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Document And Entity Information
6 Months Ended
Jun. 30, 2011
Jul. 25, 2011
Document And Entity Information
Entity Registrant Name FLUIDIGM CORP
Entity Central Index Key 0001162194
Document Type 10-Q
Document Period End Date Jun 30, 2011
Amendment Flag false
Current Fiscal Year End Date --12-31
Entity Filer Category Non-accelerated Filer
Entity Common Stock, Shares Outstanding 19,992,765
Document Fiscal Year Focus 2011
Document Fiscal Period Focus Q2
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Condensed Consolidated Balance Sheets (USD  $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
ASSETS
Cash and cash equivalents  $ 10,129  $ 5,723
Available-for-sales securities 54,222 0
Accounts receivable (net of allowances of  $467 at both June 30, 2011 and December 31, 2010) 10,316 8,100
Inventories 4,850 4,893
Prepaid expenses and other current assets 1,472 2,165
Total current assets 80,989 20,881
Property and equipment, net 2,539 2,328
Investment, at cost 1,340 1,340
Other non-current assets 787 252
Total assets 85,655 24,801
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable 2,983 3,155
Accrued compensation and related benefits 1,666 1,904
Other accrued liabilities 3,014 3,379
Deferred revenue, current portion 1,786 1,336
Long-term debt, current portion 8,310 4,561
Line of credit 0 3,125
Convertible preferred stock warrants 0 1,052
Total current liabilities 17,759 18,512
Long-term debt, net of current portion 4,696 10,139
Deferred revenue, net of current portion 577 426
Other non-current liabilities 318 341
Total liabilities 23,350 29,418
Commitments and contingencies    
Convertible preferred stock issuable in series:  $0.001 par value, 10,000 and 11,269 shares authorized at June 30, 2011 and December 31, 2010, respectively; 0 and 10,296 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively 0 184,550
Stockholders' equity (deficit):
Common stock:  $0.001 par value, 200,000 and 18,327 shares authorized at June 30, 2011 and December 31, 2010, respectively; 19,986 and 1,937 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively 20 2
Additional paid-in capital 276,910 10,936
Accumulated other comprehensive loss (774) (778)
Accumulated deficit (213,851) (199,327)
Total stockholders' equity (deficit) 62,305 (189,167)
Total liabilities, convertible preferred stock and stockholders' equity (deficit)  $ 85,655  $ 24,801
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Condensed Consolidated Balance Sheets (Parenthetical) (USD  $)
In Thousands, except Per Share data
Jun. 30, 2011
Dec. 31, 2010
Condensed Consolidated Balance Sheets
Accounts receivable, allowances  $ 467  $ 467
Convertible preferred stock, par value  $ 0.001  $ 0.001
Convertible preferred stock, shares authorized 10,000 11,269
Convertible preferred stock, shares issued 0 10,296
Convertible preferred stock, shares outstanding 0 10,296
Common stock, par value  $ 0.001  $ 0.001
Common stock, shares authorized 200,000 18,327
Common stock, shares issued 19,986 1,937
Common stock, shares outstanding 19,986 1,937
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Condensed Consolidated Statements Of Operations (USD  $)
In Thousands, except Per Share data
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Revenue:
Product revenue  $ 9,711  $ 7,469  $ 18,123  $ 13,733
Collaboration revenue 754 75 921 75
Grant revenue 111 479 229 931
Total revenue 10,576 8,023 19,273 14,739
Costs and expenses:
Cost of product revenue 2,965 2,900 5,878 5,545
Research and development 3,422 3,447 6,642 6,635
Selling, general and administrative 7,843 5,902 15,285 12,023
Litigation settlement 3,000 0 3,000 0
Total costs and expenses 17,230 12,249 30,805 24,203
Loss from operations (6,654) (4,226) (11,532) (9,464)
Interest expense (512) (555) (2,272) (1,080)
(Loss) gain from changes in the fair value of convertible preferred stock warrants 0 (5) (1,483) 272
Gain from expiration of unexercised warrants 0 0 765 0
Other income (expense), net 42 108 108 (17)
Loss before income taxes (7,124) (4,678) (14,414) (10,289)
Provision for income taxes (62) (141) (110) (155)
Net loss (7,186) (4,819) (14,524) (10,444)
Deemed dividend related to the change in conversion rate of Series E convertible preferred stock 0 0 (9,900) 0
Net loss attributed to common stockholders  $ (7,186)  $ (4,819)  $ (24,424)  $ (10,444)
Net loss per share attributed to common stockholders, basic and diluted  $ (0.36)  $ (2.59)  $ (1.58)  $ (5.61)
Shares used in computing net loss per share attributed to common stockholders, basic and diluted 19,975 1,863 15,464 1,862
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Condensed Consolidated Statements Of Cash Flows (USD  $)
In Thousands
6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Operating activities
Net loss  $ (14,524)  $ (10,444)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 503 632
Stock-based compensation expense 1,328 846
Loss (gain) from changes in the fair value of convertible preferred stock warrants, net 1,483 (272)
Gain from expiration of unexercised warrants (765) 0
Write-off of debt discount upon note repayment 1,157 0
Amortization of debt discount and issuance cost 122 186
Changes in assets and liabilities:
Accounts receivable (2,245) 2,117
Inventories 42 (267)
Prepaid expenses and other assets 174 209
Accounts payable (173) (384)
Deferred revenue 600 834
Other liabilities (610) 516
Net cash used in operating activities (12,908) (6,027)
Investing activities
Purchases of available-for-sale securities (57,712) 0
Maturities of available-for-sale securities 3,490 0
Purchases of property and equipment (714) (658)
(Increase) decrease in restricted cash (21) 131
Net cash used in investing activities (54,957) (527)
Financing activities
Proceeds from initial public offering, net of issuance costs 76,946 0
Proceeds from exercise of stock options 242 11
Proceeds from note 5,000 0
Repayment of note (5,000) 0
Repayment of long-term debt (1,831) 0
Repayment of line of credit (3,125) 0
Net cash provided by financing activities 72,232 11
Effect of foreign exchange rate fluctuations on cash and cash equivalents 39 10
Net increase (decrease) in cash and cash equivalents 4,406 (6,533)
Cash and cash equivalents at beginning of period 5,723 14,602
Cash and cash equivalents at end of period 10,129 8,069
Supplemental disclosures of cash flow information
Conversion of convertible preferred stock to common stock upon initial public offering  $184,550  $0
Issuance of convertible preferred stock warrants in connection with note and warrant agreement and long-term debt 1,157 63
Extinguishment of convertible preferred stock warrants upon initial public offering 765 0
Conversion of convertible preferred stock warrants to common stock warrants 1,535 0
Net exercise of convertible preferred stock warrants  $ 1,391  $ 0
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Description Of Business
6 Months Ended
Jun. 30, 2011
Description Of Business
Description Of Business
1. Description of Business

Fluidigm Corporation (the Company) was incorporated in the State of California on May 19, 1999, to commercialize microfluidic technology initially developed at the California Institute of Technology. In July 2007, the Company was reincorporated in the State of Delaware. The Company's headquarters are located in South San Francisco, California. The Company develops, manufactures and markets microfluidic systems in the life science and agricultural biotechnology (Ag-Bio) industries. The Company's proprietary microfluidic systems consist of instruments and consumables, including chips and reagents. The Company's microfluidic systems are designed to simplify experimental workflow, increase throughput, reduce costs, and provide quality data. The Company markets systems and consumables to leading pharmaceutical and biotechnology companies, academic institutions, diagnostic laboratories, and Ag-Bio companies.

 

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Summary Of Significant Accounting Policies
6 Months Ended
Jun. 30, 2011
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies
2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and following the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These financial statements have been prepared on the same basis as the Company's annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of the Company's financial information. The results of operations for the three and six months ended June 30, 2011 are not necessarily indicative of the results to be expected for the year ending December 31, 2011 or for any other interim period or for any other future year. The balance sheet as of December 31, 2010 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

The preparation of these condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. On an ongoing basis, the Company evaluates its estimates, including critical accounting policies or estimates related to revenue recognition, income tax provisions, stock-based compensation, inventory valuation, and warrants to purchase convertible preferred stock. The Company bases its estimates on historical experience and on various relevant assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates.

The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2010 included in the Company's Annual Report on Form 10-K filed with the SEC.

Amended and Restated Certificate of Incorporation

In February 2011, the Company amended and restated its Certificate of Incorporation. The amendment and restatement increased the total number of shares of stock authorized for issuance from 29,595,999 to 210,000,000, consisting of an increase in the number of shares of common stock authorized for issuance from 18,327,000 to 200,000,000 and a decrease in the number of shares of preferred stock authorized for issuance from 11,268,999 to 10,000,000.

 

In January 2011, the Company amended and restated its Certificate of Incorporation decreasing the conversion price of its Series E convertible preferred stock from  $24.22 to  $18.63 per share. As a result, the Company recognized a deemed dividend of  $9,900,000 to reflect the fair value of the additional shares of common stock to be issued as a result of the change in conversion price of the Series E convertible preferred stock. The deemed dividend increased the net loss attributed to common stockholders in the calculation of basic and diluted net loss per share.

Reverse Stock Split

On February 3, 2011, the Company effected a 1 for 1.73 reverse stock split of the Company's issued and outstanding shares of common stock and convertible preferred stock, and changed the par value of the Company's common and preferred stock from  $0.0035 per share to  $0.001 per share. All issued and outstanding common stock, convertible preferred stock, options to purchase common stock, warrants to purchase convertible preferred stock, and per share amounts contained in these condensed consolidated financial statements have been retroactively adjusted to reflect this reverse stock split and par value change for all periods presented.

Initial Public Offering

On February 9, 2011, the Company's registration statement on Form S-1 relating to an initial public offering (IPO) of its common stock was declared effective by the SEC. Upon the closing of the IPO in February 2011, the Company sold 6,392,083 shares of common stock and received net cash proceeds of approximately  $77.0 million. Concurrently, all outstanding shares of convertible preferred stock converted by their terms into approximately 11,480,000 shares of common stock with the related carrying value of approximately  $184,550,000 reclassified to common stock and additional paid-in capital.

Net Loss per Share Attributed to Common Stockholders

The Company's basic and diluted net loss per share attributed to common stockholders is calculated by dividing net loss attributed to common stockholders by the weighted-average number of shares of common stock outstanding for the period. The Company's convertible preferred stock, options to purchase common stock and warrants to purchase convertible preferred stock are considered to be potential common shares but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive.

The following potential common shares were excluded from the computation of diluted net loss per share attributed to common stockholders for the interim periods presented because including them would have been anti-dilutive (in thousands):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2011      2010      2011      2010  

Convertible preferred stock

     0         10,239         0         10,239   

Options to purchase common stock

     2,314         1,660         2,229         1,615   

Warrants to purchase convertible preferred stock

     0         444         0         444   

Investment

The Company has a minority equity investment in a privately-held company that is accounted for under the cost method of accounting. Under the cost method of accounting, investments in equity securities are carried at cost and are adjusted only for other-than-temporary declines in value. No such declines have been identified through June 30, 2011.

Comprehensive Loss

Comprehensive loss primarily consists of net loss and an immaterial amount of foreign currency translation adjustments for all periods presented.

 

Recent Accounting Pronouncements

Adopted

Revenue Arrangements with Multiple Deliverables

In September 2009, the Financial Accounting Standards Board (FASB) ratified authoritative accounting guidance regarding revenue recognition for arrangements with multiple deliverables. The guidance impacts the determination of when the individual deliverables included in a multiple element arrangement may be treated as separate units of accounting. Additionally, the guidance allows the use of management's best estimate of selling price for individual elements of an arrangement when vendor specific objective evidence or third-party evidence is unavailable. The guidance also requires arrangement consideration to be allocated at the inception of the arrangement to all deliverables using the relative-selling-price method and eliminates the use of the residual method of allocation. This guidance is effective for fiscal years beginning on or after June 15, 2010 and early adoption is permitted. The Company adopted this guidance prospectively on January 1, 2011. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements. However, the adoption of this standard may result in revenue recognition patterns for future agreements that are materially different from those recognized for the Company's past multiple-element arrangements.

Revenue Arrangements with Software Elements

In October 2009, the FASB ratified authoritative accounting guidance that modifies the scope of the software revenue recognition guidance to exclude tangible products that contain both software and non-software components that function together to deliver the product's essential functionality. This guidance is effective for fiscal years beginning on or after June 15, 2010 and early adoption is permitted. This guidance must be adopted in the same period an entity adopts the amended guidance for revenue arrangements with multiple deliverables described in the preceding paragraph. The Company adopted this guidance prospectively on January 1, 2011. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

Milestone Method of Revenue Recognition

In March 2010, the FASB ratified the milestone method of revenue recognition. Under this new standard, an entity can recognize contingent consideration earned from the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the Company's performance or on the occurrence of a specific outcome resulting from the Company's performance (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to the Company. A milestone is substantive if the consideration earned from the achievement of the milestone is consistent with the Company's performance required to achieve the milestone or the increase in value to the collaboration resulting from the Company's performance, relates solely to past performance, and is reasonable relative to all of the other deliverables and payments within the arrangement. The milestone method of revenue recognition is effective for new arrangements or existing arrangements which are materially modified for fiscal years beginning on or after June 15, 2010 and early adoption is permitted. The Company adopted this guidance prospectively on January 1, 2011. The election of the milestone method did not have a material impact on the Company's condensed consolidated financial statements and is not expected to result in different accounting treatment for future substantive milestones earned after the date of this adoption. Non-substantive milestones will continue to be recognized over the remaining performance period.

Issued

Fair Value Measurement

In May 2011, the FASB issued changes to conform existing guidance regarding fair value measurement and disclosure between U.S. GAAP and International Financial Reporting Standards. This guidance clarifies the application of existing fair value measurements and disclosures, and changes certain principles or requirements for fair value measurements and disclosures. The amendment is effective for interim and annual periods beginning after December 15, 2011 and will be applied prospectively. The Company is currently evaluating the impact on the Company's condensed consolidated financial statements of adopting these amendments and cannot estimate the impact of adoption at this time.

 

Comprehensive Income

In June 2011, the FASB issued changes to the presentation of comprehensive income. These changes give an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements; the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity was eliminated. The items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income were not changed. Additionally, no changes were made to the calculation and presentation of earnings per share. The amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. The Company is currently evaluating these changes to determine which option will be chosen for the presentation of comprehensive income.

Legal Matters

From time to time, the Company may be involved in lawsuits, arbitrations, claims, investigations and proceedings, relating to intellectual property, commercial, employment and other matters, which arise in the ordinary course of business. The Company makes provisions for liabilities when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Such provisions, if necessary, are reviewed at least quarterly and adjusted to reflect the impact of settlement negotiations, judicial and administrative rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. If any unfavorable ruling were to occur in any specific period, there exists the possibility of a material adverse impact on the results of operations of that period or on the Company's cash flows and liquidity.

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License And Collaboration Agreements
6 Months Ended
Jun. 30, 2011
License And Collaboration Agreements
License And Collaboration Agreements
3. License and Collaboration Agreements

License Agreements

On June 30, 2011, the Company settled certain litigation and entered into a series of patent license agreements with Life Technologies Corporation and its subsidiary Applied Biosystems, LLC (collectively, Life). These agreements settled litigation filed by the Company against Life on June 29, 2011 in United States District Court for the Northern District of California and litigation filed by Life against the Company on June 29, 2011 in United States District Court for the District of Delaware. The agreements resulted in a net  $3.0 million payment by the Company to Life, which was recognized as a litigation settlement expense in the Company's June 30, 2011 condensed consolidated statement of operations because the agreement specified that the amount paid by the Company was principally attributable to resolving Life's litigation claims with respect to a specific expiring U.S. patent and its foreign counterparts. The agreements also provide for various royalty payments on future sales of certain products by each of the parties. Such royalty payments or receipts are not expected to be material to the Company in future periods based on its current business.

Under the terms of the agreements, each party had the option, exercisable for thirty days from the date of the agreements, to limit or preclude certain patent litigation between the parties over the next two to four years. These rights were subject to certain exceptions and required an additional payment by the party exercising the option at the time of exercise. In July 2011, the Company exercised its option and paid Life  $2.0 million. As a result, subject to certain exceptions, Life may not initiate litigation under its patents existing as of June 30, 2011 against the Company's customers for two years and against the Company, with respect to its current products and equivalent future products, for four years. The additional payment will be accounted for as an other asset and amortized to selling, general and administrative expense over 4 years on a straight-line basis beginning in July 2011. Life elected not to exercise its option.

In May 2011, the Company entered into an agreement with Caliper Life Sciences, Inc. to license Caliper's existing patent portfolio in certain fields, including non-invasive prenatal diagnostics, and obtained an option to extend the license to cover additional fields. Under the agreement, the Company made an up-front payment of  $625,000, which is subject to adjustment, and will have royalty obligations commencing in January 2012. The Company's royalty payments are not expected to be material to the Company in future periods. Additional payments are due if the Company exercises its option to extend the license or if the up-front payment is adjusted upwards. The up-front payment is being recognized as cost of product revenue on a straight-line basis through December 31, 2017, which is the Company's estimated useful life of the patents with respect to its current and future products.

Collaboration Agreement

In May 2010, the Company entered into a collaboration agreement to develop a new product and received an up-front payment of  $750,000. Under the agreement, the Company is also eligible for milestone payments for the design and development of product prototypes.

In March 2011, the Company entered into an amendment to the collaboration agreement and received an additional  $300,000. Under the amendment, certain milestones were modified and payment terms associated with satisfaction of the milestones were revised. The  $750,000 up-front payment and the  $300,000 payment received in March 2011 are being recognized on a straight-line basis through September 30, 2011, which is the Company's estimated period of performance under the amended agreement.

The Company's amended collaboration agreement provides for payments to the Company upon the achievement of milestones, such as the design and development of product prototypes. These product prototypes have not been previously produced by the Company and the achievement of these and other future milestones was uncertain at the time the Company entered into the collaboration agreement. The Company considers each of the milestones to be substantive and, accordingly, expects to recognize as revenue future payments received from such milestones as each milestone is achieved. The Company achieved two such milestones during the three months ended June 30, 2011 and recognized  $0.5 million of milestone revenue. At June 30, 2011, one additional milestone remains with a potential future payment of  $0.5 million.

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Inventories
6 Months Ended
Jun. 30, 2011
Inventories
Inventories
4. Inventories

Inventories consist of the following as of (in thousands):

 

     June 30,
2011
     December 31,
2010
 

Raw materials

    $ 1,996        $ 2,401   

Work-in-process

     510         357   

Finished goods

     2,344         2,135   
  

 

 

    

 

 

 
    $ 4,850        $ 4,893   
  

 

 

    

 

 

 

 

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Fair Value Of Financial Instruments
6 Months Ended
Jun. 30, 2011
Fair Value Of Financial Instruments
Fair Value Of Financial Instruments
5. Fair Value of Financial Instruments

The Company's financial instruments consist principally of cash and cash equivalents, available-for-sale securities, accounts receivable, accounts payable and long-term debt. The carrying values of the Company's cash equivalents, available-for-sale securities, accounts receivable and accounts payable approximated their fair values due to the short period of time to maturity or repayment. The Company's long-term debt bears interest at a rate commensurate with the Company's risk profile and stage of development, and, as a result, management believes its carrying value approximates fair value. As a basis for considering fair value, the Company follows a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level I: observable inputs such as quoted prices in active markets;

Level II: inputs other than quoted prices in active markets that are observable either directly or indirectly; and

Level III: unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions.

The Company's cash equivalents are classified as Level I because they are valued using quoted market prices. The Company's available-for-sale securities are generally classified as Level II because their value is based on other observable inputs. The Company's convertible preferred stock warrants are valued using Level III inputs, the valuation of which is discussed in Note 9.

The following table sets forth the Company's financial instruments that were measured at fair value by level within the fair value hierarchy (in thousands):

 

     June 30, 2011      December 31, 2010  
     Level I      Level II      Level III      Total      Level I      Level II      Level III      Total  

Assets

                       

Money market funds

    $ 2,189        $ 0        $ 0        $ 2,189        $ 32        $ 0        $ 0        $ 32   

U.S. government and agency securities

     0         53,787         0         53,787         0         0         0         0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets measured at fair value

    $ 2,189        $ 53,787        $ 0        $ 55,976        $ 32        $ 0        $ 0        $ 32   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

                       

Convertible preferred stock warrants

    $ 0        $ 0        $ 0        $ 0        $ 0        $ 0        $ 1,052        $ 1,052   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities measured at fair value

    $ 0        $ 0        $ 0        $ 0        $ 0        $ 0        $ 1,052        $ 1,052   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Changes in the fair value of the Company's Level III convertible preferred stock warrants during the six months ended June 30, 2011 were as follows (in thousands):

 

Balance, beginning of period

    $ 1,052   

Issuances

     1,157   

Exercises

     (1,392

Changes in fair value

     1,483   

Expiration of warrants

     (765

Conversion to common stock warrants

     (1,535
  

 

 

 

Balance, end of period

    $ 0   
  

 

 

 

The following table sets forth our financial assets that were measured at fair value as of June 30, 2011 (in thousands):

 

      Amortized
Cost
     Gross
Unrealized
Gain
     Gross
Unrealized
Loss
    Estimated
Fair Value
 

Money market funds

    $ 2,189        $ 0        $ 0       $ 2,189   

U.S. government and agency securities

     53,784         11         (8     53,787   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total assets measured at fair value

    $ 55,973        $ 11        $ (8    $ 55,976   
  

 

 

    

 

 

    

 

 

   

 

 

 

The contractual maturity date of all of the Company's available-for-sale securities is within one year. The Company did not hold any available-for-sale securities as of December 31, 2010.

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Note And Warrant Purchase Agreement 2010
6 Months Ended
Jun. 30, 2011
Note And Warrant Purchase Agreement 2010
Note And Warrant Purchase Agreement 2010
6. Note and Warrant Purchase Agreement 2010

In January 2011, the Company entered into a Note and Warrant Purchase Agreement (the Note Agreement) with existing stockholders, including certain of the Company's officers, under which the Company issued subordinated secured promissory notes (the Notes) with an aggregate principal amount of  $5,000,000 bearing interest at 8% per year. The Notes matured on the earliest to occur of the closing of the next financing in which the Company issued and sold shares of capital stock of at least  $25,000,000, a change of control as defined in the Note Agreement, or January 6, 2012. The Company's obligations under the Notes were secured by the assets of the Company, excluding intellectual property, and were subordinated to senior indebtedness of the loan agreement entered into in March 2005, as amended (see Note 7) and the Line of Credit (see Note 8). In connection with the Note Agreement, the Company issued warrants to acquire a total of 103,182 shares of Series E-1 convertible preferred stock with an exercise price of  $0.02 per share. The fair value of these warrants, based on a contemporaneous valuation, was  $1,157,000 and was recognized as an original issue discount amortizable over the expected life of the borrowing. In connection with the IPO in February 2011, the warrants were exercised for 103,182 shares of common stock and the Company repaid all principal and interest outstanding under these Notes in February and March 2011. Upon the repayment of the Notes, the unamortized discount of  $1,157,000 was immediately recognized as interest expense.

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Long-Term Debt
6 Months Ended
Jun. 30, 2011
Long Term Debt
Long-Term Debt
7. Long-Term Debt

The Company entered into a long-term loan agreement in March 2005 that was subsequently amended in 2006, 2008, 2009, and 2010. In connection with this long-term loan agreement and in conjunction with the various amendments thereto, the Company issued a total of 209,960 warrants to purchase shares of convertible preferred stock to the lender. As of June 30, 2011, the outstanding balance under this long-term loan agreement was  $13,000,000 with interest accruing at 13.5% per annum and the loan maturing in February 2013. Commencing in March 2011, the Company began making monthly payments of  $612,000 for principal and interest and will make an additional payment of  $2,263,000 in March 2012. The additional payment is being recognized as interest expense using the effective interest method through the extended maturity date of February 2013. Upon completion of the IPO in February 2011, all 209,960 warrants to purchase preferred stock that were held by the lender were converted to warrants to purchase shares of common stock. The common stock warrants have an exercise price of  $12.11 and expire at various dates though 2017. As of June 30, 2011, the Company was in compliance with all loan covenants under this long-term loan agreement.

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Line Of Credit
6 Months Ended
Jun. 30, 2011
Line Of Credit
Line Of Credit
8. Line of Credit

In December 2010, the Company entered into a bank line of credit agreement (Line of Credit) that is collateralized by the Company's accounts receivable and provided the Company with the ability to borrow up to  $4,000,000, subject to certain covenants and other restrictions. The term of the Line of Credit is two years and it bears interest at the greater of (i) 5.50% or (ii) the prime rate, as defined in the Line of Credit, plus 2.25% per year. As of December 31, 2010, the outstanding balance on the Line of Credit was  $3,125,000. In February 2011, the Company repaid all outstanding borrowings under the Line of Credit. In March 2011, the Line of Credit was amended to increase the credit limit to  $7,000,000. At June 30, 2011, there was no outstanding balance on the Line of Credit and the Company was in compliance with its loan covenants.

 

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Convertible Preferred Stock Warrants
6 Months Ended
Jun. 30, 2011
Convertible Preferred Stock Warrants
Convertible Preferred Stock Warrants
9. Convertible Preferred Stock Warrants

On February 10, 2011, the Company had total outstanding warrants to purchase 489,880 shares of convertible preferred stock that had been granted at various times since 2001. Warrants to purchase the Company's convertible preferred stock were recognized at fair value using the Black-Scholes option-pricing model and classified as liabilities because the warrants may have conditionally obligated the Company to transfer assets at some point in the future. The warrants were subject to re-measurement to fair value at each balance sheet date and any change in fair value was recognized in gain (loss) from changes in the fair value of convertible preferred stock warrants, in the condensed consolidated statements of operations. The fair value of these warrants was approximately  $3,691,000 at February 10, 2011, which was an increase in fair value of approximately  $1,483,000 since December 31, 2010. Upon the closing of the IPO, approximately 103,182 of such warrants were net exercised and the related liability of  $1,391,000 was reclassified to additional paid-in capital and 209,960 of such warrants were converted into warrants to purchase common stock and the related liability of  $1,535,000 was reclassified to additional paid-in capital. The remaining 176,738 warrants expired unexercised and the related liability of  $765,000 was recognized as other income in the six months ended June 30, 2011.

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Stock-Based Compensation
6 Months Ended
Jun. 30, 2011
Stock-Based Compensation
Stock-Based Compensation
10. Stock-Based Compensation

During the three months ended June 30, 2011, the Company granted to certain employees options to purchase 330,000 shares of common stock. During the six months ended June 30, 2011, the Company granted to certain employees options to purchase 828,000 shares of common stock. Of these options, 438,000 were granted with an exercise price of  $8.37 per share, 385,000 were granted with exercise prices ranging from  $14.31 to  $14.90 per share, and the remainder were granted with an exercise price of  $16.77 per share. These options had a total fair value of  $5,053,000, of which  $488,000 was immediately recognized as compensation expense because 66,500 of such options were fully vested upon grant while the remainder will vest over four years.

The computation of the fair value of stock options and other equity instruments using the Black-Scholes option pricing model requires inputs such as the fair value of the Company's common stock. For options granted prior to the IPO in February 2011, the Company performed a contemporaneous valuation to determine the fair value of its common stock.

The Company recognized stock-based compensation expense of  $538,000 and  $417,000 during the three months ended June 30, 2011 and 2010, respectively. During the six months ended June 30, 2011 and 2010, the Company recognized stock-based compensation expense of  $1,328,000 and  $846,000, respectively. As of June 30, 2011, the Company had  $5.2 million of unrecognized stock-based compensation costs, which are expected to be recognized over an average period of 3.3 years.

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Income Taxes
6 Months Ended
Jun. 30, 2011
Income Taxes
Income Taxes
11. Income Taxes

Income tax expense for the three and six months ended June 30, 2011 was  $62,000 and  $110,000, respectively, and was comprised of state and foreign income taxes. The provision for income taxes for the periods differs from the 34% U.S. Federal statutory rate primarily due to maintaining a valuation allowance for U.S. losses and tax assets which the Company does not consider to be realizable.

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Information About Geographic Areas
6 Months Ended
Jun. 30, 2011
Information About Geographic Areas
Information About Geographic Areas
12. Information about Geographic Areas

The Company has a single reporting segment and operating unit structure, which is the development, manufacturing, and commercialization of microfluidic systems for the life science and agricultural biotechnology industries.

The following table presents the Company's product revenue by geography based on the billing address of the Company's customers for each period presented (in thousands):

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2011      2010      2011      2010  

United States

    $ 5,164        $ 4,401        $ 9,306        $ 7,960   

Europe

     2,408         1,554         4,555         3,193   

Japan

    
1,287
  
     100        
2,187
  
     353   

Asia Pacific

     667         1,061         1,650         1,809   

Other

     185         353         425         418   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

    $ 9,711        $ 7,469        $ 18,123        $ 13,733   
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company's collaboration revenue is primarily generated in the United States and grant revenue is generated in Singapore and the United States.

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