10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission File Number: 001-40632

 

CYTEK BIOSCIENCES, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

47-2547526

(State or other jurisdiction of incorporation or organization)

46107 Landing Pkwy

(I.R.S. Employer Identification No.)

Fremont, California

94538

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (877) 922-9835

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value per share

 

CTKB

 

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of August 31, 2021, there were 46,425,422 outstanding shares of the registrant’s common stock, par value $0.001 per share.

 


 

Table of Contents

 

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

1

Item 1.

Consolidated Financial Statements (Unaudited)

1

 

Consolidated Balance Sheets

1

 

Consolidated Statements of Operations and Comprehensive Income

2

 

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Deficit

3

 

Consolidated Statements of Cash Flows

4

 

Notes to Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

PART II.

OTHER INFORMATION

33

Item 1.

Legal Proceedings

33

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

62

Item 3.

Defaults Upon Senior Securities

62

Item 4.

Mine Safety Disclosures

62

Item 5.

Other Information

62

Item 6.

Exhibits

63

Signatures

 

64

 

i


 

PART I-FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

Cytek Biosciences, Inc.

Consolidated Balance Sheets

 

 

 

June 30,

 

 

December 31,

 

(In thousands, except share and per share data)

 

2021

 

 

2020

 

 

 

(unaudited)

 

 

(audited)

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

   Cash and cash equivalents

 

$

159,846

 

 

$

165,231

 

   Trade accounts receivable, net

 

 

24,029

 

 

 

16,990

 

   Restricted cash

 

 

-

 

 

 

888

 

   Inventories

 

 

26,655

 

 

 

23,018

 

   Prepaid expenses and other current assets

 

 

6,408

 

 

 

2,495

 

Total current assets

 

 

216,938

 

 

 

208,622

 

Deferred income tax assets, noncurrent

 

 

7,378

 

 

 

7,378

 

Property and equipment, net

 

 

3,895

 

 

 

2,140

 

Goodwill

 

 

476

 

 

 

476

 

Intangible assets, net

 

 

333

 

 

 

274

 

Other noncurrent assets

 

 

1,259

 

 

 

1,089

 

     Total assets

 

$

230,279

 

 

$

219,979

 

Liabilities, redeemable convertible preferred stock and stockholders’ deficit

 

 

 

 

 

 

    Current liabilities:

 

 

 

 

 

 

   Trade accounts payable

 

$

3,324

 

 

$

2,944

 

   Legal settlement liability, current

 

 

7,229

 

 

 

6,253

 

   Accrued expenses

 

 

11,593

 

 

 

9,048

 

   Other current liabilities

 

 

1,351

 

 

 

4,626

 

   Deferred revenue, current

 

 

4,668

 

 

 

3,665

 

Total current liabilities

 

 

28,165

 

 

 

26,536

 

Legal settlement liability, noncurrent

 

 

11,724

 

 

 

10,959

 

   Deferred revenue, noncurrent

 

 

6,317

 

 

 

3,456

 

Other noncurrent liabilities

 

 

739

 

 

 

737

 

Total liabilities

 

$

46,945

 

 

$

41,688

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

Redeemable convertible preferred stock, $0.001 par value; 87,268,694 shares authorized, issued and outstanding as of June 30, 2021 and December 31, 2020; aggregate liquidation preference of $199,230 as of June 30, 2021 and December 31, 2020

 

 

194,319

 

 

 

194,319

 

Stockholders’ deficit:

 

 

 

 

 

 

Common stock, $0.001 par value; 153,329,500 authorized shares at June 30, 2021 and December 31, 2020; 32,096,586 and 31,241,916 issued and outstanding shares at June 30, 2021 and December 31, 2020, respectively

 

 

24

 

 

 

23

 

Additional paid-in capital

 

 

7,975

 

 

 

6,491

 

Accumulated deficit

 

 

(19,835

)

 

 

(22,607

)

Accumulated other comprehensive income

 

 

536

 

 

 

65

 

Noncontrolling interest in consolidated subsidiary

 

 

315

 

 

 

-

 

   Total stockholders’ deficit

 

$

(10,985

)

 

$

(16,028

)

      Total liabilities, redeemable convertible preferred stock and stockholders’ deficit

 

$

230,279

 

 

$

219,979

 

 

The accompanying notes are an integral part of these unaudited interim consolidated financial statements

1


 

Cytek Biosciences, Inc.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

(In thousands, except share and per share data)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue, net:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

28,676

 

 

$

17,471

 

 

$

51,376

 

 

$

33,535

 

Service

 

 

1,732

 

 

 

1,665

 

 

 

3,304

 

 

 

3,589

 

Total revenue, net

 

 

30,408

 

 

 

19,136

 

 

 

54,680

 

 

 

37,124

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

7,932

 

 

 

8,896

 

 

 

15,240

 

 

 

16,088

 

Service

 

 

2,731

 

 

 

1,970

 

 

 

5,209

 

 

 

4,391

 

Total cost of sales

 

 

10,663

 

 

 

10,866

 

 

 

20,449

 

 

 

20,479

 

Gross profit

 

 

19,745

 

 

 

8,270

 

 

 

34,231

 

 

 

16,645

 

Operating expenses:

 

 

 

 

 

 

 

 

-

 

 

 

 

Research and development

 

 

6,194

 

 

 

2,916

 

 

 

11,288

 

 

 

5,932

 

Sales and marketing

 

 

5,576

 

 

 

3,059

 

 

 

9,853

 

 

 

6,590

 

General and administrative

 

 

4,164

 

 

 

2,513

 

 

 

8,147

 

 

 

5,051

 

Total operating expenses

 

 

15,934

 

 

 

8,488

 

 

 

29,288

 

 

 

17,573

 

Income (loss) from operations

 

 

3,811

 

 

 

(218

)

 

 

4,943

 

 

 

(928

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(433

)

 

 

(1

)

 

 

(808

)

 

 

(1

)

Interest income

 

 

9

 

 

 

16

 

 

 

19

 

 

 

102

 

Other income (expense), net

 

 

(120

)

 

 

395

 

 

 

(735

)

 

 

358

 

Total other income (expense), net

 

 

(544

)

 

 

410

 

 

 

(1,524

)

 

 

459

 

Income (loss) before income taxes

 

 

3,267

 

 

 

192

 

 

 

3,419

 

 

 

(469

)

Provision for (benefit from) income taxes

 

 

597

 

 

 

(7,919

)

 

 

647

 

 

 

(7,741

)

Net income

 

$

2,670

 

 

$

8,111

 

 

$

2,772

 

 

$

7,272

 

Less: net income allocated to participating securities

 

 

(2,670

)

 

 

(6,211

)

 

 

(2,772

)

 

 

(6,075

)

Net income attributable to common stockholders, basic and diluted

 

$

-

 

 

$

1,900

 

 

$

-

 

 

$

1,197

 

Net income attributable to common stockholders per share, basic

 

$

-

 

 

$

0.07

 

 

$

-

 

 

$

0.04

 

Net income attributable to common stockholders per share diluted

 

$

-

 

 

$

0.06

 

 

$

-

 

 

$

0.04

 

Weighted-average shares used in calculating net income per share, basic

 

 

31,878,762

 

 

 

28,497,247

 

 

 

31,719,005

 

 

 

28,475,868

 

Weighted-average shares used in calculating net income per share, diluted

 

 

36,173,036

 

 

 

31,133,913

 

 

 

35,908,554

 

 

 

31,070,177

 

Comprehensive income:

 

 

 

 

 

 

 

 

-

 

 

 

 

Net income

 

$

2,670

 

 

$

8,111

 

 

$

2,772

 

 

$

7,272

 

Foreign currency translation adjustment, net of tax

 

 

269

 

 

 

(19

)

 

 

471

 

 

 

(96

)

Net comprehensive income

 

$

2,939

 

 

$

8,092

 

 

$

3,243

 

 

$

7,176

 

 

The accompanying notes are an integral part of these unaudited interim consolidated financial statements

2


 

Cytek Biosciences, Inc

Consolidated Statements of Redeemable Convertible

Preferred Stock and Stockholders’ Deficit

(Unaudited)

 

 

 

Redeemable convertible

 

 

 

 

 

Additional

 

 

 

 

 

Accumulated other

 

 

Noncontrolling

 

 

Total

 

 

preferred stock

 

 

Common stock

 

 

paid-in

 

 

Accumulated

 

 

comprehensive

 

 

interest in consolidated

 

 

stockholders’

 

(In thousands, except share data)

Shares

 

Amount

 

 

Shares

 

Amount

 

 

capital

 

 

deficit

 

 

income

 

 

subsidiary

 

 

deficit

 

Balances at December 31, 2020

 

87,268,694

 

$

194,319

 

 

 

31,241,916

 

$

23

 

 

$

6,491

 

 

$

(22,607

)

 

$

65

 

 

$

-

 

 

$

(16,028

)

Exercise of stock options

 

 

 

 

 

 

533,540

 

 

1

 

 

 

195

 

 

 

 

 

 

 

 

 

 

 

 

196

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

456

 

 

 

 

 

 

 

 

 

 

 

 

456

 

Foreign currency translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

202

 

 

 

 

 

 

202

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

102

 

 

 

 

 

 

 

 

 

102

 

Noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

315

 

 

 

315

 

Balances at March 31, 2021

 

87,268,694

 

$

194,319

 

 

 

31,775,456

 

$

24

 

 

$

7,142

 

 

$

(22,505

)

 

$

267

 

 

$

315

 

 

$

(14,757

)

Exercise of stock options

 

 

 

 

 

 

321,130

 

 

-

 

 

 

166

 

 

 

 

 

 

 

 

 

 

 

 

166

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

667

 

 

 

 

 

 

 

 

 

 

 

 

667

 

Foreign currency translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

269

 

 

 

 

 

 

269

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,670

 

 

 

 

 

 

 

 

 

2,670

 

Noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

Balances at June 30, 2021

 

87,268,694

 

$

194,319

 

 

 

32,096,586

 

$

24

 

 

$

7,975

 

 

$

(19,835

)

 

$

536

 

 

$

315

 

 

$

(10,985

)

 

 

Redeemable convertible

 

 

 

 

 

Additional

 

 

 

 

 

Accumulated other

 

 

Total

 

 

preferred stock

 

 

Common stock

 

 

paid-in

 

 

Accumulated

 

 

comprehensive

 

 

stockholders’

 

(In thousands, except share data)

Shares

 

Amount

 

 

Shares

 

Amount

 

 

capital

 

 

deficit

 

 

income (loss)

 

 

deficit

 

Balances at December 31, 2019

 

69,516,626

 

$

74,653

 

 

 

28,397,955

 

$

21

 

 

$

443

 

 

$

(42,018

)

 

$

(147

)

 

$

(41,701

)

Exercise of stock options

 

 

 

 

 

 

97,801

 

 

1

 

 

 

12

 

 

 

 

 

 

 

 

 

13

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

105

 

 

 

 

 

 

 

 

 

105

 

Foreign currency translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(77

)

 

 

(77

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(839

)

 

 

 

 

 

(839

)

Balances at March 31, 2020

 

69,516,626

 

$

74,653

 

 

 

28,495,756

 

$

22

 

 

$

560

 

 

$

(42,857

)

 

$

(224

)

 

$

(42,499

)

Exercise of stock options

 

 

 

 

 

 

2,511

 

 

-

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

109

 

 

 

 

 

 

 

 

 

109

 

Foreign currency translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19

)

 

 

(19

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,111

 

 

 

 

 

 

8,111

 

Balances at June 30, 2020

 

69,516,626

 

$

74,653

 

 

 

28,498,267

 

$

22

 

 

$

670

 

 

$

(34,746

)

 

$

(243

)

 

$

(34,297

)

 

 

 

The accompanying notes are an integral part of these unaudited interim consolidated financial statements

3


 

Cytek Biosciences, Inc

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Six months ended June 30,

 

(In thousands)

2021

 

2020

 

Cash flows from operating activities:

 

 

 

 

Net income

$

2,772

 

$

7,272

 

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

 

 

 

 

Depreciation and amortization

 

368

 

 

266

 

Stock-based compensation

 

1,123

 

 

214

 

Gain on equity method investment

 

(40

)

 

-

 

Provision for excess and obsolete inventory

 

263

 

 

797

 

Interest expenses for accretion of the legal settlement liabilities

 

776

 

 

-

 

Change in operating assets and liabilities:

 

 

 

 

Trade accounts receivable

 

(6,054

)

 

4,092

 

Inventories

 

(3,874

)

 

(4,486

)

Prepaid expenses and other assets

 

(2,557

)

 

(8,380

)

Trade accounts payable

 

(149

)

 

(50

)

Accrued expenses and other liabilities

 

505

 

 

(190

)

Legal settlement liabilities

 

965

 

 

971

 

Deferred revenue

 

3,923

 

 

818

 

                Net cash (used in) provided by operating activities

 

(1,979

)

 

1,324

 

Cash flows from investing activities:

 

 

 

 

      Purchase of property and equipment

 

(1,760

)

 

(870

)

      Payment for additional investment in Cytek Japan, net of cash acquired

 

371

 

 

-

 

               Net cash used in investing activities

 

(1,389

)

 

(870

)

Cash flows from financing activities:

 

 

 

 

      Proceeds from Paycheck Protection Program loan

 

-

 

 

4,082

 

      Repayment of Paycheck Protection Program loan