UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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
(Exact name of Registrant as specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
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 |
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Smaller reporting company |
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Emerging growth company |
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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
1
Table of Contents
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PART I |
FINANCIAL INFORMATION |
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Item 1. |
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2 |
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Consolidated Statements of Operations and Comprehensive Income (Loss) |
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Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
38 |
Item 3. |
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Item 4. |
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PART II |
OTHER INFORMATION |
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Item 1. |
39 |
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Item 1A. |
40 |
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Item 2. |
79 |
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Item 3. |
80 |
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Item 4. |
80 |
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Item 5. |
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Item 15. |
81 |
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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) |
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March 31, |
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December 31, |
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(unaudited) |
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(audited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Trade accounts receivable, net |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Deferred income tax assets, noncurrent |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Goodwill |
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Intangible assets, net |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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Liabilities, redeemable convertible preferred stock and stockholders’ equity |
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Current liabilities: |
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Trade accounts payable |
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$ |
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$ |
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Legal settlement liability, current |
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Accrued expenses |
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Other current liabilities |
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Deferred revenue, current |
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Total current liabilities |
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Legal settlement liability, noncurrent |
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Deferred revenue, noncurrent |
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Operating lease liability, non-current |
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Other noncurrent liabilities |
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Total liabilities |
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$ |
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$ |
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Redeemable convertible preferred stock, $ |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive income |
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Noncontrolling interest in consolidated subsidiary |
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Total stockholders’ equity |
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$ |
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$ |
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Total liabilities, redeemable convertible preferred stock and stockholders’ equity |
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$ |
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$ |
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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)
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Three months ended March 31, |
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(In thousands, except share and per share data) |
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2022 |
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2021 |
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Revenue, net: |
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Product |
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$ |
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$ |
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Service |
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Total revenue, net |
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Cost of sales: |
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Product |
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Service |
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Total cost of sales |
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Gross profit |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Total operating expenses |
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(Loss) income from operations |
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Other income (expense): |
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Interest expense |
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Interest income |
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Other expense, net |
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( |
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Total other expense, net |
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(Loss) income before income taxes |
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(Benefit from) provision for income taxes |
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( |
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Net (loss) income |
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$ |
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$ |
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Less: net loss allocated to noncontrolling interests |
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Less: net income allocated to participating securities |
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Net (loss) income attributable to common stockholders, basic and diluted |
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$ |
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$ |
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Net (loss) income attributable to common stockholders per share, basic |
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$ |
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$ |
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Net (loss) income attributable to common stockholders per share, diluted |
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$ |
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$ |
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Weighted-average shares used in calculating net (loss) income per share, basic |
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Weighted-average shares used in calculating net (loss) income per share, diluted |
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Comprehensive (loss) income: |
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Net (loss) income |
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$ |
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$ |
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Foreign currency translation adjustment, net of tax |
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Net comprehensive (loss) income |
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$ |
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$ |
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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)
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Redeemable convertible |
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Additional |
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Accumulated other |
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Noncontrolling |
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Total |
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preferred stock |
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Common stock |
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paid-in |
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Accumulated |
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comprehensive |
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interest in consolidated |
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stockholders’ |
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(In thousands, except share data) |
Shares |
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Amount |
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Shares |
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Amount |
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capital |
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deficit |
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income |
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subsidiary |
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equity |
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Balances at December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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Exercise of stock options |
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Stock-based compensation |
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Foreign currency translation adjustment, net of tax |
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Net loss |
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Noncontrolling interest |
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Balances at March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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Redeemable convertible |
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Additional |
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Accumulated other |
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Noncontrolling |
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Total |
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preferred stock |
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Common stock |
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paid-in |
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Accumulated |
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comprehensive |
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interest in consolidated |
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stockholders’ |
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(In thousands, except share data) |
Shares |
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Amount |
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Shares |
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Amount |
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capital |
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deficit |
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income |
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subsidiary |
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equity (deficit) |
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Balances at December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Exercise of stock options |
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Stock-based compensation |
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Foreign currency translation adjustment, |
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Net income |
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Noncontrolling interest |
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Balances at March 31, 2021 |
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$ |
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$ |
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— |
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$ |
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— |
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$ |
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— |
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$ |
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— |
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$ |
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— |
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$ |
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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)
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Three months ended March 31, |
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(In thousands) |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net (loss) income |
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$ |
( |
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$ |
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Adjustments to reconcile net (loss) income to net cash (used in) provided by |
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Depreciation and amortization |
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Amortization of operating lease-right-of use assets |
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Stock-based compensation |
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Gain on equity method investment |
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Provision for excess and obsolete inventory |
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Interest expenses for accretion of the legal settlement liabilities |
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Change in operating assets and liabilities: |
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Trade accounts receivable |
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Inventories |
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( |
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( |
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Prepaid expenses and other assets |
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( |
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( |
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Trade accounts payable |
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Accrued expenses and other liabilities |
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Legal settlement liabilities |
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Deferred revenue |
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Lease liabilities |
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Net cash (used in) provided by operating activities |
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Cash flows from investing activities: |
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Purchase of property and equipment |
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Payment for additional investment in Cytek Japan, net of cash acquired |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Proceeds from issuance of common stock upon exercise of stock options |
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Net cash provided by financing activities |
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Effect of exchange rate changes on cash and cash equivalents |
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Cash and cash equivalents: |
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Net (decrease) increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Cash paid for taxes |
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$ |
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$ |
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Non-cash investing and financing activities: |
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Fixed asset purchases in accounts payable at period end |
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$ |
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$ |
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Intangible asset in accrued expenses at period end |
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$ |
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$ |
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Stock option exercise in accounts receivable at period end |
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$ |
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$ |
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Deferred financing costs in accounts payable at period end |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited interim consolidated financial statements
5
6
Cytek Biosciences, Inc.
Notes to consolidated financial statements
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
Initial Public Offering
In July 2021, the Company priced its initial public offering (“IPO”) of
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
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.
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
Use of 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
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 $
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 $
The following is a summary of cash and cash equivalents on the consolidated balance sheets (in thousands):
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March 31, |
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December 31, |
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Cash |
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$ |
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$ |
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Money market funds |
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Total cash and cash equivalents as presented on the |
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$ |
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$ |
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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.