10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 31, 2022

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)

(I.R.S. Employer

Identification No.)

47215 Lakeview Blvd. 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, par value $0.001 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 May 5, 2022, there were 134,313,135 outstanding shares of the Registrant’s common stock, par value $0.001 per share.

 

 

 


1

Table of Contents

 

 

 

Page

PART I

 FINANCIAL INFORMATION

 

Item 1.

Consolidated Financial Statements (Unaudited)

2

 

Consolidated Balance Sheets

2

 

Consolidated Statements of Operations and Comprehensive Income (Loss)

3

 

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity

4

 

Consolidated Statements of Cash Flows

5

 

Notes to Consolidated Financial Statements

6

Item 2.

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

38

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

Item 4.

Controls and Procedures

 

 

 

 

PART II

OTHER INFORMATION

 

Item 1.

Legal Proceedings

39

Item 1A.

Risk Factors

40

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

79

Item 3.

Defaults Upon Senior Securities

80

Item 4.

Mine Safety Disclosures

80

Item 5.

Other Information

80

Item 15.

Exhibits

81

 

 

 

Signatures

 

82

 

1


2

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited).


 

Cytek Biosciences, Inc.

Consolidated Balance Sheets

 

(In thousands, except share and per share data)

 

March 31,
2022

 

 

December 31,
2021

 

 

 

(unaudited)

 

 

(audited)

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

362,506

 

 

$

364,618

 

Trade accounts receivable, net

 

 

30,406

 

 

 

29,760

 

Inventories

 

 

37,982

 

 

 

32,171

 

Prepaid expenses and other current assets

 

 

8,218

 

 

 

5,184

 

Total current assets

 

 

439,112

 

 

 

431,733

 

Deferred income tax assets, noncurrent

 

 

10,688

 

 

 

9,173

 

Property and equipment, net

 

 

6,504

 

 

 

5,851

 

Operating lease right-of-use assets

 

 

13,839

 

 

 

-

 

Goodwill

 

 

10,144

 

 

 

10,144

 

Intangible assets, net

 

 

4,328

 

 

 

4,739

 

Other noncurrent assets

 

 

1,264

 

 

 

1,665

 

Total assets

 

$

485,879

 

 

$

463,305

 

Liabilities, redeemable convertible preferred stock and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Trade accounts payable

 

$

5,971

 

 

$

3,034

 

Legal settlement liability, current

 

 

1,554

 

 

 

1,463

 

Accrued expenses

 

 

14,640

 

 

 

15,251

 

Other current liabilities

 

 

8,386

 

 

 

6,352

 

Deferred revenue, current

 

 

12,252

 

 

 

7,081

 

Total current liabilities

 

 

42,803

 

 

 

33,181

 

Legal settlement liability, noncurrent

 

 

14,635

 

 

 

13,745

 

Deferred revenue, noncurrent

 

 

7,199

 

 

 

9,790

 

Operating lease liability, non-current

 

 

12,684

 

 

 

-

 

Other noncurrent liabilities

 

 

1,116

 

 

 

1,204

 

Total liabilities

 

$

78,437

 

 

$

57,920

 

Commitments and contingencies (Note 17)

 

 

 

 

 

 

Redeemable convertible preferred stock, $0.001 par value; 10,000,000 shares authorized, zero issued and outstanding as of March 31, 2022 and December 31, 2021; aggregate liquidation preference of zero as of March 31, 2022 and December 31, 2021.

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 1,000,000,000 authorized shares as of March 31, 2022 and December 31, 2021, respectively; 134,242,930 and 133,749,663 issued and outstanding shares as of March 31, 2022 and December 31, 2021, respectively.

 

 

134

 

 

 

126

 

Additional paid-in capital

 

 

427,818

 

 

 

423,625

 

Accumulated deficit

 

 

(21,627

)

 

 

(19,606

)

Accumulated other comprehensive income

 

 

911

 

 

 

897

 

Noncontrolling interest in consolidated subsidiary

 

 

206

 

 

 

343

 

Total stockholders’ equity

 

$

407,442

 

 

$

405,385

 

Total liabilities, redeemable convertible preferred stock and stockholders’ equity

 

$

485,879

 

 

$

463,305

 

 

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

2


3

Cytek Biosciences, Inc.

Consolidated Statements of Operations and Comprehensive (Loss) Income

(Unaudited)

 

 

 

Three months ended March 31,

 

(In thousands, except share and per share data)

 

2022

 

 

2021

 

Revenue, net:

 

 

 

 

 

 

Product

 

$

31,481

 

 

$

22,700

 

Service

 

 

3,583

 

 

 

1,572

 

Total revenue, net

 

 

35,064

 

 

 

24,272

 

Cost of sales:

 

 

 

 

 

 

Product

 

 

11,767

 

 

 

7,308

 

Service

 

 

3,120

 

 

 

2,478

 

Total cost of sales

 

 

14,887

 

 

 

9,786

 

Gross profit

 

 

20,177

 

 

 

14,486

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

8,025

 

 

 

5,094

 

Sales and marketing

 

 

6,960

 

 

 

4,277

 

General and administrative

 

 

7,549

 

 

 

3,983

 

Total operating expenses

 

 

22,534

 

 

 

13,354

 

(Loss) income from operations

 

 

(2,357

)

 

 

1,132

 

Other income (expense):

 

 

 

 

 

 

Interest expense

 

 

(590

)

 

 

(375

)

Interest income

 

 

18

 

 

 

10

 

Other expense, net

 

 

(374

)

 

 

(615

)

Total other expense, net

 

 

(946

)

 

 

(980

)

(Loss) income before income taxes

 

 

(3,303

)

 

 

152

 

(Benefit from) provision for income taxes

 

 

(1,145

)

 

 

50

 

Net (loss) income

 

$

(2,158

)

 

$

102

 

Less: net loss allocated to noncontrolling interests

 

 

137

 

 

 

-

 

Less: net income allocated to participating securities

 

 

 

 

 

(102

)

Net (loss) income attributable to common stockholders, basic and diluted

 

$

(2,021

)

 

$

-

 

Net (loss) income attributable to common stockholders per share, basic

 

$

(0.02

)

 

$

-

 

Net (loss) income attributable to common stockholders per share, diluted

 

$

(0.02

)

 

$

-

 

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

 

 

133,902,523

 

 

 

31,557,473

 

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

 

 

133,902,523

 

 

 

35,757,157

 

Comprehensive (loss) income:

 

 

 

 

 

 

Net (loss) income

 

$

(2,158

)

 

$

102

 

Foreign currency translation adjustment, net of tax

 

 

14

 

 

 

202

 

Net comprehensive (loss) income

 

$

(2,144

)

 

$

304

 

 

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

3


4

Cytek Biosciences, Inc

Consolidated Statements of Redeemable Convertible

Preferred Stock and Stockholders’ Equity (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

 

 

 

equity

 

Balances at December 31, 2021

 

-

 

$

-

 

 

 

133,749,663

 

$

126

 

 

 

$

423,625

 

 

 

$

(19,606

)

 

 

$

897

 

 

 

$

343

 

 

 

$

405,385

 

Exercise of stock options

 

 

 

 

 

 

493,267

 

 

8

 

 

 

 

356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

364

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

3,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,837

 

Foreign currency translation adjustment, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

 

 

 

 

 

14

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,021

)

 

 

 

 

 

 

 

 

 

 

 

(2,021

)

Noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(137

)

 

 

 

(137

)

Balances at March 31, 2022

 

-

 

$

-

 

 

 

134,242,930

 

$

134

 

 

 

$

427,818

 

 

 

$

(21,627

)

 

 

$

911

 

 

 

$

206

 

 

 

$

407,442

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

equity (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

)

 

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

4


5

Cytek Biosciences, Inc

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Three months ended March 31,

 

(In thousands)

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(2,158

)

 

$

102

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

794

 

 

 

167

 

Amortization of operating lease-right-of use assets

 

 

676

 

 

 

-

 

Stock-based compensation

 

 

3,837

 

 

 

456

 

Gain on equity method investment

 

 

-

 

 

 

(40

)

Provision for excess and obsolete inventory

 

 

74

 

 

 

321

 

Interest expenses for accretion of the legal settlement liabilities

 

 

498

 

 

 

372

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Trade accounts receivable

 

 

(1,038

)

 

 

2,236

 

Inventories

 

 

(5,921

)

 

 

(3,614

)

Prepaid expenses and other assets

 

 

(4,351

)

 

 

(477

)

Trade accounts payable

 

 

2,782

 

 

 

112

 

Accrued expenses and other liabilities

 

 

555

 

 

 

135

 

Legal settlement liabilities

 

 

482

 

 

 

429

 

Deferred revenue

 

 

2,581

 

 

 

1,736

 

Lease liabilities

 

 

(291

)

 

 

-

 

Net cash (used in) provided by operating activities

 

 

(1,480

)

 

 

1,935

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(780

)

 

 

(509

)

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

 

 

-

 

 

 

371

 

Net cash used in investing activities

 

 

(780

)

 

 

(138

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

 

364

 

 

 

187

 

Net cash provided by financing activities

 

 

364

 

 

 

187

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(216

)

 

 

481

 

Cash and cash equivalents:

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

 

(2,112

)

 

 

2,465

 

Cash and cash equivalents at beginning of period

 

 

364,618

 

 

 

166,119

 

Cash and cash equivalents at end of period

 

$

362,506

 

 

$

168,584

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for taxes

 

$

75

 

 

$

125

 

Non-cash investing and financing activities:

 

 

 

 

 

 

Fixed asset purchases in accounts payable at period end

 

$

228

 

 

$

 

Intangible asset in accrued expenses at period end

 

$

40

 

 

$

 

Stock option exercise in accounts receivable at period end

 

$

 

 

$

9

 

Deferred financing costs in accounts payable at period end

 

$

 

 

$

369

 

 

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

5


6

Cytek Biosciences, Inc.

Notes to consolidated financial statements

 

1.
Description of business

Cytek Biosciences, Inc. (“Cytek” or the “Company”) is a leading cell analysis solutions company advancing the next generation of cell analysis tools by leveraging novel technical approaches. The Company has focused on becoming the premier cell analysis company through continued innovation that facilitates scientific advances in biomedical research and clinical applications.

The Company has successfully developed and manufactured its full spectrum flow cytometry platform (“instrument(s)” or “product(s)”). The Company believes its core instruments, the Aurora and Northern Lights systems, are the first full spectrum flow cytometers able to deliver high-resolution, high-content and high-sensitivity cell analysis by utilizing the full spectrum of fluorescence signatures from multiple lasers to distinguish fluorescent tags on single cells (“Full Spectrum Profiling” or “FSP”). The Company’s FSP platform includes instruments, accessories, reagents, software, and services to provide a comprehensive and integrated suite of solutions for its customers.

The Company was incorporated in the state of Delaware in December 2014 and is headquartered in Fremont, California with offices, manufacturing facilities and distribution channels across the globe.

Initial Public Offering

In July 2021, the Company priced its initial public offering (“IPO”) of 13,949,401 shares of common stock, which included the full exercise by the underwriters of their option to purchase an additional 2,184,695 shares from the Company, at an initial public offering price of $17.00 per share for gross proceeds of $237.1 million, which resulted in net proceeds to the Company of approximately $215.7 million, after deducting underwriting discounts and commissions of approximately $17.3 million and offering-related transaction costs of approximately $5.3 million. In addition, certain selling stockholders offered and sold an additional 2,799,929 shares or common stock in the IPO. The Company did not receive any proceeds from the sale of such shares by the selling stockholders.

In addition, in connection with the completion of the IPO on July 27, 2021, all outstanding shares of convertible preferred stock (see Note 11) were automatically converted into 87,268,694 shares of the Company’s common stock and were reclassified as permanent equity. Further, immediately following the closing of the IPO, the Company amended and restated its certificate of incorporation such that the total number of shares of common stock authorized to be issued was 1,000,000,000 and the total number of shares of preferred stock authorized to be issued was 10,000,000. Following the IPO, there are no shares of convertible preferred stock outstanding.

2.
Basis of presentation and summary of significant accounting policies

The Company has prepared the accompanying unaudited interim consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).

Principles of consolidation

The unaudited interim consolidated financial statements include the accounts of Cytek Biosciences, Inc., its wholly-owned subsidiaries, Cytek Limited (HK), Cytek Biosciences B.V. (Europe), Cytek (Shanghai) Biosciences Co., Ltd., Cytek Biosciences (Wuxi) Co., Ltd., Cytoville Biosciences Shanghai Co., Ltd. and Cytek (Shanghai) Software Development Technology Co., Ltd. and its majority-owned subsidiary, Cytek Japan Kabushiki Kaisha (“Cytek Japan”). The noncontrolling interest is presented in stockholders’ equity in the consolidated balance sheets and consolidated statements of redeemable convertible preferred stock and stockholders’ equity (deficit). All intercompany accounts and transactions have been eliminated in consolidation.

On July 16, 2021, the Company effected a 1.3333-for-1 stock split of its common stock and redeemable convertible preferred stock (the “Stock Split”). All share and per share information has been retroactively adjusted to reflect the Stock Split for all periods presented.

Variable interest entities and voting interest entities

The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a variable interest entity (“VIE”) and therefore subject to the consolidation requirements under the VIE model. Only if the entity does not meet the definition of a VIE, the Company will apply the voting interest model (“VOE”) or other applicable GAAP. VOEs are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. The

6


7

Company consolidates VOEs in which it has greater than 50% of the voting shares and that other equity holders do not have substantive voting, participating or liquidation rights. As defined in applicable accounting standards, VIEs are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company consolidates a VIE where it has been determined that the Company is the primary beneficiary of the entity’s operations. The Company does not currently hold an interest in a VIE.

Use of estimates

The preparation of the unaudited interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s unaudited interim consolidated financial statements and accompanying notes as of the date of the unaudited interim consolidated financial statements. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates.

COVID-19

The global COVID-19 pandemic continues to evolve and the Company intends to continue to monitor it closely. In response to the COVID-19 pandemic and various resulting government directives, the Company took proactive measures to protect the health and safety of its employees, contractors, customers and visiting vendors and suppliers, including implementing social distancing and other protective measures, restricting business travel and limiting access to its facilities to vendors, suppliers and partners who are critical to its business operations. The Company communicates regularly with its suppliers so that its supply chain remains intact, and the Company has not experienced any material supply issues. The Company also developed, and continues to develop, remote learning capabilities to help its customers and partners operate and reduce the number of required customer/partner on-site visits for its field application scientists and field support engineers to comply with travel restrictions and country-specific quarantine requirements. While the COVID-19 pandemic has not had a material adverse effect on the Company's business, results of operations or the operation of financial reporting systems, internal control over financial reporting and disclosure controls and procedures, given the considerable uncertainty around the duration and extent of the pandemic, the related financial and operational impact cannot be reasonably estimated. The Company continues to monitor the implications of the COVID-19 pandemic on its business, as well as its customers’ and suppliers’ business. Potential impacts of the COVID-19 pandemic, some of which the Company has already experienced, include those described throughout the “Risk Factors” section, including “A pandemic, epidemic or outbreak of an infectious disease in the United States or worldwide could adversely affect our business. The COVID-19 pandemic has had and could continue to have an adverse impact on our business, operations, and the markets and communities in which we, our partners, and customers operate."

Operating segments

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating and evaluating financial performance. The Company operates and manages its business as one reportable and operating segment.

Foreign currency translation and transactions

The Company has determined that the functional and reporting currency for its operations across the globe is the functional currency of the Company’s international subsidiaries. Accordingly, all foreign balance sheet accounts have been translated into U.S. dollars using the rate of exchange at the respective balance sheet date. Components of the unaudited interim consolidated statements of operations and comprehensive income have been translated at the average exchange rate for the year or the reporting period. Translation gains and losses are recorded in accumulated other comprehensive income as a component of stockholders’ equity. Gains or losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in the unaudited interim consolidated statements of operations and comprehensive income.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value.

The Company’s cash and cash equivalents consist of money held in demand depositary accounts and money market funds. The carrying amount of cash and cash equivalents was $362.5 million and $364.6 million as of March 31, 2022 and December 31, 2021,

7


8

respectively, which approximates fair value and was determined based upon Level 1 inputs. The money market account is valued using quoted market prices with no valuation adjustments applied and is categorized as Level 1. The Company limits its credit risk associated with cash and cash equivalents by maintaining its bank accounts at major and reputable financial institutions. The Company’s cash and cash equivalents balance exceeded the federally insured limit of $250,000 as of March 31, 2022 and December 31, 2021.

The following is a summary of cash and cash equivalents on the consolidated balance sheets (in thousands):

 

 

March 31,
2022

 

 

December 31,
2021

 

Cash

 

$

18,445

 

 

$

18,939

 

Money market funds

 

 

344,061

 

 

 

345,679

 

Total cash and cash equivalents as presented on the
   consolidated statements of cash flows

 

$

362,506

 

 

$

364,618

 

 

Trade accounts receivable, net

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and the Company’s customers’ respective financial conditions, the amounts of receivables in dispute and the current receivables aging and current payment patterns. To the extent identified, account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. To date, the Company’s customers have primarily been large pharmaceutical companies, biopharmaceutical companies, leading academic research centers and clinical research organizations and therefore, the Company has not had any material write-offs or allowance for doubtful accounts for the presented periods. The following is a summary of the accounts receivables allowance for doubtful accounts for the three months ended March 31, 2022 and the year ended December 31, 2021 (in thousands):