Cytek Biosciences Inc

Previous wording

Our core FSP systems, the Cytek Aurora and Northern Lights flow cytometers, deliver high-resolution, high-content and high-sensitivity cell analysis and addresses the inherent limitations of other technologies by providing a higher level of multiplexing with exquisite sensitivity, more flexibility and increased efficiency, all at a lower cost for performance. Additionally, our Cytek Aurora cell sorter (“Aurora CS”) leverages our FSP technology to further broaden our potential applications across cell analysis. Each system is supported by our highly intuitive, proprietary embedded SpectroFlo software, our reagents, and our service offerings to provide a comprehensive, end-to-end platform of solutions for our customers. Since our first U.S. commercial launch in mid-2017 through December 31, 2023, we have sold and deployed our instruments to customers around the world, including pharmaceutical companies, biopharma companies, academic research centers, and clinical research organizations (“CROs”).

Current wording

Our core FSP systems, the Cytek Aurora and Northern Lights flow cytometers, deliver high-resolution, high-content and high-sensitivity cell analysis and addresses the inherent limitations of other technologies by providing a higher level of multiplexing with exquisite sensitivity, more flexibility and increased efficiency, all at a lower cost for performance. Additionally, our Cytek Aurora cell sorter (“Aurora CS”) leverages our FSP technology to further broaden our potential applications across cell analysis. Each system is supported by our highly intuitive, proprietary embedded SpectroFlo software, our reagents, and our service offerings to provide a comprehensive, end-to-end platform of solutions for our customers. Since our first U.S. commercial launch in mid-2017, we have sold and deployed our instruments to customers around the world, including pharmaceutical companies, biopharma companies, academic research centers, and clinical research organizations (“CROs”).

Previous wording

On February 28, 2023, we 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”), which provide insights into all facets of cellular phenotypes and morphology. The acquisition supports our plan to develop new products and capabilities with flow cytometry and imaging technology, expand our reach and offerings into customer segments previously underserved, and increase the efficiency of our operations.

Current wording

On February 28, 2023, we 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”), which provide insights into all facets of cellular phenotypes and morphology. The acquisition supports our plan to develop new products and capabilities with flow cytometry and imaging technology, expand our reach and offerings into customer sectors previously underserved, and increase the efficiency of our operations.

Previous wording

June 30, 2024 decreased compared to total revenue for the three months ended June 30, 2023 due to lower product revenue resulting from lower product sales in the United States, particularly in the academic and government market segment. The increase in total revenue for the six months ended June 30, 2024 compared to total revenue for the six months ended June 30, 2023 was due to higher service revenue as a result of a larger installed base of instruments generating service contracts and other service revenue, partially offset by lower product revenue in the period.

Current wording

Total revenue for the three and nine months ended September 30, 2024 was $51.5 million and $143.0 million, respectively, representing a 7% increase and a 6% increase, respectively, compared to total revenue for the three and nine months ended September 30, 2023 of $48.0 million and $134.8 million, respectively. Total revenue for the three months ended September 30, 2024 increased compared to total revenue for the three months ended September 30, 2023 primarily due to higher product revenue resulting from higher product sales in Europe, the Middle East and Africa (“EMEA”) and Asia and Pacific countries (“APAC”), particularly in the biotechnology and pharmaceutical market sector. The increase in total revenue for the nine months ended September 30, 2024 compared to total revenue for the nine months ended September 30, 2023 was due to higher service revenue as a result of a larger installed base of instruments generating service contracts and other service revenue, partially offset by lower product revenue in the period.

Previous wording

To date, we have adopted a direct sales model in North America, Europe, China, and several other countries in the Asia-Pacific region, and sell our products through third-party distributors in certain countries in Europe, Latin America, the Middle East, Africa and the Asia-Pacific region. Revenue from direct sales represented 74% and 75% of total revenue for the three and six months ended June 30, 2024, respectively, and 77% and 73% for the three and six months ended June 30, 2023, respectively. Revenue from distributors represented 26% and 25% of total revenue for the three and six months ended June 30, 2024 and 23% and 27% for the three and six months ended June 30, 2023.

Current wording

To date, we have adopted a direct sales model in North America, Europe, China, and several other countries in the Asia-Pacific region, and sell our products through third-party distributors in certain countries in Europe, Latin America, the Middle East, Africa and the Asia-Pacific region. Revenue from direct sales represented 77% and 76% of total revenue for the three and nine months ended September 30, 2024, respectively, and 77% and 74% for the three and nine months ended September 30, 2023, respectively. Revenue from distributors represented 23% and 24% of total revenue for the three and nine months ended September 30, 2024 and 23% and 26% for the three and nine months ended September 30, 2023.

Previous wording

We focus a substantial portion of our resources on developing new products and solutions to meet our customers’ needs. Our research and development efforts focus on developing new and complementary instruments, reagents and reagent kits, and continued operating software development. We incurred research and development expensesof $10.0 million and $19.8 million for the three and six months ended June 30, 2024, respectively, and $12.1 million and $22.1 million three and six months ended June 30, 2023, respectively. While research and development expense was slightly lower in the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, we intend to continue to make significant investments in research and development in the future.

Current wording

We focus a substantial portion of our resources on developing new products and solutions to meet our customers’ needs. Our research and development efforts focus on developing new and complementary instruments, reagents and reagent kits, and continued operating software development. We incurred research and development expensesof $9.9 million and $29.7 million for the three and nine months ended September 30, 2024, respectively, and $11.2 million and $33.3 million three and nine months ended September 30, 2023, respectively. While research and development expense was slightly lower in thethree and nine months ended September 30, 2024 compared to thethree and nine months ended September 30, 2023, we intend to continue to make significant investments in research and development in the future.

Previous wording

We expect tocontinue to invest in our commercial infrastructure through hiring additional employees with strong scientific and technical backgrounds to support growth in our instrument sales as well as our planned expansion of reagents offerings and panel design capabilities. We also plan to continue to invest in sales, marketing and business development across the globe to drive commercialization of our products. We incurred sales and marketing expenses of $12.3 million and $24.8 million for the three and six months ended June 30, 2024, respectively, and $14.4 million and $25.5 million for the three and six months ended June 30, 2023, respectively.

Current wording

We expect tocontinue to invest in our commercial infrastructure through hiring additional employees with strong scientific and technical backgrounds to support growth in our instrument sales as well as our planned expansion of reagents offerings and panel design capabilities. We also plan to continue to invest in sales, marketing and business development across the globe to drive commercialization of our products. We incurred sales and marketing expenses of$12.4 million and $37.2 millionfor the three and nine months ended September 30, 2024, respectively, and $12.1 million and $37.6 million for the three and nine months ended September 30, 2023, respectively.

Previous wording

Our net loss was $10.4 million and $16.6 million for the three and six months ended June 30, 2024, respectively, and $4.4 million and $11.2 million for the three and six months ended June 30, 2023, respectively. The increase in net loss for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 resulted primarily from higher tax expense and net other income due to foreign exchange losses in 2024. The change for the six months ended June 30, 2024 compared to the three months ended June 30, 2023 was also due to higher tax expense and lower net other income due to foreign exchange losses in 2024, partially offset by an increase in operating income as a result of lower sales and marketing and general and administrative expenses.

Current wording

Our net income (loss) was $0.9 million and$(15.7) million for the three and nine months ended September 30, 2024, respectively, and our net loss was$6.5 million and$17.7 million for the three and nine months ended September 30, 2023, respectively. The increase in net income (loss) for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 resulted primarily from a lower loss from operations compared to the prior period, a foreign exchange gain compared to a loss in the prior period and a tax benefit compared to a tax expense in the prior period. The decrease in net loss for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to a lower loss from operations and lower interest expense, offset by lower interest income and lower net other income due to foreign exchange losses.

Previous wording

We believe our expanding installed base of instruments to new and existing customers will provide us with greater leverage to drive pull-through for reagent and service revenue, which are recurring by nature. Furthermore, as we develop and identify new applications and products, we expect to further increase pull-through across our installed base.

Current wording

We believe our expanding installed base of instruments to new and existing customers will provide us with greater leverage to drive pull-through for reagent and service revenue, which are recurring by nature. Furthermore, as we develop and identify new applications and products, we expect to further increase pull-through across our installed base. We expect recurring revenue on an absolute basis to increase and become an increasingly important contributor to our revenue as our installed base expands.

Previous wording

Our revenue is primarily derived from sales of our instruments and services. Although we expect sales of our instruments to continue to represent the largest percentage of our revenue in the future, we expect service revenues to increase as a percentage of our total revenue as we grow our installed base. We expect a higher gross margin on our instruments as we increase the scale of our manufacturing operations as revenue grows and improve manufacturing efficiency. Our sales in certain regions, particularly outside of the United States, are realized through third-party distribution partners that typically receive discounted prices, thus resulting in lower gross margins than those recognized by our direct sales organization. Furthermore, our gross margins and instrument selling prices may fluctuate in the future as we continue to grow our volume of third-party distribution partners in geographies outside of the United States, introduce new products and reduce our production costs and as a result of variability in the timing of new product introductions.

Current wording

Our revenue is primarily derived from sales of our instruments and services. Although we expect sales of our instruments to continue to represent the largest percentage of our revenue in the future, we expect service revenues to increase as a percentage of our total revenue as we grow our installed base. We expect a higher gross margin on our instruments as we increase the scale of our manufacturing operations as revenue grows and improve manufacturing efficiency. Our sales in certain regions outside of the United States, are realized through third-party distribution partners that typically receive discounted prices, thus resulting in lower gross margins than those recognized by our direct sales organization. Furthermore, our gross margins and instrument selling prices may fluctuate in the future as we continue to grow our volume of third-party distribution partners in geographies outside of the United States, introduce new products and reduce our production costs and as a result of variability in the timing of new product introductions.

Previous wording

We focus our research and development efforts on the greatest value-additive products to meet the growing and unmet needs of the research and clinical markets. We work closely with researchers, clinicians and scientists to optimize and implement new panels and applications to meet their specific needs. We also gain valuable insight on potential new products, new applications and enhancements to existing products, as well as biomarker combinations that would be beneficial in different fields, through collaborations with our customers, academic laboratories, KOLs and industry partners. We plan to continue to invest in new product development and enhancements to support our expansion into new markets.

Current wording

We focus our research and development efforts on the greatest value-additive products to meet the growing and unmet needs of the research and clinical markets. We work closely with researchers, clinicians and scientists to optimize and implement new panels and applications to meet their specific needs. We also gain valuable insight on potential new products, new applications and enhancements to existing products, as well as biomarker combinations that would be beneficial in different fields, through collaborations with our customers, academic laboratories, key opinion leaders and industry partners. We plan to continue to invest in new product development and enhancements to support our expansion into new markets.

Previous wording

The recent trends towards rising inflation may adversely affect our business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of materials and supplies, interest rates and overhead costs may adversely affect our operating results. The general consensus among economists suggests that we should expect a higher recession risk to continue over the next year, which could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates continue to rise) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with future public health crises, the ongoing conflict between Russia and Ukraine, the Israel and Palestine conflict orliquidity concerns at, and failure of, banks and other financial institutions.

Current wording

Recent inflation trends may adversely affect our business and corresponding financial position and cash flows. Inflationary factors, such as increases in the cost of materials and supplies, interest rates and overhead costs may adversely affect our operating results. Many economists suggest that we should expect a higher recession risk to continue in the near term, which could result in further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect our operations. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates continue to rise) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with future public health crises, the ongoing conflict between Russia and Ukraine, conflict in the Middle East orliquidity concerns at, and failure of, banks and other financial institutions.

Previous wording

Many of our pharmaceutical and biotech customers based in the United States have been impacted by macro-economic uncertainties related to the weakening economy, liquidity concerns in the broader financial services industry, such as those caused by recent banking failures, disruptions to and volatility in the credit and equity markets, and rising interest rates. We believe these factors contributed to longer sales cycles, which adversely impacted our operating results for the three months ended June 30, 2024, and may adversely affect our operating results in the future.

Current wording

Many of our pharmaceutical and biotech customers based in the United States have been impacted by macro-economic uncertainties related to the weakening economy, liquidity concerns in the broader financial services industry, such as those caused by recent banking failures, disruptions to and volatility in the credit and equity markets, and rising interest rates. We believe these factors contributed to longer sales cycles, which adversely impacted our operating results for the nine months ended September 30, 2024, and may adversely affect our operating results in the future.

Previous wording

Product. Cost of sales associated with our products primarily consist of manufacturing-related costs incurred in the production process, inventory write-downs, warranty costs, third party royalty costs, personnel and related costs, costs of component materials, overhead, packaging and delivery and depreciation expense.

Current wording

Product. Cost of sales associated with our products primarily consists of manufacturing-related costs incurred in the production process, inventory write-downs, warranty costs, third party royalty costs, personnel and related costs, costs of component materials, overhead, packaging and delivery and depreciation expense.

Previous wording

Our operating expenses are primarily comprised of research and development, sales and marketing, and general and administrative expenses, depreciation and amortization, and related overhead.

Current wording

Our operating expenses are primarily comprised of research and development, sales and marketing, general and administrative expenses, depreciation and amortization, and related overhead.

Previous wording

Our provision for (benefit from) income taxes consists primarily of provision for federal taxes and local taxes in the United States as well as foreign taxes. As we plan to expand the scale and scope of our international business activities, any changes in the United States and foreign taxation of such activities may increase our overall provision for income taxes in the future.

Current wording

Our (benefit from) provision for income taxes consists primarily of provision for federal taxes and local taxes in the United States as well as foreign taxes. As we plan to expand the scale and scope of our international business activities, any changes in the United States and foreign taxation of such activities may increase our overall provision for income taxes in the future.

Previous wording

Comparison of the three and six months ended June 30, 2024 and 2023

Current wording

Comparison of the three and nine months ended September 30, 2024 and 2023

Previous wording

Total revenue decreased by $3.1 million to $46.6 million, or 6%; and increased by $4.7 million, or 5%, for the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, respectively. The decrease in total revenue for the three months ended June 30, 2024 compared to total revenue for the three months ended June 30, 2023 was due to lower product revenue. The increase in total revenue for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was due to higher service revenue and an additional two months of revenue from the FCI Acquisition, which closed on February 28, 2023.

Current wording

Total revenue increased by$3.5 million to $51.5 million, or 7%, and by$8.2 million, or 6%, forthe three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023, respectively. The increase in total revenue for the three months ended September 30, 2024 compared to total revenue for the three months ended September 30, 2023 was due to higher service and product revenue. The increase in total revenue for thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023 was due to higher service revenue and an additional two months of revenue from the FCI Acquisition, which closed on February 28, 2023.

Previous wording

Service revenue increased $2.8 million to $12.0 million, or 30%; and $7.6 million to $22.8 million, or 50% for the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, respectively. The increase was primarily due to growth in the installed base of instruments as compared to prior year periods which drove growth in both service contract revenue and other service revenue.

Current wording

Service revenue increased by$2.4 million to $12.0 million, or 25%, and by$10.0 million to $34.7 million, or 41%, for the three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023, respectively. The increase was primarily due to growth in the installed base of instruments as compared to prior year periods which drove growth in both service contract revenue and other service revenue.

Previous wording

Total cost of sales decreased by $0.4 million, or 2%, and increased by $5.4 million, or 14%, for the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, respectively. The decrease in product cost of sales for the three months ended June 30, 2024 was primarily driven by the decrease in product revenue. This was partially offset by higher overhead costs, as a result of lower capitalization of labor costs to inventory, and higher stock-based compensation expense. The increase of product cost of sale for the six months ended June 30, 2024 was primarily due to higher inventory adjustments of a one-time nature in the three months ended March 31, 2024 arising from the integration of Luminex inventories, and higher overhead costs due to the factors described above. Service cost of sales for the three and six months ended June 30, 2024 increased compared to the prior year period due to higher service headcount, travel, and contractor expense. Service cost of sales increased at a lower rate than service revenue in the three and six months ended June 30, 2024 due to higher service labor productivity, lower material costs relative to revenue and improved absorption of overhead costs.

Current wording

Total cost of sales increased by$1.7 million, or 8%, and by$7.1 million, or 12%, for the three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023, respectively. The increase in product cost of sales for the three months ended September 30, 2024 was primarily driven by the increase in product revenue, higher material cost associated with the amortization of the standard cost revaluation in January 2024 and higher scrap expense and excess and obsolete inventory expense, offset by lower manufacturing overhead expense. The increase in product cost of sales for thenine months ended September 30, 2024 was primarily due to higher inventory adjustments of a one-time nature in the three months ended March 31, 2024 arising from the integration of Luminex inventories, higher material costs due to the factors described above and higher manufacturing overhead. Service cost of sales for the three and nine months ended September 30, 2024 increased compared to the prior year period due to higher service headcount, travel, and contractor expense. Service cost of sales increased at a lower rate than service revenue in the three and nine months ended September 30, 2024 due to higher service labor productivity, lower material costs relative to revenue and improved absorption of overhead costs.

Previous wording

Total gross profit margin was 55% and 57% of total revenue for the three months ended June 30, 2024 and 2023, respectively, and 53% and 57% for the six months ended June 30, 2024 and 2023, respectively. Total gross profit margin declined for the three months ended June 30, 2024 as a result of lower product gross margins driven primarily by higher product overhead costs and lower product revenue. This was partially offset by higher service gross margin driven by higher service revenue, higher service labor productivity and improved absorption of overhead costs. Gross profit margin declined for the six months ended June 30, 2024 due to lower product gross margins related to higher overhead costs and unfavorable inventory adjustments recognized in the three months ended March 31, 2024. The lower product gross margin was partially offset by higher service gross margins. Gross profit margin depends on many factors, including market conditions that might affect our pricing; services; product mix changes between instrument configurations; excess and obsolete inventories; our cost structure for manufacturing operations relative to volume, freight costs and product support.

Current wording

Total gross margin was 56% and 57% of total revenue for the three months ended September 30, 2024 and 2023, respectively, and 54% and 57% for thenine months ended September 30, 2024 and 2023, respectively. Total gross margin decreased for the three months ended September 30, 2024 as a result of lower product gross margin due to higher product cost of sales for the reasons described above. This was partially offset by higher service gross margin driven by higher service revenue, higher service labor productivity and improved absorption of overhead costs. Gross margin decreased for thenine months ended September 30, 2024 due to lower product gross margin as a result of higher product cost of sales for the reasons described above. Gross margin depends on many factors, including market conditions that might affect our pricing, services, product mix changes between instrument configurations, excess and obsolete inventories, our cost structure for manufacturing operations relative to volume, freight costs and product support.

Previous wording

June 30, 2024 decreased by 5% and increased by 11%, respectively, as compared to the three and six months ended June 30, 2023. Product gross profit for the three and six months ended June 30, 2024 decreased 21% and 14%, respectively, as compared to the three and six months ended June 30, 2023. The lower product gross profit margins in the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was driven primarily by lower product revenue and higher overhead costs. The lower product gross profit margins in the six months ended June 30, 2024 compared to the six month ended June 30, 2023 was a result of higher material costs related to unfavorable inventory adjustments in the three months ended March 31, 2024 arising from the integration of Luminex inventories and higher overhead costs.

Current wording

Product revenue increased by 3% for the three months ended September 30, 2024 and decreased by 2% for thenine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023, respectively. Product cost of sales for the three and nine months ended September 30, 2024 increased by 8% and 10%, respectively, as compared to the three andnine months ended September 30, 2023. Product gross profit for the three and nine months ended September 30, 2024 decreased 1% and 10%, respectively, as compared to the three and nine months ended September 30, 2023. The lower product gross margins in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was driven primarily by higher product cost of sales and higher overhead costs. The lower product gross margins in thenine months ended September 30, 2024 compared to thenine month ended September 30, 2023 was a result of higher material costs related to unfavorable inventory adjustments in the three months ended March 31, 2024 arising from the integration of Luminex inventories and higher overhead costs.

Previous wording

Service revenue for the three and six months ended June 30, 2024 increased 30% and 50%, respectively, as compared to the three and six months ended June 30, 2023. Service cost of sales for the three and six months ended June 30, 2024 increased by 11% and 27%, respectively, as compared to the three and six months ended June 30, 2023. Service gross profit for the three and six months ended June 30, 2024 increased 52% and 78%, respectively, as compared to the three and six months ended June 30, 2023. The higher service gross margins in the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 were mainly driven by operating efficiencies from higher service labor productivity and improved absorption of overhead costs by leveraging these costs over greater revenues.

Current wording

Service revenue for the three and nine months ended September 30, 2024 increased 25% and 41%, respectively, as compared to the three and nine months ended September 30, 2023. Service cost of sales for the three and nine months ended September 30, 2024 increased by 8% and 20%, respectively, as compared to the three and nine months ended September 30, 2023. Service gross profit for the three and nine months ended September 30, 2024 increased 41% and 62%, respectively, as compared to the three and nine months ended September 30, 2023. The higher service gross margins in the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 were mainly driven by operating efficiencies from higher service labor productivity and improved absorption of overhead costs by leveraging these costs over greater revenues.

Previous wording

Research and development expenses were $10.0 million and $19.8 million for the three and six months ended June 30, 2024, respectively, as compared to $12.1 million and $22.1 million for the three and six months ended June 30, 2023, respectively. The decrease in research and development expenses for both the three and six months ended June 30, 2024 compared to research and development expenses for the three and six months ended June 30, 2023 was primarily due to headcount reductions and to a lesser extent a reduction in engineering expenses.

Current wording

Research and development expenses were $9.9 million and $29.7 million for the three and nine months ended September 30, 2024, respectively, as compared to $11.2 million and $33.3 million for the three and nine months ended September 30, 2023, respectively. The decrease in research and development expenses for both the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was primarily due to headcount reductions and to a lesser extent a reduction in engineering expenses.

Previous wording

Sales and marketing expenses were $12.3 million and $24.8 million for the three and six months ended June 30, 2024, respectively, as compared to $14.4 million and $25.5 million for the three and six months ended June 30, 2023, respectively. The decrease in sales and marketing expenses for the three and six months ended June 30, 2024 compared to sales and marketing expenses for the three and six months ended June 30, 2023 was primarily due to a decrease in headcount and personnel-related expenses.

Current wording

Sales and marketing expenses were $12.4 million and $37.2 million for the three and nine months ended September 30, 2024, respectively, as compared to $12.1 million and $37.6 million for the three and nine months ended September 30, 2023, respectively. The decrease in sales and marketing expenses for thenine months ended September 30, 2024 compared to thenine months ended September 30, 2023 was primarily due to a decrease in headcount and personnel-related expenses.

Previous wording

June 30, 2023, respectively. The increase of $0.9 million in general and administrative expenses in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 was primarily due to an increase in stock-based compensation expense and outside professional service expenses, partially offset by lower insurance and software expense. The increase of $0.2 million in general and administration expenses in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 included increases in stock-based compensation expense, outside professional services expense and software expenses, partially offset by a decrease in legal fees, insurance and sales and use tax.

Current wording

General and administrative expenses were $10.9 million and $34.0 million for the three and nine months ended September 30, 2024, respectively, as compared to $10.4 million and $33.2 million for the three and nine months ended September 30, 2023, respectively. The increase of $0.6 million in general and administrative expenses in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily due to an increase in stock-based compensation expense, partially offset by lower outside professional service expense. The increase of $0.8 million in general and administration expenses in thenine months ended September 30, 2024 as compared to thenine months ended September 30, 2023 included increases in stock-based compensation expense, and outside professional services expense, partially offset by a decrease in audit, insurance expense and sales and use tax.

Previous wording

While the Company is focused on controlling its general and administrative expenses, these may increase in absolute dollars in future periods to provide the infrastructure necessary to support the growth of the business.

Current wording

While we are focused on controlling our general and administrative expenses, these may increase in absolute dollars in future periods to provide the infrastructure necessary to support the growth of the business.

Previous wording

Interest expense was $0.1 million and $0.6 million for the three and six months ended June 30, 2024, respectively, as compared to $0.4 million and $1.1 million, for the three and six months ended June 30, 2023, respectively. The decrease in interest expense was mainly due to the accretion of the present value discount related to the settlement agreement with Becton, Dickinson and Company (“BD”). See Note 11 to our unaudited interim consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Current wording

Interest expense was $0.1 million and $0.7 million for the three and nine months ended September 30, 2024, respectively, as compared to $0.6 million and $1.7 million, for the three and nine months ended September 30, 2023, respectively. The decrease in interest expense was mainly due to an adjustment to the accretion of the present value of the financial obligation related to the settlement agreement with Becton, Dickinson and Company (“BD”). See Note 11 to our unaudited interim consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.

Previous wording

Interest income was $1.4 million and $2.8 million for the three and six months ended June 30, 2024, respectively, as compared to $1.2 million and $3.3 million for the three and six months ended June 30, 2023, respectively. The decrease in interest income for the six months ended June 30, 2024 compared to interest income for the six months ended June 30, 2023 was the result of lower average balance of cash and cash equivalents due to the funding of the FCI Acquisition on February 28, 2023 and the investment of cash in marketable securities.

Current wording

Interest income was $1.4 million and $4.2 million for the three and nine months ended September 30, 2024, respectively, as compared to $1.6 million and $5.0 million for the three and nine months ended September 30, 2023, respectively. The decrease in interest income for the nine months ended September 30, 2024 compared to interest income for the nine months ended September 30, 2023 was the result of lower average balance of cash and cash equivalents due to the funding of the FCI Acquisition on February 28, 2023 and the investment of cash in marketable securities.

Previous wording

Other income, net was $0.1 million and $0.9 million for the three and six months ended June 30, 2024, respectively, as compared to other income, net of $1.7 million and $3.4 million for the three and six months ended June 30, 2023, respectively. The decline in other income was primarily driven by an increase in realized and unrealized foreign exchange losses for the three and six months ended June 30, 2024.

Current wording

Other income, net was $3.1 million and $4.0 million for the three and nine months ended September 30, 2024, respectively, as compared to other income, net of $1.2 million and $4.6 million for the three and nine months ended September 30, 2023, respectively. The increase in other income, net for the three months ended September 30, 2024 was primarily due to net foreign exchange gains of $1.2 million compared to a foreign exchange loss of $0.6 million in the prior year period. The decline in other income for the nine months ended September 30, 2024 was primarily driven by an increase in realized and unrealized foreign exchange losses.

Previous wording

Provision for income taxes was $3.2 million and $0.4 million for the three and six months ended June 30, 2024, respectively, as compared to the benefit for income taxes of $2.2 million and $4.4 million for the three and six months ended June 30, 2023, respectively. The net change of $5.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to the reversal of the tax benefit during the three months ended March 31,2024 due to a lower effective tax rate for the six 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. The reduction in tax benefit of $4.9 million for the six months ended June 30, 2024 was primarily due to a lower effective tax rate. Neither of these tax expense and benefit changes had a cash impact on the company.

Current wording

Benefit from income taxes was $0.8 million and $0.4 million for the three and nine months ended September 30, 2024, respectively, as compared to a provision for income taxes of $2.3 million and benefit from income taxes of $2.2 million for the three and nine months ended September 30, 2023, respectively. The net change of $3.1 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to the reversal in the three months ended September 30, 2023 of the tax benefit from the six months ended September 30, 2023 due to a lower effective tax rate for the nine months ended September 30, 2023, and an adjustment to tax expense for the three months ended September 30, 2024 to account for the settlement price of restricted stock units settled in the quarter being lower than the grant price. The decrease in tax benefit of $1.8 million for the nine months ended September 30, 2024 was primarily due to lower projected loss and lower projected R&D tax credits in 2024 which caused a reduction in the effective tax rate. Neither of these tax expense and benefit changes had a cash impact on the company.

Previous wording

To date, our primary sources of capital have been through sales of our securities and revenue from the sale of our products and services. As of June 30, 2024 and December 31, 2023, we had approximately $277.2 million and $262.7 million, respectively, in cash and cash equivalents, restricted cash, and short term investments, which were primarily held in U.S. short-term bank deposit accounts, money market funds, U.S. Treasury notes, Federal agency security notes, and short term commercial paper.

Current wording

To date, our primary sources of capital have been through sales of our securities and revenue from the sale of our products and services. As of September 30, 2024 and December 31, 2023, we had approximately$277.8 million and $262.7 million, respectively, in cash and cash equivalents, restricted cash, and short term investments, which were primarily held in U.S. short-term bank deposit accounts, money market funds, U.S. Treasury notes, Federal agency security notes, and short term commercial paper.

Previous wording

In addition, we lease certain office facilities under operating lease arrangements that expire on various dates through fiscal year 2029. Under the terms of the leases, we are responsible for certain expenses related to operations, maintenance, repairs and management fees. Future minimum lease payments under non-cancelable operating leases totaled $11.1 million as of June 30, 2024.

Current wording

In addition, we lease certain office facilities under operating lease arrangements that expire on various dates through fiscal year 2029. Under the terms of the leases, we are responsible for certain expenses related to operations, maintenance, repairs and management fees. Future minimum lease payments under non-cancelable operating leases totaled$11.8 million as of September 30, 2024.

Previous wording

Net cash provided by operating activities for the six months ended June 30, 2024 was $10.2 million due to the non-cash provision for stock-based compensation expense, depreciation and amortization, excess and obsolete inventory and amortization of right-of-use assets of $12.8 million, $3.5 million, $1.0 million, and $1.4 million, respectively; partially offset by a gain on investments, accretion and amortization, net of $2.4 million. Additionally, there was a decrease of inventories of $9.2 million and a decrease of trade accounts receivable of $10.2 million due to seasonality with our first quarter typically being lower than our fourth quarter due to marketing campaign closing activity. These were partially offset by the usage of cash which included the net loss of $16.6 million, an increase in accrued expenses and other liabilities of $9.4 million, and an increase prepaid expenses and other assets of $0.5 million.

Current wording

Net cash provided by operating activities for the nine months ended September 30, 2024 was $23.4 million due to the non-cash provision for stock-based compensation expense, depreciation and amortization, amortization of right-of-use assets, and excess and obsolete inventory of $19.8 million, $5.4 million, $2.4 million, and $1.4 million, respectively, partially offset by a gain on investments, accretion and amortization, net of $3.6 million. Additionally, there was a decrease of inventories of $12.8 million and a decrease of trade accounts receivable of $3.9 million. These were partially offset by the usage of cash which included the net loss of $15.7 million, a decrease in accrued expenses and other liabilities of $3.8 million, and an increase prepaid expenses and other assets of $2.1 million.

Previous wording

Net cash provided by operating activities for the six months ended June 30, 2023 was less than $0.1 million including net loss of $11.2 million. We also incurred non-cash provision for excess and obsolete inventory, stock-based compensation expense, depreciation and amortization, amortization of right-of-use assets, and interest expenses for accretion of the legal settlement liabilities of $0.6 million, $10.6 million, $2.7 million, $1.6 million, and $0.8 million, respectively. Usage of cash which included a decrease in lease liability of $1.4 million, a decrease of inventories of $0.2 million and a decrease in the legal settlement liability of $0.2 million. Additionally, there was a decrease of trade accounts receivable of $0.7 million,, a decrease in prepaid expenses and other assets of $3.2 million, an increase in accrued expenses and other liabilities of $0.3 million, and an increase of trade accounts payables of $1.7 million.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2023 was $4.2 million including net loss of $17.7 million. We also incurred non-cash provision for stock-based compensation expense, gain on investments, depreciation and amortization, amortization of right-of-use assets, and interest expenses for accretion of the legal settlement liabilities, and excess and obsolete inventory of $16.4 million, $5.3 million, $4.4 million, $2.4 million, $1.3 million, and $0.8 million, respectively. Usage of cash which included a decrease in lease liability of $2.2 million, an increase in inventories of $2.0 million and an increase in the legal settlement liability of $0.4 million. Additionally, there was an increase of trade accounts receivable of $7.6 million, an increase in prepaid expenses and other assets of $2.3 million, an increase in accrued expenses and other liabilities of $0.6 million, an increase in deferred revenue of $7.2 million and an increase of trade accounts payables of $0.01 million.

Previous wording

Net cash used in investing activities during the six months ended June 30, 2024 was $3.7 million driven by purchases of marketable securities of $114.0 million and the purchase of fixed assets and intangibles of approximately $1.6 million. This was partially offset by the proceeds from maturities of marketable securities of $112.0 million

Current wording

Net cash used in investing activities during the nine months ended September 30, 2024 was $19.5 million driven by purchases of marketable securities of $166.8 million and the purchase of property and equipment of approximately $2.6 million. This was partially offset by the proceeds from maturities of marketable securities of $150.0 million.

Previous wording

Net cash used in investing activities during the six months ended June 30, 2023 was $166.1 million driven by purchases of marketable securities of $129.1 million, proceeds from maturities of marketable securities of $10.0 million purchase of business of $44.9 million, purchase of property and equipment of $1.8 million, and payment of additional investments in Cytek Japan of $0.2 million.

Current wording

Net cash used in investing activities during the nine months ended September 30, 2023 was $123.0 million driven by purchases of marketable securities of $152.6 million, proceeds from maturities of marketable securities of $78.0 million, purchase of business of $44.9 million, purchase of property and equipment of $3.1 million, and payment of additional investments in Cytek Japan of $0.2 million.

Previous wording

Net cash used in financing activities during the six months ended June 30, 2024 was $0.1 million driven by the payment for the repurchase of shares of $2.7 million. This was partially offset by the proceeds from a line of credit of $1.4 million and the proceeds from the issuance of common stock under employee stock plans of $0.7 million.

Current wording

Net cash used in financing activities during the nine months ended September 30, 2024 was $12.2 million driven by the payments for the repurchase of shares of $14.6 million. This was partially offset by the proceeds from a line of credit of $1.4 million, proceeds from our Employee Stock Purchase Plan of $1.0 million, and the proceeds from the issuance of common stock under our equity incentive plans of $0.9 million.

Previous wording

Net cash provided by financing activities during the six months ended June 30, 2023 was $0.2 million driven by the issuance of our common stock under our equity incentive plans, offset by repayment of loan of $0.3 million and $1.0 million costs related to the repurchase of our shares.

Current wording

Net cash used in financing activities during the nine months ended September 30, 2023 was $8.1 million driven by the payments for the repurchase of shares of $9.4 million, repayment of loan of $0.4 million, and payment for taxes related to net share settlement of equity awards of $0.3 million. This was offset by the issuance of our common stock under our equity incentive plans of $1.1 million and proceeds from our Employee Stock Purchase Plan of $1.0 million.

Previous wording

During the six months ended June 30, 2024, there were no material changes to our contractual obligations and commitments from those described under “Management’s Discussion and Analysis of Financial Condition” which is contained in our Form 10-K and filed with the SEC on March 13, 2024.

Current wording

During the nine months ended September 30, 2024, there were no material changes to our contractual obligations and commitments from those described under “Management’s Discussion and Analysis of Financial Condition” which is contained in our Form 10-K and filed with the SEC on March 13, 2024.