10q10k10q10k.net

What changed in Cytek Biosciences, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Cytek Biosciences, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+496 added−467 removedSource: 10-K (2025-02-28) vs 10-K (2024-03-13)

Top changes in Cytek Biosciences, Inc.'s 2024 10-K

496 paragraphs added · 467 removed · 398 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

103 edited+30 added−13 removed122 unchanged
Biggest changeThese research use only (“RUO”) products are optimized for use with our Aurora and Northern Lights systems and designed to simplify the workflow and improve operational efficiency for our customers. Our single-color reagents are registered as Class 1 with the China National Medical Products Administration (NMPA) and in the European Union under the IVDD.
Biggest changeOur single-color reagents are registered as Class 1 with the China National Medical Products Administration (the “NMPA”) and in the European Union under the IVDD. Our 6-color reagent cocktails that identify and determine the percentages and absolute counts of T, B and NK cells in peripheral blood are registered as Class 3 with the NMPA.
Cytek Guava Muse ® Cell Analyzer The Cytek Guava Muse cell analyzer is a compact, easy-to-use benchtop device with a user-friendly touchscreen interface and intuitive cell analysis software. The Muse system delivers high-performance cell analysis using a microcapillary technology and miniaturized optics.
Cytek Guava Muse ® Cell Analyzer The Cytek Guava Muse cell analyzer is a compact, easy-to-use benchtop device with a user-friendly touchscreen interface and intuitive cell analysis software. The Muse system delivers high-performance cell analysis using microcapillary technology and miniaturized optics.
SpectroFlo® Software Our proprietary SpectroFlo software is integrated into our systems and is unique in that it offers intuitive workflows for handling full spectrum flow cytometry data, from quality control to data analysis. The software was developed specifically for our Cytek Aurora and Northern Lights systems to streamline instrument setup, automated quality control, data analysis and data management.
Software Our proprietary SpectroFlo software is integrated into our systems and is unique in that it offers intuitive workflows for handling full spectrum flow cytometry data, from quality control to data analysis. The software was developed specifically for our Cytek Aurora and Northern Lights systems to streamline instrument setup, automated quality control, data analysis, and data management.
We also own a number of issued patents related to the Amnis and Guava families of flow cytometer products from the FCI Acquisition. We generally seek patent protection in the United States, Japan, China and selected countries of the European Union, such as France, Germany and the United Kingdom.
We also own a number of issued patents related to the Amnis and Guava families of flow cytometer products from the FCI Acquisition. We generally seek patent protection in the United States, Japan, China, the United Kingdom and selected countries of the European Union, such as France and Germany.
Food and Drug Administration Regulation After a medical device is placed on the market, numerous FDA regulatory requirements apply, including, but not limited to the following: • the QSR, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures during the manufacturing process; • establishment registration, which requires establishments involved in the production and distribution of medical devices, intended for commercial distribution in the United States, to register with the FDA; • medical device listing, which requires manufacturers to list the devices they have in commercial distribution with the FDA; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • complying with the new federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; • labeling regulations, which prohibit “misbranded” devices from entering the market, as well as prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; and • post-market surveillance including Medical Device Reporting, which requires manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury, or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur. 16 Table of Contents The FDA enforces these requirements by inspection and market surveillance.
Food and Drug Administration Regulation After a medical device is placed on the market, numerous FDA regulatory requirements apply, including, but not limited to the following: • the QSR, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures during the manufacturing process; 16 Table of Contents • establishment registration, which requires establishments involved in the production and distribution of medical devices, intended for commercial distribution in the United States, to register with the FDA; • medical device listing, which requires manufacturers to list the devices they have in commercial distribution with the FDA; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • complying with the new federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; • labeling regulations, which prohibit “misbranded” devices from entering the market, as well as prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; and • post-market surveillance including Medical Device Reporting, which requires manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury, or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur.
As a result of these factors and the budget cycles of our customers, the sales cycle on our instrument, the time from initial contact with a customer to our receipt of a purchase order, can be six months or longer. MANUFACTURING AND SUPPLY Our manufacturing operations are located in Fremont, California; San Diego, California; Seattle, Washington; and Wuxi, China.
As a result of these factors and the budget cycles of our customers, the sales cycle on our instrument, the time from initial contact with a customer to our receipt of a purchase order, can be six months or longer. MANUFACTURING AND SUPPLY Our manufacturing operations are located in Fremont, California; San Diego, California; Seattle, Washington; Wuxi, China; and Singapore.
We have developed our own portfolio of issued patents and patent applications directed at our core and system level technology, including claims directed to methods and apparatus of flow cytometers and cell sorters with excitation, fluidics, emission, mechanical, magnetic, electronics, bio-safety and temperature control technology in configurations of our Aurora, Aurora CS, Northern Lights and Northern Lights CLC systems.
We have developed our own portfolio of issued patents and patent applications directed at our core and system level technology, including claims directed to methods and apparatus of flow cytometers and cell sorters with excitation, fluidics, emission, mechanical, magnetic, electronics, bio-safety and temperature control technology in configurations of our Cytek Aurora, Aurora CS, Northern Lights and Northern Lights-CLC systems.
We currently compete with established and early stage life sciences and in vitro diagnostics (“IVD”) companies developing or commercializing flow cytometry instruments and consumables, as well as other companies that design, manufacture and market instruments, accessories, consumables, reagent kits and software for, among other applications, cell analysis, immunophenotyping, cell sorting and/or provide services related to the same.
We currently compete with established and early stage life sciences and in vitro diagnostics companies developing or commercializing flow cytometry instruments and consumables, as well as other companies that design, manufacture and market instruments, accessories, consumables, reagent kits and software for, among other applications, cell analysis, immunophenotyping, cell sorting and/or provide services related to the same.
Importance of cell analysis at the single-cell level. Due to the heterogeneity within tissues, understanding cellular biology, particularly at the single-cell level, is necessary to unravel mechanisms that might otherwise not be detectable in bulk assays. Deep cellular analysis is a key application that we expect to enable a new age of healthcare delivery, and in particular, personalized medicine.
Due to the heterogeneity within tissues, understanding cellular biology, particularly at the single-cell level, is necessary to unravel mechanisms that might otherwise not be detectable in bulk assays. Deep cellular analysis is a key application that we expect to enable a new age of healthcare delivery, and in particular, personalized medicine.
Our Northern Lights CLC system has been registered or approved for clinical use in the European Union and China and we plan to continue generating supporting publications and data, as well as pursue any required regulatory approvals for clinical use in the United States. Our Market Opportunity and Industry Background Our market opportunity.
Our Northern Lights-CLC (NL-CLC ™ ) system has been registered or approved for clinical use in the European Union and China, and we plan to continue generating supporting publications and data, as well as pursue any required regulatory approvals for clinical use in the United States. Our Market Opportunity and Industry Background Our market opportunity.
Our Aurora CS system was commercially launched in June 2021 and is the first highly flexible, intuitive and ultra-sensitive cell sorter that leverages the detection and sensitivity capabilities of our FSP technology to isolate living cell populations from lower to higher complexity panels beyond 40 biomarkers.
Our Aurora CS system was commercially launched in June 2021 and was the first highly flexible, intuitive and ultra-sensitive cell sorter that leverages the detection and sensitivity capabilities of our FSP technology to isolate living cell populations from lower to higher complexity panels beyond 40 biomarkers.
We believe the combination of our people and our global reach will enable us to continue to execute on our growth strategies, stay ahead of competition and remain at the forefront of innovation in cell analysis. Our leadership team has extensive track records in the life sciences and technology sectors.
We believe the combination of our people and our global reach will enable us to continue to execute our growth strategies, stay ahead of competition and remain at the forefront of innovation in cell analysis. Our leadership team has extensive track records in the life sciences and technology sectors.
Additionally, our optical design and unmixing algorithm make the instrument amenable to a wide array of applications and fluorochrome options, all without needing to reconfigure the instrument hardware as would otherwise be required on a conventional flow cytometer (“CFC”).
Additionally, our optical design and unmixing algorithm make the instrument amenable to a wide array of applications and fluorochrome options, all without needing to reconfigure the instrument hardware as would otherwise be required on a conventional flow cytometer.
The acquisition supports our plan to develop new products and capabilities with flow cytometry and imaging technology, expand our reach and offerings into customer segments previously underserved, and increase the efficiency of our operations .
The FCI Acquisition supports our plan to develop new products and capabilities with flow cytometry and imaging technology, expand our reach and offerings into customer segments previously underserved, and increase the efficiency of our operations .
In November 2013 the FDA issued a guidance document entitled “Distribution of In Vitro Diagnostic Products Labeled for Research Use Only or Investigational Use Only” (RUO Guidance) which highlights the FDA’s interpretation that distribution of RUO products with any labeling, advertising or promotion that suggests that clinical laboratories can validate the test through their own procedures and subsequently offer it for clinical diagnostic use as a laboratory developed test is in conflict with RUO status.
In November 2013 the FDA issued a guidance document entitled “Distribution of In Vitro Diagnostic Products Labeled for Research Use Only or Investigational Use Only” (the “RUO Guidance”) which highlights the FDA’s interpretation that distribution of RUO products with any labeling, advertising or promotion that suggests that clinical laboratories can validate the test through their own procedures and subsequently offer it for clinical diagnostic use as a laboratory developed test is in conflict with RUO status.
In addition, both instruments incorporate our SpectroFlo ® software, which offers an intuitive workflow from quality control to sample acquisition to data analysis, with technology- enabling tools that simplify running applications. The Northern Lights CLC (NL-CLC ™ ) system was registered in the European Union in compliance with Regulation (EU) 2017/746 on In Vitro Diagnostic Medical Devices in November 2023.
In addition, both instruments incorporate our SpectroFlo software, which offers an intuitive workflow from quality control to sample acquisition to data analysis, with technology- enabling tools that simplify running applications. The Northern Lights-CLC system was registered in the European Union in compliance with Regulation (EU) 2017/746 on In Vitro Diagnostic Medical Devices (the “IVDR”) in November 2023.
Our FSP platform is designed to offer the following key benefits: • Ultra-sensitive: resolve the most challenging cell populations (such as cells with high autofluorescence or low levels of expression of key biomarkers) by providing high-resolution data at the single-cell level with an optimized signal-to-noise ratio. • Deep, high integrity content: allow development of highly complex assays through access to more than 40 different colors and thus, supporting more than 40 biomarkers in a single tube without sacrificing precision and throughput to gain a deeper understanding of biological systems and arrive at faster and more accurate diagnoses in clinical settings. 4 Table of Contents • Flexible and compatible: enable a single configuration across a wide range of reagents and applications, full backwards compatibility across panels, and greater leverage for downstream analysis with complementary technologies, including NGS. • Efficient and compact: improve costs and save time while maintaining industry-leading performance and efficient workflows that limit consumables usage and reduce labor costs—all within a highly compact footprint minimizing space requirements for laboratories. • Integrated and intuitive: provide fully-integrated workflows through a suite of solutions that include instruments, accessories, reagents and kits, software and services.
Our FSP platform is designed to offer the following key benefits: • Ultra-sensitive: resolve the most challenging cell populations (such as cells with high autofluorescence or low levels of expression of key biomarkers) by providing high-resolution data at the single-cell level with an optimized signal-to-noise ratio. • Deep, high integrity content: allow development of highly complex assays through access to 50 different colors and, thus, supporting 50 biomarkers in a single tube without sacrificing precision and throughput to gain a deeper understanding of biological systems and arrive at faster and more accurate diagnoses in clinica l settings. 4 Table of Contents • Flexible and compatible: enable a single configuration across a wide range of reagents and applications, full backwards compatibility across panels, and greater leverage for downstream analysis with complementary technologies, including NGS. • Efficient and compact: improve costs and save time while maintaining industry-leading performance and efficient workflows that limit consumables usage and reduce labor costs—all within a highly compact footprint minimizing space requirements for laboratories. • Integrated and intuitive: provide fully integrated workflows through a suite of solutions that include instruments, accessories, reagents and kits, software and services.
Any patents we have obtained or do obtain may be challenged by re-examination, opposition or other administrative proceeding, or may be challenged in litigation, and such challenges could result in a determination that the patent is invalid. In addition, competitors may be able to design alternative methods or devices that avoid infringement of our patents.
Any patents we have obtained or do obtain may be challenged by re-examination, opposition or other administrative proceedings, or may be challenged in litigation, and such challenges could result in a determination that the patent is invalid. In addition, competitors may be able to design alternative methods or devices that avoid infringement of our patents.
Our license under the Biotium Agreement does not include diagnostic use, which may be added through an amendment and additional payment to Biotium. Becton, Dickinson and Company Settlement, License and Equity Issuance Agreement On February 13, 2018, BD filed a lawsuit against us alleging trade secret misappropriation and copyright infringement.
Our license under the Biotium Agreement does not include diagnostic use, which may be added through an amendment and additional payment to Biotium. Becton, Dickinson and Company Settlement, License and Equity Issuance Agreement On February 13, 2018, Becton, Dickinson and Company (“BD”) filed a lawsuit against us alleging trade secret misappropriation and copyright infringement.
Some pre-amendment devices are unclassified, but are subject to the FDA’s pre-market notification and clearance process in order to be commercially distributed. 510(k) Clearance Process To obtain 510(k) clearance, we must submit a pre-market notification to the FDA demonstrating that the proposed device is substantially equivalent to a previously-cleared 510(k) device, a device that was in commercial distribution before 14 Table of Contents May 28, 1976 for which the FDA has not yet called for the submission of PMA applications, or is a device that has been reclassified from Class III to either Class II or I.
Some pre-amendment devices are unclassified, but are subject to the FDA’s pre-market notification and clearance process in order to be commercially distributed. 510(k) Clearance Process To obtain 510(k) clearance, we must submit a pre-market notification to the FDA demonstrating that the proposed device is substantially equivalent to a previously-cleared 510(k) device, a device that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for the submission of PMA applications, or is a device that has been reclassified from Class III to either Class II or I.
Our worldwide commercial team of 254 employees and our research and development team of 164 employees have significant expertise, industry experience and collaborative relationships with key opinion leaders (“KOLs”), industry leaders, innovators and potential customers. We have a long history of providing high-quality and efficient customer service and our product development efforts reflect our deep understanding of our customers’ needs.
Our worldwide commercial team of 244 employees and our research and development team of 164 employees have significant expertise, industry experience and collaborative relationships with key opinion leaders (“KOLs”), industry leaders, innovators and potential customers. We have a long history of providing high-quality and efficient customer service and our product development efforts reflect our deep understanding of our customers’ needs.
The federal Anti-Kickback Statute prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce either the referral of an individual, for an item or service or the purchasing, leasing, ordering, or arranging for or 17 Table of Contents recommending the purchase, lease or order of any good, facility, item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as the Medicare and Medicaid programs.
The federal Anti-Kickback Statute prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce either the referral of an individual, for an item or service or the purchasing, leasing, ordering, or arranging for or recommending the purchase, lease or order of any good, facility, item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as the Medicare and Medicaid programs.
Foreign Corrupt Practices Act The U.S. Foreign Corrupt Practices Act, or FCPA, prohibits U.S. corporations and their representatives from directly or indirectly offering, promising, authorizing or making corrupt payments, gifts or transfers to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business.
Foreign Corrupt Practices Act The U.S. Foreign Corrupt Practices Act (“FCPA”), prohibits U.S. corporations and their representatives from directly or indirectly offering, promising, authorizing or making corrupt payments, gifts or transfers to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business.
The information contained on the websites referenced in this Annual Report on Form 10-K is not incorporated by reference into this filing. Further, our references to website URLs are intended to be inactive textual references only. 19 Table of Contents
The information contained on the websites referenced in this Annual Report on Form 10-K is not incorporated by reference into this filing. Further, our references to website URLs are intended to be inactive textual references only. 20 Table of Contents
Since our first U.S. commercial launch in mid-2017 through December 31, 2023, we have sold and deployed our instruments to customers around the world, including pharmaceutical companies, biopharma companies, academic research centers, and clinical research organizations (“CROs”).
Since our first U.S. commercial launch in mid-2017 through December 31, 2024, we have sold and deployed our instruments to customers around the world, including pharmaceutical companies, biopharma companies, academic research centers, and clinical research organizations (“CROs”).
Unlike other high-capacity sorters, we believe the Aurora CS system is the only cell sorter that can accommodate the same number of parameters with the same sensitivity as the Cytek Aurora system and isolate living cell populations of interest using the same panel and without having to alter the optical configuration, while also being able to sort panels designed for conventional analyzers.
Unlike other high-capacity sorters, we believe the Aurora CS system is the only cell sorter that can accommodate the same number of parameters with the same sensitivity as the Cytek Aurora system and isolate living cell populations of 7 Table of Contents interest using the same panel and without having to alter the optical configuration, while also being able to sort panels designed for conventional analyzers.
With our SpectroFlo software, users can conveniently and efficiently collect both raw and unmixed FCS 3.1 files, which can be used to live unmix samples and extract autofluorescence that would otherwise negative impact data resolution.
With our SpectroFlo software, users can conveniently and efficiently collect both raw and unmixed FCS 3.1 files, which can be used to live unmix samples and extract autofluorescence that would otherwise negatively impact data resolution.
Laser-based fluorescence detection of each cell event can evaluate up to three cellular parameters, providing more quantitative results than non-flow based imaging systems. Cytek Guava easyCyte™ Flow Cytometer The Cytek Guava easyCyte flow cytometer is a highly dynamic benchtop system with great sensitivity and optional high-throughput capabilities powered by intuitive software.
Laser-based fluorescence detection of each cell event can evaluate up to three cellular parameters, providing more quantitative results than non-flow cytometry-based imaging systems. Cytek Guava easyCyte™ Flow Cytometer The Cytek Guava easyCyte flow cytometer is a highly dynamic benchtop system with great sensitivity and optional high-throughput capabilities driven by intuitive software.
This investment will also support our entry into new markets as we rollout new solutions and applications and appropriately manage inbound interest from new customers. • Continue to innovate and offer our customers best-in-class solutions. Our development efforts focus on value-additive features and enhancements to meet the growing needs of the cell analysis market.
This investment will also support our entry into new markets as we roll out new solutions and applications and appropriately manage inbound interest from new customers. • Continue to innovate and offer our customers best-in-class solutions. Our development efforts focus on value-additive features and enhancements to meet the growing needs of the cell analysis market.
Item 1. Business Overview We are a leading cell analysis solutions company advancing the next generation of cell analysis tools with our novel technical approach of leveraging the full spectrum of fluorescence signatures from multiple lasers to distinguish fluorescent tags on single cells (“Full Spectrum Profiling” or “FSP” technology).
Item 1. Business Overview We are a leading cell analysis solutions company advancing the next generation of research and clinical tools with our novel technical approach of leveraging the full spectrum of fluorescence signatures from multiple lasers to distinguish fluorescent tags on single cells (“Full Spectrum Profiling” or “FSP” technology).
There is growing demand for deep content through high dimensional cell analysis and for solutions that can provide a complete picture of cellular biological processes and interactions. To achieve this, scientists need to phenotype and isolate rare events or unique populations down to the single-cell through highly resolvable multi-dimensional cell analysis.
As a result, there is growing demand for deep content through high dimensional cell analysis and for solutions that can provide a complete picture of cellular biological processes and interactions. To achieve this, scientists need to phenotype and isolate rare events or unique populations down to the single-cell level through highly resolvable multi-dimensional cell analysis.
OUR PRODUCTS We are a leading cell analysis solutions provider that develops compact, cost-effective instruments with high multiplexing capability, and we offer a wide range of services to support scientists and clinicians. Our products are used in the world’s most renowned pharmaceutical and clinical research organizations, as well as premier academic and research institutions.
OUR PRODUCTS We are a leading cell analysis solutions provider that develops compact, cost-effective instruments with high multiplexing capability, and we offer a wide range of services to support scientists and clinicians. Our products are used in the world’s most renowned pharmaceutical and CROs, as well as premier academic and research institutions.
Cytek Aurora CS System Key to the discovery of unraveling cellular complexity is the ability to perform additional downstream genomic and proteomic studies on the specific subsets identified using high dimensional phenotyping approaches.
Cytek Aurora CS System Key unraveling cellular complexity is the ability to perform additional downstream genomic and proteomic studies on the specific subsets identified using high dimensional phenotyping approaches.
One of our key differentiators is our customer-facing technical team, which collaborates closely with our customers to identify and find solutions for unmet needs across the market. We 5 Table of Contents collaborate closely with KOLs, generating relevant data and publications to demonstrate not only the feasibility, but also the quality of our approach.
One of our key differentiators is our customer-facing technical team, which collaborates closely with our customers to identify and find solutions for unmet needs across the market. We also collaborate closely with KOLs, generating relevant data and publications to demonstrate not only the feasibility, but also the quality of our approach.
Since our FSP platform provides highly complex data down to single-cell resolution at a rapid speed, it is inherently well-suited to drive more targeted and efficient 6 Table of Contents downstream analyses for other single-cell technologies, such as NGS, single-cell capture and sample preparation, high-resolution microscopy (such as mass imaging cytometry, super resolution microscopy, confocal microscopy and high-throughput screening platforms), and micro and optofluidic systems.
Since our FSP platform provides highly complex data down to single-cell resolution at a rapid speed, it is inherently well-suited to drive more targeted and efficient downstream analyses for other single-cell technologies, such as NGS, single-cell capture and sample preparation, high-resolution microscopy (such as mass imaging cytometry, super resolution microscopy, confocal microscopy and high-throughput screening platforms), and micro and optofluidic systems.
Thus, we believe our potential total addressable market is larger than the current cell analysis market, which excludes new and existing markets addressable by our platform, such as clinical research applications within immunotherapy, immuno-oncology, bio-processing, infectious diseases and immuno-deficiencies.
Thus, we believe our potential total addressable market is larger than the current cell analysis market, which excludes new and existing markets addressable by our platform, such as clinical research applications within immunotherapy, immuno-oncology, bioprocessing, infectious diseases and immuno-deficiencies.
On October 6, 2020, we entered into a Settlement, License and Equity Issuance Agreement with BD pursuant to which we and BD agreed to a mutual release of all claims against each other as of the date thereof (the “BD 12 Table of Contents Agreement”).
On October 6, 2020, we entered into a Settlement, License and Equity Issuance Agreement with BD pursuant to which we and BD agreed to a mutual release of all claims against each other as of the date thereof (the “BD Agreement”).
For further discussion of the risks we face relating to competition, see the section titled “Risk factors— Risks Related to Our Business and Strategy—The market for cell analysis technologies and life sciences tools, including flow cytometry, is highly competitive, and if we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue, or achieve and sustain profitability.” INTELLECTUAL PROPERTY Our commercial success depends in part on our ability to obtain and maintain patent and other proprietary protection for our commercially important technology, inventions and know-how; to defend and enforce our parents; to operate without infringing, misappropriating or violating our proprietary rights.
For further discussion of the risks we face relating to competition, see the section titled “Risk factors— Risks Related to Our Business and Strategy—The market for cell analysis technologies and life sciences tools, including flow 11 Table of Contents cytometry, is highly competitive, and if we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue, or achieve and sustain profitability.” INTELLECTUAL PROPERTY Our commercial success depends in part on our ability to obtain and maintain patent and other proprietary protection for our commercially important technology, inventions and know-how; to defend and enforce our patents; and to operate without third parties infringing, misappropriating or violating our proprietary rights.
The Similarity index compares the emission spectrum of two dyes, identifying whether the dyes have unique characteristics or if the dyes 9 Table of Contents are identical, which determines whether they can be used together to analyze a sample in a flow cytometry assay.
The Similarity index compares the emission spectrum of two dyes, identifying whether the dyes have unique characteristics or if the dyes are identical, which determines whether they can be used together to analyze a sample in a flow cytometry assay.
The implications are significant in terms of flexibility and user experience, including experiment workflow transportability and assay reproducibility, enabling a 40-biomarker assay to be run in both the Cytek Aurora and the Aurora CS systems, with similar results.
The implications are significant in terms of flexibility and user experience, including experiment workflow transportability and assay reproducibility, now enabling a 50-biomarker assay to be run in both the Cytek Aurora and the Aurora CS systems, with similar results.
This patented optics design enables researchers to effectively collect the full range of light emissions in an extremely compact space, resulting in higher resolution and enabling the development of highly complex assays with more than 40 different colors (individual fluorochromes), supporting more than 40 biomarkers within just a single tube.
This patented optics design enables researchers to effectively collect the full range of light emissions in an extremely compact space, resulting in higher resolution and enabling the development of highly complex assays with 50 different colors (individual fluorochromes), supporting 50 biomarkers within just a single tube.
Our core FSP systems, the Cytek Aurora™ and Northern Lights™ flow cytometers, deliver high-resolution, high-content and high-sensitivity cell analysis and address the inherent limitations of other technologies by providing a higher level of multiplexing with exquisite sensitivity, more flexibility and increased efficiency, all at a lower cost for performance.
Our FSP cell analyzers, the Cytek Aurora™ and Northern Lights™ systems, deliver high-resolution, high-content and high-sensitivity cell analysis and address the inherent limitations of other technologies by providing a higher level of multiplexing with exquisite sensitivity, more flexibility and increased efficiency, all at a lower cost for performance.
Additionally, our Cytek Aurora cell sorter (“Aurora CS” system) leverages our FSP technology to further broaden our potential applications across cell analysis by enabling the same number of parameters with the same sensitivity as the Cytek Aurora cell analyzer system.
Additionally, our Cytek Aurora cell sorter (“Aurora CS system”) leverages our FSP technology to further broaden our potential applications across cell analysis by enabling the same number of parameters with the same sensitivity as the Cytek Aurora cell analyzer system.
Our employees are neither represented by a labor union nor party to a collective bargaining agreement and we believe that we have strong employee relations. Culture and Values We seek to maintain high ethical standards and a culture that values honesty, integrity, accountability and transparency in all that we do.
Our employees are neither represented by a labor union nor party to a collective bargaining agreement and we believe that we have strong employee relations. 13 Table of Contents Culture and Values We seek to maintain high ethical standards and a culture that values honesty, integrity, accountability and transparency in all that we do.
Our Cytek Aurora and Northern Lights systems are used in the study of infectious diseases, immunology, immunotherapy, immuno-oncology, oncology, inflammation, and drug discovery . The Cytek Aurora system is available with three to five lasers and can detect more than 40 biomarkers in one sample tube.
Our Cytek Aurora and Northern Lights systems are used in the study of infectious diseases, immunology, immunotherapy, immuno-oncology, oncology, inflammation, and drug discovery . The Cytek Aurora system is available with three to five lasers and can detect 50 biomarkers in one sample tube.
Our FSP technology enables the processing of a tremendous amount of 7 Table of Contents highly complex information to provide real-time unmixing and sorting capabilities at the field-programmable gate array level.
Our FSP technology enables the processing of a tremendous amount of highly complex information to provide real-time unmixing and sorting capabilities at the field-programmable gate array level.
We have received incentive grants from the local Wuxi government for research, development, and manufacturing. 10 Table of Contents We believe that having dual sources for our core products would help mitigate the potential impact of a production disruption at any one of our facilities to ensure a reliable and stable supply chain and product availability for our customers.
We have received incentive grants from the local Wuxi government for research, development, and manufacturing. We believe that having multiple sources for our core products would help mitigate the potential impact of a production disruption at any one of our facilities to ensure a reliable and stable supply chain and product availability for our customers.
In addition, in many countries outside of North America, sales to academic or governmental institutions require participation in a tender process involving preparation of extensive documentation and a lengthy review process.
In addition, in many countries outside of North America, sales to academic or governmental 10 Table of Contents institutions require participation in a tender process involving preparation of extensive documentation and a lengthy review process.
In 2023, we introduced the single-tube 20-color panel for identifying and characterizing normal and aberrant cells and evaluating MRD in acute myeloid leukemia samples and our pan leukocyte kit, a lyse-no-wash assay designed to help researchers fully enumerate the complete set of major leukocyte subsets in drug discovery and development.
In 2023, we introduced a single-tube 20-color panel for identifying and characterizing normal and aberrant cells and evaluating MRD in acute myeloid leukemia samples, and our pan leukocyte kit is designed to help researchers fully enumerate the complete set of major leukocyte subsets for drug discovery and development.
FSP technology is highly complementary to single-cell genomics applications utilizing NGS as it can be used earlier in workflows to rapidly phenotype and isolate living cell populations to the single-cell level with highly multiplexed proteomic data.
FSP technology is highly complementary to single-cell genomics applications utilizing NGS as it can be used earlier in workflows to rapidly phenotype and isolate living cell 6 Table of Contents populations to the single-cell level with highly multiplexed proteomic data.
For more information regarding the risks related to our intellectual property, please see “Risk Factors—Risks Related to Our Intellectual Property.” Including rights acquired in connection with the FCI Acquisition, as of December 31, 2023, we own 33 issued U.S. utility patents, nine issued Japan utility patents, seven issued European utility patents, three issued China utility patents, one Canada utility patent, one India utility patent, two Australian utility patents, and three Singapore utility patents.
For more information regarding the risks related to our intellectual property, please see “Risk Factors—Risks Related to Our Intellectual Property.” Including rights acquired in connection with the FCI Acquisition, as of December 31, 2024, we own 35 issued U.S. utility patents, ten issued Japan utility patents, seven issued European utility patents, three issued China utility patents, one Canada utility patent, one India utility patent, two Australian utility patents, and three Singapore utility patents.
We commenced manufacturing operations in Fremont, California in 2015. We relocated our Fremont headquarters and manufacturing facility in October 2021 to provide us with capacity expansion capability that would be sufficient to support our growth. Our Fremont facility maintains ISO 9001 and ISO 13485 certifications and manufactures our Cytek Aurora and Aurora CS systems, as well as spare parts.
We commenced manufacturing operations in Fremont, California in 2015. We relocated our Fremont headquarters and manufacturing facility in October 2021 to provide us with expansion capability to support our growth. Our Fremont facility maintains ISO 9001 and ISO 13485 certifications and manufactures our Cytek Aurora and Aurora CS systems, as well as spare parts.
We offer and continue to develop cFluor ® immunoprofiling kits, which include the cFluor reagents and tools necessary to simplify the workflow from sample preparation to data analysis.
We offer and continue to develop additional cFluor immunoprofiling kits, which include cFluor conjugated antibody reagents and tools necessary to simplify the workflow from sample preparation to data analysis.
As of December 31, 2023, our multidisciplinary group of over 676 employees includes employees with expertise across optics, electronics, fluidics, computer sciences, chemistry, biology, and medical sciences.
As of December 31, 2024, our multidisciplinary group of over 648 employees includes employees with expertise across optics, electronics, fluidics, computer sciences, chemistry, biology, and medical sciences.
Competitors may assert that our products infringe their intellectual property rights as part of a business strategy to impede our successful entry into those markets and there has been substantial litigation regarding patent and other intellectual property rights in the medical device industry.
Competitors may assert that our products infringe their intellectual property rights as part of a business strategy to impede our successful entry into those markets and there has been substantial litigation regarding patent and 12 Table of Contents other intellectual property rights in the medical device and laboratory equipment industries.
Our Strategy Our strategy includes the following core elements: • Accelerate adoption of our solutions. To continue driving adoption of our solutions and to support our leading global brand, we intend to maximize the effectiveness of our sales infrastructure, including our sales representatives, technical applications specialists and customer support staff, in addition to increasing marketing efforts.
To continue driving adoption of our solutions and to support our leading global brand, we intend to maximize the effectiveness of our sales infrastructure, including our sales representatives, technical applications specialists and customer support staff, in addition to increasing marketing efforts.
The system’s flexible configuration provides for up to three lasers and 14 parameters and its innovative microcapillary technology provides for direct absolute counting with industry-leading precision. Cytek Orion™ Reagent Cocktail Preparation System The Cytek Orion reagent cocktail preparation system enables researchers to fully automate the preparation of antibody cocktails for flow cytometry.
The flexible configuration of the instrument allows for up to three lasers and 14 parameter measurements. Innovative microcapillary technology provides for direct absolute counting with industry-leading precision. Cytek Orion Reagent Cocktail Preparation System The Cytek Orion reagent cocktail preparation system enables researchers to fully automate the preparation of antibody cocktails for flow cytometry.
These cells can then be transferred from our instrument into NGS systems to correlate proteomic and genomic expression, which in turn enables researchers to develop novel drug targets for therapeutics and clinicians to drive outcomes for patients through more informed treatment decision-making.
These cells can then be transferred from our instrument into NGS systems to correlate proteomic and genomic expression, which in turn enables researchers to develop novel drug targets for therapeutics and clinicians to drive outcomes for patients through more informed treatment decision-making. Importance of cell analysis at the single-cell level.
Furthermore, the regulation introduces UDI, a bar code that must be placed on the label of the device or on its packaging and manufacturers will be obligated to file adverse effects reports via the Eudamed platform in case there is an increase in the frequency or severity of incidents related to the medical device.
Furthermore, the regulation introduces UDI, a bar code that must be placed on the label of the device or on its packaging and manufacturers are obligated to file adverse events reports via the Eudamed database in case there is an increase in the frequency or severity of incidents related to the in vitro diagnostic medical device.
The FDA has historically exercised enforcement discretion and has not required clearance or approval of LDTs prior to marketing. On October 3, 2023 FDA issued proposed regulations under which it would phase out its enforcement discretion approach to LDTs over a period of four years.
The FDA has historically exercised enforcement discretion and has not required clearance or approval of LDTs prior to marketing. On May 6, 2024, the FDA issued regulations under which it would phase out its enforcement discretion approach to LDTs over a period of four years.
GOVERNMENT REGULATION AND PRODUCT APPROVAL FDA Regulation of Medical Devices The FDA and other U.S. and foreign governmental agencies regulate, among other things, with respect to medical devices: • design, development and manufacturing; • testing, labeling, content and language of instructions for use and storage; • clinical trials; • product safety; • marketing, sales and distribution; • pre-market clearance and approval; • record keeping procedures; • advertising and promotion; • recalls and field safety corrective actions; • post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; • post-market approval studies; and • product import and export.
GOVERNMENT REGULATION AND PRODUCT APPROVAL FDA Regulation of Medical Devices The FDA and other U.S. and foreign governmental agencies regulate, among other things, with respect to medical devices: • design, development and manufacturing; • testing, labeling, content and language of instructions for use and storage; • clinical trials; • product safety; • marketing, sales and distribution; • pre-market clearance and approval; • record keeping procedures; • advertising and promotion; • recalls and field safety corrective actions; • post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; • post-market approval studies; and • product import and export. 14 Table of Contents In the United States, numerous laws and regulations govern all the processes by which medical devices are brought to market and marketed.
To the extent that our products have already been certified under the existing regulatory framework, the MDR allows us to market them provided that the requirements of the transitional provisions are fulfilled. In particular, the certificate in question must still be valid.
To the extent that our products have already been self-certified under the previously existing regulatory framework, the IVDR allows us to market them provided that the requirements of the transitional provisions are fulfilled. In particular, the Declaration of Conformity in question must still be valid per the IVDR.
Reagents and Kits We launched our cFluor ® reagent products to provide additional options for researchers and clinical laboratories when choosing which biomarkers to run together in a panel, particularly since our Cytek Aurora, Northern Lights and 8 Table of Contents Aurora CS systems allow for more fluorochromes to be run together than was previously commercially available.
Both systems have three throughput modes (high-throughput, default, low carryover) to meet changing customer priorities. 8 Table of Contents Reagents and Kits We launched our cFluor ® reagent products to provide additional options for researchers and clinical laboratories when choosing which biomarkers to run together in a panel, particularly since our Cytek Aurora, Northern Lights and Aurora CS systems allow for more fluorochromes to be run together than was previously commercially available.
These efforts drive continued innovation across our proprietary reagents, software and services offerings, in addition to new instrumentation releases, such as the Aurora CS and the recently launched Cytek Orion™ reagent cocktail preparation system . • Invest in integrated workflow solutions to drive pull-through from our consumables and services.
These efforts drive continued innovation across our proprietary reagents, software and services offerings, in addition to new instrumentation releases, such as the Aurora CS system, the Cytek Orion™ reagent cocktail preparation system and the Enhanced Small Particle™ (ESP™) detection option for our Cytek Aurora, Northern Lights and Aurora CS systems . • Invest in integrated workflow solutions to drive pull-through from our consumables and services.
Although the proposed regulation is subject to a period of notice and comment, if finalized as proposed, PMA approval or 510(k) clearance would be required for certain tests by October 1, 2027 and device registration and listing requirements, medical device reporting requirements and the requirements of the FDA’s Quality System Regulation would become applicable. Pervasive and Continuing U.S.
PMA approval or 510(k) clearance would be required for certain tests by October 1, 2027 and device registration and listing requirements, medical device reporting requirements and the requirements of the FDA’s Quality System Regulation would become applicable. Pervasive and Continuing U.S.
Parties making claims against us may be able to obtain injunctive or other relief, which could block our ability to develop, commercialize and sell products, and could result in the award of substantial damages against us.
We could incur substantial costs and divert the attention of our management and technical personnel in defending any of these claims. Parties making claims against us may be able to obtain injunctive or other relief, which could block our ability to develop, commercialize and sell products, and could result in the award of substantial damages against us.
Both instruments are highly flexible, intuitive, and ultra-sensitive full spectrum flow cytometers, utilizing state-of-the-art optics and low-noise electronics to provide excellent sensitivity and resolution, allowing researchers to resolve rare cell populations that were previously challenging to resolve.
Cytek Aurora and Northern Lights Systems Our Cytek Aurora and Northern Lights systems were commercially launched in June 2017 and October 2018, respectively. Both instruments are highly flexible, intuitive, and ultra-sensitive full spectrum flow cytometers, utilizing state-of-the-art optics and low-noise electronics to provide excellent sensitivity and resolution, allowing researchers to resolve rare cell populations that were previously challenging to resolve.
As of December 31, 2023, we had 676 employees, including 164 employees in research and development, 254 employees in sales and marketing, 204 employees in manufacturing and operations, and 49 employees in general and administrative. We believe that the success of our business will depend, in part, on our ability to attract and retain qualified personnel.
As of December 31, 2024, we had 648 employees, including 164 employees in research and development, 244 employees in sales and marketing, 177 employees in manufacturing and operations, and 63 employees in general and ad ministrative. We believe that the success of our business will depend, in part, on our ability to attract and retain qualified personnel.
The systems offer preset settings for ease of use, but also allow researchers to customize and fine-tune the systems for their unique experimental requirements. Their reliable 96-well plate acquisition solution increases productivity. The ASL adds additional compatibility with 96 deep-well plates, 38 well plates and 40-tube racks.
The systems offer preset settings for ease of use, but also allow researchers to customize and fine-tune the systems for their unique experimental requirements. Both systems allow acquisition from standard 96-well plates, enabling automated sample acquisition without user intervention. The ASL adds additional compatibility with 96 deep-well plates, 38 well plates and 40-tube racks.
CORPORATE INFORMATION We were incorporated under the laws of the state of Delaware in December 2014 under the name Cytoville, Inc. In August 2015, we changed our name to Cytek Biosciences, Inc. Our principal executive offices are located at 47215 Lakeview Blvd., Fremont, California 94538. Our telephone number is (877) 922-9835. Our website is www.cytekbio.com.
In August 2015, we changed our name to Cytek Biosciences, Inc. Our principal executive offices are located at 47215 Lakeview Blvd., Fremont, California 94538. Our telephone number is (877) 922-9835. Our website is www.cytekbio.com.
Compensation is driven by local market conditions, internal equity and employee performance. 13 Table of Contents Health and Wellness We offer a comprehensive package including: retirement savings plan, medical, dental and vision insurance, life insurance, short-and long-term disability insurance, paid holidays and paid time off for vacation and incidental time due to sickness or to handle personal affairs.
Health and Wellness We offer a comprehensive package including: retirement savings plan, medical, dental and vision insurance, life insurance, short-and long-term disability insurance, paid holidays and paid time off for vacation and incidental time due to sickness or to handle personal affairs.
The Medical Devices Regulation will among other things: • strengthen the rules on placing devices on the market and reinforce surveillance once they are available; • establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • improve the traceability of medical devices throughout the supply chain to the end user or patient through a unique identification number; • set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and • strengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market.
European Union The IVDR, among other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory framework across the EEA for in vitro diagnostic medical devices and ensure a high level of safety and effectiveness while supporting innovation. 17 Table of Contents The IVDR among other things: • strengthens the rules on placing devices on the market and reinforce surveillance once they are available; • establishes explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • improves the traceability of in vitro diagnostic medical devices throughout the supply chain to the end user or patient through a unique identification number; • sets up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and • strengthens rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market.
Further, there has been a meaningful acceleration in the rate of publications generated to showcase our technology, with over 1,650 peer-reviewed articles published, including many prominent journals, across a wide range of applications including oncology, infectious diseases, immunology, immunotherapy and immuno-oncology.
Further, there has been a meaningful increase in the number of publications generated to showcase our technology, with more than 2,300 peer-reviewed articles published since our first commercial launch in 2017, including many prominent journals, across a wide range of applications including oncology, infectious diseases, immunology, immunotherapy and immuno-oncology.
Our San Diego facility was assumed in connection with the Tonbo Acquisition and manufactures our reagents. Our Seattle, Washington facility was assumed in connection with the FCI Acquisition and manufactures our Amnis instruments and spare parts. Our Wuxi manufacturing facility commenced operations in 2017.
Our San Diego facility, which was assumed in connection with the Tonbo Acquisition to manufacture our reagent products, was awarded ISO 13485 certification in August 2024. Our Seattle, Washington facility was assumed in connection with the FCI Acquisition and manufactures our Amnis instruments and spare parts. Our Wuxi manufacturing facility commenced operations in 2017.
Compensation Philosophy We strive to provide comprehensive compensation, including cash, equity, benefits and services that attract, motivate and retain exceptional employees.
Compensation Philosophy We strive to provide comprehensive compensation, including cash, equity, benefits and services that attract, motivate and retain exceptional employees. Compensation is driven by local market conditions, internal equity and employee performance.
FDA Pre-market Clearance and Approval Requirements Each medical device we seek to commercially distribute in the United States must first receive 510(k) clearance, de novo classification, or approval of a pre-market approval (PMA) application, from the FDA, unless specifically exempted.
These include the U.S. Federal Food, Drug and Cosmetic Act (“FDCA”) and the FDA’s implementing regulations, among others. FDA Pre-market Clearance and Approval Requirements Each medical device we seek to commercially distribute in the United States must first receive 510(k) clearance, de novo classification, or approval of a pre-market approval (“PMA”) application, from the FDA, unless specifically exempted.
We are deeply committed to developing our platform’s clinical research applications, and in particular, within disease detection, diagnosis, and treatment monitoring. We also focus on areas where we can leverage the combination of our platform with complementary cell analysis technologies (such as NGS) to produce differentiated outcomes with greater sensitivity, such as with minimal residual disease (“MRD”) testing .
We also focus on areas where we can leverage the combination of our platform with complementary cell analysis technologies (such as NGS) to produce differentiated outcomes with greater sensitivity, such as with minimal residual disease (“MRD”) testing .
We have 58 pending utility patent applications, including 34 utility patent applications in the United States two international utility patent applications, nine utility patent applications in the European Union, seven utility patent applications in China and five utility patent applications in Japan.
We have 70 pending utility patent applications, including 45 utility patent applications in the United States, three international utility patent applications, nine utility patent applications in the European Union, nine utility patent applications in China, and four utility patent applications in Japan.
It is certified for clinical use by China NMPA. The DxP Athena system incorporates technology with efficient photomultiplier tubes to enable high sensitivity and high resolution and our proprietary QbSure software to ensure optimal daily instrument performance. The system is available in multiple configurations with one to three lasers and up to 13 fluorescence detection channels.
DxP Athena™ System Our DxP Athena conventional flow cytometry system commercially launched in 2016 and is currently available for sale only in China. It is certified for clinical use by China NMPA. The DxP Athena system incorporates technology with efficient photomultiplier tubes to enable high sensitivity and high resolution and our proprietary QbSure software to ensure optimal daily instrument performance.
Users can quickly visualize, compare, and optimize their fluorochrome selections with a suite of spectral panel design tools in real-time, allowing them to build their panels faster. In addition, users can jumpstart their panel design process with a built-in repository of pre-designed panels like the Cytek reagent kits and optimized multicolor immunofluorescence panels.
Users can quickly visualize, compare, and optimize their fluorochrome selections with a suite of spectral panel design tools in real-time, allowing them to build their panels faster.

… 66 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

188 edited+37 added−26 removed492 unchanged
Biggest changeIf academic and government institutions, clinical research organizations, pharmaceutical companies and clinical laboratories are unwilling to adopt our products, it will negatively affect our business, financial condition, prospects and results of operations. • If we are unable to manufacture our products in high-quality commercial quantities successfully and consistently to meet demand, our growth will be limited. • Our future success is dependent upon our ability to increase penetration in our existing markets and expand into adjacent markets.
Biggest changeAs a result, we may not be able to find replacements or immediately transition to alternative suppliers, which could have an adverse effect on our business, financial condition and results of operations. • Our results of operations will be harmed if we are unable to accurately forecast customer demand for our products and manage our inventory. • International operations and expansion of our international business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States. • We are subject to governmental export controls and sanctions programs that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws. • We have limited experience manufacturing our products, and if we are unable to manufacture our products in high-quality commercial quantities successfully and consistently to meet demand, our growth will be limited. • Our future success is dependent upon our ability to increase penetration in our existing markets and expand into adjacent markets. • Our business is dependent on adoption of our products by academic and government institutions, clinical research organizations (“CROs”), pharmaceutical companies and clinical laboratories for their research and development activities focused on cell analysis.
We plan to continue generating supporting publications and data, as well as pursue any required regulatory approvals for clinical use for our products in the United States.
We plan to continue generating supporting publications and data, as well as pursue any required regulatory approvals for clinical use for our products in the United States.
Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions, obtain, maintain and enforce our intellectual property rights and, more generally, could affect the value of our intellectual property or narrow the scope of our patents.
Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions and to obtain, maintain and enforce our intellectual property rights and, more generally, could affect the value of our intellectual property or narrow the scope of our patents.
In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial negative impact on our common stock price.
In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial negative impact on our common stock price.
Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately.
Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately.
For example, because many of these stockholders purchased their shares at prices substantially below the current market price or our shares and have held their shares for a longer period, they may be more interested in selling our company to an acquirer than other investors, or they may want us to pursue strategies that deviate from the interests of other stockholders.
For example, because many of these stockholders purchased their shares at prices substantially below the current market price of our shares and have held their shares for a longer period, they may be more interested in selling our company to an acquirer than other investors, or they may want us to pursue strategies that deviate from the interests of other stockholders.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the level of demand for any of our products, which may vary significantly; • the timing and cost of, and level of investment in, research, development, manufacturing, regulatory approval and commercialization activities relating to our products, which may change from time to time; • the size, seasonality and customer mix of the cell analysis market; • sales and marketing efforts and expenses; • the rate at which we grow our sales force and the speed at which newly-hired salespeople become effective; • changes in the productivity of our sales force; • the effectiveness of our distribution partners in selling our products; • positive or negative coverage in the media or publications of our products or competitive products; • the cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our arrangements with our suppliers; • the degree of competition in our industry and any change in the competitive landscape of our industry, including the introduction of new products or enhancements or technologies by us or others in the cell analysis market and competition-related pricing pressures; • changes in governmental regulations or in the status of our regulatory approvals or applications; • future accounting pronouncements or changes in our accounting policies; • general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting the industry in which we do business, including those related widespread health crises; 34 Table of Contents • future global financial crises and economic downturns, including those caused by widespread public health crises; • economic factors, including changes in inflation, interest rates, foreign currency rates, liquidity concerns at, and failures of, banks and other financial institutions and the potential effect of such factors on revenues and expenses; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the level of demand for any of our products, which may vary significantly; • the timing and cost of, and level of investment in, research, development, manufacturing, regulatory approval and commercialization activities relating to our products, which may change from time to time; • the size, seasonality and customer mix of the cell analysis market; • sales and marketing efforts and expenses; • the rate at which we grow our sales force and the speed at which newly-hired salespeople become effective; 35 Table of Contents • changes in the productivity of our sales force; • the effectiveness of our distribution partners in selling our products; • positive or negative coverage in the media or publications of our products or competitive products; • the cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our arrangements with our suppliers; • the degree of competition in our industry and any change in the competitive landscape of our industry, including the introduction of new products or enhancements or technologies by us or others in the cell analysis market and competition-related pricing pressures; • changes in governmental regulations or in the status of our regulatory approvals or applications; • future accounting pronouncements or changes in our accounting policies; • general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting the industry in which we do business, including those related to widespread health crises; • future global financial crises and economic downturns, including those caused by widespread public health crises; • economic factors, including changes in inflation, interest rates, foreign currency rates, liquidity concerns at, and failures of, banks and other financial institutions and the potential effect of such factors on revenues and expenses; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches; • the federal Physician Payments Sunshine Act, implemented as Open Payments, requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually, with certain exceptions to CMS, information related to payments or other “transfers of value” made to physicians, as defined by such law, and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists and certified nurse-midwives; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require medical device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state beneficiary inducement laws, which are state laws that require medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or 46 Table of Contents marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches; • the federal Physician Payments Sunshine Act, implemented as Open Payments, requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually, with certain exceptions to CMS, information related to payments or other “transfers of value” made to physicians, as defined by such law, and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists and certified nurse-midwives; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require medical device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state beneficiary inducement laws, which are state laws that require medical device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
For example, in February 2023, we entered into an asset purchase agreement with Luminex Corporation (“Luminex”) and acquired certain assets related to the flow cytometry and imaging (“FCI”) business unit of Luminex (the “FCI Acquisition”). We may choose to further expand our business by acquiring additional businesses or assets in the future.
For example, in February 2023, we entered into an asset purchase agreement with Luminex Corporation (“Luminex”) and acquired certain assets related to the flow cytometry and imaging business unit of Luminex (the “FCI Acquisition”). We may choose to further expand our business by acquiring additional businesses or assets in the future.
The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. We manufacture our products at our manufacturing facilities located in Fremont and San Diego, California; Seattle Washington; and Wuxi, China, and we rely on various suppliers in the United States, China and other countries.
The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. We manufacture our products at our manufacturing facilities located in Fremont and San Diego, California; Seattle, Washington; Wuxi, China ; and Singapore; and we rely on various suppliers in the United States, China and other countries.
For example, in connection with the revenue accounting standard, Accounting Standards Codification, or ASC, Topic 606, management makes judgments and assumptions based on our interpretation of the new standard. The revenue standard is principle-based and interpretation of those principles may vary from company to company based on their unique circumstances.
For example, in connection with the revenue accounting standard, Accounting Standards Codification, or ASC, Topic 606, management makes judgments and assumptions based on our interpretation of the standard. The revenue standard is principle-based and interpretation of those principles may vary from company to company based on their unique circumstances.
Some of these provisions include: • a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time; • a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders; • a requirement that special meetings of stockholders be called only by the chairman of the board of directors, the chief executive officer, the president, or by a majority of the total number of authorized directors; • advance notice requirements for stockholder proposals and nominations for election to our board of directors; 58 Table of Contents • a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors; • a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our certificate of incorporation; and • the authority of the board of directors to issue redeemable convertible preferred stock on terms determined by the board of directors without stockholder approval and which redeemable convertible preferred stock may include rights superior to the rights of the holders of common stock.
Some of these provisions include: • a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time; • a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders; • a requirement that special meetings of stockholders be called only by the chairman of the board of directors, the chief executive officer, the president, or by a majority of the total number of authorized directors; • advance notice requirements for stockholder proposals and nominations for election to our board of directors; • a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors; • a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our certificate of incorporation; and • the authority of the board of directors to issue redeemable convertible preferred stock on terms determined by the board of directors without stockholder approval and which redeemable convertible preferred stock may include rights superior to the rights of the holders of common stock.
Doing business internationally involves a number of risks, including: • multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, tariffs, economic sanctions and embargoes, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • failure by us or our distributors to obtain approvals to conduct our business in various countries; • differing intellectual property rights; • complexities and difficulties in obtaining intellectual property protection, enforcing our intellectual property and defending against third party intellectual property claims; • difficulties in staffing and managing foreign operations; • logistics and regulations associated with shipping systems and parts and components for our products, as well as transportation delays; • travel restrictions that limit the ability of marketing, presales, sales, services and support teams to service customers; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; • international trade disputes that could result in tariffs and other protective measures; • natural disasters, political and economic instability, including wars, terrorism and political unrest such as the ongoing war in Ukraine, the Israel and Palestine conflict, outbreak of disease, boycotts, curtailment of trade and other business restrictions; and • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the U.S.
Doing business internationally involves a number of risks, including: • multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, tariffs, economic sanctions and embargoes, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • failure by us or our distributors to obtain approvals to conduct our business in various countries; • differing intellectual property rights; • complexities and difficulties in obtaining intellectual property protection, enforcing our intellectual property and defending against third-party intellectual property claims; • difficulties in staffing and managing foreign operations; • logistics and regulations associated with shipping systems and parts and components for our products, as well as transportation delays; • travel restrictions that limit the ability of marketing, presales, sales, services and support teams to service customers; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; • international trade disputes that could result in tariffs and other protective measures; • natural disasters, political and economic instability, including wars, terrorism and political unrest such as the ongoing war in Ukraine, conflict in the Middle East, outbreak of disease, boycotts, curtailment of trade and other business restrictions; and • regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the U.S.
We are highly dependent on a limited number of product offerings. Our revenue has been primarily generated from sale of our core Cytek Aurora, Northern Lights and Aurora CS systems, which require a substantial sales cycle and are prone to quarterly fluctuations in revenue.
We are highly dependent on a limited number of product offerings. Our revenue has been primarily generated from sales of our core Cytek Aurora, Northern Lights and Aurora CS systems, which require a substantial sales cycle and are prone to quarterly fluctuations in revenue.
We currently compete with both established and early stage life sciences and in vitro diagnostics (“IVD”) companies that design, manufacture and market flow cytometry instruments, accessories, consumables and software for cell analysis and/or provide services related to the same.
We currently compete with both established and early stage life sciences and in vitro diagnostics companies that design, manufacture and market flow cytometry instruments, accessories, consumables and software for cell analysis and/or provide services related to the same.
In addition, we required addition time to complete our financial closing procedures as of the end of period ending December 31, 2023 due to a lack of internal accounting resources, resulting in a delay in obtaining and compiling required information.
In addition, we required additional time to complete our financial closing procedures as of the end of period ending December 31, 2023 due to a lack of internal accounting resources, resulting in a delay in obtaining and compiling required information.
Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf, (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, or other employees to us or our stockholders, (iii) any action or proceeding asserting a claim against us or any of our current or former directors, officers, or other employees, arising out of or pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, (iv) any action or proceeding to interpret, apply, enforce, or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws, (v) any action or proceeding as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware and (vi) any action asserting a claim against us or any of our directors, officers, or other employees governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.
Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf, (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, or other employees to us or our stockholders, (iii) any action or proceeding asserting a claim against us or any of our current or 60 Table of Contents former directors, officers, or other employees, arising out of or pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, (iv) any action or proceeding to interpret, apply, enforce, or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws, (v) any action or proceeding as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware and (vi) any action asserting a claim against us or any of our directors, officers, or other employees governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.
The failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions; • customer notifications for repair, replacement or refunds; • recall, detention or seizure of our products; 40 Table of Contents • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying our requests for 510(k) clearance or PMA approval of new products or modified products; • withdrawal of 510(k) clearances on PMA approvals that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution.
The failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions: • untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions; • customer notifications for repair, replacement or refunds; • recall, detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying our requests for 510(k) clearance or PMA approval of new products or modified products; • withdrawal of 510(k) clearances on PMA approvals that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution.
Furthermore, future or past business transactions (such as acquisitions or integrations) could also expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
Furthermore, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
In addition, some of our products include components from other vendors, which may contain defects. As a result, should problems occur, it may be difficult to identify the source of the problem.
In addition, some of our products include components from other vendors, which may contain latent defects. As a result, should problems occur, it may be difficult to identify the source of the problem.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, these factors include: • the degree and rate of market adoption of our products; • variance in our financial performance from expectations of securities analysts or investors; • actual or anticipated fluctuations in our financial condition and results of operations, including as a result of anticipated or unanticipated demand based on seasonal factors; • changes in our projected operating and financial results; • actual or anticipated fluctuations in our operating results; • developments or disputes concerning our intellectual property or other proprietary rights; • significant lawsuits, including patent or stockholder litigation; • negative publicity associated with issues related to our products; • changes in senior management or key personnel; 56 Table of Contents • future sales of our common stock or other securities, by us or our stockholders, as well as the anticipation of lock-up releases; • the trading volume of our common stock; • our ability to obtain and maintain regulatory approvals for our products; • changes in laws or regulations applicable to our products; • adverse developments concerning any of our third-party distribution partners and suppliers, including our single and sole-source suppliers; • announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • our inability to engage additional distribution partners and establish collaborations, if needed; • performance or news releases by other companies in our industry including about adverse developments related to safety, effectiveness, accuracy and usability of their products, reputational concerns, regulatory compliance, and product recalls; • general economic, regulatory and market conditions, including economic recessions or slowdowns, the ongoing war in Ukraine and the general inflationary environment; and • other events or factors, many of which are beyond our control.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, these factors include: • the degree and rate of market adoption of our products; • variance in our financial performance from expectations of securities analysts or investors; • actual or anticipated fluctuations in our financial condition and results of operations, including as a result of anticipated or unanticipated demand based on seasonal factors; • changes in our projected operating and financial results; • actual or anticipated fluctuations in our operating results; • developments or disputes concerning our intellectual property or other proprietary rights; • significant lawsuits, including patent or stockholder litigation; • negative publicity associated with issues related to our products; • changes in senior management or key personnel; • future sales of our common stock or other securities, by us or our stockholders, as well as the anticipation of lock-up releases; • the trading volume of our common stock; • our ability to obtain and maintain regulatory approvals for our products; • changes in laws or regulations applicable to our products; • adverse developments concerning any of our third-party distribution partners and suppliers, including our single and sole-source suppliers; • announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • our inability to engage additional distribution partners and establish collaborations, if needed; • performance or news releases by other companies in our industry including about adverse developments related to safety, effectiveness, accuracy and usability of their products, reputational concerns, regulatory compliance, and product recalls; • general economic, regulatory and market conditions, including economic recessions or slowdowns, the ongoing war in Ukraine, conflict in the Middle East and the general inflationary environment; and • other events or factors, many of which are beyond our control.
These provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22 of the Securities Act of 1933 (the “Securities Act”) creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
These provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22 of the Securities Act of 1933, as amended (the “Securities Act”) creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
If any such minerals may have originated in the Democratic Republic of the Congo, or DRC, or any of its adjoining countries, or covered countries, then we must conduct diligence on the source and chain of custody of those conflict minerals to determine if they originated in one of the covered countries and, if so, whether they financed or benefited armed groups in the covered countries.
If any such minerals may have originated in the Democratic Republic of the Congo (the “DRC”) or any of its adjoining countries, or covered countries, then we must conduct diligence on the source and chain of custody of those conflict minerals to determine if they originated in one of the covered countries and, if so, whether they financed or benefited armed groups in the covered countries.
In addition to experiencing a security incident, third parties may gather, collect, or infer Sensitive Information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.
In addition to experiencing a security incident, third parties may gather, collect, or infer Sensitive Information about us from public sources, data brokers, or other means that reveal competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.
In some cases, we may not be able to obtain issued patent claims or other intellectual property rights covering our technologies which are sufficient to prevent third parties, such as our competitors, from utilizing our products and negate any competitive advantage we may have.
In some cases, we may not be able to obtain issued patent claims or other intellectual property rights covering our technologies which are sufficient to prevent third parties, such as our competitors, from utilizing our products and negating any competitive advantage we may have.
Although there are currently various mechanisms that may be used to transfer personal information from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
Although there are currently various mechanisms that can be used to transfer personal information from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
In connection with our financial statement close process for the year ended December 31, 2023, we identified deficiencies in the control environment and control activities components of the Committee of Sponsoring Organizations (“COSO”) framework that constitute material weaknesses, either individually or in the aggregate.
In connection with our financial statement close process for the year ended December 31, 2024, we identified deficiencies in the control environment and control activities components of the Committee of Sponsoring Organizations (“COSO”) framework that constitute material weaknesses, either individually or in the aggregate.
We have a compliance program, code of conduct and associated policies and procedures, but it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent noncompliance may not be effective in protecting us from governmental investigations for failure to comply with applicable fraud and abuse or other healthcare laws and regulations.
We have a compliance program, code of conduct and associated policies and procedures, but it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent noncompliance may not be effective in protecting us from governmental investigations for 46 Table of Contents failure to comply with applicable fraud and abuse or other healthcare laws and regulations.
In addition, various state, federal and foreign agencies that provide grants and other funding may be subject to stringent budgetary constraints that could result in spending reductions, reduced grant making, reduced allocations or budget cutbacks, including as a result of negative or worsening conditions in the general economy, which could jeopardize the ability of these customers, or the customers to whom they provide funding, to purchase our solutions.
In addition, various state, federal and foreign agencies that provide grants and other funding may be subject to stringent budgetary constraints that could result in spending reductions, reduced grant making, reduced allocations or 27 Table of Contents budget cutbacks, including as a result of negative or worsening conditions in the general economy, which could jeopardize the ability of these customers, or the customers to whom they provide funding, to purchase our solutions.
In addition, regardless of merit or eventual outcome, product liability claims may result in: • substantial litigation costs; 35 Table of Contents • distraction of management’s attention from our primary business; • the inability to commercialize our products or new products; • decreased demand for our products; • damage to our business reputation; • product recalls or withdrawals from the market; • loss of sales; or • termination of existing agreements by our partners and potential partners failing to partner with us.
In addition, regardless of merit or eventual outcome, product liability claims may result in: • substantial litigation costs; • distraction of management’s attention from our primary business; • the inability to commercialize our products or new products; • decreased demand for our products; • damage to our business reputation; • product recalls or withdrawals from the market; • loss of sales; or • termination of existing agreements by our partners and potential partners failing to partner with us.
Any of these events could have a material adverse effect on our reputation, 44 Table of Contents business, or financial condition, including but not limited to: loss of customers, interruptions or stoppages in our business operations, inability to process personal information or to operate in certain jurisdictions, limited ability to develop or commercialize our products, expenditure of time and resources to defend any claim or inquiry, adverse publicity, or revision or restructuring of our business model or operations.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers, interruptions or stoppages in our business operations, inability to process personal information or to operate in certain jurisdictions, limited ability to develop or commercialize our products, expenditure of time and resources to defend any claim or inquiry, adverse publicity, or revision or restructuring of our business model or operations.
Our obligations related to data privacy and security (and consumer's data privacy and security expectations) are quickly changing in an increasingly stringent fashion and creating regulatory uncertainty. These obligations may be subject to differing applications and interpretations, which may be inconsistent or in conflict among jurisdictions.
Our obligations related to data privacy and security (and consumers' data privacy and security expectations) are quickly changing in an increasingly stringent fashion and creating regulatory uncertainty. These obligations may be subject to differing applications and interpretations, which may be inconsistent or in conflict among jurisdictions.
While the number of customers using our products has increased in recent years, many academic and government institutions, clinical research organizations, pharmaceutical 24 Table of Contents companies and clinical laboratories have not yet adopted our products, and such institutions and companies may choose not to adopt our products for a number of reasons, including: • inadequate recruiting or training of talented sales force in existing and new markets to facilitate outreach and further adoption and awareness of our products; • lack of experience with our products for cell analysis; • perceived inadequacy of evidence supporting benefits or cost-effectiveness of our products over existing alternatives; • liability risks generally associated with the use of new products and processes; • the training required to use new products; • a decrease or delay in the research and development activities using our products; • competing products and alternatives; and • introduction of other novel alternative products for cell analysis.
While the number of customers using our products has increased in recent years, many academic and government institutions, CROs, pharmaceutical companies and clinical laboratories have not yet adopted our products, and such institutions and companies may choose not to adopt our products for a number of reasons, including: • inadequate recruiting or training of talented sales force in existing and new markets to facilitate outreach and further adoption and awareness of our products; • lack of experience with our products for cell analysis; • perceived inadequacy of evidence supporting benefits or cost-effectiveness of our products over existing alternatives; • liability risks generally associated with the use of new products and processes; • the training required to use new products; • a decrease or delay in the research and development activities using our products; • competing products and alternatives; and • introduction of other novel alternative products for cell analysis.
Our consolidated effective income tax rate could be materially adversely affected by several factors, including: changing tax laws, regulations and treaties, or the interpretation thereof; tax policy initiatives and reforms under consideration; the practices of tax authorities in jurisdictions in which we operate; the resolution of issues arising from tax audits or examinations and any related interest 61 Table of Contents or penalties.
Our consolidated effective income tax rate could be materially adversely affected by several factors, including: changing tax laws, regulations and treaties, or the interpretation thereof; tax policy initiatives and reforms under consideration; the practices of tax authorities in jurisdictions in which we operate; the resolution of issues arising from tax audits or examinations and any related interest or penalties.
Some of these characteristics 31 Table of Contents are more appealing to high quality candidates than what we can offer. Further, if we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached legal obligations, resulting in a diversion of our time and resources and, potentially, damages.
Some of these characteristics are more appealing to high quality candidates than what we can offer. Further, if we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached legal obligations, resulting in a diversion of our time and resources and, potentially, damages.
Companies are also required to maintain certain records of corrections and removals, even if these do not require reporting to the FDA. We may initiate voluntary recalls involving our products. A recall announcement by us could harm our reputation with customers and negatively affect our business, financial condition, and results of operations.
Companies are also required to maintain certain records of corrections and removals, even if these do not require reporting to the FDA. We may initiate 42 Table of Contents voluntary recalls involving our products. A recall announcement by us could harm our reputation with customers and negatively affect our business, financial condition, and results of operations.
In addition, our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from geopolitical tensions, such as the ongoing war in Ukraine, the Israel and Palestine conflict, government actions implemented as a result of either of the foregoing, as well as tensions with and economic uncertainty in China, inflation, rising interest rates, and liquidity concerns at, and failures of, banks and other financial institutions.
In addition, our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from geopolitical tensions, such as the ongoing war in Ukraine, conflict in the Middle East, government actions implemented as a result of either of the foregoing, as well as tensions with, and economic uncertainty in, China, inflation, rising interest rates and liquidity concerns at, and failures of, banks and other financial institutions.
Some open source software licenses require users who distribute software containing open source software to publicly disclose all or part of the source code to the licensee’s software that incorporates, links or uses such open source software, and make available to third parties for no cost, any derivative works of the open source code created by the licensee, which could include the licensee’s own valuable proprietary code.
Some open source software licenses require users who distribute software containing open source software to publicly disclose all or part of the source code to the licensee’s software that incorporates, links or uses such open source software, and make available to third parties for no cost, any derivative works of the open source code created by the 57 Table of Contents licensee, which could include the licensee’s own valuable proprietary code.
We cannot predict the impact of such changes and cannot be certain of our future compliance. We do not currently maintain separate environmental liability coverage and any accidental contamination or discharge or any resultant injury from these materials could result in significant cost to us in penalties, damages and suspension of our operations.
We cannot predict the impact of such changes and cannot be certain of our future compliance. We do not 40 Table of Contents currently maintain separate environmental liability coverage and any accidental contamination or discharge or any resultant injury from these materials could result in significant cost to us in penalties, damages and suspension of our operations.
Moreover, in the event that we transition to a new supplier, particularly from any of our single source suppliers, doing so could be time-consuming and expensive, may result in interruptions in our ability to 22 Table of Contents supply our products to the market and could affect the performance of our products, resulting in increased costs and negative customer perception.
Moreover, in the event that we transition to a new supplier, particularly from any of our single source suppliers, doing so could be time-consuming and expensive, may result in interruptions in our ability to supply our products to the market and could affect the performance of our products, resulting in increased costs and negative customer perception.
If we are unable to identify and fix defects or other problems, we could experience, among other things: • loss of customers or orders; • increased costs of warranty expenses; • damage to our brand reputation; • failure to attract new customers; • diversion of development, engineering and manufacturing resources; • regulatory actions by governmental authorities; and • legal actions by our customers.
If we are unable to identify and fix defects or other problems, we could experience, among other things: • loss of customers or orders; • increased costs of warranty expenses; • damage to our brand reputation; 30 Table of Contents • failure to attract new customers; • diversion of development, engineering and manufacturing resources; • regulatory actions by governmental authorities; and • legal actions by our customers.
Complying with these and other similar laws and regulations (to the extent applicable) may cause us to incur substantial operational costs or require us to change our business practices, and could lead to material fines, penalties and liability. In addition, many jurisdictions have enacted data localization laws and cross-border persona information transfer laws.
Complying with these and other similar laws and regulations (to the extent applicable) causes us to incur substantial operational costs and may require us to change our business practices, and could lead to material fines, penalties and liability. In addition, many jurisdictions have enacted data localization laws and cross-border persona information transfer laws.
Third parties may also raise claims challenging the validity or enforceability of our patents before administrative bodies in the United States or abroad, even outside the context of litigation, including through re-examination, post-grant review, IPR, derivation proceedings and equivalent 50 Table of Contents proceedings in foreign jurisdictions (such as opposition proceedings).
Third parties may also raise claims challenging the validity or enforceability of our patents before administrative bodies in the United States or abroad, even outside the context of litigation, including through re-examination, post-grant review, IPR, derivation proceedings and equivalent proceedings in foreign jurisdictions (such as opposition proceedings).
As a result, it may be more difficult for us to attract and retain qualified people to serve on our board of directors, on our board committees or as executive officers. We do not 38 Table of Contents know, however, if we will be able to maintain existing insurance with adequate levels of coverage.
As a result, it may be more difficult for us to attract and retain qualified people to serve on our board of directors, on our board committees or as executive officers. We do not know, however, if we will be able to maintain existing insurance with adequate levels of coverage.
Occurrence of any of the foregoing could harm our reputation, business, financial condition, results of operations and prospects. We and our suppliers are subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.
Occurrence of any of the foregoing could harm our reputation, business, financial condition, results of operations and prospects. 41 Table of Contents We and our suppliers are subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.
If the FDA determines that our promotional materials constitute the unlawful promotion of an off-label use, it could subject us to regulatory or enforcement actions, 41 Table of Contents including civil money penalties, criminal fines and penalties, and exclusion from participation in federal health programs, among others.
If the FDA determines that our promotional materials constitute the unlawful promotion of an off-label use, it could subject us to regulatory or enforcement actions, including civil money penalties, criminal fines and penalties, and exclusion from participation in federal health programs, among others.
If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing data (including personal information); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management's attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
If we (or a third party with whom we work) experience a security incident or are perceived to have experienced a security incident, we may experience material adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing data (including personal information); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management's attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
Although we endeavor to comply with all applicable data privacy and security obligations, we may at times fail (or be perceived to have failed) to do so. Moreover, despite our efforts, our personnel or third parties upon whom we rely may fail to comply with such obligations which could impact our compliance posture and business operations.
Although we endeavor to comply with all applicable data privacy and security obligations, we may at times fail (or be perceived to have failed) to do so. Moreover, despite our efforts, our personnel or third parties with whom we work may fail to comply with such obligations which could impact our compliance posture and business operations.
We have not conducted an extensive search of patents issued or assigned to other parties, including our competitors, and no assurance can be given that patents containing claims covering our current and any future products, components of our current and any future products, technology or methods do not exist, have not been filed or could not be filed or issued.
We have not conducted an extensive search of patents issued or assigned to other parties, including our competitors, and no assurance can be given that patents containing claims covering our current and any future products, components of our current and any future 54 Table of Contents products, technology or methods do not exist, have not been filed or could not be filed or issued.
Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. 59 Table of Contents Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
These reductions or delays could also result in a decrease in the aggregate amount of grants awarded for life sciences research or the redirection of existing funding to other projects or priorities, any of which in turn could 25 Table of Contents cause our customers and potential customers to reduce or delay purchases of our solutions.
These reductions or delays could also result in a decrease in the aggregate amount of grants awarded for life sciences research or the redirection of existing funding to other projects or priorities, any of which in turn could cause our customers and potential customers to reduce or delay purchases of our solutions.
There can be no assurance that our research and development efforts will produce commercially viable products and solutions and before we can commercialize any new products, we will need to expend significant funds to, for example: • conduct substantial research and development; • obtain necessary regulatory approval; • further develop and scale our laboratory, engineering and manufacturing processes to accommodate different products; • source and enter into agreements with new suppliers; and 28 Table of Contents • further develop and scale our infrastructure.
There can be no assurance that our research and development efforts will produce commercially viable products and solutions and before we can commercialize any new products, we will need to expend significant funds to, for example: • conduct substantial research and development; • obtain necessary regulatory approval; • further develop and scale our laboratory, engineering and manufacturing processes to accommodate different products; • source and enter into agreements with new suppliers; and • further develop and scale our infrastructure.
Existing and future warranties place us at the risk of incurring future repair and/or replacement costs. At the time revenue is recognized, we establish an accrual for estimated warranty expenses based on historical data and trends of product reliability and costs of repairing and replacing 29 Table of Contents defective products.
Existing and future warranties place us at the risk of incurring future repair and/or replacement costs. At the time revenue is recognized, we establish an accrual for estimated warranty expenses based on historical data and trends of product reliability and costs of repairing and replacing defective products.
Whether or not we are successful in defending against any such actions or investigations, we could incur 47 Table of Contents substantial costs, including legal fees and reputational harm, and divert the attention of management in defending ourselves against any of these claims or investigations, which could harm our business, financial condition and results of operations.
Whether or not we are successful in defending against any such actions or investigations, we could incur substantial costs, including legal fees and reputational harm, and divert the attention of management in defending ourselves against any of these claims or investigations, which could harm our business, financial condition and results of operations.
Our business may not in all cases meet all of the criteria for statutory exception or regulatory safe harbor protection from anti-kickback liability; • the federal civil False Claims Act, or the FCA, which prohibits, among other things, persons or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government 45 Table of Contents funds and knowingly making, using or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease or conceal an obligation to pay money to the federal government.
Our business may not in all cases meet all of the criteria for statutory exception or regulatory safe harbor protection from anti-kickback liability; • the federal civil False Claims Act (the “FCA”), which prohibits, among other things, persons or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds and knowingly making, using or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease or conceal an obligation to pay money to the federal government.
Similar to the federal healthcare Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, and their implementing regulations, also impose obligations, including mandatory contractual terms, on covered entities subject to the rule, such as health plans, healthcare clearinghouses and certain healthcare providers, as well as their business associates that perform certain services for them or on their behalf involving the use or disclosure of individually identifiable health information with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • various state laws govern the privacy and security of personal information, including the California Consumer Protection Act, or CCPA, which became effective January 1, 2020, and gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used by requiring covered companies to provide new disclosures to California consumers (as that term is broadly defined) and provide such consumers new ways to opt-out of certain sales of personal information.
Similar to the federal healthcare Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • HIPAA, as amended by HITECH, and their implementing regulations, also impose obligations, including mandatory contractual terms, on covered entities subject to the rule, such as health plans, healthcare clearinghouses and certain healthcare providers, as well as their business associates that perform certain services for them or on their behalf involving the use or disclosure of individually identifiable health 47 Table of Contents information with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • various state laws govern the privacy and security of personal information, including the CCPA, which became effective January 1, 2020, and gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used by requiring covered companies to provide new disclosures to California consumers (as that term is broadly defined) and provide such consumers new ways to opt-out of certain sales of personal information.
Consequently, a catastrophic event or business interruption at our manufacturing facilities or at our suppliers’ facilities could harm our business, financial condition and results of operations. Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured liabilities.
Consequently, a catastrophic event or business interruption at our manufacturing facilities or at our suppliers’ facilities could harm our business, financial condition and results of operations. 39 Table of Contents Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured liabilities.
We also expect that operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
Operating as a public company may also make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
Future actions or escalations by either the United States or China that affect trade relations may also negatively affect our business, or that of our suppliers or customers, and we cannot provide any assurances as to whether such actions will occur or the form that they may take.
Future actions or escalations by either the United 43 Table of Contents States or China that affect trade relations may also negatively affect our business, or that of our suppliers or customers, and we cannot provide any assurances as to whether such actions will occur or the form that they may take.
In the course of our operations, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share sensitive, confidential, and proprietary information, including personal 42 Table of Contents information, business data, trade secrets, intellectual property, and sensitive third-party data.
In the course of our operations, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share sensitive, confidential, and proprietary information, including personal information, business data, trade secrets, intellectual property, and sensitive third-party data.
The CCPA allows for statutory fines for noncompliance (up to $7,500 per intentional violation) and allows private litigants affected by certain data breaches to recover significant statutory damages.
The CCPA allows for statutory fines for noncompliance (up to $7,988 per intentional violation) and allows private litigants affected by certain data breaches to recover significant statutory damages.
If we become subject to new data privacy and security laws, the risk of enforcement action against us could increase because we may become subject to additional obligations, and the number of individuals or entities that can initiate actions against us may increase (including individuals via a private right of action and state actors), increasing legal risk and compliance costs for us and the third parties upon whom we rely.
If we become subject to new data privacy and security laws, the risk of enforcement action against us could increase because we may become subject to additional obligations, and the number of individuals or entities that can initiate actions against us may increase (including individuals via a private right of action and state actors), increasing legal risk and compliance costs for us and the third parties with whom we work.
As this burden is a high one requiring us to 53 Table of Contents present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent.
As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent.
Risks Related to Government Regulation and Our Industry Our RUO products may become subject to more onerous regulation by the FDA or other regulatory agencies in the future, which could increase our costs and delay or prevent sales of our products or commercialization of new products 39 Table of Contents and product enhancements, thereby materially and adversely affecting our business, financial condition, results of operations and prospects.
Risks Related to Government Regulation and Our Industry Our products may become subject to more onerous regulation by the FDA or other regulatory agencies in the future, which could increase our costs and delay or prevent sales of our products or commercialization of new products and product enhancements, thereby materially and adversely affecting our business, financial condition, results of operations and prospects.
Supply interruptions have in the past arisen and could arise in the future from effects of infectious disease outbreaks, shortages of raw materials, labor disputes or weather conditions affecting products or shipments, transportation disruptions, adjustments to our inventory levels or other factors within and beyond our control, and such supply interruption risk is increased by the limited number of suppliers for certain of the components we use in our products.
Supply interruptions have in the past arisen and could arise in the future as a result of infectious disease outbreaks, shortages of raw materials, labor disputes or weather conditions affecting products or shipments, transportation disruptions, adjustments to our inventory levels or other factors within and beyond our control, and such supply interruption risk is increased by the limited number of suppliers for certain of the components we use in our products.
Our primary strategy to grow our revenue is to take a stepwise approach to market our products across key stakeholders in flow cytometry and cell analysis, such as academic and government institutions, clinical research organizations, pharmaceutical companies and clinical laboratories.
Our primary strategy to grow our revenue is to take a stepwise approach to market our products across key stakeholders in flow cytometry and cell analysis, such as academic and government institutions, CROs, pharmaceutical companies and clinical laboratories.
Introduction of new products and product enhancements will require 27 Table of Contents that we effectively transfer production processes from research and development to manufacturing and coordinate our efforts with those of our suppliers to achieve the desired level of production.
Introduction of new products and product enhancements will require that we effectively transfer production processes from research and development to manufacturing and coordinate our efforts with those of our suppliers to achieve the desired level of production.
Our decisions concerning the allocation of research, development, collaboration, management and financial resources toward particular markets, products or services may not lead to the development of any viable products or services and may divert resources away from better opportunities.
Our decisions concerning the allocation of research, 29 Table of Contents development, collaboration, management and financial resources toward particular markets, products or services may not lead to the development of any viable products or services and may divert resources away from better opportunities.
Our future sales will depend, in large part, on our ability to develop and substantially expand our sales infrastructure, particularly as we enter into new markets, rollout new solutions and applications and manage inbound interest from new customers.
Our future sales will depend, in large part, on our ability to develop and substantially expand our sales infrastructure, particularly as we enter into new markets, roll out new solutions and applications and manage inbound interest from new customers.
Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who 43 Table of Contents self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal information to the United States or other countries.
Data Privacy Framework (the “Framework”) and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal information to the United States or other countries.
Furthermore, even if they are unchallenged, our patents may not adequately protect our current and any future products, provide exclusivity for such products or prevent others from designing around the claims of our patents.
Furthermore, even if 50 Table of Contents they are unchallenged, our patents may not adequately protect our current and any future products, provide exclusivity for such products or prevent others from designing around the claims of our patents.
We may rely upon third parties (such as service providers) for our data processing–related activities and share or receive Sensitive Information with or from third parties. We face a variety of evolving threats, which have in the past and could in the future cause security incidents.
We rely upon third parties (such as 37 Table of Contents service providers) for our data processing–related activities and share or receive Sensitive Information with or from third parties. We face a variety of evolving threats, which have in the past and could in the future cause security incidents.
If academic and government institutions, clinical research organizations, pharmaceutical companies and clinical laboratories are unwilling to change current practices to adopt our products, it will negatively affect our business, financial condition, prospects and results of operations.
If academic and government institutions, CROs, pharmaceutical companies and clinical laboratories are unwilling to change current practices to adopt our products, it will negatively affect our business, financial condition, prospects and results of operations.
Annual limitations may result in the expiration of the state net operating loss carryforwards before utilization. Changes in our effective tax rate or tax liability may have an adverse effect on our results of operations.
Annual limitations may result in the expiration of the state net operating loss carryforwards before utilization. 62 Table of Contents Changes in our effective tax rate or tax liability may have an adverse effect on our results of operations.
These products may compete with our current and any future products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 51 Table of Contents Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
These products may compete with our current and any future products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
Such claims could harm our business, financial condition and results of operations. If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
Such claims could harm our business, financial condition and results of operations. 56 Table of Contents If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In the ordinary course of our business, we and the third parties upon which we rely, collect, use, store, safeguard, disclose, share, transfer, secure and otherwise process (collectively, “Process” or “Processing”) proprietary, confidential and sensitive data, including personal information (such as key-coded data, health information and other special categories of personal information), intellectual property, trade secrets and proprietary business information owned or controlled by ourselves, our customers and other parties (collectively “Sensitive Information”).
In the ordinary course of our business, we and the third parties with whom we work, collect, use, store, safeguard, disclose, share, transfer, secure and otherwise process (collectively, “Process” or “Processing”) proprietary, confidential and sensitive data, including personal information (such as key-coded data, health information and other special categories of personal information), intellectual property, trade secrets and proprietary business information owned or controlled by ourselves, our customers and other parties (collectively “Sensitive Information”).
If our information technology systems or data, or those of third parties on which we rely, are compromised now, or in the future, we could experience adverse consequences resulting from such a compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
If our information technology systems or data, or those of third parties with whom we work, are compromised, now or in the future, we could experience adverse consequences resulting from such a compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
We and the third parties upon which we rely may be subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly 36 Table of Contents more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, attacks enhanced or facilitated by artificial intelligence and other similar threats.
We and the third parties with whom we work are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing, credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, attacks enhanced or facilitated by artificial intelligence, and other similar threats.
As of December 31, 2023, we had accrued approximately $2.8 million in expenses relating to product warranty accruals. Substantial amounts of warranty claims could have an adverse effect on our business, financial condition and results of operations.
As of December 31, 2024, we had accrued approximately $1.8 million in expenses relating to product warranty accruals. Substantial amounts of warranty claims could have an adverse effect on our business, financial condition and results of operations.

… 171 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+0 added−1 removed6 unchanged
Biggest changeWilliams has experience in the security of both corporate and technical systems as well as business continuity planning in previous security operations roles at public pharmaceutical companies. 62 Table of Contents Management is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel.
Biggest changeManagement is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel. Management is also responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
For a description of the risks from cybersecurity threats that may materially affect our business and how they may do so, see the section titled “Risk factors” in this Annual Report on Form 10-K, including “If our information technology systems or data, or those of third parties upon which we rely, are compromised now, or in the future, we could experience adverse consequences resulting from such a compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.” Governance Our board of directors addresses our cybersecurity risk management as part of its general oversight function and is responsible for overseeing our cybersecurity risk management processes, including oversight of mitigation of risks from cybersecurity threats.
For a description of the risks from cybersecurity threats that may materially affect our business and how they may do so, see the section titled “Risk factors” in this Annual Report on Form 10-K, including “If our information technology systems or data, or those of third parties with whom we work, are compromised, now or in the future, we could experience adverse consequences resulting from such a compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.” Governance Our board of directors addresses our cybersecurity risk management as part of its general oversight function and is responsible for overseeing our cybersecurity risk management processes, including oversight of mitigation of risks from cybersecurity threats.
Our board of directors receives periodic reports from management concerning our significant cybersecurity threats and risk and the processes we have implemented to address them. Our board of directors also receives various reports, summaries or presentations related to cybersecurity threats, risk and mitigation.
In addition, our incident response process includes reporting to our board of directors for certain cybersecurity incidents. Our board of directors receives periodic reports from management concerning our significant cybersecurity threats and risk and the processes we have implemented to address them. Our board of directors also receives various reports, summaries or presentations related to cybersecurity threats, risk and mitigation.
Depending on the environment, system, and data, we implement and maintain various technical, physical, and organizational measures, processes, standards, and/or policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: a security incident response plan, disaster recovery and business continuity plans, encryption of data, access controls, asset management, and penetration testing.
Our information technology department identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment using various methods including, for example, evaluating threats reported to us, conducting threat and vulnerability assessments, and performing audits. 63 Table of Contents Depending on the environment, system, and data, we implement and maintain various technical, physical, and organizational measures, processes, standards, and/or policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: a security incident response plan, disaster recovery and business continuity plans, encryption of data, access controls, asset management, and penetration testing.
Management is also responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports. Our security incident response plan is designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including our COO and senior director of global information technology.
Our security incident response plan is designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including our CFO and senior director of global information technology. Our CFO works with our IT department to help us mitigate and remediate cybersecurity incidents of which they are notified.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain members of our management team, including our COO, Mr. Chris Williams. Mr.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain members of our management team , including our CFO, Mr. William McCombe. Mr. McCombe has experience in the security of both corporate and technical systems as well as business continuity planning in previous roles at various companies.
Our Chief Operating Officer (“COO”) and our information technology (“IT”) department help identify, assess, and manage our cybersecurity threats and risks. Our information technology department identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment using various methods including, for example, evaluating threats reported to us, conducting threat and vulnerability assessments, and performing audits.
Our Chief Financial Officer (“CFO”) and our information technology (“IT”) department help identify, assess, and manage our cybersecurity threats and risks.
Removed
Our COO works with our IT department to help us mitigate and remediate cybersecurity incidents of which they are notified. In addition, our incident response process includes reporting to our board of directors for certain cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−1 removed1 unchanged
Biggest changeIn November 2023, we purchased a building in Wuxi, China and relocated our Wuxi operations to the new facility in January 2024. The Wuxi building has approximately 56,000 square feet of manufacturing and office space. In Shanghai, China, we lease approximately 14,000 square feet of office and laboratory space, under multiple leases expiring between October 2024 and November 2026.
Biggest changeIn November 2023, we purchased a building in Wuxi, China and relocated our Wuxi operations to the new facility in January 2024. The Wuxi building has approximately 56,000 square feet of manufacturing and office space.
We also lease office space in Seattle, Washington; Bethesda, Maryland; San Diego, California; Beijing, China; Tokyo, Japan; and Amsterdam, Netherlands. We believe that our existing office, laboratory and manufacturing space, together with additional space and facilities available on commercially reasonable terms, will be sufficient to meet our current and future needs. Item 3. Legal Proceedings.
We also lease space in Seattle, Washington; Bethesda, Maryland; San Diego, California; Beijing, China; Tokyo, Japan; Amsterdam, Netherlands; and Ely, England. We believe that our existing office, laboratory and manufacturing space, together with additional space and facilities available on commercially reasonable terms, will be sufficient to meet our current and future needs.
Removed
We are not currently engaged in any material pending legal proceedings. From time to time, we may be subject to legal proceedings and claims arising in the ordinary course of business. Item 4. Mine Safety Disclosures. Not applicable. 63 Table of Contents PART II
Added
In Shanghai, China, we lease approximately 14,000 square feet of office and laboratory space, under multiple leases expiring between November 2025 and November 2026. 64 Table of Contents In Singapore, we lease approximately 8,500 square feet of manufacturing and office space. The lease expires in January 2028.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+0 added−0 removed6 unchanged
Biggest change(Except for the share amount and average price per share, dollar value in thousands) 64 Table of Contents Total number of shares repurchased Average price paid for share Total number of shares purchased as part of publicly announced plans or programs Maximum dollar that may yet be purchased under the plans or programs May 19 - May 31, 2023 100,623 $ 7.75 100,623 $ 49,220 June 1 - June 30, 2023 25,159 7.89 125,782 49,021 July 1 - July 31, 2023 — — 125,782 49,021 August 1- August 31,2023 295,574 7.66 421,356 46,758 September 1- September 31, 2023 859,655 7.14 1,281,011 40,616 October 1 - October 31, 2023 — — 1,281,011 40,616 November 1 - November 30, 2023 3,964,765 6.19 5,245,776 16,094 December 1 - December 31, 2023 1,368,004 7.39 6,613,780 5,981 Year to Date Total 6,613,780 $ 6.66 6,613,780 $ 5,981 The repurchase program was used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards.
Biggest change(Except for the share amount and average price per share, dollar value in thousands) 66 Table of Contents Total number of shares repurchased Average price paid for share Total number of shares purchased as part of publicly announced plans or programs Remaining dollar value that may yet be purchased under the plans or programs Beginning Balance - December 31, 2023 6,613,780 $ 6.66 6,613,780 $ 5,981,000 June 1 – June 30, 2024 444,319 $ 5.99 7,058,099 $ 47,300,000 July 1 – July 31, 2024 — — — — August 1 – August 31, 2024 1,113,843 5.45 8,171,942 $ 41,500,000 September 1 – September 30, 2024 1,080,512 5.37 9,252,454 $ 35,500,000 October 1 – October 31, 2024 959,007 5.12 10,211,461 $ 30,500,000 November 1 – November 30, 2024 373,943 5.44 10,585,404 $ 28,500,000 December 1 – December 31, 2024 — — — — Life to Date Total 3,971,624 6.19 10,585,404 $ 28,500,000 The repurchase program was used to return capital to shareholders and to minimize the dilutive impact of stock options and other stock-based awards.
Stock Performance Graph This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Cytek Biosciences under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. 65 Table of Contents The following graph compares the cumulative total return on an investment of $100 in cash on July 23, 2021 through December 31, 2023, in our common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Components Index and assuming that all dividends were reinvested.
Stock Performance Graph This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Cytek Biosciences under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. 67 Table of Contents The following graph compares the cumulative total return on an investment of $100 in cash on July 23, 2021 through December 31, 2024, in our common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Components Index and assuming that all dividends were reinvested.
Use of Proceeds In July 2021, we issued and sold an aggregate of 13,949,401 shares of common stock in connection with our IPO, including the full exercise by the underwriters of their option to purchase an additional 2,184,695 shares from us, and the selling stockholders sold 2,799,929 shares of common stock, at a public offering price of $17.00 per share.
Use of Proceeds In July 2021, we issued and sold an aggregate of 13,949,401 shares of common stock in connection with our initial public offering (“IPO”), including the full exercise by the underwriters of their option to purchase an additional 2,184,695 shares from us, and the selling stockholders sold 2,799,929 shares of common stock, at a public offering price of $17.00 per share.
The stockholder return shown on the graph below is based on historical data and is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. Item 6. [Reserved] 66 Table of Contents
The stockholder return shown on the graph below is based on historical data and is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. Item 6. [Reserved] 68 Table of Contents
The following table provides information with respect to the repurchase of shares of our common stock from the commencement of the repurchase program until its expiration on December 31, 2023.
The following table provides information with respect to the repurchase of shares of our common stock from the commencement of the repurchase program until its expiration on December 31, 2024.
Holders of Record As of February 16, 2024, there were approximately 21 stockholders of record. Because brokers and other institutions hold many of our shares on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Holders of Record As of February 17, 2025, there were approximately 18 stockholders of record. Because brokers and other institutions hold many of our shares on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
As of December 31, 2023, we have accrued $0.3 million excise taxes related with our shares repurchases.
As of December 31, 2024, we have accrued $0.4 million excise taxes related with our shares repurchases.
Issuer Purchases of Equity Securities On May 17, 2023, the Board approved a program for the repurchase of up to an aggregate of $50 million of our outstanding common stock. The repurchase program expired on December 31, 2023 with a remaining unused balance of $6.0 million.
Issuer Purchases of Equity Securities On June 5, 2024, our board of directors approved a program for the repurchase of up to an aggregate of $50 million of our outstanding common stock. The repurchase program expired on December 31, 2024 with a remaining unused balance of $28.5 million.
The repurchased shares of common stock were retired. The commissions costs related with the repurchases were $0.1 million for both the three months and twelve months ended December 31, 2023. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”), was signed into law.
The repurchased shares of common stock were retired. The commission costs related to the repurchases were $0.03 million and $0.08 million for the three months and twelve months ended December 31, 2024, respectively. On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”), was signed into law.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

87 edited+30 added−28 removed59 unchanged
Biggest changeInvesting activities Net cash used in investing activities during the year ended December 31, 2023 was $93.9 million driven by purchases of marketable securities of $175.9 million, the purchase of the FCI Business of $44.9 million, purchases of property and equipment of $4.6 million, purchase of intangible assets of $0.2 million, and payment of investments in Japan of $0.2 million, partially offset by proceeds from maturities of marketable securities of $132.0 million.
Biggest changeNet cash used in investing activities during the year ended December 31, 2023 was $93.9 million driven by purchases of marketable securities of $175.9 million, the purchase of the FCI business of $44.9 million, purchases of property and equipment of $4.6 million, purchase of intangible assets of $0.2 million, and payment of investments in Japan of $0.2 million, partially offset by proceeds from maturities of marketable securities of $132.0 million. 79 Table of Contents Financing activities Net cash used in financing activities during the year ended December 31, 2024 was $15.8 million driven by $21.6 million of costs related to our share repurchase program, $0.6 million in loan repayment costs and payments for taxes related to net share settlement of equity awards of $0.6 million, partially offset by proceeds from line of credit of $4.2 million, the issuance of our common stock under our equity incentive plans of $1.0 million and the issuance of our common stock under our Employee Stock Purchase Plan of $1.7 million.
We also incurred non-cash stock-based compensation expense, depreciation and amortization, amortization of right-of-use assets, interest expenses for accretion of the legal settlement liabilities and provision for excess and obsolete inventory of $22.0 million, $6.0 million, $3.2 million, $1.6 million, and $1.5 million, respectively. We had gain on investment accretion and amortization of $6.7 million.
We also incurred non-cash stock-based compensation expense, depreciation and amortization, amortization of right-of-use assets, and interest expenses for accretion of the legal settlement liabilities and provision for excess and obsolete inventory of $22.0 million, $6.0 million, $3.2 million, $1.6 million, and $1.5 million respectively. We had gain on investment accretion and amortization of $6.7 million.
Cash provided included an increase in deferred revenue of $6.5 million, a decrease of inventories of $4.3 million and an increase in accrued expenses and other liabilities of $0.7 million.
Cash provided included an increase in deferred revenue of $6.5 million, a decrease of inventories of $4.3 million, an increase in accrued expenses and other liabilities of $0.7 million.
Financing activities Net cash used in financing activities during the year ended December 31, 2023 was $41.8 million driven by $44.2 million of costs related to our share repurchase program, $0.6 million in loan repayment costs and payments for taxes related to net share settlement of equity awards of $0.4 million, partially offset by the issuance of our common stock under our equity incentive plans of $1.5 million and the issuance of our common stock under our Employee Stock Purchase Plan of $1.9 million.
Net cash used in financing activities during the year ended December 31, 2023 was $41.8 million driven by $44.2 million of costs related to our share repurchase program, $0.6 million in loan repayment costs and payments for taxes related to net share settlement of equity awards of $0.4 million, partially offset by the issuance of our common stock under our equity incentive plans of $1.5 million and the issuance of our common stock under our Employee Stock Purchase Plan of $1.9 million.
Gross profit margin depends on many factors, including market conditions that might affect our pricing; services; product mix changes between instrument configurations; excess and obsolete inventories; our cost structure for manufacturing operations relative to volume, freight costs and product support.
Gross margin depends on many factors, including market conditions that might affect our pricing; services; product mix changes between instrument configurations; excess and obsolete inventories; our cost structure for manufacturing operations relative to volume, freight costs and product support.
Our sales in certain regions, particularly outside of the United States, are realized through third-party distribution partners that typically receive discounted prices, thus resulting in lower gross margins than those recognized by our direct sales organization.
Our sales in certain regions, particularly outside of the United States, are largely realized through third-party distribution partners that typically receive discounted prices, thus resulting in lower gross margins than those recognized by our direct sales organization.
This was partially offset by an increase of trade accounts receivable of $7.3 million, an increase in prepaid expenses and other assets of $9.5 million, a decrease in the legal settlement liability of $0.3 million, and a decrease of operating lease liabilities of $3.1 million, and a decrease of trade accounts payables of $1.8 million.
This was partially offset by an increase of trade accounts receivable of $7.3 million, an increase in prepaid expenses and other assets of $9.5 million, a decrease in the legal settlement of $0.3 million, and a decrease of operating lease liabilities of $3.1 million, and a decrease of trade accounts payables of $1.8 million.
Unless the context requires otherwise, references in this Annual Report on Form 10-K to “ we, ” “ us ” and “ our ” refer to Cytek Biosciences, Inc. The following is a discussion and year-to-year comparisons of our financial condition and results of operations for the years ended December 31, 2023 and 2022.
Unless the context requires otherwise, references in this Annual Report on Form 10-K to “ we, ” “ us ” and “ our ” refer to Cytek Biosciences, Inc. The following is a discussion and year-to-year comparisons of our financial condition and results of operations for the years ended December 31, 2024 and 2023.
Product revenue is recognized upon transfer of control of the product to the customer, which, for us, generally occurs at a point in time depending on the shipping terms. Payment terms are generally 30 to 45 days from the date of invoicing. Our distributor arrangements with our customers include a purchase order.
Product revenue is recognized upon transfer of control of the product to the customer, which, for us, generally occurs at a point in time depending on the shipping terms. Payment terms are generally 30 to 90 days from the date of invoicing. Our distributor arrangements with our customers include a purchase order.
Since our first U.S. commercial launch in mid-2017 through December 31, 2023, we have sold and deployed our instruments to customers around the world, including pharmaceutical companies, biopharma companies, academic research centers, and clinical research organizations (“CROs”).
Since our first U.S. commercial launch in mid-2017 through December 31, 2024, we have sold and deployed our instruments to customers around the world, including pharmaceutical companies, biopharma companies, academic research centers, and clinical research organizations (“CROs”).
Cost of sales associated with our products primarily consist of manufacturing-related costs incurred in the production process, inventory write-downs, warranty costs, third party royalty costs, personnel and related costs, costs of component materials, overhead, packaging and delivery and depreciation expense. Service .
Cost of sales associated with our products primarily consists of manufacturing-related costs incurred in the production process, inventory write-downs, warranty costs, third-party royalty costs, personnel and related costs, costs of component materials, overhead, packaging and delivery and depreciation expense. Service .
Recently adopted accounting pronouncements See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our financial statements. 80 Table of Contents
Recently adopted accounting pronouncements See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a description of recent accounting pronouncements applicable to our financial statements. 82 Table of Contents
The Company identified the following performance obligations in the contracts: product sales of instrument systems, installation on instrument systems, delivery of instrument accessories such as loaders, consumables, reagents, extended service contracts and professional services revenue for post-warranty service contracts, preventative maintenance plans, repairs, installations, training, time and material services and other specialized support services.
The 80 Table of Contents Company identified the following performance obligations in the contracts: product sales of instrument systems, installation on instrument systems, delivery of instrument accessories such as loaders, consumables, reagents, extended service contracts and professional services revenue for post-warranty service contracts, preventative maintenance plans, repairs, installations, training, time and material services and other specialized support services.
Additionally, our Cytek Aurora cell sorter (“Aurora CS”) leverages our FSP technology to further broaden our potential applications across cell analysis. Each system is supported by our highly intuitive, proprietary embedded SpectroFlo software, our reagents, and our service offerings to provide a comprehensive, end-to-end platform of solutions for our customers.
Additionally, our Cytek Aurora cell sorter (“Aurora CS system”) leverages our FSP technology to further broaden our potential applications across cell analysis. Each system is supported by our highly intuitive, proprietary embedded SpectroFlo software, our reagents, and our service offerings to provide a comprehensive, end-to-end platform of solutions for our customers.
Overview We are a leading cell analysis solutions company advancing the next generation of cell analysis tools with our novel technical approach of leveraging the full spectrum of fluorescence signatures from multiple lasers to distinguish fluorescent tags on single cells (“Full Spectrum Profiling” or “FSP” technology).
Overview We are a leading cell analysis solutions company advancing the next generation of research and clinical tools with our novel technical approach of leveraging the full spectrum of fluorescence signatures from multiple lasers to distinguish fluorescent tags on single cells (“Full Spectrum Profiling” or “FSP” technology).
Significant judgment is sometimes required to determine the appropriate accounting for such arrangements, including whether the deliverables specified in a contract with multiple promises should be treated as separate performance obligations for revenue recognition purposes and, if so, how the related sales price should be allocated among the performance obligations, when to recognize revenue for each performance obligation, and the period 78 Table of Contents over which revenue should be recognized.
Significant judgment is sometimes required to determine the appropriate accounting for such arrangements, including whether the deliverables specified in a contract with multiple promises should be treated as separate performance obligations for revenue recognition purposes and, if so, how the related sales price should be allocated among the performance obligations, when to recognize revenue for each performance obligation, and the period over which revenue should be recognized.
Our core FSP systems, the Cytek Aurora and Northern Lights flow cytometers, deliver high-resolution, high-content and high-sensitivity cell analysis and addresses the inherent limitations of other technologies by providing a higher level of multiplexing with exquisite sensitivity, more flexibility and increased efficiency, all at a lower cost for performance.
Our FSP cell analyzers, the Cytek Aurora and Northern Lights systems, deliver high-resolution, high-content and high-sensitivity cell analysis and addresses the inherent limitations of other technologies by providing a higher level of multiplexing with exquisite sensitivity, more flexibility and increased efficiency, all at a lower cost for performance.
The acquisition supports our plan to develop new products and capabilities with flow cytometry and imaging technology, expand our reach and offerings into customer segments previously underserved, and increase the efficiency of our operations. We manufacture our instruments in our facilities in Fremont, California; Wuxi, China; and Seattle, Washington.
The acquisition supports our plan to develop new products and capabilities with flow cytometry and imaging technology, expand our reach and offerings into customer segments previously underserved, and increase the efficiency of our operations. We manufacture our instruments in our facilities in Fremont, California; Wuxi, China; Seattle, Washingto n; and Singapore.
For a discussion of the results of operations and financial condition for the years ended December 31, 2022 and year-to-year comparisons between 2022 and 2021, please refer to “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” section of our Annual Report on Form 10-K filed with the SEC on March 1, 2023.
For a discussion of the results of operations and financial condition for the years ended December 31, 2023 and year-to-year comparisons between 2023 and 2022, please refer to “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” section of our Annual Report on Form 10-K filed with the SEC on March 13, 2024 .
Revenue mix and gross margin Our revenue is primarily derived from sales of our instruments and services with our instruments recognizing higher gross margins than our services.
Revenue mix and gross margin Our revenue is primarily derived from sales of our instruments and services with our instruments recognizing higher revenue and gross profit than our services.
During the three months ended December 31, 2023, we repurchased 5,332,769 shares of our outstanding common stock for a total cost of approximately $34.6 million at an average price per share of $6.49.
During the three months ended December 31, 2023 , the Company repurchased 5,332,769 shares of its outstanding common stock for a total cost of approximately $34.6 million at an average price per share of $6.49.
Sources of liquidity We have financed our operations primarily through sales of our securities. In July 2021, we completed our IPO, which resulted in net proceeds to us of approximately $215.7 million. We have also benefited from operating cash flows from the sale of our products and services.
Sources of liquidity We have financed our operations primarily through sales of our securities. In July 2021, we completed our initial public offering (“IPO”), which resulted in net proceeds to us of approximately $215.7 million. We have also benefited from operating cash flows from the sale of our products and services.
We also plan to continue to invest in sales, marketing and business development across the globe to drive commercialization of our products. We incurred sales and marketing expenses of $49.1 million, $33.2 million and $24.7 million for the year ended December 31, 2023, 2022 and 2021, respectively.
We also plan to continue to invest in sales, marketing and business development across the globe to drive commercialization of our products. We incurred sales and marketing expenses of $49.1 million, $49.1 million and $33.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Since our inception in 2014, we have financed our operations primarily through sales of our securities and revenue from the sale of our products and services. Our net loss was $12.1 million for the year ended December 31, 2023, our net income was $2.5 million and $3.0 million, for the year ended December 31, 2022 and 2021, respectively.
Since our inception in 2014, we have financed our operations primarily through sales of our securities and revenue from the sale of our products and services. Our net loss was $6.0 million and $12.1 million f or the years ended December 31, 2024 and 2023, respectively, and our net income was $2.5 million for the year ended December 31, 2022.
Known Trends, Events and Uncertainties The recent trends towards rising inflation may adversely affect our business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of materials and supplies, interest rates and overhead costs may adversely affect our operating results.
Known Trends, Events and Uncertainties Recent inflation trends may adversely affect our business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of materials and supplies, labor and benefit costs and overhead costs may adversely affect our operating results.
Under the terms of the leases, we are responsible for certain expenses related to operations, maintenance, repairs and management fees. Future minimum lease payments under non-cancelable operating leases totaled $12.7 million as of December 31, 2023.
Under the terms of the leases, we are responsible for certain expenses related to operations, maintenance, repairs and management fees. Future minimum lease payments under non-cancelable operating leases totaled $11.9 million as of December 31, 2024.
We have designed our operating model to be capital efficient and to scale efficiently as our product volumes grow. Total revenue for the year ended December 31, 2023 was $193.0 million, representing a 18% increase compared to revenue for the year ended December 31, 2022 of $164.0 million.
We have designed our operating model to be capital efficient and to scale efficiently as our product volumes grow. Total revenue for the year ended December 31, 2024 was $200.5 million , representing a 4% increase compared to revenue for the year ended December 31, 2023 of $193.0 million.
As of December 31, 2023 and 2022, we had immaterial amounts of contract assets included within prepaid expenses and other current assets on the consolidated balance sheets.
As of December 31, 2024 and 2023, we had 81 Table of Contents immaterial amounts of contract assets included within prepaid expenses and other current assets on the consolidated balance sheets.
Our Northern Lights CLC system received CE Marking under the European Union In Vitro Diagnostic Medical Devices Directive in September 2020 and was registered in the European Union in compliance with Regulation (EU) 2017/746 on In Vitro Diagnostic Medical Devices in November 2023.
Our Northern Lights-CLC system received CE Marking under the European Union In Vitro Diagnostic Medical Devices Directive in September 2020 and was registered in the European Union in compliance with Regulation (EU) 2017/746 on In Vitro Diagnostic Medical Devices in November 2023. The Northern Lights-CLC system was also registered as a Class II In Vitro Diagnostic Medical Device in China.
Product gross profit for the year ended December 31, 2023 decreased by 7%, as compared to the year ended December 31, 2022. Product cost of sales for the year ended December 31, 2023 increased by 31% as compared to the same period in 2022.
Product gross profit for the year ended December 31, 2024 decreased by 8%, as compared to the year ended December 31, 2023. Product cost of sales for the year ended December 31, 2024 increased by 6% as compared to the same period in 2023.
We believe the presentation of revenue on a constant currency basis, in addition to results reported in accordance with accounting principles generally accepted in the United States of America ( “ GAAP ” ), provides useful information about our operating performance because the constant currency presentation excludes the effects of foreign currency volatility and highlights our core operating results.
We believe the presentation of revenue on a constant currency basis, in addition to results reported in accordance with GAAP, provides useful information about our operating performance because the constant currency presentation excludes the effects of foreign currency volatility and highlights our core operating results.
As of December 31, 2023 and December 31, 2022, we had approximately $262.7 million and $344.0 75 Table of Contents million, respectively, in cash and cash equivalents and short term investments, which were primarily held in U.S. short-term bank deposit accounts, money market funds, U.S. Treasury notes, Federal agency security notes, and short term commercial paper.
As of December 31, 2024 and December 31, 2023, we had approximately $277.9 million and $262.7 million, respectively, in cash and cash equivalents and short term investments, which were primarily held in U.S. short-term bank deposit accounts, money market funds, U.S. Treasury notes, Federal agency security notes, and short term commercial paper.
Our general and administrative expenses primarily consist of salaries, benefits, and stock-based compensation costs for employees in our executive, accounting and finance, legal and human resource functions, as well as professional services fees, such as consulting, audit, tax, legal, general corporate costs, allocated overhead expenses and acquisition costs. We expect our operating expenses to increase as a public company.
Our general and administrative expenses primarily consist of salaries, benefits, and stock-based compensation costs for employees in our executive, accounting and finance, legal, and human resource functions, as well as professional services fees, such as consulting, audit, tax, legal, general corporate costs, and allocated overhead expenses.
Our income (expense), net consists primarily of foreign exchange gains and losses. Income taxes Our provision for (benefit from) income taxes consists primarily of provision for federal taxes and local taxes in the United States as well as foreign taxes.
Income taxes Our provision for (benefit from) income taxes consists primarily of provision for federal taxes and local taxes in the United States as well as foreign taxes.
Payments from customers are in arrears. For arrangements where the anticipated period between timing of transfer of services and the timing of payment is one year or less, we have elected to not assess whether a significant financing component exists. For arrangements with terms greater than one year, payments are received up-front and are for reasons other than financing.
Payments from customers are in arrears. For arrangements where the anticipated period between timing of transfer of services and the timing of payment is one year or less, we have elected to not assess whether a significant financing component exists.
Our research and development expenses primarily consist of salaries, benefits, stock-based compensation costs for employees in our research and development department, independent contractor costs, laboratory supplies, equipment maintenance and materials expenses. We plan to continue to invest in our research and development efforts, including hiring additional employees to enhance existing products and develop new products.
Our research and development expenses primarily consist of salaries, benefits, and stock-based compensation costs for employees in our research and development department, independent contractor costs, laboratory supplies, equipment maintenance and materials expenses. We plan to continue to invest in our research and development efforts.
The Northern Lights CLC system was also registered as a Class II In Vitro Diagnostic Medical Device in China. These registrations enable the Northern Lights CLC system to be marketed for clinical use in China, the European Union and in other countries around the world that accept the Certification of Free Sale issued from an EU Competent Authority.
These registrations enable the Northern Lights-CLC system to be marketed for clinical use in China, the European Union and in other countries around the world that accept the Certification of Free Sale issued from an EU Competent Authority.
Non-GAAP Financial Measure To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles, we use constant currency revenue, which is a non-GAAP financial measure.
Non-GAAP Financial Measure To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles, we use constant currency revenue, which is a financial measure not reported in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Our sales and marketing expenses consist primarily of salaries, benefits, and stock-based compensation costs for employees in our sales and marketing department, sales commissions, marketing material costs, travel expenses and costs related to trade shows, trainings and various workshops.
Our sales and marketing expenses consist primarily of salaries, benefits, and stock-based compensation costs for employees in our sales and marketing department, sales commissions, marketing material costs, travel expenses and costs related to trade shows, trainings and various workshops. Sales and marketing expense may increase in absolute dollars in future periods. General and administrative .
We expect to continue to invest in our commercial infrastructure through hiring additional employees with strong scientific and technical backgrounds to support growth in our instrument sales as well as our planned expansion of reagents offerings and panel design capabilities.
We intend to continue to make significant investments in research and development in the future. 69 Table of Contents We expect to continue to invest in our commercial infrastructure through hiring additional employees with strong scientific and technical backgrounds to support growth in our instrument sales as well as our planned expansion of reagents offerings and panel design capabilities.
Our revenue was $193.0 million, $164.0 million and $128.0 million for the year ended December 31, 2023, 2022 and 2021, respectively. A portion of our revenue for the three and twelve months ended December 31, 2023 is attributable to the acquired FCI Business.
Our revenue was $200.5 million, $193.0 million and $164.0 million for the years ended December 31, 2024, 2023 and 2022, respectively. A portion of our revenue for the three and twelve months ended December 31, 2024, and December 31, 2023, were attributable to the acquired FCI Business.
The lower product gross margins in the year ended December 31, 2023 compared to the year ended December 31, 2022 were driven primarily by higher material costs and by less favorable instrument product mix following the FCI Acquisition.
The lower product gross margins in the year ended December 31, 2024 compared to the year ended December 31, 2023 were driven by higher material costs, less favorable instrument product mix and higher production overhead costs.
Service revenue and service gross profit for the year ended December 31, 2023 increased by 135% and 674%, respectively, as compared to the year ended December 31, 2022. Service cost of sales for the year ended December 31, 2023 increased by 39% as compared to the same period in 2022.
Service revenue and service gross profit for the year ended December 31, 2024 increased by 30% and 49%, respectively, as compared to the year ended December 31, 2023. Service cost of sales for the year ended December 31, 2024 increased by 11% as compared to the same period in 2023.
This was primarily due to increased headcount from the FCI Acquisition. We expect our sales and marketing expenses to increase in absolute dollars as we hire additional sales and marketing personnel, expand our sales support infrastructure and invest in our brand and product awareness to further penetrate the United States and the international markets.
We expect our sales and marketing expenses to increase in absolute dollars in the future as we hire additional sales and marketing personnel, expand our sales support infrastructure and invest in our brand and product awareness to further penetrate the United States and the international markets.
See Note 11 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details. 74 Table of Contents Interest income Year ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Interest income $ 6,413 $ 4,619 $ 1,794 39 % Interest income was $6.4 million and $4.6 million for the year ended December 31, 2023 and 2022, respectively.
See Note 11 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details on the legal settlement liability. 76 Table of Contents Interest income Year ended December 31, Change (In thousands, except percentages) 2024 2023 Amount % Interest income $ 5,121 $ 6,413 $ (1,292) (20) % Interest income was $5.1 million and $6.4 million for the years ended December 31, 2024 and 2023, respectively.
The following table presents a reconciliation of constant currency revenue to our reported net revenue for the periods indicated (in thousands, except percentages): Revenue Year ended December 31, 2023 Year ended December 31, 2022 As reported 193,015 164,036 Non-GAAP constant currency 193,697 171,793 FX Impact [$] 682 7,757 FX Impact [%] 0.4 % 4.7 % Liquidity and capital resources Overview To date, our primary sources of capital have been through sales of our securities and revenue from the sale of our products and services.
The following table presents a reconciliation of constant currency revenue to our reported net revenue for the periods indicated (in thousands, except percentages): Revenue Twelve months ended December 31, 2024 Twelve months ended December 31, 2023 As reported 200,453 193,015 Non-GAAP constant currency 201,346 193,697 FX Impact [$] 893 682 FX Impact [%] 0.4 % 0.4 % 77 Table of Contents Liquidity and capital resources Overview To date, our primary sources of capital have been through sales of our securities and revenue from the sale of our products and services.
Although we expect sales of our instruments to continue to represent the largest 68 Table of Contents percentage of our revenue in the future, we expect reagent sales to increase as a percentage of our total revenue and our gross margins to experience a corresponding improvement as we grow our installed base and increase our focus on commercializing reagents.
Although we expect sales of our instruments to continue to represent the largest percentage of our revenue in the future, we expect service revenue to increase as a percentage of our total revenue and our gross margins to experience a corresponding improvement as we grow our installed base and increase our focus on leveraging our fixed manufacturing and service overhead costs.
Sales and marketing Year ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Sales and marketing $ 49,148 $ 33,230 $ 15,918 48 % Sales and marketing expenses were $49.1 million for the year ended December 31, 2023 as compared to $33.2 million for the year ended December 31, 2022.
Sales and marketing Year ended December 31, Change (In thousands, except percentages) 2024 2023 Amount % Sales and marketing $ 49,114 $ 49,148 $ (34) — % Sales and marketing expenses were $49.1 million for the year ended December 31, 2024 as compared to $49.1 million for the year ended December 31, 2023.
During the twelve months ended December 31, 2023, we repurchased 6,613,780 shares of our outstanding common stock for a total cost of approximately $44.0 million at an average price per share of $6.66. The repurchase program was used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards.
During the twelve months ended December 31, 2024 , the Company repurchased 3,971,624 shares of its outstanding common stock for a total cost of approximately $21.6 million at an average price per share of $5.41. The repurchase program was used to return capital to shareholders and to minimize the dilutive impact of stock options and other stock-based awards.
The following table summarizes the weighted-average assumptions used in estimating the fair value of stock options granted during each of the periods presented: Year Ended December 31, 2023 2022 2021 Expected term (in years) 5.96 5.91 6.05 Expected volatility 71 % 75 % 90 % Risk-free interest rate 4 % 2 % 1 % Dividend yield — — — Expected volatility—Expected volatility is estimated by studying the volatility of selected industry peers deemed to be comparable to our business corresponding to the expected term of the awards.
The following table summarizes the weighted-average assumptions used in estimating the fair value of stock options granted during each of the periods presented: Year Ended December 31, 2024 2023 2022 Expected term (in years) 6.00 5.96 5.91 Expected volatility 73 % 71 % 75 % Risk-free interest rate 4 % 4 % 2 % Dividend yield — — — Expected volatility—Expected volatility is estimated by analyzing the historical volatility of selected industry peers, and the Company's historical market data for the assessment corresponds to the expected term of the awards.
Among other things, the IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. Beginning in 2023, net stock repurchases are subject to the excise tax.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into law. Among other things, the IRA imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy.
General and administrative Year ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % General and administrative $ 43,972 $ 34,690 $ 9,282 27 % General and administrative expenses were $44.0 million for the year ended December 31, 2023 as compared to $34.7 million for the year ended December 31, 2022.
General and administrative Year ended December 31, Change (In thousands, except percentages) 2024 2023 Amount % General and administrative $ 43,113 $ 43,972 $ (859) (2) % General and administrative expenses were $43.1 million for the year ended December 31, 2024 as compared to $44.0 million for the year ended December 31, 2023.
The increase in service revenue was mainly driven by continued growth in the instruments installed base with more instruments coming off warranty and the addition of the FCI Business.
The increase in service revenue was mainly driven by continued growth in the instruments installed base with more instruments coming off warranty contributing to greater contract and time and material service revenue.
Deferred revenue that is expected to be recognized during the following 12 months is recorded as a current liability and the remaining portion is recorded as noncurrent. Business Combinations The Company uses the acquisition method of accounting under ASC 805, Business Combinations .
Deferred revenue that is expected to be recognized during the following 12 months is recorded as a current liability and the remaining portion is recorded as noncurrent.
We believe these factors contributed to longer sales cycles, which adversely impacted our operating results for the three months and full year ended December 31, 2023, and may adversely affect our operating results in the future. Components of our results of operations Total revenue, net We currently generate our total revenue, net from product revenue and service revenue. Pr oduct.
We believe these factors contributed to longer sales cycles, which adversely impacted our operating results for the three months and full year ended December 31, 2024, and may adversely affect our operating results in the future.
Revenue from direct sales represented 76%, 79% and 86% of total 67 Table of Contents revenue for the year ended December 31, 2023, 2022 and 2021, respectively, and revenue from distributors represented 24%, 21% and 14% of total revenue for the year ended December 31, 2023, 2022 and 2021, respectively.
Revenue from direct sales represented 75% , 76% and 79% of total revenue for the years ended December 31, 2024, 2023 and 2022, respectively, and revenue from distributors represented 25% , 24% and 21% of total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
Other income, net Year ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Other income, net $ 7,794 $ 1,018 $ 6,776 666 % Other income, net was $7.8 million for the year ended December 31, 2023 as compared to other income, net of $1.0 million for the year ended December 31, 2022, respectively.
Other income, net Year ended December 31, Change (In thousands, except percentages) 2024 2023 Amount % Other income, net $ 4,463 $ 7,794 $ (3,331) (43) % Other income, net was $4.5 million for the year ended December 31, 2024 as compared to other income, net of $7.8 million for the year ended December 31, 2023, respectively.
We intend to continue increasing our workforce in line with our growth. Recurring revenues We believe our expanding installed base of instruments to new and existing customers will provide us with greater leverage to drive pull-through for reagent and service revenue, which are recurring by nature.
We are investing in our direct sales organization and commercial support functions and developing third-party distributor relationships to support global expansion and drive revenue growth. Recurring revenues We believe our expanding installed base of instruments to new and existing customers will provide us with greater leverage to drive pull-through for reagent and service revenue, which are recurring by nature.
Results of operations Comparison of the year ended December 31, 2023 and 2022 The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. 71 Table of Contents The following table sets forth our consolidated results of operations and comprehensive (loss) income data for the periods presented: Year ended December 31, (In thousands) 2023 2022 Revenue, net: Product $ 156,717 $ 148,600 Service 36,298 15,436 Total revenue, net 193,015 164,036 Cost of sales: Product 65,327 49,955 Service 18,262 13,107 Total cost of sales 83,589 63,062 Gross profit 109,426 100,974 Operating expenses: Research and development 44,151 34,858 Sales and marketing 49,148 33,230 General and administrative 43,972 34,690 Total operating expenses 137,271 102,778 Loss from operations (27,845) (1,804) Other income, net Interest expense (2,071) (2,573) Interest income 6,413 4,619 Other income, net 7,794 1,018 Total other income, net 12,136 3,064 (Loss) income before income taxes (15,709) 1,260 Benefit from income taxes (3,561) (1,224) Net (loss) income (12,148) 2,484 Foreign currency translation adjustment, net of tax (549) (1,611) Unrealized (loss) gain on marketable securities (29) 17 Net comprehensive (loss) income $ (12,726) $ 890 Total revenue, net Year ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Revenue, net Product $ 156,717 $ 148,600 $ 8,117 5 % Service 36,298 15,436 20,862 135 % Total revenue, net $ 193,015 $ 164,036 $ 28,979 18 % Total revenue, net increased by $29.0 million, or 18%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Results of operations Comparison of the years ended December 31, 2024 and 2023 The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. 73 Table of Contents The following table sets forth our consolidated results of operations and comprehensive (loss) income data for the periods presented: Year ended December 31, (In thousands) 2024 2023 Revenue, net: Product $ 153,263 $ 156,717 Service 47,190 36,298 Total revenue, net 200,453 193,015 Cost of sales: Product 69,088 65,327 Service 20,259 18,262 Total cost of sales 89,347 83,589 Gross profit 111,106 109,426 Operating expenses: Research and development 39,402 44,151 Sales and marketing 49,114 49,148 General and administrative 43,113 43,972 Total operating expenses 131,629 137,271 Loss from operations (20,523) (27,845) Other income (expense): Interest income (expense), net (Notes 11, 12) 5,239 (2,071) Interest income 5,121 6,413 Other income, net 4,463 7,794 Total other income, net 14,823 12,136 Loss before income taxes (5,700) (15,709) Provision for (benefit from) income taxes 320 (3,561) Net loss $ (6,020) (12,148) Foreign currency translation adjustment, net of tax 1,193 (549) Unrealized gain (loss) on marketable securities 97 (29) Net comprehensive loss $ (4,730) $ (12,726) Total revenue, net Year ended December 31, Change (In thousands, except percentages) 2024 2023 Amount % Revenue, net Product $ 153,263 $ 156,717 $ (3,454) (2) % Service 47,190 36,298 10,892 30 % Total revenue, net $ 200,453 $ 193,015 $ 7,438 4 % Total revenue, net increased by $7.4 million, or 4%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Year ended December 31, 2023 vs. 2022 2022 vs. 2021 (In thousands) 2023 2022 2021 Dollar Change Dollar Change Sales channel mix Direct sales channel $ 147,169 $ 129,098 $ 110,520 $ 18,071 $ 18,578 Distributor channel 45,846 34,938 17,430 10,908 17,508 Total revenue, net $ 193,015 $ 164,036 $ 127,950 $ 28,979 $ 36,086 Customer mix Academia and government $ 82,145 $ 73,706 $ 59,415 $ 8,439 $ 14,291 Biotechnology, pharmaceutical, distributor and CRO 110,870 90,330 68,535 20,540 21,795 Total revenue, net $ 193,015 $ 164,036 $ 127,950 $ 28,979 $ 36,086 Distributors typically sell to end customers identified in other customer categories.
Year ended December 31, 2024 vs. 2023 2023 vs. 2022 (In thousands) 2024 2023 2022 Dollar Change Dollar Change Sales channel mix Direct sales channel $ 149,874 $ 147,169 $ 129,098 $ 2,705 $ 18,071 Distributor channel 50,579 45,846 34,938 4,733 10,908 Total revenue, net $ 200,453 $ 193,015 $ 164,036 $ 7,438 $ 28,979 Customer mix Academia and government $ 80,911 $ 82,145 $ 73,706 $ (1,234) $ 8,439 Biotechnology, pharmaceutical, distributor and CRO 119,542 110,870 90,330 8,672 20,540 Total revenue, net $ 200,453 $ 193,015 $ 164,036 $ 7,438 $ 28,979 Distributors typically sell to end customers identified in other customer categories.
This was partially offset by an increase of trade accounts payables of $1.9 million, an increase in deferred revenue of $9.4 million, an increase in accrued expenses and other liabilities of $7.5 million and an increase in the legal settlement liability of $0.4 million.
This was partially offset by an increase of trade accounts receivable of $5.4 million, an increase in prepaid expenses and other assets of $2.8 million, a decrease in the legal settlement liability of $1.1 million, and a decrease of operating lease liabilities of $3.2 million, and a decrease of accrued expenses and other liabilities of $0.8 million.
See our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details regarding the settlement. Interest income. Our interest income consists primarily of interest earned on our cash and cash equivalents which are invested in cash deposits and in money market funds. Other income, net.
Other income (expense), net Interest expense. Interest expense consists primarily of accretion of the present value of the litigation settlement liability. See our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details regarding the settlement. Interest income.
Interest expense Year ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Interest expense $ (2,071) $ (2,573) $ 502 (20) % Interest expense was $2.1 million for the year ended December 31, 2023 as compared to $2.6 million for the year ended December 31, 2022.
Interest income (expense), net Year ended December 31, Change (In thousands, except percentages) 2024 2023 Amount % Interest income (expense), net $ 5,239 $ (2,071) $ 7,310 (353) % Interest income was $5.2 million for the year ended December 31, 2024 as compared to interest expense of $2.1 million for the year ended December 31, 2023.
We expect research and development expense will increase in 70 Table of Contents absolute dollars in future periods and vary from period to period as a percentage of revenue due to our continuing investment in product development. Sales and marketing .
Research and development expense may increase in absolute dollars in future periods due to our continuing investment in product development. 72 Table of Contents Sales and marketing .
We incurred research and development expenses of $44.2 million, $34.9 million and 24.4 million for the year ended December 31, 2023, 2022 and 2021, respectively. We intend to continue to make significant investments in research and development in the future.
We incurred research and development expenses of $39.4 million, $44.2 million and $34.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The securities in this transaction were offered pursuant to an automatic shelf registration statement on Form S-3ASR (File No. 333-267118) that was filed with the SEC on August 26, 2022. Share repurchases On May 17, 2023, the Board approved a program for our repurchase of up to an aggregate of $50 million of our outstanding common stock.
The securities in this transaction were offered pursuant to an automatic shelf registration statement on Form S-3ASR (File No. 333-267118) that was filed with the SEC on August 26, 2022.
As of December 31, 2023, we have accrued $0.3 million excise taxes related with our stock repurchases. 76 Table of Contents Cash flows The following table summarizes our cash flows for the periods presented: Year ended December 31, (In thousands) 2023 2022 Net cash provided by (used in): Operating activities $ 5,281 $ (12,231) Investing activities (93,894) (55,909) Financing activities (41,812) 5,513 Effect of exchange rate changes on cash, cash equivalents and restricted cash (1,445) (2,491) Net decrease in cash, cash equivalents and restricted cash $ (131,870) $ (65,118) Operating activities Net cash provided by operating activities for the year ended December 31, 2023 was $5.3 million including net loss of $12.1 million.
Cash flows The following table summarizes our cash flows for the periods presented: Year ended December 31, (In thousands) 2024 2023 Net cash provided by (used in): Operating activities $ 25,379 $ 5,281 Investing activities (82,974) (93,894) Financing activities (15,822) (41,812) Effect of exchange rate changes on cash, cash equivalents and restricted cash 4,532 (1,445) Net decrease in cash, cash equivalents and restricted cash $ (68,885) $ (131,870) Operating activities Net cash provided by operating activities for the year ended December 31, 2024 was $25.4 million including net loss of $6.0 million.
Stock-based compensation We maintain an equity incentive compensation plan under which incentive stock options and nonqualified stock options to purchase common stock, and restricted stock units for common stock, are granted primarily to employees and non-employee consultants.
See Note 11 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details. Stock-based compensation We maintain an equity incentive compensation plan under which incentive stock options and nonqualified stock options to purchase common stock, and restricted stock units for common stock, are granted primarily to employees and non-employee consultants.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates continue to rise) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with COVID-19 or future public health crises, the ongoing conflict between Russia and Ukraine, the Israel and Palestine conflict or liquidity concerns at, and failure of, banks and other financial institutions.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if the rate of inflation increases) on our operating costs, including our labor costs and research and development costs.
Contractual Obligations and Commitments During the year ended December 31, 2023, there were no material changes to our contractual obligations and commitments from those described under “Management’s Discussion and Analysis of Financial Condition” which is contained in our Form 10-K and filed with the SEC on March 1, 2023. 77 Table of Contents Off-balance sheet arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Off-balance sheet arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Total cost of sales, gross profit and gross margin Year ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Cost of sales: Product $ 65,327 $ 49,955 $ 15,372 31 % Service 18,262 13,107 5,155 39 % Total cost of sales $ 83,589 $ 63,062 $ 20,527 33 % Gross profit $ 109,426 $ 100,974 $ 8,452 8 % Gross margin 57 % 62 % Total cost of sales increased by $20.5 million, or 33%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Total cost of sales, gross profit and gross margin Year ended December 31, Change (In thousands, except percentages) 2024 2023 Amount % Cost of sales: Product $ 69,088 $ 65,327 $ 3,761 6 % Service 20,259 18,262 1,997 11 % Total cost of sales $ 89,347 $ 83,589 $ 5,758 7 % Gross profit $ 111,106 $ 109,426 $ 1,680 2 % Gross margin 55 % 57 % Total cost of sales increased by $5.8 million, or 7%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The increase in research and development expenses for the year ended December 31, 2023 was primarily driven by costs relating to the FCI Business. We expect our research and development expense to increase in absolute dollars as we continue to develop new products and enhance existing instruments and technologies.
We expect our research and development expense to increase in absolute dollars going forward as we continue to develop new products and enhance existing instruments and technologies.
The change for the year ended December 31, 2023 compared to the year ended December 31, 2022 resulted primarily from expenses driven by an increase in headcount and salaries and efforts in research and development and marketing initiatives.
The change for the year ended December 31, 2024 compared to the year ended December 31, 2023 resulted primarily from an increase in revenues and gross profit and a reduction in operating expenses.
The increase of $6.8 million was primarily from short-term investment income increase during the year ended December 31, 2023. Income Taxes Year ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Benefit from income taxes $ (3,561) $ (1,224) $ (2,337) 191 % Benefit from income tax was $3.6 million for the year ended December 31, 2023.
Income Taxes Year ended December 31, Change (In thousands, except percentages) 2024 2023 Amount % Provision for (benefit from) income taxes $ 320 $ (3,561) $ 3,881 (109) % Provision for income taxes was $0.3 million for the year ended December 31, 2024. The benefit from income taxes was $3.6 million for the year ended December 31, 2023.
As a result, our historical results of operations may not be indicative of our results of operations in future periods. We expect these expenses to vary from period to period as a percentage of revenue. Other income, net Interest expense. Interest expense consists primarily of accretion of the present value of the litigation settlement liability.
The Company is focused on controlling our general and administrative expenses; however these may increase in absolute dollars in future periods. We expect our operating expenses to vary from period to period as a percentage of revenue. As a result, our historical results of operations may not be indicative of our results of operations in future periods.
Net cash used in investing activities during the year ended December 31, 2022 was $55.9 million driven by purchases of marketable securities of $44.5 million, purchases of property and equipment of $9.9 million, and payment of investments of $1.6 million.
Investing activities Net cash used in investing activities during the year ended December 31, 2024 was $83.0 million driven by purchases of marketable securities of $274.1 million, the purchase of the Cytometric Engineering Ltd. (d.b.a.
The increase in cost of sales was driven by increases in product and service revenue, primarily due to more instruments shipped, increased material costs, and increased service and manufacturing headcount and associated personnel cost. Total gross profit margin was 57% and 62% as a percent of total revenue for the year ended December 31, 2023 and 2022, respectively.
The increase in cost of sales was driven by increases in product unit volume and service revenue, and was primarily due to increased material costs, increased service and manufacturing headcount and associated personnel cost, partially offset by lower warranty cost.
The higher service gross margins in the year ended December 31, 2023 compared to the year ended December 31, 2022 were mainly driven by continued growth in the instruments installed base with more instrument coming off warranty and the addition of the FCI Business. 73 Table of Contents Operating expenses Research and development Year ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Research and development $ 44,151 $ 34,858 $ 9,293 27 % Research and development expenses were $44.2 million for the year ended December 31, 2023 as compared to $34.9 million for the year ended December 31, 2022.
The higher service gross margins in the year ended December 31, 2024 compared to the year ended December 31, 2023 were mainly driven by lower overhead costs as a percentage of sales due to higher revenue and greater overhead cost productivity, and lower material costs as a percentage of sales. 75 Table of Contents Operating expenses Research and development Year ended December 31, Change (In thousands, except percentages) 2024 2023 Amount % Research and development $ 39,402 $ 44,151 $ (4,749) (11) % Research and development expenses were $39.4 million for the year ended December 31, 2024 as compared to $44.2 million for the year ended December 31, 2023.
Revenue is recognized only to the extent that it is probable that a significant reversal of the cumulative amount recognized will not occur in future periods. Certain of our sales contracts involve the delivery or performance of multiple products and services within contractually binding arrangements.
Certain of our sales contracts involve the delivery or performance of multiple products and services within contractually binding arrangements.
Year ended December 31, Change (In thousands, except percentages) 2023 2022 Amount % Product: Revenue $ 156,717 $ 148,600 $ 8,117 5 % Cost of sales 65,327 49,955 15,372 31 % Product gross profit $ 91,390 $ 98,645 $ (7,255) (7) % Gross margin 58 % 66 % Service: Revenue $ 36,298 $ 15,436 $ 20,862 135 % Cost of sales 18,262 13,107 5,155 39 % Service gross profit $ 18,036 $ 2,329 $ 15,707 674 % Gross margin 50 % 15 % Product revenue for the year ended December 31, 2023 increased by 5%, as compared to the year ended December 31, 2022.
Year ended December 31, Change (In thousands, except percentages) 2024 2023 Amount % Product: Revenue $ 153,263 $ 156,717 $ (3,454) (2) % Cost of sales 69,088 65,327 3,761 6 % Product gross profit $ 84,175 $ 91,390 $ (7,215) (8) % Gross margin 55 % 58 % Service: Revenue $ 47,190 $ 36,298 $ 10,892 30 % Cost of sales 20,259 18,262 1,997 11 % Service gross profit $ 26,931 $ 18,036 $ 8,895 49 % Gross margin 57 % 50 % Product revenue for the year ended December 31, 2024 decreased by 2%, as compared to the year ended December 31, 2023.

… 65 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed7 unchanged
Biggest changeInterest rate risk The market risk inherent in our financial instruments and in our financial condition represents the potential loss arising from adverse changes in interest rates or exchange rates. As of December 31, 2023, we had cash and cash equivalents of $167.6 million, which consisted primarily of money market funds and bank deposits.
Biggest changeInterest rate risk The market risk inherent in our financial instruments and in our financial condition represents the potential loss arising from adverse changes in interest rates or exchange rates. As of December 31, 2024, we had cash and cash equivalents of $98.7 million, which consisted primarily of money market funds and bank deposits.
Please see the section entitled “Management's Discussion and Analysis of Financial Condition and Results of Operations— Non-GAAP Financial Measure” for a presentation of revenue on a constant currency basis, which provides information regarding our operating performance excluding the effects of foreign currency volatility. 81 Table of Contents
Please see the section entitled “Management's Discussion and Analysis of Financial Condition and Results of Operations— Non-GAAP Financial Measure” for a presentation of revenue on a constant currency basis, which provides information regarding our operating performance excluding the effects of foreign currency volatility. 83 Table of Contents

Other CTKB 10-K year-over-year comparisons