CYTEK(US:CTKB)2022-05-11 23:59PART I - FINANCIAL INFORMATION Consolidated Financial Statements (Unaudited) The unaudited consolidated financial statements detail the company's financial position, operations, and cash flows for the three months ended March 31, 2022, reflecting $35.1 million in revenue, a $2.2 million net loss, and $485.9 million in total assets Consolidated Balance Sheets As of March 31, 2022, total assets increased to $485.9 million, driven by inventories and lease assets, while total liabilities rose to $78.4 million, and equity remained stable at $407.4 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 (unaudited) | December 31, 2021 (audited) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $362,506 | $364,618 | | Inventories | $37,982 | $32,171 | | Operating lease right-of-use assets | $13,839 | $0 | | Total Assets | $485,879 | $463,305 | | Liabilities & Equity | | | | Total current liabilities | $42,803 | $33,181 | | Operating lease liability, non-current | $12,684 | $0 | | Total Liabilities | $78,437 | $57,920 | | Total Stockholders' Equity | $407,442 | $405,385 | Consolidated Statements of Operations and Comprehensive (Loss) Income Total revenue increased 44% to $35.1 million for the three months ended March 31, 2022, but a significant rise in operating expenses led to a $2.2 million net loss compared to prior year net income Consolidated Statement of Operations Highlights (in thousands) | Account | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Total revenue, net | $35,064 | $24,272 | | Gross profit | $20,177 | $14,486 | | Total operating expenses | $22,534 | $13,354 | | (Loss) income from operations | $(2,357) | $1,132 | | Net (loss) income | $(2,158) | $102 | | Net (loss) income per share, diluted | $(0.02) | $0.00 | Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity Total stockholders' equity slightly increased to $407.4 million as of March 31, 2022, primarily due to stock-based compensation and option exercises offsetting the net loss - In Q1 2022, total stockholders' equity increased by approximately $2.0 million, primarily due to stock-based compensation of $3.8 million and proceeds from stock option exercises of $0.4 million, which was partially offset by a net loss of $2.0 million16 Consolidated Statements of Cash Flows Net cash used in operating activities was $1.5 million for the three months ended March 31, 2022, a reversal from the prior year, primarily due to increased inventories, resulting in a $2.1 million overall decrease in cash Consolidated Statement of Cash Flows Highlights (in thousands) | Activity | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,480) | $1,935 | | Net cash used in investing activities | $(780) | $(138) | | Net cash provided by financing activities | $364 | $187 | | Net (decrease) increase in cash | $(2,112) | $2,465 | | Cash and cash equivalents at end of period | $362,506 | $168,584 | Notes to Consolidated Financial Statements The notes detail accounting policies and financial statement items, covering the company's cell analysis business, 2021 IPO, lease accounting adoption, Tonbo acquisition, and other significant disclosures - The company is a cell analysis solutions company that develops and manufactures a full spectrum flow cytometry platform, including instruments (Aurora, Northern Lights), reagents, and software2627 - In July 2021, the company completed its IPO, raising net proceeds of approximately $215.7 million, with all convertible preferred stock converted to common stock2930 - The company adopted the new lease accounting standard, Topic 842, on January 1, 2022, resulting in the recognition of operating lease right-of-use assets of $14.6 million and lease liabilities of $15.2 million8793 - In November 2021, the company acquired the reagents business of Tonbo Biotechnologies for $17 million, adding a portfolio of life science research reagents and recognizing $9.7 million in goodwill118121 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2022 financial results, noting a 44% revenue increase to $35.1 million driven by product demand, but a $2.2 million net loss due to strategic investments in R&D and sales - Total revenue for Q1 2022 was $35.1 million, a 44% increase from $24.3 million in Q1 2021, primarily due to continued demand for the company's product portfolio186222 - The company reported a net loss of $2.2 million in Q1 2022, compared to a net income of $0.1 million in Q1 2021, resulting from increased operating expenses in R&D, sales & marketing, and G&A191221 - The company's installed base of instruments grew to 1,226 as of March 31, 2022, up from 1,110 at the end of 2021205 - As of March 31, 2022, the company had cash and cash equivalents of $362.5 million, which management believes is sufficient to meet working capital and capital expenditure needs for at least the next 12 months242245 Results of Operations Total revenue increased 44% to $35.1 million in Q1 2022, but a slight gross margin decrease and a 69% surge in operating expenses led to an operating loss compared to prior year income Revenue Comparison (in thousands) | Revenue Type | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product | $31,481 | $22,700 | $8,781 | 39% | | Service | $3,583 | $1,572 | $2,011 | 128% | | Total | $35,064 | $24,272 | $10,792 | 44% | - Gross margin decreased to 58% in Q1 2022 from 60% in Q1 2021, primarily due to increased material costs and higher service and manufacturing headcount227 Operating Expense Comparison (in thousands) | Expense Category | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $8,025 | $5,094 | $2,931 | 58% | | Sales and marketing | $6,960 | $4,277 | $2,683 | 63% | | General and administrative | $7,549 | $3,983 | $3,566 | 90% | | Total | $22,534 | $13,354 | $9,180 | 69% | Liquidity and Capital Resources As of March 31, 2022, the company held $362.5 million in cash, primarily from securities sales and IPO proceeds, with net cash used in operations at $1.5 million due to increased inventory - The company's primary sources of capital have been sales of securities and revenue from product sales, with the July 2021 IPO resulting in net proceeds of approximately $215.7 million246 - Cash used in operating activities was $1.5 million in Q1 2022, compared to cash provided by operating activities of $1.9 million in Q1 2021, driven by a $5.9 million increase in inventories and a $4.2 million increase in prepaid expenses and other assets250251 - The company fully repaid its $4.1 million Paycheck Protection Program (PPP) loan on May 4, 2021247 Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from foreign currency fluctuations in renminbi and euro, while interest rate risk is minimal due to short-term cash holdings, with no hedging currently employed - The company's primary market risk exposures are from foreign currency exchange rates (primarily renminbi and euro) and interest rates262265 - Interest rate risk is considered low as cash and cash equivalents of $362.5 million are held in short-term, variable-rate money market funds and bank deposits263264 - The company does not currently use hedging instruments to mitigate foreign currency risk but will reassess this approach as international operations grow266 Controls and Procedures Management concluded that disclosure controls were ineffective as of March 31, 2022, due to material weaknesses related to insufficient personnel and inadequate policies, with remediation efforts underway - Management concluded that disclosure controls and procedures were not effective as of March 31, 2022, due to existing material weaknesses268 - Material weaknesses identified relate to (i) insufficient qualified personnel in accounting and IT and (ii) lack of formal policies and procedures for applying U.S. GAAP and designing appropriate IT and financial reporting controls269 - Remediation efforts are underway, including engaging external consultants, hiring qualified personnel, formalizing the internal controls environment, and strengthening IT general controls270272 PART II - OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings expected to materially adversely affect its business, operating results, or financial condition - The company is not presently a party to any legal proceedings that would individually or in aggregate have a material adverse effect on its business276 Risk Factors This section outlines various risks, including limited operating history, product dependence, supply chain reliance, manufacturing challenges, regulatory oversight, intellectual property concerns, competition, and internal control weaknesses - The company has a limited operating history and is highly dependent on a limited number of products, primarily the Aurora and Northern Lights systems279283 - Reliance on single and sole source suppliers for key components like lasers and semiconductors poses a significant risk to the supply chain and manufacturing279286 - The company has identified material weaknesses in its internal control over financial reporting, which could impact the accuracy and timeliness of financial reports281348 - The market for cell analysis is highly competitive, with competitors including large, well-resourced companies like Becton, Dickinson and Company (BD), Danaher, and Thermo Fisher Scientific312 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered equity sales during the period and confirmed no material change in the use of proceeds from its July 2021 IPO - There were no unregistered sales of equity securities in the quarter520 - There has been no material change in the use of proceeds from the company's IPO, which were registered under Form S-1 (Registration No. 333-257663)523 Defaults Upon Senior Securities There were no defaults upon senior securities reported during the period - None525 Mine Safety Disclosures This section is not applicable to the company - Not applicable527 Other Information No other information is reported for this item - None529 Exhibits This section lists exhibits filed with the quarterly report, including corporate documents, CEO and CFO certifications, and Inline XBRL documents - Exhibits filed include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act532533534 - The report includes Inline XBRL instance, schema, calculation, definition, label, and presentation linkbase documents536537