Cytek Biosciences Inc

The following table displays the benefit from income taxes for the three and six months ended June 30, 2024 and 2023 (in thousands):

Provision for income taxes was $3.2 million for the three months ended June 30, 2024, as compared to a benefit from income taxes of $2.2 million for the three months ended June 30, 2023. The net change of $5.5 million for the three months ended June 30, 2024 was primarily due to the reversal of the tax benefit during the three months ended June 30, 2024 due to a lower effective tax rate for the three months ended June 30, 2024, and an adjustment to tax expense to account for the settlement price of restricted stock units settled in the quarter being lower than the grant price.

Provision for income taxes was $0.4 million for the six months ended June 30, 2024, as compared to a benefit from income taxes of $4.4 million for the six months ended June 30, 2023. The net increase of $4.9 million for the six months ended June 30, 2024 is primarily due to a lower effective tax rate.

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 7.25 years. Some leases includeone or more options to renew, generally at the Company's sole discretion, with renewal terms that can extend the lease term up to 5 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 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 3 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):

For the three and six months ended June 30, 2024, sublease income was $0 and $57,000 recorded as other income.

Supplemental cash flow information related to leases is as follows (in thousands):

Supplemental balance sheet information related to leases is as follows (in thousands):

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 June 30, 2024 is as follows (in thousands):

18. Commitments and contingencies

Legal proceedings

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.

The Company is not currently involved in any legal proceedings or litigation, nor to management's knowledge are there any potential claims, legal proceedings or litigation for which the ultimate disposition is likely to have a material effect on the Company’s financial position, results of operations or liquidity.

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 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.

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):

21. Net loss per share

The following table sets forth the computation of the Company’s basic and diluted net loss per share for the three and six months ended June 30, 2024 and 2023 (in thousands except share and per share data):

Because we are in a net loss position,1.9 million and 2.9 million shares for the three months ended June 30, 2024 and 2023, respectively, were dilutive, but were not included in the computation of diluted net loss per share because their inclusion would have been anti-dilutive. Therefore, basic net loss per share is the same as diluted net loss per share. Also approximately 10.9 million and 2.5 million equivalent shares for the three months ended June 30, 2024 and 2023, respectively, have been excluded from the calculation of diluted net loss per share because their impacts are anti-dilutive.

Because we are in a net loss position,2.1 million and 3.1 million shares for the six months ended June 30, 2024 and 2023, respectively, were dilutive, but were not included in the computation of diluted net loss per share because their inclusion would have been anti-dilutive. Therefore, basic net loss per share is the same as diluted net loss per share. Also approximately 7.1 million and 6.0 million equivalent shares for the six months ended June 30, 2024 and 2023, respectively, have been excluded from the calculation of diluted net loss per share because their impacts are anti-dilutive.

22. Geographic areas

The Company sells its products worldwide and attributes revenue to the geography where the product is delivered. The geographical distribution of revenue for the three and six months ended June 30, 2024 and 2023 was as follows (in thousands):

EMEA includes Europe, the Middle East and Africa; APAC includes Asia and the Pacific countries; Other includes Canada and Latin America.

For the three and six months ended June 30, 2024 and 2023, the Company had no major customers.

As of June 30, 2024 and December 31, 2023, the Company’s long-lived assets by geographic area were as follows (in thousands):

As of June 30, 2024 and December 31, 2023, most of the Company’s long-lived assets were located in the United States and in Wuxi, China.