased from **$17.8 million** at December 31, 2018, to **$19.4 million** at September 30, 2019, with **$9.0 million** recognized and **$10.6 million** in new advance payments[54](index=54&type=chunk) Expected Revenue Recognition for Unfulfilled Performance Obligations (in thousands) | Fiscal Year | Expected Revenue | | :---------- | :--------------- | | 2019 (remainder) | $3,417 | | 2020 | $8,425 | | 2021 | $5,052 | | Thereafter | $4,110 | | Total | $21,004 | [Note 4. Goodwill and Intangible Assets, net](index=15&type=section&id=4.%20Goodwill%20and%20Intangible%20Assets,%20net) This note provides details on the company's goodwill and other intangible assets, including amortization schedules - Goodwill of **$104.1 million** was recognized from the DVS Sciences, Inc. acquisition in February 2014 and remained unchanged[58](index=58&type=chunk) Intangible Assets, Net (in thousands) | Asset Category | September 30, 2019 Net | December 31, 2018 Net | Weighted Average Amortization Period | | :--------------- | :--------------------- | :-------------------- | :----------------------------------- | | Developed technology | $49,000 | $57,400 | 10.0 years | | Patents and licenses | $3,634 | $4,413 | 7.8 years | - Amortization of intangibles was **$3.0 million** and **$9.2 million** for the three and nine months ended September 30, 2019, respectively[58](index=58&type=chunk) Expected Annual Amortization Expense (in thousands) | Fiscal Year | Developed Technology Amortization Expense | Patents and Licenses Amortization Expense | Total | | :---------- | :---------------------------------------- | :---------------------------------------- | :---- | | 2019 (remainder) | $2,800 | $260 | $3,060 | | 2020 | $11,200 | $1,042 | $12,242 | | 2021 | $11,200 | $887 | $12,087 | | 2022 | $11,200 | $804 | $12,004 | | 2023 | $11,200 | $634 | $11,834 | | Thereafter | $1,400 | $7 | $1,407 | | Total | $49,000 | $3,634 | $52,634 | [Note 5. Balance Sheet Details](index=16&type=section&id=5.%20Balance%20Sheet%20Details) This note provides detailed breakdowns of specific balance sheet accounts such as cash, inventories, and property and equipment Cash, Cash Equivalents and Restricted Cash (in thousands) | Item | September 30, 2019 | December 31, 2018 | | :-------------------------------------- | :----------------- | :---------------- | | Cash and cash equivalents | $25,886 | $95,401 | | Restricted cash | $2,075 | — | | Cash, cash equivalents and restricted cash | $27,961 | $95,401 | Inventories (in thousands) | Item | September 30, 2019 | December 31, 2018 | | :-------------- | :----------------- | :---------------- | | Raw materials | $7,504 | $5,996 | | Work-in-process | $319 | $650 | | Finished goods | $7,175 | $6,357 | | Total inventories, net | $14,998 | $13,003 | Property and Equipment, Net (in thousands) | Item | September 30, 2019 | December 31, 2018 | | :---------------------------------- | :----------------- | :---------------- | | Property and equipment, gross | $32,356 | $31,660 | | Less accumulated depreciation and amortization | $(23,967) | $(22,855) |\ | Construction-in-progress | $7 | $20 | | Property and equipment, net | $8,396 | $8,825 | Warranty Accrual Activity (in thousands) | Item | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Beginning balance | $1,091 | $608 | $863 | $699 |\ | Accrual for warranties | $255 | $458 | $912 | $1,195 | | Warranty costs incurred | $(239) | $(325) | $(668) | $(1,153) | | Ending balance | $1,107 | $741 | $1,107 | $741 | [Note 6. Convertible Notes and Credit Facility](index=18&type=section&id=6.%20Convertible%20Notes%20and%20Credit%20Facility) This note details the company's convertible debt instruments and its revolving credit facility - The 2018 Senior Convertible Notes, with an aggregate principal amount of **$150.0 million**, were fully converted into **19.5 million** shares of common stock and retired in the first quarter of 2019, resulting in a **$9.0 million** loss on extinguishment of debt[44](index=44&type=chunk)[69](index=69&type=chunk)[77](index=77&type=chunk) - As of September 30, 2019, **$51.3 million** aggregate principal amount of the 2.75% 2014 Senior Convertible Notes due 2034 remained outstanding[43](index=43&type=chunk)[79](index=79&type=chunk) Carrying Values of Convertible Notes (in thousands) | Note Type | September 30, 2019 | December 31, 2018 | | :---------------------- | :----------------- | :---------------- | | 2.75% 2014 Notes due 2034 | $49,853 | $49,794 | | 2.75% 2018 Notes due 2034 | — | $122,264 | | Total | $49,853 | $172,058 | - The company has a **$15.0 million** Revolving Credit Facility with Silicon Valley Bank, maturing on August 2, 2020, with **$9.0 million** available as of September 30, 2019, and no outstanding borrowings[80](index=80&type=chunk)[81](index=81&type=chunk) [Note 7. Leases](index=22&type=section&id=7.%20Leases) This note provides information on the company's lease arrangements, including right-of-use assets and lease liabilities Operating Lease Right-of-Use Assets, Net (in thousands) | Asset Category | September 30, 2019 Net | | :----------------------------- | :--------------------- | | Operating lease right-of-use buildings | $5,070 | | Operating lease right-of-use equipment | $42 | | Operating lease right-of-use vehicles | $240 | | Total | $5,352 | - Operating lease cost (including variable costs) for the nine months ended September 30, 2019, was **$4.7 million**, with **$2.1 million** attributed to variable costs[86](index=86&type=chunk) - The weighted-average remaining lease term is **4.6 years**, with a weighted-average discount rate of **5.1%**[86](index=86&type=chunk) Future Minimum Lease Payments and Sublease Income (in thousands) | Fiscal Year | Minimum Lease Payments for Operating Leases | Minimum Sublease Income | Net Amount | | :---------- | :---------------------------------------- | :---------------------- | :--------- | | 2019 (remainder) | $996 | $(132) | $864 | | 2020 | $1,956 | $(131) | $1,825 | | 2021 | $1,267 | — | $1,267 | | 2022 | $932 | — | $932 | | 2023 | $720 | — | $720 | | Thereafter | $1,800 | — | $1,800 | | Total future minimum payments (income) | $7,671 | $(263) | $7,408 | - A new operating lease for the corporate headquarters, commencing in early 2020, is expected to result in a ROU asset and lease liability of approximately **$47.4 million**[85](index=85&type=chunk) [Note 8. Fair Value of Financial Instruments](index=24&type=section&id=8.%20Fair%20Value%20of%20Financial%20Instruments) This note presents the fair value measurements for various financial instruments, including cash, investments, and convertible notes Fair Value of Cash and Available-for-Sale Securities (in thousands) | Asset Category | September 30, 2019 Fair Value | December 31, 2018 Fair Value | | :--------------- | :---------------------------- | :--------------------------- | | Cash-non-restricted | $14,053 | $17,685 | | Cash-restricted | $2,075 | — | | Money market funds | $11,833 | $77,716 | | U.S. treasury securities | $36,875 | — | | Total | $64,836 | $95,401 | Fair Value of Convertible Notes (in thousands) | Note Type | September 30, 2019 Fair Value | December 31, 2018 Fair Value | | :---------------------- | :---------------------------- | :--------------------------- | | 2014 Notes | $49,713 | $43,665 | | 2018 Notes | — | $171,843 | | Total | $49,713 | $215,508 | - The fair value of the 2014 and 2018 Notes is based on a Level II valuation using a market approach and market-based risk measurements[91](index=91&type=chunk) [Note 9. Shareholders' Equity](index=26&type=section&id=9.%20Shareholders'%20Equity) This note details changes in shareholders' equity, particularly related to common stock issuance and convertible note conversions - In Q1 2019, **19,460,260 shares** of common stock were issued from the conversion of 2018 Notes, adding **$133.3 million** to equity, equivalent to the fair value of the retired bonds[94](index=94&type=chunk) [Note 10. Stock-Based Plans](index=26&type=section&id=10.%20Stock-Based%20Plans) This note describes the company's stock-based compensation plans, including RSUs, stock options, and PSUs - The 2011 Equity Incentive Plan was amended in April 2019, increasing shares reserved by approximately **5.0 million** and extending its term to April 2029[99](index=99&type=chunk) Restricted Stock Units (RSUs) Activity (in thousands) | Item | Number of Units | Weighted-Average Grant Date Fair Value per Unit | | :-------------------------- | :-------------- | :-------------------------------------------- | | Balance as of Dec 31, 2018 | 1,812 | $7.09 | | RSU granted | 1,638 | $8.59 | | RSU released | (525) | $8.30 | | RSU forfeited | (284) | $7.97 | | Balance as of Sep 30, 2019 | 2,641 | $7.69 | - Unrecognized compensation costs for RSUs were **$17.4 million** as of September 30, 2019, to be recognized over a weighted average of **3.3 years**[103](index=103&type=chunk) Stock Options Activity (in thousands) | Item | Number of Options | Weighted-Average Exercise Price per Option | Weighted-Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | | :-------------------------- | :---------------- | :--------------------------------------- | :-------------------------------------------------- | :------------------------ | | Balance as of Dec 31, 2018 | 2,385 | $7.56 | 7.8 | $5,991 | | Options granted | 50 | $13.08 | | — | | Options exercised | (185) | $5.73 | | $1,147 | | Options forfeited | (164) | $9.56 | | — | | Balance as of Sep 30, 2019 | 2,086 | $7.69 | 7.1 | $244 | - Unrecognized compensation costs for stock options were **$2.8 million** as of September 30, 2019, to be recognized over a weighted average of **2.0 years**[104](index=104&type=chunk) - **400,839** performance stock units (PSUs) were granted in 2019, with vesting tied to Total Shareholder Return (TSR) relative to peers over three years, valued at **$16.90** per unit using a Monte Carlo simulation[105](index=105&type=chunk)[106](index=106&type=chunk) Share-based Compensation Expense (in thousands) | Item | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Options and Restricted Stock Units | $2,738 | $2,185 | $7,731 | $5,699 | | Employee Stock Purchase Plan | $291 | $118 | $561 | $358 | | Total Share-based Compensation | $3,029 | $2,303 | $8,292 | $6,057 | [Note 11. Income Taxes](index=29&type=section&id=11.%20Income%20Taxes) This note provides details on the company's income tax benefit and deferred tax assets and liabilities Income Tax Benefit (in thousands) | Period | Income Tax Benefit | | :-------------------------- | :----------------- | | 3 Months Ended Sep 30, 2019 | $1,168 | | 3 Months Ended Sep 30, 2018 | $780 | | 9 Months Ended Sep 30, 2019 | $2,269 | | 9 Months Ended Sep 30, 2018 | $2,167 | - The tax benefit was primarily due to the amortization of acquisition-related deferred tax liability, partially offset by foreign operations' tax provision[113](index=113&type=chunk) - The company maintains a valuation allowance for deferred tax assets, mainly net operating loss carryforwards, which differs from the **21%** U.S. Federal statutory rate[114](index=114&type=chunk)[116](index=116&type=chunk) [Note 12. Information about Geographic Areas](index=29&type=section&id=12.%20Information%20about%20Geographic%20Areas) This note disaggregates revenue by geographic region, highlighting sales to key markets - Sales to customers in the United States represented **40%** (**$10.5 million**) and **39%** (**$32.9 million**) of total revenues for the three and nine months ended September 30, 2019, respectively[119](index=119&type=chunk) - Sales to customers in China represented **15%** (**$3.9 million**) and **13%** (**$11.4 million**) of total revenues for the three and nine months ended September 30, 2019, respectively[120](index=120&type=chunk) - No individual customer accounted for more than **10%** of total revenues for the periods presented[121](index=121&type=chunk) [Note 13. Commitments and Contingencies](index=30&type=section&id=13.%20Commitments%20and%20Contingencies) This note outlines the company's indemnification provisions and involvement in legal proceedings - The company enters into indemnification provisions with business partners, customers, and suppliers, typically for intellectual property infringement claims, with maximum potential payments often unlimited[122](index=122&type=chunk) - Fluidigm is subject to various legal proceedings and claims in the ordinary course of business, including intellectual property and employment matters, for which liabilities are accrued if probable and estimable[123](index=123&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, discussing revenue drivers, cost trends, and liquidity. It highlights the impact of strategic initiatives and accounting changes on financial results [Overview](index=31&type=section&id=Overview) This section provides a high-level summary of Fluidigm's business, strategic initiatives, and financial performance - Fluidigm is a global biotechnology tools provider focused on improving health insights through innovative technologies and multi-omic tools for translational and clinical research, particularly in cancer and immunology[130](index=130&type=chunk)[131](index=131&type=chunk) - Total revenue for the nine months ended September 30, 2019, was **$84.8 million**, up from **$80.6 million** in the prior year, but the company has an accumulated deficit of **$611.0 million** as of September 30, 2019[133](index=133&type=chunk) - Strategic initiatives since 2017, including resource reallocation, operational efficiencies, and cost-savings, have led to reduced net losses and a strengthened balance sheet through common stock issuance and debt reduction[134](index=134&type=chunk) [Critical Accounting Policies, Significant Judgments and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies,%20Significant%20Judgments%20and%20Estimates) This section discusses the key accounting policies and estimates that require significant management judgment - The preparation of financial statements requires significant estimates and assumptions, which, if materially different from actual results, could affect financial presentation[135](index=135&type=chunk) - No material changes in critical accounting policies occurred during the nine months ended September 30, 2019, except for the adoption of ASC 842, Leases[136](index=136&type=chunk)[137](index=137&type=chunk) [Recent Accounting Pronouncements](index=32&type=section&id=Recent%20Accounting%20Pronouncements) This section details the impact of recently adopted and pending accounting standards on the company's financial statements - The company adopted ASC 842, Leases, on January 1, 2019, using a modified retrospective approach, recognizing **$9.2 million** in lease liabilities and **$7.4 million** in ROU assets[137](index=137&type=chunk)[138](index=138&type=chunk)[140](index=140&type=chunk) - The company elected practical expedients for lease identification, classification, and initial direct costs, and chose not to recognize ROU assets or lease liabilities for short-term leases (one year or less)[139](index=139&type=chunk)[141](index=141&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section analyzes the company's revenues, costs, and profitability for the reported periods Key Financial Metrics and YoY Changes (in thousands, except percentages) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | YoY Change (%) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | YoY Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Total revenue | $26,496 | $28,963 | (9)% | $84,803 | $80,639 | 5% | | Product revenue | $20,666 | $24,242 | (15)% | $68,728 | $66,496 | 3% | | Service revenue | $5,630 | $4,721 | 19% | $15,875 | $14,143 | 12% | | Gross profit | $14,038 | $15,822 | (11)% | $46,391 | $42,838 | 8% | | Gross margin | 53.0% | 54.6% | (1.6) ppts | 54.7% | 53.1% | 1.6 ppts | | Research and development | $7,125 | $7,430 | (4)% | $23,362 | $22,072 | 6% | | Selling, general and administrative | $20,729 | $20,020 | 4% | $65,687 | $57,812 | 14% | | Loss from operations | $(13,816) | $(11,628) | (19)% | $(42,658) | $(37,046) | (15)% | | Interest expense | $(444) | $(4,019) | 89% | $(3,636) | $(9,824) | 63% | | Net loss | $(12,887) | $(14,750) | 13% | $(52,105) | $(44,238) | (18)% | - Instrument sales decreased by **34%** for the three months ended September 30, 2019, due to lower unit sales of mass cytometry instruments, while consumables revenue increased by **11%**[150](index=150&type=chunk) - Gross margin decreased by **1.6 percentage points** for the three months due to lower plant utilization and service margins, but increased by **1.6 percentage points** for the nine months due to higher capacity utilization[155](index=155&type=chunk)[156](index=156&type=chunk) - Selling, general and administrative expenses increased by **4%** for the three months and **14%** for the nine months, driven by higher headcount-related costs and stock-based compensation, partially offset by lower employee compensation accruals[162](index=162&type=chunk)[163](index=163&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, sources of liquidity, and capital needs - As of September 30, 2019, principal liquidity sources included **$25.9 million** in cash and cash equivalents, **$36.9 million** in short-term investments, **$2.1 million** in restricted cash, and **$9.0 million** available under the Revolving Credit Facility[172](index=172&type=chunk) - Net cash used in operating activities was **$29.7 million** for the nine months ended September 30, 2019, primarily due to net loss and changes in working capital[174](index=174&type=chunk) - The company believes existing cash, cash equivalents, and short-term investments will be sufficient through December 31, 2020, but may need additional capital for operations, R&D, or acquisitions[182](index=182&type=chunk)[183](index=183&type=chunk) - The **$150.0 million** 2018 Convertible Notes were converted into common stock in Q1 2019, leaving **$51.3 million** of 2014 Notes outstanding, which holders can require repurchase of in 2021, 2024, and 2029[179](index=179&type=chunk)[180](index=180&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to market risks, primarily from foreign currency exchange rates and interest rates, and its approach to managing these risks - The company's financial position is subject to fluctuations from foreign currency exchange rates, as international revenue and expenses are denominated in various local currencies[188](index=188&type=chunk) - For the nine months ended September 30, 2019 and 2018, foreign exchange gains and losses were less than **$0.1 million**, and a **10%** change in exchange rates would not have a material impact[188](index=188&type=chunk) - The company holds **$62.8 million** in cash, cash equivalents, and short-term investments, primarily in short-term instruments, limiting material exposure to interest rate changes[189](index=189&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of the company's disclosure controls and procedures, confirming their effectiveness, and notes no material changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2019[191](index=191&type=chunk) - There were no material changes in internal control over financial reporting during the three months ended September 30, 2019[192](index=192&type=chunk) - Control systems provide reasonable, not absolute, assurance, and inherent limitations mean misstatements due to error or fraud may occur and not be detected[193](index=193&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes legal proceedings, risk factors, and other supplementary information [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is involved in various legal proceedings in the normal course of business, but currently believes that the outcomes will not have a material adverse effect on its financial condition or operations - Fluidigm is periodically involved in legal proceedings, including those related to employment and intellectual property[196](index=196&type=chunk) - Management believes the final outcome of currently pending matters will not have a material adverse effect on the business, operating results, financial condition, or cash flows[196](index=196&type=chunk) - Litigation, regardless of outcome, can adversely impact the company due to defense and settlement costs and diversion of management resources[196](index=196&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section details various risks that could materially affect Fluidigm's business, financial condition, and operating results, categorized into business and strategy risks, and intellectual property risks [Risks Related to Fluidigm's Business and Strategy](index=42&type=section&id=Risks%20Related%20to%20Fluidigm's%20Business%20and%20Strategy) This section details various risks inherent to Fluidigm's business model, market, operations, and financial strategy - Financial results and revenue growth rates have varied significantly, leading to stock price volatility, and the company may continue to incur substantial losses due to ongoing investments in R&D, sales, and marketing[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - The life science markets are highly competitive and subject to rapid technological change, posing risks from established and emerging competitors with greater resources and broader product lines[203](index=203&type=chunk)[204](index=204&type=chunk) - Market opportunities for emerging applications like mass cytometry may not develop as quickly as expected, and failure to achieve sufficient market acceptance for products could adversely affect revenue[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) - Development or manufacturing problems, reliance on single/sole source suppliers, and potential defects or errors in complex products could limit revenue growth, increase losses, and harm reputation[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - Dependence on customer R&D spending, international revenue exposure to foreign currency fluctuations and regulatory risks, and potential disruptions in shipping or manufacturing facilities could adversely affect business[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) - Future success relies on expanding the customer base, introducing new applications, and retaining key management and skilled personnel, with risks if these efforts are unsuccessful[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) - Potential acquisitions carry integration risks, and security breaches or IT failures could disrupt operations, damage reputation, and incur significant costs[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk) - Efficiency and cost-savings initiatives could be disruptive, and reliance on specialized reagents from third parties could limit product marketing if availability or formulation changes[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk) - Seeking medical device regulation (FDA/foreign) would entail significant time, expense, and ongoing compliance, and current RUO products could become subject to such regulation before approval, harming sales[243](index=243&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) - Failure to maintain effective internal controls over financial reporting could impair accuracy and timing of financial reporting, and impairment of goodwill or other intangible assets could materially affect financial condition[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk) - Future capital needs are uncertain, and additional funding may cause dilution or unfavorable terms; failure to comply with credit facility covenants could accelerate debt repayment[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) - Risks related to taxation in multiple jurisdictions, including disagreements with authorities and limitations on net operating loss carryforwards, could adversely affect the effective income tax rate and financial position[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) - Adverse global economic conditions, inability to expand sales and marketing, and challenges in implementing an ERP system could harm revenue, profitability, and operations[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk) - Changes in accounting principles or interpretations could significantly impact financial position and results of operations, requiring system and process changes[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk) - Significant outstanding indebtedness, particularly the 2014 Notes, poses risks including cash flow diversion for interest payments, increased vulnerability to economic conditions, and limitations on future borrowing capacity[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk) [Risks Related to Intellectual Property](index=58&type=section&id=Risks%20Related%20to%20Intellectual%20Property) This section outlines risks associated with protecting and enforcing the company's intellectual property rights - The ability to protect intellectual property through patents, copyrights, trade secrets, and trademarks is uncertain, as patents may not issue or may be challenged, and competitors could design around them[281](index=281&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk) - Involvement in lawsuits to protect or enforce IP rights, or defend against infringement claims, could be time-intensive, costly, and adversely impact business or stock price, potentially requiring licenses or royalty payments[286](index=286&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk) - Claims of wrongful use or disclosure of trade secrets by employees could lead to litigation, injunctive relief, and loss of key personnel or work product, harming future product development and sales[289](index=289&type=chunk) - Dependence on licensed technologies, including core IFC and mass cytometry, means loss of rights or disputes over license terms could prevent product sales and materially affect business[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk) - Manufacturing restrictions related to U.S. governmental grants (domestic manufacturing requirements) and Canadian government agencies (commercialization efforts, march-in rights) could adversely affect operations and financial condition[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) [Item 5. Other Information](index=61&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information is reported in this section[296](index=296&type=chunk) [Item 6. Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section lists the documents filed as exhibits to the Form 10-Q, including amendments to lease agreements, certifications from executive officers, and XBRL-related documents - Exhibits include the Tenth Amendment to Lease Agreement, CEO and CFO certifications (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), and various XBRL documents[300](index=300&type=chunk) [SIGNATURES](index=63&type=section&id=SIGNATURES) This section contains the required signatures of the registrant's authorized officers, confirming the filing of the report - The report is signed by Stephen Christopher Linthwaite, President and Chief Executive Officer, and Vikram Jog, Chief Financial Officer, on November 7, 2019[304](index=304&type=chunk)

PART I. FINANCIAL INFORMATION This part presents unaudited financial statements, notes, and management's discussion of financial condition and operations [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue recognition, asset details, debt, leases, fair value measurements, equity, stock-based compensation, income taxes, geographic information, and commitments and contingencies [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific dates | Item | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | | :------------------------------------------------------------------------------------------------ | :--------------------------- | :------------------------------- | | **ASSETS** | | | | Cash and cash equivalents | $24,046 | $95,401 | | Short-term investments | $44,815 | — | | Accounts receivable, net | $19,262 | $16,651 | | Inventories | $14,269 | $13,003 | | Prepaid expenses and other current assets | $4,387 | $2,051 | | Total current assets | $106,779 | $127,106 | | Property and equipment, net | $8,298 | $8,825 | | Operating lease right-of-use asset, net | $6,506 | — | | Other non-current assets | $6,302 | $6,208 | | Developed technology, net | $51,800 | $57,400 | | Goodwill | $104,108 | $104,108 | | **Total assets** | **$283,793** | **$303,647** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable | $8,075 | $4,027 | | Accrued compensation and related benefits | $8,281 | $14,470 | | Operating lease liabilities, current | $3,350 | — | | Other accrued liabilities | $5,642 | $7,621 | | Deferred revenue, current | $11,972 | $11,464 | | Total current liabilities | $37,320 | $37,582 | | Convertible notes, net | $49,833 | $172,058 | | Deferred tax liability, net | $12,295 | $13,714 | | Operating lease liabilities, non-current | $4,812 | — | | Deferred revenue, non-current | $6,318 | $6,327 | | Other non-current liabilities | $575 | $1,850 | | Total liabilities | $111,153 | $231,531 | | Total stockholders' equity | $172,640 | $72,116 | | **Total liabilities and stockholders' equity** | **$283,793** | **$303,647** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net loss over specific reporting periods | Item | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :--------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Product revenue | $23,235 | $21,777 | $48,062 | $42,254 | | Service revenue | $4,961 | $4,651 | $10,245 | $9,422 | | **Total revenue** | **$28,196** | **$26,428** | **$58,307** | **$51,676** | | Cost of product revenue | $11,100 | $11,160 | $22,489 | $21,382 | | Cost of service revenue | $1,733 | $1,680 | $3,465 | $3,278 | | **Total cost of revenue** | **$12,833** | **$12,840** | **$25,954** | **$24,660** | | **Gross profit** | **$15,363** | **$13,588** | **$32,353** | **$27,016** | | Research and development | $7,865 | $7,386 | $16,237 | $14,642 | | Selling, general and administrative | $22,134 | $18,987 | $44,958 | $37,792 | | **Total operating expenses** | **$29,999** | **$26,373** | **$61,195** | **$52,434** | | **Loss from operations** | **$(14,636)** | **$(12,785)** | **$(28,842)** | **$(25,418)** | | Interest expense | $(491) | $(3,916) | $(3,192) | $(5,805) | | Loss on extinguishment of debt | — | — | $(9,000) | — | | Other income, net | $231 | $256 | $715 | $348 | | **Loss before income taxes** | **$(14,896)** | **$(16,445)** | **$(40,319)** | **$(30,875)** | | Income tax benefit | $1,143 | $204 | $1,101 | $1,387 | | **Net loss** | **$(13,753)** | **$(16,241)** | **$(39,218)** | **$(29,488)** | | Net loss per share, basic and diluted | $(0.20) | $(0.42) | $(0.61) | $(0.76) | | Shares used in computing net loss per share, basic and diluted | 69,158 | 39,003 | 63,923 | 38,930 | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This statement presents net loss and other comprehensive income/loss, reflecting all non-owner equity changes | Item | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :-------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net loss | $(13,753) | $(16,241) | $(39,218) | $(29,488) | | Other comprehensive income (loss), net of tax: | | | | | | Foreign currency translation adjustment | $(9) | $26 | $(1) | $69 | | Net change in unrealized gain on investments | $63 | $2 | $65 | $1 | | Other comprehensive income, net of tax | $54 | $28 | $64 | $70 | | **Comprehensive loss** | **$(13,699)** | **$(16,213)** | **$(39,154)** | **$(29,418)** | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement outlines changes in equity accounts, including common stock, paid-in capital, and accumulated deficit | Item | Common Stock Shares (in thousands) | Common Stock Amount (in thousands) | Additional Paid-in Capital (in thousands) | Accumulated Other Comprehensive (Loss)/Income (in thousands) | Accumulated Deficit (in thousands) | Total Stockholders' Equity (in thousands) | | :--------------------------------------- | :--------------------------------- | :--------------------------------- | :---------------------------------------- | :----------------------------------------------------------- | :--------------------------------- | :---------------------------------------- | | Balance as of December 31, 2018 | 49,338 | $49 | $631,605 | $(687) | $(558,851) | $72,116 | | Issuance of common stock on bond conversion | 19,460 | $19 | $133,279 | — | — | $133,298 | | Issuance of restricted stock, net | 140 | $1 | $(177) | — | — | $(176) | | Issuance of common stock from option exercises | 53 | — | $255 | — | — | $255 | | Stock-based compensation expense | — | — | $2,207 | — | — | $2,207 | | Net loss | — | — | — | — | $(25,465) | $(25,465) | | Other comprehensive income, net of tax | — | — | — | $10 | — | $10 | | Balance as of March 31, 2019 | 68,991 | $69 | $767,169 | $(677) | $(584,316) | $182,245 | | Issuance of restricted stock, net | 183 | — | $(325) | — | — | $(325) | | Issuance of common stock from option exercises | 130 | — | $793 | — | — | $793 | | Issuance of common stock under ESPP | 96 | — | $641 | — | — | $641 | | Stock-based compensation expense | — | — | $2,985 | — | — | $2,985 | | Net loss | — | — | — | — | $(13,753) | $(13,753) | | Other comprehensive income, net of tax | — | — | — | $54 | — | $54 | | Balance as of June 30, 2019 | 69,400 | $69 | $771,263 | $(623) | $(598,069) | $172,640 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash flows from operating, investing, and financing activities over specific periods | Item | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(25,143) | $(20,499) | | Net cash provided by (used in) investing activities | $(45,299) | $3,936 | | Net cash provided by (used in) financing activities | $1,187 | $(2,152) | | Effect of foreign exchange rate fluctuations on cash and cash equivalents | $(25) | $83 | | **Net decrease in cash, cash equivalents and restricted cash** | **$(69,280)** | **$(18,632)** | | Cash, cash equivalents and restricted cash at beginning of period | $95,401 | $58,056 | | **Cash, cash equivalents and restricted cash at end of period** | **$26,121** | **$39,424** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on the company's accounting policies, financial instruments, and operational activities, including revenue recognition, asset valuation, debt management, lease accounting, equity changes, stock-based compensation, income taxes, geographic information, and commitments and contingencies [Note 1. Description of Business](index=10&type=section&id=Note%201.%20Description%20of%20Business) This note describes Fluidigm's business, microfluidic technology, life science tools, and research focus - Fluidigm Corporation, reincorporated in Delaware in 2007, commercializes microfluidic technology and creates, manufactures, and markets innovative technologies and life science tools, including instruments for Mass Cytometry, PCR, Library Prep, Single Cell Genomics, and related consumables. The company focuses on translational and clinical research, particularly in cancer, immunology, and immunotherapy[22](index=22&type=chunk)[23](index=23&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=10&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines key accounting principles, methods, and recent standard adoptions - The company adopted Topic 842, Leases, on January 1, 2019, recognizing **$9.2 million** in lease liabilities and **$7.4 million** in ROU assets, with no impact on retained earnings[45](index=45&type=chunk)[47](index=47&type=chunk) - Potentially dilutive common shares, including stock options, RSUs, performance awards, and convertible notes, were excluded from diluted net loss per share calculations for being anti-dilutive[26](index=26&type=chunk)[27](index=27&type=chunk) - Revenue is recognized from product sales (instruments, consumables) at the point of control transfer and service sales (contracts, repairs, training) over time or at completion[29](index=29&type=chunk)[31](index=31&type=chunk)[34](index=34&type=chunk) [Note 3. Revenue](index=14&type=section&id=Note%203.%20Revenue) This note details revenue by geographic market, product, service, and deferred revenue information | Geographic Markets | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :----------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Americas | $11,120 | $12,520 | $24,091 | $23,354 | | Europe | $11,217 | $9,109 | $19,373 | $17,582 | | Asia Pacific | $5,859 | $4,799 | $14,843 | $10,740 | | **Total revenue** | **$28,196** | **$26,428** | **$58,307** | **$51,676** | | Product and Service | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Instruments | $12,201 | $10,421 | $25,041 | $17,941 | | Consumables | $11,034 | $11,356 | $23,021 | $24,313 | | **Product revenue** | **$23,235** | **$21,777** | **$48,062** | **$42,254** | | Service | $4,961 | $4,651 | $10,245 | $9,422 | | **Total revenue** | **$28,196** | **$26,428** | **$58,307** | **$51,676** | - Deferred revenue at June 30, 2019, was **$18.3 million**, with **$6.8 million** of the opening balance recognized as revenue during the six months ended June 30, 2019[53](index=53&type=chunk) [Note 4. Goodwill and Intangible Assets, net](index=16&type=section&id=Note%204.%20Goodwill%20and%20Intangible%20Assets,%20net) This note details goodwill and intangible assets, including amortization and acquisition origins - Goodwill of **$104.1 million** was recognized from the DVS acquisition in February 2014[59](index=59&type=chunk) | Asset Type | June 30, 2019 Net (in thousands) | December 31, 2018 Net (in thousands) | Weighted Average Amortization Period | | :------------------- | :------------------------------- | :----------------------------------- | :----------------------------------- | | Developed technology | $51,800 | $57,400 | 10.0 years | | Patents and licenses | $3,896 | $4,413 | 7.8 years | - Amortization of intangibles was **$3.1 million** for each of the three months ended June 30, 2019 and 2018, and **$6.2 million** for each of the six months ended June 30, 2019 and 2018[59](index=59&type=chunk) [Note 5. Balance Sheet Details](index=16&type=section&id=Note%205.%20Balance%20Sheet%20Details) This note provides further breakdown of cash, inventories, and warranty liabilities | Item | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | | :------------------------------------ | :--------------------------- | :------------------------------- | | Cash and cash equivalents | $24,046 | $95,401 | | Restricted cash | $2,075 | — | | **Cash, cash equivalents and restricted cash** | **$26,121** | **$95,401** | | Item | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | | :---------------- | :--------------------------- | :------------------------------- | | Raw materials | $7,023 | $5,996 | | Work-in-process | $553 | $650 | | Finished goods | $6,693 | $6,357 | | **Total inventories, net** | **$14,269** | **$13,003** | | Item | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :-------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Beginning balance | $930 | $591 | $863 | $699 | | Accrual for warranties | $371 | $401 | $657 | $738 | | Warranty costs incurred | $(210) | $(383) | $(429) | $(828) | | **Ending balance** | **$1,091** | **$609** | **$1,091** | **$609** | [Note 6. Convertible Notes and Credit Facility](index=18&type=section&id=Note%206.%20Convertible%20Notes%20and%20Credit%20Facility) This note details convertible notes, conversions, outstanding amounts, and the revolving credit facility - In Q1 2019, **$150.0 million** of 2018 Notes were converted into **19.5 million shares** of common stock, resulting in a **$9.0 million** loss on extinguishment of debt and a net impact of **$133.3 million** on equity[78](index=78&type=chunk) - As of June 30, 2019, **$51.25 million** principal amount of 2014 Notes remained outstanding, maturing on February 1, 2034, with holder repurchase options in 2021, 2024, and 2029[79](index=79&type=chunk)[66](index=66&type=chunk)[69](index=69&type=chunk) - The company has a **$15.0 million** revolving credit facility with Silicon Valley Bank, maturing August 2, 2020, with **$12.5 million** available as of June 30, 2019, and no outstanding borrowings[80](index=80&type=chunk) [Note 7. Leases](index=23&type=section&id=Note%207.%20Leases) This note outlines lease accounting under ASC 842, including liabilities, ROU assets, and future commitments - The company adopted ASC 842 on January 1, 2019, recognizing **$9.2 million** in lease liabilities and **$7.4 million** in ROU assets[47](index=47&type=chunk) - A new operating lease for the corporate headquarters, commencing late 2019/early 2020 with a **10.25-year term**, is expected to result in approximately **$46.7 million** in ROU assets and lease liabilities[87](index=87&type=chunk) | Item | Six Months Ended June 30, 2019 (in thousands) | | :----------------------------------------------------------------------------------------------------- | :-------------------------------------------- | | Operating lease cost (including variable costs) | $3,056 | | Variable costs including non-lease component | $1,303 | | Cash paid for amounts included in the measurement of operating lease liabilities (included in net cash used in operating activities) | $2,061 | [Note 8. Fair Value of Financial Instruments](index=25&type=section&id=Note%208.%20Fair%20Value%20of%20Financial%20Instruments) This note provides fair value measurements for financial instruments like cash, investments, and convertible notes | Item | Carrying Amount (in thousands) | Fair Value (in thousands) | | :-------------------- | :----------------------------- | :------------------------ | | Total cash | $18,003 | $18,003 | | Available-for-sale | $52,868 | $52,933 | | **Total** | **$70,871** | **$70,936** | | Notes | June 30, 2019 Par Value (in thousands) | June 30, 2019 Carrying Value (in thousands) | June 30, 2019 Fair Value (in thousands) | December 31, 2018 Par Value (in thousands) | December 31, 2018 Carrying Value (in thousands) | December 31, 2018 Fair Value (in thousands) | | :--------- | :------------------------------------- | :------------------------------------------ | :-------------------------------------- | :----------------------------------------- | :---------------------------------------------- | :------------------------------------------ | | 2014 Notes | $51,250 | $49,833 | $49,559 | $51,250 | $49,794 | $43,665 | | 2018 Notes | — | — | — | $149,999 | $122,264 | $171,843 | | **Total** | **$51,250** | **$49,833** | **$49,559** | **$201,249** | **$172,058** | **$215,508** | [Note 9. Shareholders' Equity](index=27&type=section&id=Note%209.%20Shareholders'%20Equity) This note details changes in shareholders' equity, including common stock issuances from bond conversions - In Q1 2019, the conversion of 2018 Notes resulted in the issuance of **19,460,260 common shares** and a **$133.3 million** increase in equity[96](index=96&type=chunk) [Note 10. Stock-Based Plans](index=27&type=section&id=Note%2010.%20Stock-Based%20Plans) This note describes stock-based compensation plans, including amendments, terminations, and related expenses - The 2011 Equity Incentive Plan was amended in April 2019 to increase reserved shares by approximately **5.0 million** and extend its term to April 2029[101](index=101&type=chunk) - The Inducement Plan was terminated in June 2019, with no further grants, while outstanding awards remain subject to its terms[103](index=103&type=chunk) | Item | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Options and Restricted Stock Units | $2,848 | $1,888 | $4,993 | $3,514 | | Employee Stock Purchase Plan | $144 | $119 | $270 | $240 | | **Total Share-based Compensation** | **$2,992** | **$2,007** | **$5,263** | **$3,754** | [Note 11. Income Taxes](index=29&type=section&id=Note%2011.%20Income%20Taxes) This note explains the income tax benefit, its components, and factors affecting the effective tax rate - The company recorded a tax benefit of **$1.1 million** for both the three and six months ended June 30, 2019, primarily from the amortization of acquisition-related deferred tax liability, partially offset by foreign operations provision[114](index=114&type=chunk) - The tax benefit differs from the **21%** U.S. Federal statutory rate due to a valuation allowance for deferred tax assets, mainly net operating loss carryforwards[115](index=115&type=chunk) [Note 12. Information about Geographic Areas](index=30&type=section&id=Note%2012.%20Information%20about%20Geographic%20Areas) This note breaks down revenue by geographic region, highlighting sales contributions from key markets - Sales to customers in the United States represented **35%** (**$9.9 million**) and **38%** (**$22.4 million**) of total revenues for the three and six months ended June 30, 2019, respectively[120](index=120&type=chunk) - Sales to customers in China represented **14%** (**$4.0 million**) and **13%** (**$7.5 million**) of total revenues for the three and six months ended June 30, 2019, respectively, showing an increase from prior year[121](index=121&type=chunk) [Note 13. Commitments and Contingencies](index=30&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) This note discloses indemnification provisions and legal proceedings, assessing potential financial impact - The company enters into indemnification provisions in the ordinary course of business, typically with business partners, customers, and suppliers, for intellectual property infringement claims, with maximum potential payments often not limited[123](index=123&type=chunk) - The company is subject to various legal proceedings and claims, including intellectual property and employment matters, and accrues liabilities for probable and estimable losses[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, including an overview of its business, critical accounting policies, recent accounting changes, and a detailed analysis of results of operations, liquidity, and capital resources. It highlights revenue growth, gross margin improvements, changes in operating expenses, and the impact of debt extinguishment [Overview](index=33&type=section&id=Overview) This section introduces Fluidigm's business, strategic focus, financial trends, and operational efficiency initiatives - Fluidigm is a global biotechnology tools provider focused on translational and clinical research, particularly cancer, immunology, and immunotherapy, utilizing proprietary CyTOF® and microfluidics technologies[131](index=131&type=chunk)[132](index=132&type=chunk) - Total revenue for the six months ended June 30, 2019, increased to **$58.3 million** from **$51.7 million** in the prior year, but the company has an accumulated deficit of **$598.1 million** as of June 30, 2019[135](index=135&type=chunk) - The company has implemented operational efficiencies and cost-savings initiatives since 2017, leading to reduced net losses (**$76.0 million** in 2016 to **$59.0 million** in 2018) and a strengthened balance sheet through equity issuance and debt reduction[136](index=136&type=chunk) [Critical Accounting Policies, Significant Judgments and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies,%20Significant%20Judgments%20and%20Estimates) This section discusses accounting policies requiring significant judgment and estimates, and their financial impact - The preparation of financial statements requires significant estimates and assumptions, which, if materially different from actual results, could affect financial condition and results of operations[137](index=137&type=chunk) - No material changes in critical accounting policies occurred during the six months ended June 30, 2019, except for the adoption of ASC 842[138](index=138&type=chunk) [Recent Accounting Pronouncements](index=34&type=section&id=Recent%20Accounting%20Pronouncements) This section details new accounting standard adoptions, specifically ASC 842 for leases, and its financial impact - The company adopted ASC 842 (Leases) on January 1, 2019, using a modified retrospective approach, recognizing **$9.2 million** in lease liabilities and **$7.4 million** in ROU assets, with no impact on retained earnings[139](index=139&type=chunk)[140](index=140&type=chunk)[142](index=142&type=chunk) - The company elected practical expedients under ASC 842, including not reassessing prior conclusions on lease identification/classification and not recognizing ROU assets/liabilities for short-term leases (one year or less)[141](index=141&type=chunk)[143](index=143&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) The company experienced revenue growth driven by mass cytometry instruments, improved gross margins due to better capacity utilization, and increased operating expenses from higher headcount and product development. Interest expense significantly decreased following debt extinguishment, while a one-time loss was recognized from the conversion of convertible notes | Item | Three Months Ended June 30, 2019 (in thousands) | % | Three Months Ended June 30, 2018 (in thousands) | % | Six Months Ended June 30, 2019 (in thousands) | % | Six Months Ended June 30, 2018 (in thousands) | % | | :---------------------------------- | :---------------------------------------------- | :- | :---------------------------------------------- | :- | :-------------------------------------------- | :- | :---------------------------------------------- | :- | | Revenue | $28,196 | 100 | $26,428 | 100 | $58,307 | 100 | $51,676 | 100 | | Cost of revenue | $12,833 | 46 | $12,840 | 48 | $25,954 | 45 | $24,660 | 48 | | Gross profit | $15,363 | 54 | $13,588 | 52 | $32,353 | 55 | $27,016 | 52 | | Total operating expenses | $29,999 | 106 | $26,373 | 100 | $61,195 | 105 | $52,434 | 101 | | Loss from operations | $(14,636) | (52) | $(12,785) | (48) | $(28,842) | (50) | $(25,418) | (49) | | Interest expense | $(491) | (1) | $(3,916) | (15) | $(3,192) | (5) | $(5,805) | (12) | | Loss on extinguishment of debt | — | — | — | — | $(9,000) | (15) | — | — | | Other income, net | $231 | 1 | $256 | 1 | $715 | 1 | $348 | 1 | | Loss before income taxes | $(14,896) | (52) | $(16,445) | (62) | $(40,319) | (69) | $(30,875) | (60) | | Income tax benefit | $1,143 | 4 | $204 | 1 | $1,101 | 2 | $1,387 | 3 | | Net loss | $(13,753) | (48) | $(16,241) | (61) | $(39,218) | (67) | $(29,488) | (57) | [Revenue](index=35&type=section&id=Revenue_MD%26A) This section analyzes revenue performance, highlighting growth drivers, regional contributions, and segment trends - Total revenue increased by **7%** to **$28.2 million** for Q2 2019 and **13%** to **$58.3 million** for H1 2019, driven by higher mass cytometry instrument sales, partially offset by lower microfluidics sales[149](index=149&type=chunk)[151](index=151&type=chunk) - Americas revenue decreased **11%** in Q2 2019 due to lower mass cytometry instruments and microfluidics sales, while Europe grew **23%** and Asia-Pacific grew **22%** due to increased instrument and consumables sales[150](index=150&type=chunk) - Product revenue increased **7%** for Q2 2019 and **14%** for H1 2019, primarily from higher mass cytometry instrument sales, while consumables revenue decreased **3%** in Q2 2019 due to lower microfluidics consumables[152](index=152&type=chunk)[153](index=153&type=chunk) [Cost of Revenue, Gross Profit and Gross Margin](index=37&type=section&id=Cost%20of%20Revenue,%20Gross%20Profit%20and%20Gross%20Margin) This section analyzes cost of revenue, gross profit, and gross margin trends, attributing changes to utilization and pricing | Item | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Year-Over-Year Change | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | Year-Over-Year Change | | :-------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------- | :-------------------------------------------- | :---------------------------------------------- | :-------------------- | | Cost of product revenue | $11,100 | $11,160 | (1)% | $22,489 | $21,382 | 5% | | Cost of service revenue | $1,733 | $1,680 | 3% | $3,465 | $3,278 | 6% | | **Total cost of revenue** | **$12,833** | **$12,840** | **—%** | **$25,954** | **$24,660** | **5%** | | **Gross profit** | **$15,363** | **$13,588** | **13%** | **$32,353** | **$27,016** | **20%** | | **Gross margin** | **54.5%** | **51.4%** | **3.1 ppts** | **55.5%** | **52.3%** | **3.2 ppts** | - Gross margin increased by **3.1 percentage points** for Q2 2019 and **3.2 percentage points** for H1 2019, driven by higher instrument capacity utilization and spreading fixed costs over a larger revenue base, despite lower instrument pricing[157](index=157&type=chunk)[158](index=158&type=chunk) [Operating Expenses](index=38&type=section&id=Operating%20Expenses) This section analyzes R&D and SG&A expense changes, detailing underlying cost drivers | Item | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Year-Over-Year Change | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | Year-Over-Year Change | | :------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------- | :-------------------------------------------- | :---------------------------------------------- | :-------------------- | | Research and development | $7,865 | $7,386 | 6% | $16,237 | $14,642 | 11% | | Selling, general and administrative | $22,134 | $18,987 | 17% | $44,958 | $37,792 | 19% | | **Total** | **$29,999** | **$26,373** | **14%** | **$61,195** | **$52,434** | **17%** | - R&D expense increased by **6%** for Q2 2019 and **11%** for H1 2019, primarily due to higher laboratory supplies, equipment, and headcount costs[161](index=161&type=chunk)[162](index=162&type=chunk) - SG&A expense increased by **17%** for Q2 2019 and **19%** for H1 2019, driven by higher compensation-related costs (including stock-based compensation due to executive changes and increased headcount), business development, legal, advertising, and promotional expenses[164](index=164&type=chunk)[165](index=165&type=chunk) [Interest Expense, Loss on Extinguishment of Debt, and Other Income, Net](index=38&type=section&id=Interest%20Expense,%20Loss%20on%20Extinguishment%20of%20Debt,%20and%20Other%20Income,%20Net) This section analyzes non-operating income/expense, including debt extinguishment and interest rate impacts | Item | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Year-Over-Year Change | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | Year-Over-Year Change | | :------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------- | :-------------------------------------------- | :---------------------------------------------- | :-------------------- | | Interest expense | $491 | $3,916 | (87)% | $3,192 | $5,805 | (45)% | | Loss on extinguishment of debt | — | — | NA | $9,000 | — | NA | | Other income, net | $(231) | $(256) | (10)% | $(715) | $(348) | 105% | | **Total** | **$260** | **$3,660** | **(93)%** | **$11,477** | **$5,457** | **110%** | - Interest expense significantly decreased for Q2 and H1 2019 due to the retirement of the 2018 Notes in Q1 2019[169](index=169&type=chunk) - A **$9.0 million** loss on extinguishment of debt was recognized in H1 2019 due to the conversion of **$150.0 million** of 2018 Notes into common stock[168](index=168&type=chunk) [Income Tax Benefit](index=39&type=section&id=Income%20Tax%20Benefit_MD%26A) This section discusses the income tax benefit, its sources, and factors influencing the effective tax rate - The company recorded a tax benefit of **$1.1 million** for both the three and six months ended June 30, 2019, primarily from the amortization of acquisition-related deferred tax liability, partially offset by foreign operations[172](index=172&type=chunk) - Future release of valuation allowances on deferred tax assets in foreign subsidiaries, contingent on achieving future profitability, could decrease the income tax provision[173](index=173&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash, investments, and an available revolving credit facility. Operating activities continue to use cash, while investing activities reflect significant purchases of investments. Financing activities provided cash, primarily from stock option exercises and ESPP, following the conversion of convertible notes [Sources of Liquidity](index=39&type=section&id=Sources%20of%20Liquidity) This section identifies primary liquidity sources: cash, investments, and available credit facilities - As of June 30, 2019, principal liquidity sources included **$24.0 million** in cash and cash equivalents, **$44.8 million** in short-term investments, and **$12.5 million** available under the Revolving Credit Facility[174](index=174&type=chunk) [Net Cash Used in Operating Activities](index=40&type=section&id=Net%20Cash%20Used%20in%20Operating%20Activities) This section analyzes cash flows from operating activities, detailing net loss and non-cash adjustments | Period | Net Cash Used in Operating Activities (in thousands) | | :---------------------- | :--------------------------------------------------- | | Six Months Ended June 30, 2019 | $(25,143) | | Six Months Ended June 30, 2018 | $(20,499) | - Net cash used in operating activities increased to **$25.1 million** for H1 2019 (from **$20.5 million** in H1 2018), driven by a net loss of **$39.2 million**, partially offset by non-cash adjustments and changes in assets/liabilities[178](index=178&type=chunk)[179](index=179&type=chunk) [Net Cash Provided by (Used in) Investing Activities](index=40&type=section&id=Net%20Cash%20Provided%20by%20(Used%20in)%20Investing%20Activities) This section analyzes cash flows from investing activities, focusing on investments and capital expenditures | Period | Net Cash Provided by (Used in) Investing Activities (in thousands) | | :---------------------- | :----------------------------------------------------------------- | | Six Months Ended June 30, 2019 | $(45,299) | | Six Months Ended June 30, 2018 | $3,936 | - Net cash used in investing activities was **$45.3 million** for H1 2019, primarily due to **$44.6 million** in purchases of investments and **$0.7 million** in capital expenditures[181](index=181&type=chunk) [Net Cash Provided by (Used in) Financing Activities](index=40&type=section&id=Net%20Cash%20Provided%20by%20(Used%20in)%20Financing%20Activities) This section analyzes cash flows from financing activities, including equity issuances and debt transactions | Period | Net Cash Provided by (Used in) Financing Activities (in thousands) | | :---------------------- | :----------------------------------------------------------------- | | Six Months Ended June 30, 2019 | $1,187 | | Six Months Ended June 30, 2018 | $(2,152) | - Net cash provided by financing activities was **$1.2 million** for H1 2019, mainly from stock option exercises (**$1.0 million**) and ESPP proceeds (**$0.6 million**), partially offset by tax payments for equity awards (**$0.5 million**)[182](index=182&type=chunk) [Liquidity and Capital Resources (continued)](index=40&type=section&id=Liquidity%20and%20Capital%20Resources_continued) This section assesses future liquidity, capital requirements, and potential funding strategies - The company believes existing cash, cash equivalents, and investments, along with the Revolving Credit Facility, will be sufficient for working capital and capital expenditures for at least the next **18 months** (through December 31, 2020)[186](index=186&type=chunk) - Future funding requirements are uncertain and may necessitate additional capital raises through debt or equity financing, depending on market acceptance, R&D costs, litigation, regulatory approvals, and potential acquisitions[187](index=187&type=chunk) [Off-Balance Sheet Arrangements](index=41&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements per SEC regulations - As of June 30, 2019, the company did not have any off-balance sheet arrangements as defined by SEC Regulation S-K[188](index=188&type=chunk) [Contractual Obligations and Commitments](index=41&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines contractual obligations, primarily operating leases, and notes material changes - Operating lease obligations include current headquarters and foreign subsidiary leases, with a new headquarters lease expected to commence in late 2019 or early 2020[189](index=189&type=chunk) - No material changes occurred in contractual obligations during the six months ended June 30, 2019, compared to those disclosed in the 2018 annual report on Form 10-K, other than those related to leases[190](index=190&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section assesses the company's exposure to market risks, primarily from foreign currency exchange rates and interest rates. It notes that the company does not use derivative financial instruments for trading and believes its exposure to these risks is not material due to its investment strategy [Foreign Currency Exchange Risk](index=41&type=section&id=Foreign%20Currency%20Exchange%20Risk) This section assesses exposure to foreign currency fluctuations and their potential financial impact - The company's operations and cash flows are subject to foreign currency exchange rate fluctuations, with most revenue in USD but expenses in local currencies (US, Singapore, Canada)[192](index=192&type=chunk) - For the six months ended June 30, 2019 and 2018, foreign exchange rate changes resulted in gains and losses of **less than $0.1 million**, and a **10%** change in rates would not have a material impact[193](index=193&type=chunk) [Interest Rate Sensitivity](index=42&type=section&id=Interest%20Rate%20Sensitivity) This section evaluates exposure to interest rate changes, particularly for cash and short-term investments - As of June 30, 2019, the company held **$68.9 million** in cash, cash equivalents, and short-term investments, primarily in short-term instruments like treasury bills and money market funds[194](index=194&type=chunk) - Due to the short-term nature of investments, the company believes it has no material exposure to changes in fair value from interest rate fluctuations, and a **10%** decrease in rates would not materially affect interest income[194](index=194&type=chunk) [Fair Value of Financial Instruments](index=42&type=section&id=Fair%20Value%20of%20Financial%20Instruments_MD%26A) This section discusses market risk management for financial instruments and derivative usage policy - The company does not have material exposure to market risk from investments and does not use derivative financial instruments for speculative or trading purposes, though hedging strategies may be adopted in the future[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2019, and reports no material changes in internal control over financial reporting during the quarter. It also acknowledges the inherent limitations of control systems [Evaluation of Disclosure Controls and Procedures](index=42&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on management's assessment of disclosure controls and procedures effectiveness - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2019[196](index=196&type=chunk) [Changes in Internal Control Over Financial Reporting](index=42&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports any material changes in internal control over financial reporting during the period - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2019[197](index=197&type=chunk) [Limitations on the Effectiveness of Controls](index=42&type=section&id=Limitations%20on%20the%20Effectiveness%20of%20Controls) This section acknowledges inherent limitations of control systems, noting that absolute assurance is not guaranteed - Control systems provide reasonable, not absolute, assurance, and inherent limitations mean misstatements due to error or fraud may occur and go undetected[198](index=198&type=chunk) PART II. OTHER INFORMATION This part includes legal proceedings, risk factors, other information, exhibits, and official signatures [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is involved in various legal proceedings and claims in the ordinary course of business, but currently believes these matters will not have a material adverse effect on its financial condition or operations - The company is involved in various legal proceedings and claims in the ordinary course of business, but currently believes the final outcome of pending matters would not have a material adverse effect on its business, operating results, financial condition, or cash flows[200](index=200&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks to Fluidigm's business, including financial volatility, ongoing losses, intense market competition, challenges in product development and market acceptance, supply chain dependencies, international business risks, and intellectual property protection issues. It also addresses risks related to regulatory compliance, IT security, and capital needs [Risks Related to Fluidigm's Business and Strategy](index=43&type=section&id=Risks%20Related%20to%20Fluidigm's%20Business%20and%20Strategy) This section details risks from financial performance, market competition, product development, and operations - The company's financial results and revenue growth rates have varied significantly, and future variability could lead to stock price volatility, especially given its increasing dependence on the capital-intensive mass cytometry business[203](index=203&type=chunk) - Fluidigm has incurred significant net losses since inception, with an accumulated deficit of **$598.1 million** as of June 30, 2019, and expects to continue incurring losses due to ongoing R&D and sales/marketing investments[205](index=205&type=chunk)[206](index=206&type=chunk) - The life science markets are highly competitive and subject to rapid technological change, with numerous established competitors having greater resources, which could lead to pricing pressures and reduced profit margins[207](index=207&type=chunk)[208](index=208&type=chunk) [Risks Related to Intellectual Property](index=59&type=section&id=Risks%20Related%20to%20Intellectual%20Property) This section outlines risks protecting intellectual property, potential litigation, and reliance on licensed technologies - The company's ability to protect its intellectual property through patents, copyrights, trade secrets, and contractual restrictions is uncertain, and patents may be challenged or circumvented, affecting competitive advantage[285](index=285&type=chunk)[286](index=286&type=chunk) - Litigation to protect or enforce intellectual property rights, or defend against infringement claims, can be costly, time-intensive, and may result in substantial legal fees, royalty payments, or delays in product introductions[290](index=290&type=chunk)[291](index=291&type=chunk) - The company relies on licensed technologies, and any loss of rights due to non-compliance, termination, or inability to secure future licenses on favorable terms could prevent product sales and adversely affect the business[294](index=294&type=chunk)[296](index=296&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other material information to report beyond what is already disclosed in the filing - This section states "None," indicating no other material information to report[300](index=300&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists the exhibits accompanying the Form 10-Q, including amendments to the equity incentive plan and certifications - The report includes an exhibit list detailing documents incorporated by reference or filed herewith, such as amendments to the 2011 Equity Incentive Plan and certifications pursuant to the Sarbanes-Oxley Act[302](index=302&type=chunk)[304](index=304&type=chunk) [SIGNATURES](index=64&type=section&id=SIGNATURES) This section contains the official signatures of the company's President and CEO and CFO, certifying the report - The report is signed by Stephen Christopher Linthwaite, President and Chief Executive Officer, and Vikram Jog, Chief Financial Officer, on August 7, 2019[307](index=307&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 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 FLUIDIGM CORPORATION (Exact name of registrant as specified in its charter) Delaware 77-0513190 (State or other jurisdict ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 _____________________________________________ Commission file number: 001-34180 FLUIDIGM CORPORATION (Exact name of registrant as specified in its charter) ...