Cytek Biosciences, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Cytek Biosciences, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Cytek Biosciences, Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive (loss) income, stockholders' equity, cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2025, expressed an adverse opinion on the Company's internal control over financial reporting because of material weaknesses. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Inventories – Excess and Obsolete Inventories — Refer to Notes 2 and 5 to the financial statements Critical Audit Matter Description The Company records write-downs for excess and obsolete inventories based on the Company’s estimate of demand for its products, potential obsolescence of technology, product life cycles, and whether pricing trends or forecasts indicate that the carrying value of inventory exceeds its estimated selling price. These factors are impacted by market and economic conditions, technology changes, and new product introductions and require estimates that may include elements that are uncertain. The Company's estimates of forecasted demand are based upon analysis and assumptions including, but not limited to, expected product lifecycles, product development plans and historical usage by product. The Company’s inventories balance is $43.9 million as of December 31, 2024. We identified excess and obsolete inventories as a critical audit matter because of the estimates and assumptions made by management to evaluate inventories for excess and obsolescence, especially considering the uncertainty present in these estimates and assumptions. This required a high degree of auditor judgment when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to excess and obsolete inventories. How the Critical Audit Matter Was Addressed in the Audit 84 Table of Contents Our audit procedures related to excess and obsolete inventories included the following, among others: ◦ We tested the effectiveness of internal controls over management’s estimates and assumptions used to evaluate excess and obsolete inventories, including internal controls over the estimates of demand for products. ◦ We evaluated the reasonableness of management’s method, assumptions, and judgments used in developing their estimate of excess and obsolete inventories, which included estimates of demand for its products, potential obsolescence of technology, product life cycles, pricing trends and forecasts, and selling prices. ◦ We tested underlying data used and considered by management in making their estimates and assumptions related to excess and obsolete inventories, including the amount of inventory on hand, estimates of demand for products, and historical usage by product. ◦ We compared actual inventory usage and write-down activity in the current year to the excess and obsolete estimates made by management in the prior year to evaluate management’s ability to make accurate estimates. ◦ We selected a sample of inventory items from a) those management determined to be excess and obsolete and b) those management did not determine to be excess and obsolete, and performed the following: • We evaluated the reasonableness of management’s estimates and assumptions by obtaining product-specific information. • We inquired of management, including personnel with operational roles, regarding the estimates and assumptions specific to the selected inventory items. ◦ We considered inventory write-downs made subsequent to December 31, 2024 in evaluating the reasonableness of management’s estimates and assumptions related to excess and obsolete inventories. /s/ Deloitte & Touche LLP San Jose, California February 27, 2025 We have served as the Company's auditor since 2019. 85 Table of Contents Cytek Biosciences, Inc. Consolidated Balance Sheets (In thousands, except share and per share data) December 31, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 98,716 $ 167,299 Restricted cash 29 331 Marketable securities 179,145 95,111 Trade accounts receivable, net 60,588 55,928 Inventories 43,893 60,877 Prepaid expenses and other current assets 14,075 12,514 Total current assets 396,446 392,060 Deferred income tax assets, noncurrent 33,374 30,487 Property and equipment, net 17,962 18,405 Operating lease right-of-use assets 10,168 10,853 Goodwill 16,663 16,183 Intangible assets, net 20,128 23,084 Other noncurrent assets 4,759 3,385 Total assets $ 499,500 $ 494,457 Liabilities and stockholders’ equity Current liabilities: Trade accounts payable $ 5,529 $ 3,032 Legal settlement liability, current 1,705 2,561 Accrued expenses 21,443 20,035 Other current liabilities 13,494 7,903 Deferred revenue, current 25,492 22,695 Total current liabilities 67,663 56,226 Legal settlement liability, noncurrent 9,036 16,477 Deferred revenue, noncurrent 16,098 15,132 Operating lease liability, noncurrent 7,552 9,479 Long term debt 1,050 1,648 Other noncurrent liabilities 2,364 2,431 Total liabilities $ 103,763 $ 101,393 Commitments and contingencies (Note 18) Stockholders’ equity: Common stock, $ 0.001 par value; 1,000,000,000 authorized shares as of December 31, 2024 and December 31, 2023, respectively; 129,205,901 and 130,714,906 issued and outstanding shares as of December 31, 2024 and December 31, 2023, respectively. 129 131 Additional paid-in capital 430,791 423,386 Accumulated deficit ( 35,199 ) ( 29,178 ) Accumulated other comprehensive gain (loss) 16 ( 1,275 ) Total stockholders’ equity 395,737 393,064 Total liabilities and stockholders’ equity $ 499,500 $ 494,457 The accompanying notes are an integral part of these consolidated financial statements 86 Table of Contents Cytek Biosciences, Inc. Consolidated Statements of Operations and Comprehensive (Loss) Income Year Ended December 31 (In thousands, except share and per share data) 2024 2023 2022 Revenue, net: Product $ 153,263 $ 156,717 $ 148,600 Service 47,190 36,298 15,436 Total revenue, net 200,453 193,015 164,036 Cost of sales: Product 69,088 65,327 49,955 Service 20,259 18,262 13,107 Total cost of sales 89,347 83,589 63,062 Gross profit 111,106 109,426 100,974 Operating expenses: Research and development 39,402 44,151 34,858 Sales and marketing 49,114 49,148 33,230 General and administrative 43,113 43,972 34,690 Total operating expenses 131,629 137,271 102,778 Loss from operations ( 20,523 ) ( 27,845 ) ( 1,804 ) Other income (expense): Interest income (expense), net (Notes 11, 12) 5,239 ( 2,071 ) ( 2,573 ) Interest income 5,121 6,413 4,619 Other income, net 4,463 7,794 1,018 Total other income, net 14,823 12,136 3,064 (Loss) income before income taxes ( 5,700 ) ( 15,709 ) 1,260 Provision for (benefit from) income taxes 320 ( 3,561 ) ( 1,224 ) Net (loss) income $ ( 6,020 ) $ ( 12,148 ) $ 2,484 Less: net loss allocated to noncontrolling interests — — 92 Net (loss) income attributable to common stockholders, basic and diluted $ ( 6,020 ) $ ( 12,148 ) $ 2,576 Net (loss) income attributable to common stockholders per share, basic $ ( 0.05 ) $ ( 0.09 ) $ 0.02 Net (loss) income attributable to common stockholders per share, diluted $ ( 0.05 ) $ ( 0.09 ) $ 0.02 Weighted-average shares used in calculating net (loss) income per share, basic 130,611,330 135,283,044 134,510,831 Weighted-average shares used in calculating net (loss) income per share, diluted 130,611,330 135,283,044 138,562,111 Comprehensive (loss) income: Net (loss) income $ ( 6,020 ) $ ( 12,148 ) $ 2,484 Foreign currency translation adjustment, net of tax 1,193 ( 549 ) ( 1,611 ) Unrealized gain (loss) on marketable securities 97 ( 29 ) 17 Net comprehensive (loss) income $ ( 4,730 ) $ ( 12,726 ) $ 890 The accompanying notes are an integral part of these consolidated financial statements 87 Table of Contents Cytek Biosciences, Inc Consolidated Statements of Stockholders’ Equity Common stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive (loss) income Noncontrolling interest in consolidated subsidiary Total stockholders’ equity (In thousands, except share data) Shares Amount Balances at December 31, 2021 133,749,663 $ 126 $ 423,625 $ ( 19,606 ) $ 897 $ 343 $ 405,385 Shares issued in connection with employee stock plans 1,632,467 9 2,876 2,885 Shares of Common Stock withheld related to net share settlement ( 16,749 ) — ( 209 ) ( 209 ) Stock-based compensation 16,595 16,595 Unrealized gain on marketable securities 17 17 Foreign currency translation adjustment, net of tax ( 1,611 ) ( 1,611 ) Net income 2,576 2,576 Noncontrolling interest ( 92 ) ( 92 ) Balances at December 31, 2022 135,365,381 $ 135 $ 442,887 $ ( 17,030 ) $ ( 697 ) $ 251 $ 425,546 Shares issued in connection with employee stock plans 1,723,511 2 1,465 1,467 Proceeds from Employee Stock Purchase Plan 296,236 — 1,855 1,855 Shares of Common Stock withheld related to net share settlement ( 56,442 ) — ( 419 ) ( 419 ) Repurchase of shares ( 6,613,780 ) ( 6 ) ( 44,465 ) ( 44,471 ) Stock-based compensation 22,048 22,048 Noncontrolling interest 15 ( 251 ) ( 236 ) Unrealized gain on marketable securities ( 29 ) ( 29 ) Foreign currency translation adjustment, net of tax ( 549 ) ( 549 ) Net Loss ( 12,148 ) ( 12,148 ) Balances at December 31, 2023 130,714,906 $ 131 $ 423,386 $ ( 29,178 ) $ ( 1,275 ) $ — $ 393,064 Shares issued in connection with employee stock plans 2,193,491 2 1,013 1,015 Proceeds from Employee Stock Purchase Plan 358,547 — 1,705 1,705 Shares of Common Stock withheld related to net share settlement ( 89,419 ) — ( 554 ) ( 554 ) Repurchase of shares ( 3,971,624 ) ( 4 ) ( 21,607 ) ( 21,611 ) Stock-based compensation 26,848 26,848 Unrealized loss on marketable securities 97 97 Foreign currency translation adjustment, net of tax 1,193 1,193 Net loss ( 6,020 ) ( 6,020 ) Balances at December 31, 2024 129,205,901 $ 129 $ 430,791 $ ( 35,199 ) $ 16 $ — $ 395,737 The accompanying notes are an integral part of these consolidated financial statements 88 Table of Contents Cytek Biosciences, Inc Consolidated Statements of Cash Flows Year Ended December 31, (In thousands) 2024 2023 2022 Cash flows from operating activities: Net (loss) income $ ( 6,020 ) $ ( 12,148 ) $ 2,484 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 7,212 6,048 2,492 Amortization of operating lease-right-of use assets 3,278 3,182 3,167 Allowance for credit losses ( 64 ) 269 102 Stock-based compensation 26,848 22,048 16,595 Loss on disposal of property and equipment 55 7 — Provision for excess and obsolete inventory 1,646 1,468 756 Deferred income taxes ( 2,886 ) — — Gain on investments, accretion, and amortization, net ( 5,211 ) ( 6,661 ) ( 77 ) Interest expenses for accretion of the legal settlement liabilities ( 7,192 ) 1,577 2,178 Change in operating assets and liabilities: Trade accounts receivable ( 5,428 ) ( 7,332 ) ( 19,744 ) Inventories 14,755 4,286 ( 17,653 ) Prepaid expenses and other assets ( 2,809 ) ( 9,515 ) ( 19,362 ) Trade accounts payable 2,582 ( 1,784 ) 1,862 Accrued expenses and other liabilities ( 817 ) 729 7,470 Legal settlement liabilities ( 1,105 ) ( 298 ) 373 Deferred revenue 3,737 6,520 9,411 Lease liabilities ( 3,202 ) ( 3,115 ) ( 2,285 ) Net cash provided by (used in) operating activities 25,379 5,281 ( 12,231 ) Cash flows from investing activities: Purchases of marketable securities ( 274,062 ) ( 175,935 ) ( 44,454 ) Maturities of marketable securities 195,000 132,000 — Purchase of property and equipment ( 3,525 ) ( 4,648 ) ( 9,748 ) Proceeds from sales of property and equipment 288 — — Acquisition of business ( 471 ) ( 44,896 ) — Purchase of intangible assets (patents) ( 204 ) ( 179 ) ( 120 ) Payment for investment — — ( 1,587 ) Payment for additional investment in Cytek Japan, net of cash acquired — ( 236 ) — Net cash used in investing activities ( 82,974 ) ( 93,894 ) ( 55,909 ) Cash flows from financing activities: Proceeds from line of credit 4,181 — — Payment for repurchase of shares ( 21,611 ) ( 44,151 ) — Proceeds from loan — — 2,983 Repayment of loan ( 557 ) ( 565 ) ( 50 ) Proceeds from Employee Stock Purchase Plan 1,704 1,855 1,585 Payments for taxes related to net share settlement of equity awards ( 554 ) ( 419 ) ( 209 ) Proceeds from issuance of common stock under employee stock plans 1,015 1,468 1,204 Net cash (used in) provided by financing activities ( 15,822 ) ( 41,812 ) 5,513 Effect of exchange rate changes on cash, cash equivalents and restricted cash 4,532 ( 1,445 ) ( 2,491 ) Cash, cash equivalents and restricted cash: Net decrease in cash, cash equivalents and restricted cash ( 68,885 ) ( 131,870 ) ( 65,118 ) Cash, cash equivalents and restricted cash at beginning of period 167,630 299,500 364,618 Cash, cash equivalents and restricted cash at end of period $ 98,745 $ 167,630 $ 299,500 Supplemental disclosure of cash flow information: Cash paid for taxes $ 3,828 $ 5,305 $ 10,390 Non-cash investing and financing activities: Fixed asset purchases in accounts payable at period end $ 177 $ 40 $ 67 89 Table of Contents Intangible asset in accrued expenses at period end $ — $ 510 $ 30 Accrued excise taxes for share repurchase $ — $ 320 $ — Derecognition of right-of-use assets $ 205 $ — $ — Stock option exercise in other receivables at period end $ — $ — $ 96 Operating Lease Right-of-use assets obtained in exchange for operating lease liabilities $ 2,716 $ — $ — Holdback amount in business acquisition $ 100 $ — $ — The accompanying notes are an integral part of these consolidated financial statements 90 Table of Contents Cytek Biosciences, Inc. Notes to consolidated financial statements 1. Description of business Cytek Biosciences, Inc. (“Cytek” or the “Company”) is a leading cell analysis solutions company advancing the next generation of cell analysis tools with its 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). The Company is focused on becoming the premier cell analysis company through continued innovation that facilitates scientific advances in biomedical research and clinical applications. The Company has successfully developed and manufactured its full spectrum flow cytometry platform (“instrument(s)” or “product(s)”). The Company's FSP cell analyzers, the Cytek Aurora and Northern Lights systems, deliver high-resolution, high-content and high-sensitivity cell analysis. The Company also launched its Cytek Aurora cell sorter (“Aurora CS system”), which leverages FSP technology to further broaden potential applications across cell analysis. The Company’s FSP platform includes instruments, accessories, reagents, software, and services to provide a comprehensive and integrated suite of solutions for its customers. On February 28, 2023, the Company completed the acquisition of certain assets (the “FCI Acquisition”) relating to the flow cytometry and imaging business of Luminex Corporation (“Luminex”), including relating to the business of manufacturing, marketing, selling, servicing and maintaining Amnis- and Guava-branded instruments, and flow cytometry reagent products and services (the “FCI Business”). The acquired FCI Business includes conventional flow and image-based flow cytometry instrumentation and related products and services (the “FCI Products”). The Company was incorporated in the state of Delaware in December 2014 and is headquartered in Fremont, California with offices, manufacturing facilities and distribution channels across the globe. 2. Basis of presentation and summary of significant accounting policies The Company has prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”). Principles of consolidation The consolidated financial statements include the accounts of Cytek Biosciences, Inc., its wholly-owned subsidiaries, Cytek Biosciences B.V. (Netherlands), Cytek Biosciences GmbH (Germany), Cytek Biosciences Ltd (UK), Cytek Biosciences Pte. Ltd. (Singapore), Cytek Biosciences S.A.S. (France), Cytek Limited (Hong Kong), Cytek Japan Corporation (“Cytek Japan”), Cytek (Shanghai) Biosciences Co., Ltd., and Cytek (Wuxi) Biosciences Co., Ltd. (“Cytek Wuxi”). All intercompany accounts and transactions have been eliminated in consolidation. Variable interest entities and voting interest entities The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a variable interest entity (“VIE”) and therefore subject to the consolidation requirements under the VIE model. Only if the entity does not meet the definition of a VIE, the Company will apply the voting interest model (“VOE”) or other applicable GAAP metric. VOEs are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. The Company consolidates VOEs in which it has greater than 50 % of the voting shares and other equity holders do not have substantive voting, participating or liquidation rights. As defined in applicable accounting standards, VIEs are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company consolidates a VIE where it has been determined that the Company is the primary beneficiary of the entity’s operations. The Company does not currently hold an interest in a VIE. Use of estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes as of the date of the consolidated financial statements. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making 91 Table of Contents judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. Operating segments Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for allocating and evaluating financial performance. The Company operates and manages its business as one reportable and operating segment. Foreign currency translation and transactions The Company has determined that the functional and reporting currency for its operations across the globe is the functional currency of the Company’s international subsidiaries. Accordingly, all foreign balance sheet accounts have been translated into U.S. dollars using the rate of exchange at the respective balance sheet date. Components of the consolidated statements of operations and comprehensive (loss) income have been translated at the average exchange rate for the year or the reporting period. Translation gains and losses are recorded in accumulated other comprehensive (loss) income as a component of stockholders’ equity. Gains or losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in the consolidated statements of operations and comprehensive (loss) income. Cash, cash equivalents, and restricted cash The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value. The Company’s cash, cash equivalents, and restricted cash consist of money held in demand depository accounts and money market funds. The carrying amount of cash, cash equivalents, and restricted cash was $ 98.7 million and $ 167.6 million as of December 31, 2024 and 2023, respectively, which approximates fair value and was determined based upon Level 1 inputs. The money market account is valued using quoted market prices with no valuation adjustments applied and is categorized as Level 1. The Company limits its credit risk associated with cash and cash equivalents by maintaining its bank accounts at major and reputable financial institutions. The Company’s cash and cash equivalents balance exceeded the federally insured limit of $ 250,000 as of December 31, 2024 and 2023. The Company classifies restricted cash as current on the accompanying consolidated balance sheets based upon the term of the remaining restrictions. The following is a summary of cash, cash equivalents and restricted cash on the consolidated balance sheets (in thousands): December 31, 2024 December 31, 2023 Cash $ 32,251 $ 22,407 U.S. Treasury 4,743 — Money market funds 61,722 144,892 Restricted cash 29 331 Total cash, cash equivalents and restricted cash as presented on the consolidated statements of cash flows $ 98,745 $ 167,630 Short-term restricted cash As of December 31, 2024, two bank guarantees to Cytek Biosciences B.V. totaled $ 29,000 (EUR 27,540 ). The restricted cash is related to two customers and is based on a 12-month period warranty security that will be released in 2025. Investments Available-for-sale investments. The Company's investments may consist of U.S. treasury and U.S. government agency securities, corporate notes and bonds, commercial paper, and money market funds. The Company has designated all investments as available-for-sale and, therefore, such investments are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive (loss) income. The Company generally holds securities until maturity; however, they may be sold under certain circumstances including, but not limited to, when necessary for the funding of acquisitions and other strategic investments. Realized gains and losses on the sale of investments are recorded in interest 92 Table of Contents and other income (expenses), net in the consolidated statements of operations. Investments with remaining maturities at date of purchase greater than 90 days and remaining maturities as of the reporting period less than one year are classified as short-term investments. Investments with remaining maturities greater than one year are classified as long-term investments. Equity Investment. The Company's investment consists of non-marketable equity investments in a privately held company. The Company’s non-marketable equity investments do not have readily determinable fair values. Therefore, the Company elects to apply the measurement alternative and record these investments at cost, less any impairment, plus or minus observable price changes in orderly transactions for identical or similar investments of the same issuer. Investment is included within other noncurrent assets on our consolidated balance sheets and adjustments to their carrying amounts are recorded in other income (expense), net in the consolidated statements of operations. There were no material events or circumstances impacting the carrying amount of our strategic investments during the year ended December 31, 2024. Trade accounts receivable, net The Company’s accounts receivable consists principally of amounts due related to product sales of instrument systems and accessories, as well as installation and repair services. These receivables are generally due within 30 to 90 days of the period in which the corresponding sales occur, do not bear interest, and are classified as trade accounts receivable, net on the consolidated balance sheets. Trade accounts receivable are reported at their estimated net realizable value. Allowance for credit losses The Company adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13, Financial Instruments - Credit Losses”) on December 31, 2022, which was retroactively applied as of the first day of fiscal year 2022, as further described within the section below titled Recently Adopted Accounting Pronouncements. This accounting standard requires companies to measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument. Prior to the adoption of this accounting standard, the Company recorded incurred loss reserves against receivable balances based on current and historical information. Expected credit losses for uncollectible receivable balances consider both current conditions and reasonable and supportable forecasts of future conditions. Current conditions considered include pre-defined aging criteria, as well as specified events that indicate the balance due is not collectible. Reasonable and supportable forecasts used in determining the probability of future collection consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses. The Company is not party to any off-balance sheet arrangements that would require an allowance for credit losses in accordance with this accounting standard. The changes in the allowance for credit losses for the year ended December 31, 2024 were as follows (in thousands): Allowance for credit losses Balance at December 31, 2022 $ 102 Cumulative effect adjustment upon adoption of ASU 2016-13 — Balance at January 1, 2023 102 Utilization of allowance for credit losses — Provision for credit losses 270 Balance at December 31, 2023 $ 372 Utilization of allowance for credit losses ( 197 ) Provision for credit losses 135 Balance at December 31, 2024 $ 310 Inventories Inventories are stated at the lower of cost and net realizable value. Cost is computed using standard cost, which approximates actual cost on a first-in, first-out basis. The Company regularly monitors inventory quantities on hand and records write-downs for excess and obsolete inventories based on an estimate of demand for products, potential obsolescence of technology, product life cycles, and whether pricing trends or forecasts indicate that the carrying value of inventory exceeds its estimated selling price. These factors are impacted by market and economic conditions, technology changes, and new product introductions and require estimates that may include elements that are uncertain. The Company's 93 Table of Contents estimates of forecasted demand are based upon analysis and assumptions including, but not limited to, expected product lifecycles, product development plans and historical usage by product. If inventory is written down, a new cost basis is established that cannot be increased in future periods. Property and equipment, net Property and equipment are recorded at cost, net of accumulated depreciation. Depreciation is recorded using the straight-line method based on the estimated useful lives of the depreciable property or, for leasehold improvements, the remaining term of the lease, whichever is shorter. Assets not yet placed in use are not depreciated. The Company’s estimated useful lives of its property and equipment are as follows: Estimated Useful Lives Building 20 years Furniture and fixtures 7 years Laboratory equipment 5 years Office and computer equipment 3 years Leasehold improvements Shorter of expected lease term or estimated useful life Upon sale or retirement of the assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized in the consolidated statement of operations and comprehensive (loss) income. Expenditures for general maintenance and repairs are expensed as incurred. Goodwill and intangible assets, net Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisition of entities are estimated by management based on the fair value of assets received. Intangible assets are amortized on a straight-line basis over the estimated useful lives. The Company’s estimated useful lives of its intangible assets are as follows: Estimated Useful Lives Patent 20 years Trademarks 10 years Trade name 2 - 15 years FCI developed technology 1 - 6 years Customer relationship 7 - 9 years Reagent licenses 7 years IP license 5 years Accounting for Impairment of Long-Lived Assets Long-lived assets with finite lives include property and equipment and acquired intangible assets. The Company evaluates long-lived assets, including acquired intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds these estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the assets exceeds the fair value of the asset or asset group. Goodwill and indefinite-lived intangible assets are not amortized but rather tested for impairment at least annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that impairment may exist. Goodwill impairment is recognized when the quantitative assessment results in the carrying value of the reporting unit exceeding its fair value, in which case an impairment charge is recorded to goodwill to the extent the carrying value exceeds the fair value, limited to the amount of goodwill. The Company did not recognize any impairment of goodwill for all periods presented. Fair value of financial instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of 94 Table of Contents observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company recognizes transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, trade accounts receivable, net, trade accounts payable and accrued expenses approximate their fair values. Revenue recognition The Company’s product revenue consists of sales of its instrument systems and accessories. The Company recognizes product revenue at the point in time when control of the product is transferred to the customer. The Company’s service revenue primarily consists of post-warranty service contracts, installations and repairs, which are recognized over time. Post-warranty service contracts are recognized ratably over the term of the contract and installations and repair services are recognized as they are delivered to the customer. Revenue is recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for its arrangements with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Invoicing for products occurs upon shipment and is adjusted based on the applicable International Commercial Terms, and payment terms are 30 to 90 days. Service contracts are invoiced upfront and payment terms are generally 30 days. For those arrangements that have terms greater than one year, any payments received upfront are for reasons other than financing. 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. The Company does not typically offer discounts, rebates, incentives, or rights of return. Variable consideration is not material. Certain of the Company’s sales contracts involve the delivery or performance of multiple products and services within contractually binding arrangements. The Company has determined these performance obligations qualify as distinct performance obligations, as the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer, and the Company’s promise to transfer the good or service is separately identifiable from other promises in the contract. For these arrangements that contain multiple performance obligations, the Company allocates transaction price based on the relative standalone selling price (“SSP”) method by comparing the SSP of each distinct performance obligation to the total value of the contract. The Company uses a range of amounts to estimate SSP for products and services sold together in a contract to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when the Company does not sell the product or service separately, the Company determines the SSP using information that may include market conditions and other observable inputs. Sales, value-add and other taxes, collected from customers concurrent with revenue generating activities and remitted to governmental authorities are not included in revenue. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and are included in cost of sales. The Company recognizes revenue in certain circumstances before product delivery occurs (commonly referred to as bill-and-hold transactions). When the Company enters into bill-and-hold arrangements, the Company determines if the customer obtains control of the product by determining (a) the reason for the bill-and-hold arrangement; (b) whether the product was identified separately as belonging to the customer; (c) whether the product was ready for physical transfer to the customer; and (d) whether the Company was unable to utilize the product or direct it to another customer. For bill-and- 95 Table of Contents hold arrangements, the associated product inventory is identified separately by the Company as belonging to the customer and is ready for physical transfer. During the twelve months ended December 31, 2024 and December 31, 2023, the Company recorded $ 0.0 million and $ 14.9 million, respectively, of revenue under bill-and-hold arrangements. As of December 31, 2024 and December 31, 2023, $ 0.0 million and $ 5.4 million, respectively, was included in revenue for products that had not yet shipped. As of December 31, 2022, revenue recorded under bill-and-hold arrangements was $ 12.1 million. Product revenue The Company’s standard arrangement for sales to end users is a purchase order or an executed contract. Revenue is recognized upon transfer of control of the product to the customer, which occurs at a point in time depending on the shipping terms. The Company’s arrangements with its distributors include a purchase order. The purchase order is governed by terms and conditions set forth in the applicable distribution agreement. Revenue is recognized upon transfer of control of the products to the distributor, which occurs at a point in time depending on the shipping terms. Service revenue The Company’s service revenue primarily consists of post-warranty service contracts, installations and repairs, which are recognized over time. Post-warranty service contracts are recognized ratably over the term of the contract and installations and repair services are recognized as they are delivered to the customer. Service contracts are typically between one and three years . Contract liabilities Contract liabilities consist of fees invoiced or paid by the Company’s customers for which the associated services have not been performed and revenue has not been recognized based on the Company’s revenue recognition criteria described above. Such amounts are reported as deferred revenue for service and customer deposits for instruments on the consolidated balance sheets. 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. Assurance-type product warranties The Company provides a one year assurance-type warranty that is included with the sale of its instruments. At the time revenue is recognized for the products, the Company establishes an accrual for estimated warranty expense based on historical data and trends of product reliability and costs of repairing and replacing defective products. The Company exercises judgment in estimating the expected product warranty costs, using data such as the historical repair costs. While management believes that historical experience provides a reliable basis for estimating such warranty cost, unforeseen quality issues or component failure rates could result in future costs in excess of such estimates, or alternatively, improved quality and reliability in the Company’s products could result in actual expenses that are below those currently estimated. Deferred offering costs Deferred offering costs, which consist of direct incremental legal, consulting, banking and accounting fees, are capitalized, and are offset against proceeds from an offering upon the effectiveness of the offering. On August 26, 2022, the Company filed with the SEC an automatic shelf registration statement on Form S-3ASR (File No. 333-267118) (the “Registration Statement”). In connection with the filing of the Registration Statement, the Company also entered into a sales agreement (the “2022 Sales Agreement”) with Piper Sandler & Co. (“Piper”) as sales agent to sell from time to time up to $ 150 million of the Company’s common stock through an “at-the-market” offering program as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to the terms of the 2022 Sales Agreement, the aggregate compensation payable to Piper is up to 3 % of the gross proceeds from the sale of common stock sold by Piper pursuant to the 2022 Sales Agreement. Each party agreed in the 2022 Sale Agreement to provide indemnification and contribution against certain liabilities, including liabilities under the Securities Act, subject to the terms of the 2022 Sales Agreement. As of December 31, 2024, the Company has not made any sales of common stock pursuant to the 2022 Sales Agreement. Accordingly, $ 0.7 million in transaction expenses recorded as prepaid offering costs have not yet been expensed in transaction expenses recorded. Research and development costs Research and development costs are expensed as incurred. Research and development expenses to date consist primarily of salaries, benefits, stock-based compensation, independent contractor costs, laboratory supplies, equipment maintenance, materials expenses, and software license fees. Payments made prior to the receipt of goods or services to be 96 Table of Contents used in research and development activities are recorded as prepaid expenses until the related goods or services are received. Advertising costs The cost of advertising, marketing and media is expensed as incurred. For the years ended December 31, 2024, 2023 and 2022 advertising, marketing and media expenses were $ 3.8 million, $ 3.4 million and $ 2.5 million, respectively. Stock-based compensation The Company maintains 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 to employees and non-employee consultants. Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period. The fair value of stock options granted to employees is estimated using the Black-Scholes option pricing model. The Company records forfeitures as they occur. The weighted-average assumptions used in estimating the fair value of stock options granted during each of the periods presented are: 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. Expected Term—Expected term represents the period that the Company's stock-based awards are expected to be outstanding and is determined using the simplified method. Dividend Yield— The expected dividend yield is zero as the Company has never declared or paid cash dividends and has no current plans to do so in the foreseeable future. Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero-coupon issued in effect at the time of grant for periods corresponding with the expected term of the option. Income taxes The Company accounts for income taxes under an asset and liability approach. Deferred income taxes comprise the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards, and other tax credit carryforwards measured by applying currently enacted tax laws. A valuation allowance is provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized. The Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company uses a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company’s policy for interest and penalties related to uncertain tax positions is to recognize interest and penalties, if any, in interest expense and other expense, respectively, in the accompanying consolidated statement of operations. Accrued interest and penalties, if any, are included in accrued expenses in the consolidated balance sheet. The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and foreign jurisdictions. The U.S. state and foreign jurisdictions have statutes of limitations that generally range from three to five years. The Company’s federal, state and foreign income tax returns are subject to examination unless the statutes of limitations close. The Company is not currently under examination for federal, state, and foreign income tax purposes. The Company intends to reinvest its undistributed earnings of its foreign operations. Following enactment of the 2017 Tax Cuts and Jobs Act, the repatriation of cash to the United States is generally no longer taxable for federal income tax purposes. However, the repatriation of cash held outside the United States could be subject to applicable foreign withholding taxes and state income taxes. The Company may remit foreign earnings to the United States to the extent it is tax efficient to do so. It does not expect the tax impact from remitting these earnings to be material. The Company adopted this guidance on January 1, 2021 on a prospective basis, and the adoption did not have a material impact to the Company’s consolidated financial statements. Net income (loss) attributable to common stockholders per share Basic net income (loss) attributable to common stockholders per share and diluted net income (loss) attributable to common stockholders per share are computed using the weighted-average number of shares of common stock outstanding for the period. Net income (loss) per share attributable to common stockholders is calculated using the two-class method, 97 Table of Contents which is an earnings allocation formula that determines net income (loss) per share for the holders of shares of the Company’s common stock and participating securities. The Company’s redeemable convertible preferred stock contains participation rights in any dividend paid by the Company and is deemed to be a participating security. The participating securities include a contractual obligation to participate in the income of the Company and are included in the calculation of net income (loss) per share in the periods in which net income (loss) is recorded. Diluted net income (loss) attributable to common stockholders per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method. The Company allocates earnings first to preferred stockholders based on non-cumulative dividend rights if and when declared and then to common and preferred stockholders based on ownership interests. The weighted-average number of shares of common stock included in the computation of diluted net income attributable to common stockholders per share gives effect to all potentially dilutive common stock equivalents, including outstanding options and redeemable convertible preferred stock. Common stock equivalents are excluded from the computation of diluted net income (loss) attributable to common stockholders per share if their effect is antidilutive. Business Combinations The Company uses the acquisition method of accounting under ASC 805, Business Combinations . Each acquired company’s operating results are included in the Company's consolidated financial statements starting on the date of acquisition. The purchase price is equivalent to the fair value of consideration transferred. Tangible and identifiable intangible assets acquired and liabilities assumed as of the date of acquisition are recorded at the acquisition date fair value. Goodwill is recognized for the excess of purchase price over the net fair value of assets acquired and liabilities assumed. Amounts allocated to assets and liabilities are based upon their estimated fair values. Such valuations require management to make significant estimates and assumptions, especially with respect to the identifiable intangible assets. Management makes estimates of fair value based upon assumptions believed to be reasonable and that of a market participant. These estimates are based on historical experience and information obtained from the management of the acquired companies and the estimates are inherently uncertain. The separately identifiable intangible assets generally include developed technology, customer relationships, trade names, and reagent licenses. Supplier Finance Program On May 17, 2024, Cytek Wuxi entered into a Kuaiyifu Business Cooperation Agreement with the Bank of Communications Co., Ltd. to implement a supplier financing program which enables certain Cytek Wuxi suppliers, at their sole discretion, to sell their Cytek Wuxi receivables (i.e., Cytek Wuxi’s payment obligations to the suppliers) to the Bank of Communications Co., Ltd. on a non-recourse basis in order to be paid earlier than current payment terms provide. Cytek Wuxi’s payment terms to the Bank of Communications Co., Ltd., including the timing and amount of payments, are based on the original supplier invoices. Cytek Wuxi’s current payment terms with a majority of its suppliers are typically between 30 and 90 days. Cytek Wuxi undertakes unconditional payment obligations with respect to the suppliers’ account receivable transferred to the bank under the supplier finance program. The program allowed for the transfer of supplier receivables up to an aggregate outstanding balance of $ 20.0 million Chinese renminbi (approximately US $ 2.8 million) through December 25, 2024. As of December 25, 2024, the program had no outstanding balance, and no supplier had transferred their receivables to the Bank of Communications Co., Ltd. The program expired on December 25, 2024. Recently adopted accounting pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires all public entities, including public entities with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance. Additionally, the standard requires disclosure of significant segment expenses and other segment items as well as incremental qualitative disclosures. The Company adopted ASU 2023-07 effective December 31, 2024, on a retrospective basis. The adoption of 2023-07 did not change the way that the Company identifies its reportable segments and, as a result, did not have a material impact on the Company’s segment-related disclosures. Refer to Note 22 for further information on the Company’s reportable segment. 98 Table of Contents Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) , which requires enhanced income tax disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. The requirements of the ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company’s annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently in the process of evaluating the impact of this pronouncement on our related disclosures. 3. Concentrations of credit risk and other risks and uncertainties Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company maintains accounts in federally insured financial institutions in excess of federally insured limits. Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which these deposits are held and of the money market funds in which these investments are made. The Company holds marketable securities with high credit ratings. 4. Revenue from contracts with customers Disaggregation of revenue The following table depicts the disaggregation of revenue by sales channel mix and customer mix as defined by the nature of workflows (in thousands): Year Ended December 31, 2024 2023 2022 Sales channel mix Direct sales channel $ 149,874 $ 147,169 $ 129,098 Distributor channel 50,579 45,846 34,938 Total revenue, net $ 200,453 $ 193,015 $ 164,036 Customer mix Academia and government $ 80,911 $ 82,145 $ 73,706 Biotechnology, pharmaceutical, distributor and contract research organizations 119,542 110,870 90,330 Total revenue, net $ 200,453 $ 193,015 $ 164,036 Revenue by geographical markets is presented in Note 22, Segment Information and Geographic Data . Remaining performance obligations The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) as of December 31, 2024 (in thousands): Less than 1 year Greater than 1 year Total Product revenue $ 1,123 $ — $ 1,123 Service revenue 24,369 16,098 40,467 Total revenue $ 25,492 $ 16,098 $ 41,590 99 Table of Contents Contract balances The Company had immaterial amounts of contract assets included within prepaid expenses and other current assets on the consolidated balance sheets. The following table provides information about deferred revenue from contracts with customers, and customer deposits (in thousands): December 31, 2024 December 31, 2023 Contract liabilities: Deferred revenue, current $ 25,492 $ 22,695 Deferred revenue, long-term $ 16,098 $ 15,132 Customer deposits, which are included in 'Other current liabilities' 1,118 1,438 Total contract liabilities $ 42,708 $ 39,265 The following provides a roll-forward of the contract liabilities (in thousands): Contract liabilities Balance at December 31, 2021 $ 17,889 Revenue recognized ( 24,686 ) Revenue deferred 34,462 Balance at December 31, 2022 $ 27,665 Revenue recognized ( 36,298 ) Revenue deferred 47,898 Balance at December 31, 2023 $ 39,265 Revenue recognized ( 47,190 ) Revenue deferred 50,633 Balance at December 31, 2024 $ 42,708 5. Balance sheet details Inventories The following table shows the components of inventory (in thousands): December 31, 2024 December 31, 2023 Raw materials $ 22,571 $ 35,718 Work in progress 6,488 10,454 Finished goods 14,834 14,705 Total inventories $ 43,893 $ 60,877 100 Table of Contents Prepaid expenses and other current assets The following table shows the components of prepaid expenses and other current assets (in thousands): December 31, 2024 December 31, 2023 Prepaid expenses: Prepaid inventory $ 115 $ 292 Prepaid rent 47 255 Prepaid insurance 804 990 Prepaid income tax 7,380 5,813 Other 3,786 2,742 Other current assets: Tax refund receivable — 192 Other 1,943 2,230 Total prepaid expenses and other current assets $ 14,075 $ 12,514 Accrued expenses The following table shows the components of accrued expenses (in thousands): December 31, 2024 December 31, 2023 Accrued expenses: Accrued compensation and related benefits $ 14,765 $ 13,748 Professional service fees 1,694 665 Purchases 1,851 1,871 Product warranty 1,796 2,805 Other 1,337 946 Total accrued expenses $ 21,443 $ 20,035 For the product warranty analysis refer to Note 20. Other current liabilities The following table shows the components of other current liabilities (in thousands): December 31, 2024 December 31, 2023 Other current liabilities: Customer deposits $ 1,118 $ 1,438 Income tax payable 1,516 1,297 Sales and use tax payable 2,043 1,763 Operating lease liability, current 3,756 2,444 Current portion of loan 4,658 565 Other 403 396 Total other current liabilities $ 13,494 $ 7,903 6. Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The following 101 Table of Contents table sets forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy (in thousands): Description: December 31, 2024 Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Cash equivalents: Money market funds $ 61,722 $ 61,722 $ — $ — U.S. Treasury 4,743 4,743 — — Short-term investments: U.S. Treasury 161,477 161,477 — — Corporate bonds 1,977 1,977 Commercial paper 15,691 — 15,691 — Total $ 245,610 $ 227,942 $ 17,668 $ — December 31, 2023 Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Cash equivalents: Money market funds $ 144,892 $ 144,892 $ — $ — Short-term investments: U.S. Treasury 47,366 47,366 — — Federal agency securities 35,818 — 35,818 — Commercial paper 11,927 — 11,927 — Total $ 240,003 $ 192,258 $ 47,745 $ — The Company did not have any transfers of financial assets measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3 for any of the periods presented. The table above does not include the Company's investments in privately held equity securities. Non-marketable equity investments of $ 1.6 million are included within Other noncurrent assets on the consolidated balance sheet as of December 31, 2024. 7. Investments The following tables summarize the Company's investments in available-for-sale securities by significant investment category reported as short-term as of December 31, 2024 (in thousands): December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Loss Estimated Fair Value Marketable securities: U.S. Treasury $ 161,401 $ 88 $ ( 12 ) $ 161,477 Corporate bonds 1,976 1 — 1,977 Commercial paper 15,684 11 ( 4 ) 15,691 Total available-for-sale investments $ 179,061 $ 100 $ ( 16 ) $ 179,145 102 Table of Contents The following table summarizes the contractual maturities of the Company's available-for-sale securities at December 31, 2024 (in thousands): December 31, 2024 Amortized Cost Fair Value Mature in less than one year $ 179,061 $ 179,145 Total $ 179,061 $ 179,145 The following tables summarize the Company's investments in available-for-sale securities by significant investment category reported as short-term as of December 31, 2023 (in thousands): December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Loss Estimated Fair Value Marketable securities: U.S. Treasury $ 47,347 $ 19 $ — $ 47,366 Federal agency securities 35,840 — ( 22 ) 35,818 Commercial paper 11,937 — ( 10 ) 11,927 Total available-for-sale investments $ 95,124 $ 19 $ ( 32 ) $ 95,111 The following table summarizes the contractual maturities of the Company's available-for-sale securities at December 31, 2023 (in thousands): December 31, 2023 Amortized Cost Fair Value Mature in less than one year $ 95,124 $ 95,111 Total $ 95,124 $ 95,111 8. Property and equipment, net The following table shows the components of property and equipment, net (in thousands): December 31, 2024 December 31, 2023 Laboratory equipment $ 11,639 $ 9,472 Leasehold improvements 3,224 3,623 Building and land 7,763 7,653 Construction in progress 357 256 Office and computer equipment 1,495 1,235 Furniture and fixtures 2,198 2,086 Total property and equipment 26,676 24,325 Less: accumulated depreciation ( 8,714 ) ( 5,920 ) Property and equipment, net $ 17,962 $ 18,405 Total depreciation expense for the years ended December 31, 2024, 2023, and 2022 were $ 3.5 million , $ 2.8 million and $ 1.7 million, respectively. 9. Acquisition On February 28, 2023, the Company completed the FCI Acquisition for an aggregate cash consideration of $ 44.9 million. The FCI Acquisition expanded Cytek’s product portfolio to include high-resolution cell images with the speed, sensitivity and phenotyping abilities of flow cytometry and added cost-effective, entry-level and personal instrument options to broaden the market and research areas it services. The acquisition was accounted for as a business combination in accordance with ASC 805. The purchase price has been allocated to tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their 103 Table of Contents estimated fair values, with the exception of contract liabilities assumed which are recognized and measured in accordance with ASC 606, Revenue from Contracts with Customers . The Company finalized its accounting for the FCI Acquisition during the fourth quarter of 2023. During the year ended December 31, 2024 , the Company recorded the following changes as a result of measurement period adjustments to the fair value of the initial assets as follows: • Property and equipment increased by $ 1.4 million • Deferred tax assets increased by $ 0.6 million • Customer relationships increased by $ 0.1 million • Developed technologies increased by $ 0.7 million • Trade names increased by $ 0.2 million The measurement period adjustments noted above decreased goodwill by $ 3.0 million. The fol lowing table summarizes the estimated fair value of assets acquired and liabilities assumed at the date of the FCI Acquisition: (in thousands) Fair value of assets acquired and liabilities assumed: Inventories $ 18,695 Property and equipment 3,040 Prepaid expenses 70 Deferred tax assets 570 Intangible assets Customer relationships 8,600 Amnis ImageStream developed technology 10,000 Guava easyCyte and Muse developed technology 140 Amnis FlowSight and CellStream developed technology 20 Amnis trade name 2,900 Guava trade name 90 Goodwill 6,039 Deferred revenue ( 4,952 ) Accrued warranty costs ( 316 ) Fair value of net assets acquired $ 44,896 The $ 6.0 million of goodwill arising from the FCI Acquisition is primarily attributed to significant time-to-market advantages, as the Company gained immediate access to the FCI Products, existing relationships and business infrastructure and knowledgeable and experienced workforce. The goodwill is deductible for tax purposes. The Company has integrated the FCI Business into its existing business structure, which is comprised of a single reportable segment and a single reporting unit. 104 Table of Contents Intangible assets identified for recognition separate from goodwill were those that satisfied either the contractual or legal criterion or the separability criterion in the accounting guidance. The identifiable intangible assets acquired and their estimated useful lives for amortization are as follows: Fair Value Useful life (years) (In thousands, except for years) Customer relationships $ 8,600 9 Amnis ImageStream developed technology 10,000 6 Guava easyCyte and Muse developed technology 140 2 Amnis FlowSight and CellStream developed technology 20 1 Amnis trade name 2,900 15 Guava trade name 90 3 Total $ 21,750 The customer relationships intangible asset represents the fair value of the underlying relationships with existing customers of the FCI Business. The trade name intangible asset represents the fair value of brand and name recognition associated with the marketing of the FCI Products. The FCI developed technology intangible asset represents the fair value of access to certain imaging and microcapillary technologies. The fair value of the intangible assets acquired were estimated using variations of the income approach. The fair value of the customer relationships intangible asset was determined based on the multi-period excess earnings method and the relief-from-royalty method was utilized to estimate the fair values of the trade name and FCI developed technology intangible assets. The key assumptions used in estimating the fair values of intangible assets included forecasted financial information; customer retention rates; factors for technological obsolescence; royalty rates and discount rates. The cash flow projections were discounted using rates ranging from 29.0 % to 39.0 % The cash flows were based on estimates used to price the transaction, including market participant considerations, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital. All acquired intangibles are being amortized over their estimated useful lives using the straight-line method of amortization. The fair value assigned to the assets acquired are based on reasonable assumptions and estimates that market participants would use. Actual results may differ from these estimates and assumptions. The results of operation s for the FCI Business are included in the consolidated financial statements of the Company from the date of th e acquisition. 10. Goodwill and intangible assets, net On October 28, 2024, Cytek Biosciences Ltd completed an immaterial acquisition of certain assets of Cytometric Engineering Ltd. (d.b.a. FlowCEL) for cash consideration of $ 571,732 . The increase in goodwill and the customer relationships intangible during the year ended December 31, 2024 was primarily due to this acquisition. The following table shows the components of intangible assets, net (in thousands): December 31, 2024 December 31, 2023 Patents and trademarks $ 890 $ 638 Trade name 3,792 3,823 IP license 10,636 10,636 Customer relationships 11,351 10,800 Reagent license 1,800 1,800 Total intangible assets 28,469 27,697 Less: accumulated amortization ( 8,341 ) ( 4,613 ) Intangible assets, net $ 20,128 $ 23,084 Total amortization expense for the years ended December 31, 2024, 2023 and 2022 were approximately $ 3.7 million, $ 3.2 million, $ 0.8 million, respectively. 105 Table of Contents 11. Legal settlement liability On February 13, 2018, Becton, Dickinson, and Company (“BD”) filed a lawsuit against the Company alleging trade secret misappropriation and copyright infringement. On October 6, 2020, the Company entered into a Settlement, License and Equity Issuance Agreement with BD pursuant to which the Company and BD agreed to a mutual release of all claims against each other as of the date thereof (the “BD Agreement”). Additionally, BD granted Cytek a non-exclusive, irrevocable, perpetual, worldwide and non-transferrable license to certain BD patents and covenanted that it would not enforce or permit or encourage the enforcement of BD patents against Cytek or its affiliates in connection with the development, manufacture, use, importation, offer for sale or sale of its then-current instruments. In exchange, the Company agreed that Cytek and its affiliates would not dispute or challenge in a legal proceeding the validity, enforceability or scope of the applicable BD patent claims and agreed to make certain payments to BD, including (i) a one-time upfront payment of $ 2.0 million, (ii) a low single digit royalty payment for ten years , based on net sales of certain of its products, (iii) $ 6.0 million milestone payment upon the occurrence of a certain sales threshold, and (iv) a specified payment upon the closing of a change of control transaction, if any. The Company also issued 2,087,545 shares of the Company’s common stock to BD during the year ended December 31, 2020 in connection with the BD settlement. The Company achieved the sales milestone and made the milestone payment in the quarter ended December 31, 2021. The Company separated the settlement agreement into two elements, the litigation settlement and future licensing rights. The Company could not readily determine the fair value of the litigation settlement of prior infringement claims between the Company and BD. Therefore, the Company applied the residual method and allocated the difference between the total present value consideration payable under the BD Agreement and the estimated fair value of the future licensing rights to the litigation settlement element. The Company determined the estimated fair value of the future licensing rights based on the relief from royalty method. The significant assumptions used were the market royalty rate estimated as a royalty rate that a market participant would pay to license the BD intellectual property, forecasted sales subject to the market royalty rate and the discount rate. The patents in question were determined to have an average useful life of 18 months. Accordingly, beginning the second quarter of 2022, the remaining contractual payments were classified as operating expenses as they were considered deferred litigation settlement. The Company recorded $ 0.0 million, $ 0.0 million, and $ 0.6 million product cost of sales related to royalty expense for the years ended December 31, 2024, 2023, and 2022, respectively. The Company recorded $ 5.5 million of reduction in interest expense for the years ended December 31, 2024 , and $ 1.6 million, and $ 2.2 million of interest expense for the years ended December 31, 2023, and 2022, respectively, to accrete the present value discount of the payment streams over the payment period of ten years from the settlement date using the effective interest rate method. The Company made a one-time upfront payment and issued 2,087,545 shares of the Company’s common stock to BD during the year ended December 31, 2020. The Company recorded legal settlement liability on the consolidated balance sheets of $ 10.7 million and $ 19.0 million as of December 31, 2024 and December 31, 2023, respectively, and will record licensing expense in future periods. In the fourth quarter of 2024, the Company determined that it was necessary to revise its long-term forecasted net sales subject to royalties under the BD settlement as a result of the current macroeconomic conditions and headwinds. As a result, the Company remeasured the fair value of the legal settlement liability presented in the Consolidated Balance Sheets as of December 31, 2024. Based on the updated forecast, the Company recorded a $ 7.3 million reduction of the legal settlement liability, with a corresponding change to interest income (expense), net in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2024. The following table shows the components of the legal settlement liability (in thousands): December 31, 2024 December 31, 2023 Current: Legal settlement liability $ 1,705 $ 2,561 Noncurrent: Legal settlement liability 9,036 16,477 Total legal settlement liability $ 10,741 $ 19,038 12. Debt On November 7, 2022, Cytek Wuxi entered a fixed asset loan agreement with Bank of Communications, China (the “Wuxi Loan”). The Wuxi Loan was denominated in Chinese renminbi and collateralized by Cytek Wuxi's cash deposit to the bank. The deposit was in a separate account with Cytek Wuxi's name, but the use of such account was restricted. The Company presented the deposit as restricted cash on the audited consolidated balance sheets as of December 31, 2022. In 106 Table of Contents April 2023, the restricted cash account was released. The purchased building in Wuxi serves as collateral for the Wuxi Loan. The total loan amount was $ 2.9 million and the loan term is five years . As of December 31, 2024, the total loan amount left is $ 1.6 million . The current portion of the loan, $ 0.5 million , is included in other current liabilities. The fixed interest rate on the loan was 4.5 %. On January 16, 2024, the Company signed a maximum credit agreement with Bank of Communications, China for 40 million Chinese renminbi (approximately US $ 5.7 million). This credit is collateralized by the Wuxi building purchased in November 2023. 20 million Chinese renminbi (approximately US $ 2.8 million) under the credit agreement serves as collateral for the Wuxi Loan. The remaining 20 million Chinese renminbi (approximately US $ 2.8 million) can be borrowed, as needed, as a short-term loan for normal business operation requirements. The line of credit is available from December 25, 2023 to December 25, 2024. On February 28, 2024, based on the above mentioned line of credit, Cytek Wuxi entered into a one year loan agreement with Bank of Communications, China. The loan is denominated in Chinese renminbi and collateralized by the building purchased by Cytek Wuxi in November 2023. The total loan amount was 10 million Chinese renminbi (approximately US $ 1.4 million) and the interest rate is fixed at 3.45 %. The loan effective term is February 28, 2024 to February 28, 2025. The interest expenses are paid on a monthly basis. The loan will be used for operating expenses. The current portion of the line of credit loan of 10 million Chinese renminbi (approximately US $ 1.4 million) is included in other current liabilities. Cytek Wuxi intends to pay off the total loan amount of 10 million Chinese renminbi (approximately US $ 1.4 million) that it borrowed from Bank of Communications, China, at the end of the loan term on February 28, 2025. On October 24, 2024, the Company signed a maximum credit agreement with the Bank of China, Wuxi Branch, for 37 million Chinese renminbi (approximately US $ 5.2 million). This credit is collateralized by Cytek Wuxi's cash deposit to the bank. The 37 million Chinese renminbi (approximately US $ 5.2 million) can be borrowed, as needed, as a short-term loan for normal business operation requirements. The line of credit is available from October 24, 2024 to September 22, 2025. During the fourth quarter, the Company withdrew 10 million Chinese renminbi (approximately US $ 1.4 million) in November and an additional 10 million Chinese renminbi (approximately US $ 1.4 million) in December to support its operational needs. The outstanding balance as of December 31, 2024, was 17 million Chinese renminbi (approximately US $ 2.4 million). 13. Common stock As of December 31, 2024, the Company has authorized 1,000,000,000 shares of common stock at $ 0.001 par value. Holders of common stock are entitled to one vote per share, and to receive dividends, only and if declared by the Company’s Board of Directors (the “Board”) and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders, subordinate to the rights, preferences and privileges of any outstanding preferred stock with respect to dividends and in connection with a liquidation, winding up and dissolution of the Company. The holders have no preemptive or other subscription rights. On August 26, 2022, the Company filed with the SEC an automatic shelf registration statement on Form S-3ASR (File No. 333-267118) (the “Registration Statement”). In connection with the filing of the Registration Statement, the Company also entered into a sales agreement (the “2022 Sales Agreement”) with Piper Sandler & Co. (“Piper”) as sales agent to sell from time to time up to $ 150 million of the Company’s common stock through an “at-the-market” offering program as defined in Rule 415 promulgated under the Securities Act. Pursuant to the terms of the 2022 Sales Agreement, the aggregate compensation payable to Piper is up to 3 % of the gross proceeds from the sale of common stock sold by Piper pursuant to the 2022 Sales Agreement. Each party agreed in the 2022 Sale Agreement to provide indemnification and contribution against certain liabilities, including liabilities under the Securities Act, subject to the terms of the 2022 Sales Agreement. As of December 31, 2024, the Company has not made any sales of common stock pursuant to the 2022 Sales Agreement. Accordingly, $ 0.7 million in transaction expenses recorded as prepaid offering costs have not yet been expensed in transaction expenses recorded. On May 17, 2023, the Board approved a program for the repurchase by the Company of up to an aggregate of $ 50 million of its outstanding common stock. 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 . During the twelve months ended December 31, 2023 , the Company repurchased 6,613,780 shares of its outstanding common stock for a total cost of approximately $ 44.2 million at an average price per share of $ 6.66 . The commission costs related to the repurchases were $ 0.1 million for both the three months and twelve months ended December 31, 2023 . 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 repurchased shares of common stock were retired. The repurchase program expired on December 31, 2023 . 107 Table of Contents On June 6, 2024, the Board approved a program for the repurchase by the Company of up to an aggregate of $ 50 million of its outstanding common stock. During the three months ended December 31, 2024, the Company repurchased 1,332,950 shares of its outstanding common stock for a total cost of approximately $ 7.0 million at an average price per share of $ 5.21 . 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 . As of December 31, 2024, the Company had a remaining authorized amount of $ 28.5 million in the repurchase program. 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 repurchased shares of common stock were retired. The repurchase program expired on December 31, 2024. Under these two repurchase programs, the Company has purchased an aggregate of 10,585,404 shares of its outstanding common stock for a total cost of approximately $ 65.5 million at an average price per share of $ 6.19 . On December 11, 2024, the Board approved a new program for the repurchase by the Company of up to an aggregate of $ 50 million of its outstanding common stock commencing January 1, 2025, to succeed the expiration of the previous repurchase program on December 31, 2024. On August 16, 2022, the Inflation Reduction Act of 2022, or 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. Beginning in 2023, net stock repurchases are subject to the excise tax. As of December 31, 2024, we have accrued $ 0.4 million excise taxes related with our shares buy back. 14. Stock-based compensation plan Stock Plans As of December 31, 2024, the Company had three stock-based compensation plans (the “Plans”) which are described below. 2015 Equity Incentive Plan In March 2015, the Board approved the 2015 Equity Incentive Plan (“2015 Plan”), which provided for the granting of stock options to employees, directors and consultants of the Company. As of the effective date of the 2021 Plan described below, the 2015 Plan was terminated and no further equity awards may be granted pursuant to the 2015 Plan. Outstanding stock options granted under the 2015 Plan will continue to be governed by the provisions of the 2015 Plan until expiration or exercise, whichever is earlier. 2021 Equity Incentive Plan In July 2021, the Board approved the 2021 Equity Incentive Plan (the “2021 Plan”), which provides for the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, performance awards, and other awards to employees, directors and consultants of the Company. The 2021 Plan became effective on July 22, 2021 in connection with the IPO. Upon the 2021 Plan’s effective date, there were 18,000,000 shares of the Company’s common stock reserved for issuance thereunder. On January 1 of each year commencing after the effective date of the IPO and continuing through and including January 1, 2031, the number of shares of the Company’s common stock reserved for issuance under the 2021 Plan will increase automatically by an amount equal to 4 % of the number of shares of the Company’s common stock outstanding on the preceding December 31, unless the Board elects to authorize a lesser number of shares prior to the applicable January 1. As of December 31, 2024, the total number of shares of common stock available for issuance under the 2021 Plan was 22,266,746 shares. 2021 Employee Stock Purchase Plan In July 2021, the Board approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective on July 22, 2021 in connection with the IPO. Upon the ESPP’s effective date, there were 2,000,000 shares of the Company’s common stock reserved for issuance thereunder. On January 1 of each year commencing after the effective date of the IPO and continuing through and including January 1, 2031, the number of shares of the Company’s common stock reserved for issuance under the ESPP will increase automatically by an amount equal to the lesser of (1) 1 % of the number of shares of the Company’s common stock outstanding on the preceding December 31, (2) 5,000,000 shares and (3) a number of shares determined by the Board. During the year ended December 31, 2024, 358,547 shares were issued pursuant to purchases under the ESPP. As of December 31, 2024, the total number of shares of common stock available for issuance under the ESPP was 5,150,823 shares. 108 Table of Contents Stock option valuation assumptions The Company estimates the fair value of each stock option grant on the date of grant using the Black-Scholes option pricing model. The model assumptions include expected volatility, expected term, dividend yield, and the risk-free interest rate. The expected volatility was based on the volatility of a group of similar entities. The Company derived expected term by using the “simplified” method (the expected term is determined as the average of the time-to-vesting and contractual life of the option), as the Company has limited historical information to develop expectations about future exercise patterns and post vesting employment termination behavior. The Company based the risk-free rate on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term of the option. The Company has never paid any dividends and does not anticipate paying dividends in the foreseeable future, and therefore used an expected dividend yield of zero in the valuation model. Stock Options The following table shows stock option activity during the periods indicated (in thousands except share and per share data): Number of options outstanding Weighted-average exercise price Weighted-average remaining contractual term (in years) Aggregate intrinsic value Balance as of December 31, 2022 7,578,635 $ 7.76 7.42 $ 37,200 Options granted 1,295,948 10.09 Options exercised ( 1,099,160 ) 1.33 Options forfeited ( 363,937 ) 12.36 Options expired ( 191,784 ) 14.60 Balance as of December 31, 2023 7,219,702 $ 8.74 6.90 $ 23,574 Options granted 1,916,670 6.86 Options exercised ( 821,266 ) 1.23 Options forfeited ( 320,447 ) 9.63 Options expired ( 230,202 ) 13.59 Balance as of December 31, 2024 7,764,457 $ 8.89 6.85 $ 10,810 Options exercisable as of December 31, 2024 5,296,767 $ 8.79 6.07 $ 10,587 The weighted-average grant date fair value of options granted during the years ended December 31, 2024, 2023, and 2022 were $ 4.61 , $ 6.64 , and $ 8.21 per share, respectively. There was $ 14.2 million of unrecognized stock-based compensation expense related to unvested stock options as of December 31, 2024. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 2.29 years as of December 31, 2024. The Company currently uses authorized and unissued shares to satisfy option exercises. The aggregate intrinsic value is calculated as the difference between the exercise price and the estimated fair value of the Company’s common stock as of December 31, 2024. 109 Table of Contents RSU Awards The following table shows RSU awards activity during the periods indicated: Shares Weighted-average grant date fair value per share Weighted-average remaining contractual term (in years) Aggregate intrinsic value (in thousands) Unvested balance at December 31, 2022 1,169,508 $ 13.36 1.59 $ 11,941 Granted 2,445,364 10.05 Vested ( 624,351 ) 12.20 Forfeited ( 382,264 ) 11.02 Unvested balance at December 31, 2023 2,608,257 $ 10.88 1.51 $ 23,787 Granted 3,530,685 $ 6.92 Vested ( 1,372,225 ) 9.57 Forfeited ( 545,839 ) 9.12 Unvested balance at December 31, 2024 4,220,878 $ 8.22 1.46 $ 27,393 There was $ 32.5 million of unrecognized stock-based compensation expense related to unvested RSU awards as of December 31, 2024. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 2.80 years as of December 31, 2024. Stock-based compensation expense The following table shows the allocation of stock-based compensation expense related to the Company’s stock-based awards (in thousands): Year Ended December 31, 2024 2023 2022 Cost of sales $ 4,428 $ 3,212 $ 2,855 Research and development 6,427 6,676 5,035 Sales and marketing 4,766 4,290 3,419 General and administrative 11,227 7,870 5,286 Total stock-based compensation $ 26,848 $ 22,048 $ 16,595 The following table shows the weighted-average valuation assumptions used in determining the fair value of employee stock options: Year Ended December 31, 2024 2023 2022 Expected term (in years) 6 5.96 5.91 Expected volatility 73 % 71 % 75 % Risk-free interest rate 4 % 4 % 2 % Dividend yield — — — The following table summarizes the weighted-average assumptions used in estimating the fair value of the ESPP for the current offering period using the Black-Scholes option-pricing model: Year Ended December 31, 2024 2023 2022 Expected term (in years) 0.5 0.5 0.5 Expected volatility 63 % 67 % 77 % Risk-free interest rate 5 % 5 % 3 % Dividend yield — — — 110 Table of Contents 15. Employee benefit plan 401(k) retirement savings plan The Company currently maintains a 401(k) retirement savings plan that covers substantially all of its employees (the “401(k) Plan”). The 401(k) Plan permits voluntary contributions by employees, a portion of which are matched by the Company. The Company’s contributions to the 401(k) Plan were approximately $ 1,823,000 , $ 1,678,000 , and $ 1,045,000 for the years ended December 31, 2024, 2023, and 2022, respectively. 16. Income taxes For the years ended December 31, 2024, 2023, and 2022, income from continuing operations before taxes consisted of amounts related to U.S. operations and income associated with the Company’s foreign operations. The geographical breakdown of the Company’s income (loss) before provision for (benefit from) income taxes is as follows (in thousands): 2024 2023 2022 Domestic $ ( 12,778 ) $ ( 16,899 ) $ ( 1,347 ) International 7,078 1,190 2,607 (Loss) income before income taxes $ ( 5,700 ) $ ( 15,709 ) $ 1,260 Income tax expense attributable to income from continuing operations consists of (in thousands): 2024 2023 2022 Current provisions for income taxes: Federal $ 2,237 $ 4,142 $ 7,280 State 139 798 1,339 Foreign 830 1,528 1,442 Total current $ 3,206 $ 6,468 $ 10,061 Deferred tax expense (benefit): Federal $ ( 2,551 ) $ ( 8,777 ) $ ( 9,164 ) State ( 651 ) ( 1,170 ) ( 1,910 ) Foreign 316 ( 82 ) ( 211 ) Total deferred tax expense (benefit) $ ( 2,886 ) $ ( 10,029 ) $ ( 11,285 ) Total provision for (benefit from) income taxes $ 320 $ ( 3,561 ) $ ( 1,224 ) 111 Table of Contents Tax rate reconciliation The following table presents a reconciliation of the federal statutory rate to the Company’s effective tax rate: 2024 2023 2022 U.S. federal tax benefit at statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 9.0 3.4 ( 60.0 ) Foreign income taxed at different rates 10.0 ( 0.9 ) ( 37.9 ) Foreign-derived intangible income deduction ( 5.2 ) 9.1 ( 39.2 ) Research and development credits 14.4 12.9 ( 146.4 ) Tax impact of foreign earnings and losses ( 2.0 ) ( 1.4 ) 89.4 Subpart F 1.8 ( 5.3 ) 67.2 Stock-based compensation ( 44.4 ) ( 12.2 ) 7.1 Other permanent adjustments ( 2.2 ) ( 0.8 ) 1.9 Prior year true up due to tax rate change — 1.6 ( 47.1 ) Change in valuation allowance, net ( 9.3 ) ( 6.5 ) 60.6 162M compensation ( 2.7 ) ( 0.7 ) 4.4 Foreign tax credit 4.2 2.1 ( 19.6 ) Other — 0.4 1.5 Effective tax rate ( 5.4 ) % 22.7 % ( 97.1 ) % Significant components of deferred taxes The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023 are presented below (in thousands): 2024 2023 Deferred tax assets Net operating loss carryforwards $ 1,610 $ 1,414 Foreign tax credit carryforward 1,190 854 Research and development credit carryforward 2,201 1,647 Stock based compensation 4,473 3,171 Legal settlement 2,461 4,458 Deferred revenue 6,460 6,061 Research and development capitalization 13,287 10,135 Inventory reserve 1,736 1,760 Accrued bonus 1,477 1,292 Lease liability 2,362 2,631 Other accruals 1,497 2,544 Gross deferred tax assets 38,754 35,967 Valuation allowance ( 2,800 ) ( 2,268 ) Net deferred tax assets $ 35,954 $ 33,699 Deferred tax liabilities ROU assets $ ( 2,107 ) $ ( 2,392 ) Depreciation and amortization ( 473 ) ( 820 ) Net deferred tax liabilities $ ( 2,580 ) $ ( 3,212 ) Net deferred tax assets (liabilities) $ 33,374 $ 30,487 112 Table of Contents The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. The Company believes its deferred tax assets are more likely than not to be realized except for one entity in China which is expected to incur tax losses due to research and development deductions available. As of December 31, 2024, the Company maintained a valuation allowance with respect to one of its foreign subsidiary’s net operating loss that the Company believes is not more likely than not to be realized. The Company will continue to reassess the valuation allowance annually and if future evidence allows for a partial or full release of the valuation allowance, a tax benefit will be recorded accordingly. As of December 31, 2024 and 2023, the Company had state tax credit carryforwards of $ 4.0 million and $ 3.1 million, respectively, to offset future tax liability. The credit carryforwards are not subject to expiration. As of December 31, 2024 and 2023, the Company had foreign tax credit for Cytek (Shanghai) Biosciences Co., Ltd of $ 1.2 million and $ 0.9 million, respectively, which expires in 2027 if not utilized. Section 382 of the Internal Revenue Code, as amended, places a limitation on the amount of taxable income that can be offset by net operating loss carryforwards and tax credit carryforwards after a greater than 50% change in control in ownership. California has similar rules. The Company had performed a Section 382 analysis and determined that its capitalization have resulted in such a change in prior year and current year. Utilization of the net operating loss carryforwards and tax credit carryforwards had been subject to the annual limitations under IRC Section 382 and similar state provisions. The annual limitation may result in the expiration of the state net operating loss carryforwards before utilization. Uncertain Tax Positions The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands): 2024 2023 2022 Unrecognized tax benefits as of the beginning of the year $ 3,635 $ 2,235 $ 1,321 (Decrease) increase related to prior year tax provisions ( 897 ) 217 298 Increase related to current year tax provisions 861 1,183 616 Unrecognized tax benefits as of the end of the year $ 3,599 $ 3,635 $ 2,235 The Company accounts for uncertain tax positions under ASC 740. As of December 31, 2024, 2023 and 2022, there was approximately $ 3.6 million, $ 3.6 million and $ 2.2 million, respectively, of unrecognized tax benefits. Of the unrecognized tax benefits, $ 3.3 million , $ 3.4 million and $ 2.0 million represents the amount that if recognized, would favorably affect the effective income tax rate in 2024, 2023 and 2022, respectively. The Company does not expect a significant change to its unrecognized tax benefits or recorded liabilities over the next twelve months. The unrecognized tax benefits may increase or change during the next year for items that arise in the ordinary course of business. The Company files income tax returns in U.S. federal jurisdiction, various U.S. state jurisdictions and foreign jurisdictions. The U.S., state and foreign jurisdictions have statutes of limitations that generally range from three to five years. The Company’s federal, state and foreign income tax returns are subject to examination unless the statutes of limitations close. The Company is not currently under examination for federal, state or foreign income tax purposes. As of December 31, 2024, the Company’s management asserted that it was their intent to indefinitely reinvest unremitted foreign earnings for all its foreign entities. 17. Lease The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. Under Topic 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset. The Company leases office facilities and equipment from unrelated parties under operating lease agreements that have initial terms ranging from 1 to 8 years. Some leases include one or more options to renew, generally at the Company's sole discretion, with renewal terms that can extend the lease term up to five years . In addition, certain leases contain termination options, where the rights to terminate are held by either the Company, the lessor, or both parties. These options to extend or terminate a lease are included in the lease terms when it is reasonably certain that the Company will exercise 113 Table of Contents that option. The Company’s leases generally do not contain any material restrictive covenants. The Company is a sub-lessor in an agreement with a term of three years . Operating lease cost is recognized on a straight-line basis over the lease term. The components of lease expense are as follows (in thousands): Year Ended December 31, 2024 Year Ended December 31, 2023 Operating lease cost $ 3,385 $ 3,182 Short-term lease cost 625 910 Total lease cost $ 4,010 $ 4,092 For the year ended December 31, 2024, sublease loss was $ 10,647 , recorded as other income. Supplemental cash flow information related to leases is as follows (in thousands): Year Ended December 31, 2024 Year Ended December 31, 2023 Cash paid for amounts included in measurement of lease liabilities: Operating cash outflows - payments on operating leases $ 3,273 $ 3,274 Right-of-use assets obtained in exchange for new lease obligations: Operating leases $ 2,716 $ 178 Supplemental balance sheet information related to leases is as follows (in thousands): December 31, 2024 December 31, 2023 Operating lease right-of-use assets $ 10,168 $ 10,853 Included in other current liabilities: Operating lease liabilities, current $ 3,756 $ 2,444 Operating lease liabilities, noncurrent 7,552 9,479 Total operating lease liabilities $ 11,308 $ 11,923 Weighted-average remaining lease term - operating leases: 3.49 4.68 Weighted-average discount rate - operating leases: 3.4 % 2.7 % Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the balance sheet as of December 31, 2024 is as follows (in thousands): 2025 $ 3,998 2026 2,887 2027 2,519 2028 2,062 2029 363 Thereafter 38 Total lease payments $ 11,867 Less imputed interest ( 559 ) Total present value of lease liabilities $ 11,308 114 Table of Contents 18. Commitments and contingencies Purchase Obligations The Company has entered into non-cancelable arrangements with third parties, primarily related to cloud computing and other information technology services. As of December 31, 2024, future payments under these contractual obligations were as follows (in thousands): 2025 $ 2,092 2026 2,620 2027 1,121 Thereafter 17 Total Purchase Obligations $ 5,850 Legal proceedings From time to time, the Company is involved in legal proceedings and claims. On August 14, 2024, Beckman Coulter, Inc. (“Beckman Coulter”) sued the Company in federal court in the District of Delaware, alleging that the Company's Aurora flow cytometers, Aurora CS cell sorters, and Northern Lights and Northern Lights-CLC products infringe U.S. Patent Nos. 10,330,582 and 11,703,443, each titled “Flow Cytometer.” On October 7, 2024, the Company filed an answer denying any liability and including a counterclaim against Beckman Coulter for false marking. On October 28, 2024, Beckman Coulter filed an answer to the counterclaim, denying liability. On January 9, 2025, Beckman Coulter filed a first amended complaint, further alleging that the Company’s Aurora flow cytometers, Aurora CS cell sorters, and Northern Lights and Northern Lights-CLC products also infringe U.S. Patent Nos. 12,174,106 and 12,174,107, each of which is also titled “Flow Cytometer” and related to the earlier asserted patents. On February 6, 2025, the Company filed an answer to the first amended complaint, denying any liability and including a counterclaim against Beckman Coulter for false patent marking. A claim construction hearing is currently scheduled for July 16, 2025, briefing on dispositive motions is currently scheduled in March and April of 2026, and a trial is scheduled for August 17, 2026. The Company intends to vigorously defend itself and pursue the counterclaim. The Company evaluates the status of each legal matter, if any, and assesses potential financial exposure. If the potential loss from any legal proceedings or litigation is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. Significant judgment is required to determine the probability of a loss and whether the amount of the loss is reasonably estimated. The outcome of any proceeding is not determinable in advance. As a result, the assessment of a potential liability and the amount of accruals recorded are based on the information available at the time. 19. Investment in Cytek Japan In May 2019, the Company jointly formed Cytek Japan with TOMY Digital Biology (“TOMY”). Cytek Japan was created for the purpose of expanding the Company’s presence in Japan. The Company and TOMY each purchased $ 46,000 of common stock of Cytek Japan. The Company previously accounted for its 50 % interest in Cytek Japan as an equity method investment. The Company recorded $ 40,000 for its proportionate share of Cytek Japan’s earnings prior to its additional investment, which is included in other income (expense), net in the consolidated statements of operations and comprehensive (loss) income for the year ended December 31, 2022. In March 2021, the Company purchased an additional $ 688,000 of common stock of Cytek Japan and TOMY purchased an additional $ 229,000 of common stock of Cytek Japan. The Company’s interest in Cytek Japan increased from 50 % to 73 % giving the Company controlling interest. The Company consolidated Cytek Japan as of March 31, 2021. The Company recognized net assets of $ 1.1 million, consisting primarily of $ 1.0 million cash. The Company recorded noncontrolling interest of $ 315,000 on the unaudited interim consolidated financial statements as of March 31, 2021. In January 2023, the Company purchased an additional $ 235,000 of common stock of Cytek Japan. Cytek Japan became a wholly-owned subsidiary of the Company. 115 Table of Contents 20. Product warranty The following table shows the activity in the product warranty accrual included in accrued expenses on the consolidated balance sheets (in thousands): December 31, 2024 December 31, 2023 Balance, beginning of the period $ 2,805 $ 2,126 Accrual for current year warranties 949 3,540 Warranty cost incurred ( 1,958 ) ( 2,861 ) Balance, end of period $ 1,796 $ 2,805 21. Net (loss) income attributable to common stockholders per share The following table sets forth the computation of the Company’s basic and diluted net (loss) income attributable to common stockholders per share for the years ended December 31, 2024, 2023, and 2022 (in thousands except share and per share data): Year Ended December 31, 2024 2023 2022 Numerator Net (loss) income $ ( 6,020 ) $ ( 12,148 ) $ 2,484 Less: net loss (income) allocated to noncontrolling interests — — 92 Net (loss) income attributable to common stockholders, basic and diluted $ ( 6,020 ) $ ( 12,148 ) $ 2,576 Denominator Weighted-average common shares outstanding, attributable to common stockholders, basic 130,611,330 135,283,044 134,510,831 Effect of employee stock plans — — 4,051,280 Weighted-average common shares outstanding, attributable to common stockholders, diluted 130,611,330 135,283,044 138,562,111 Net (loss) income attributable to common stockholders per share, basic $ ( 0.05 ) $ ( 0.09 ) $ 0.02 Net (loss) income attributable to common stockholders per share, diluted $ ( 0.05 ) $ ( 0.09 ) $ 0.02 Stock-based compensation awards of approximately $ 7.2 million , $ 9.0 million, and $ 3.5 million shares for the years ended December 31, 2024, 2023, and 2022, respectively, were outstanding but were not included in the computation of diluted net income (loss) per share attributable to Cytek Biosciences, Inc. common stockholders, because the effect of including such shares would have been anti-dilutive in the periods presented. 22. Segment Information and Geographic Data Segment Information The Company operates and manages its business activities on a consolidated basis and has one operating and reportable segment, as defined under ASC 280, Segment Reporting. Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by the Chief Operating Decision Maker (“CODM”), who decides how to allocate resources and assess performance. The Company’s Chief Executive Officer serves as the CODM and is responsible for evaluating the Company’s financial performance and allocating resources. The CODM uses net income as the measure of profit or loss to allocate resources, assess performance, and monitor budgets against actual results. Further, the CODM reviews the significant segment expenses in the table below on net (loss) income when assessing performance and allocating resources, as well as those used for strategic decisions related to headcount and 116 Table of Contents capital expenditures. The measure of segment assets is reported on the balance sheet as total assets. The CODM does not review segment assets at a level other than that presented in the Company’s consolidated balance sheets. The following table reflect the Company’s significant segment expenses: (In thousands) 2024 2023 2022 Revenue, net: Product $ 153,263 $ 156,717 $ 148,600 Service 47,190 36,298 15,436 Total revenue, net 200,453 193,015 164,036 Cost of sales (excluding stock-based compensation) 82,922 78,655 59,024 Amortization - license & IP expense 1,997 1,721 1,183 Sales (excluding stock-based compensation) 29,320 25,510 17,120 Marketing (excluding stock-based compensation) 15,028 19,349 12,692 Research and development (excluding stock-based compensation) 32,975 37,475 29,823 General and administrative (excluding stock-based compensation) 31,885 36,102 29,403 Stock-based compensation expense 26,848 22,048 16,594 Other segment items ( 14,504 ) ( 15,696 ) ( 4,288 ) Net (loss) income $ ( 6,020 ) $ ( 12,148 ) $ 2,484 Other segment items include other income (expenses) and interest income (expenses). Revenue by geographic location The Company sells its products worldwide and attributes revenue to the geography where the product is delivered. The geographical distribution of revenue for the years ended December 31, 2024, 2023, and 2022 was as follows (in thousands): Year Ended December 31, 2024 2023 2022 United States $ 92,610 $ 102,085 $ 94,592 EMEA 62,341 53,178 43,958 APAC 35,770 31,598 22,523 Other 9,732 6,154 2,963 Total revenue, net $ 200,453 $ 193,015 $ 164,036 EMEA includes Europe, the Middle East and Africa; APAC includes Asia and the Pacific countries; Other includes Canada and Latin America. The Company had no major customers and no individual country represented more than 10% of total revenues for the years ending December 31, 2024, 2023, and 2022. 117 Table of Contents Long-lived assets by geographic location As of December 31, 2024 and December 31, 2023, the Company’s long-lived assets by geographic area were as follows (in thousands): December 31, 2024 December 31, 2023 United States $ 8,228 $ 8,814 EMEA 435 325 APAC 9,299 9,266 Total $ 17,962 $ 18,405 As of December 31, 2024 and December 31, 2023, most of the Company’s long-lived assets were located in the United States and in Wuxi, China. 23. Subsequent Events Credit Agreement On January 6, 2025, Cytek (Shanghai) Biosciences Co., Ltd. signed a maximum credit agreement with Bank of Ningbo, for 10 million Chinese renminbi (approximately US $ 1.4 million ). Cytek Wuxi collateralizes this credit to the bank, and the interest rate is fixed at 3.1 % . The line of credit is available from January 7, 2025 to January 9, 2026. On January 15, 2025, Cytek (Shanghai) Biosciences Co., Ltd. withdrew $ 2.0 million Chinese renminbi (approximately US $ 0.3 million ) to support its operational needs. As of February 27, 2025, the outstanding balance was 8 million Chinese renminbi (approximately US $ 1.1 million ). 118 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable.