10-Q 1 ctkb-20240630.htm 10-Q ctkb-20240630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________
FORM 10-Q
_______________________________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
Commission File Number 001-40632
_______________________________________________________
CYTEK BIOSCIENCES, INC.
(Exact name of Registrant as specified in its Charter)
_______________________________________________________
Delaware
47-2547526
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
47215 Lakeview Blvd. Fremont, California
94538
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (877) 922-9835
_______________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
 Common Stock, par value $0.001 per share
 CTKB
The Nasdaq Global Select Market
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES NO
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
x
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
o
Emerging growth company
o
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO
The number of shares of Registrant’s Common Stock outstanding as of July 31, 2024 was 131,505,592.
1

Table of Contents
2

PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited).
Cytek Biosciences, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)June 30,
2024
December 31,
2023
(unaudited)
(audited)
Assets
Current assets:
Cash and cash equivalents$177,888 $167,299 
Restricted cash30 331 
Marketable securities99,323 95,111 
Trade accounts receivable, net44,643 55,928 
Inventories50,070 60,877 
Prepaid expenses and other current assets12,130 12,514 
Total current assets384,084 392,060 
Deferred income tax assets, noncurrent29,676 30,487 
Property and equipment, net18,114 18,405 
Operating lease right-of-use assets9,328 10,853 
Goodwill16,183 16,183 
Intangible assets, net21,420 23,084 
Other noncurrent assets4,920 3,385 
Total assets$483,725 $494,457 
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable$3,191 $3,032 
Legal settlement liability, current2,503 2,561 
Accrued expenses15,489 20,035 
Other current liabilities7,228 7,903 
Deferred revenue, current23,968 22,695 
Total current liabilities52,379 56,226 
Legal settlement liability, noncurrent16,912 16,477 
Deferred revenue, noncurrent14,064 15,132 
Operating lease liability, noncurrent8,113 9,479 
Long term debt1,330 1,648 
Other noncurrent liabilities1,804 2,431 
Total liabilities$94,602 $101,393 
Commitments and contingencies (Note 18)
Stockholders’ equity:
Common stock, $0.001 par value; 1,000,000,000 authorized shares as of June 30, 2024 and December 31, 2023, respectively; 131,505,201 and 130,714,906 issued and outstanding shares as of June 30, 2024 and December 31, 2023, respectively.
132 131 
Additional paid-in capital434,967 423,386 
Accumulated deficit(45,781)(29,178)
Accumulated other comprehensive loss(195)(1,275)
Total stockholders’ equity389,123 393,064 
Total liabilities and stockholders’ equity$483,725 $494,457 
The accompanying notes are an integral part of these unaudited interim consolidated financial statements
3

Cytek Biosciences, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
 Three months ended June 30,Six months ended June 30,
(In thousands, except share and per share data)2024202320242023
Revenue, net:
Product$34,576 $40,452 $68,698 $71,624 
Service12,041 9,241 22,779 15,157 
Total revenue, net46,617 49,693 91,477 86,781 
Cost of sales:
Product15,808 16,675 32,554 29,352 
Service5,373 4,856 10,474 8,229 
Total cost of sales21,181 21,531 43,028 37,581 
Gross profit25,436 28,162 48,449 49,200 
Operating expenses:
Research and development10,001 12,136 19,796 22,110 
Sales and marketing12,268 14,367 24,811 25,512 
General and administrative11,694 10,786 23,102 22,867 
Total operating expenses33,963 37,289 67,709 70,489 
Loss from operations(8,527)(9,127)(19,260)(21,289)
Other income (expense):
Interest expense(134)(409)(575)(1,082)
Interest income1,416 1,201 2,775 3,344 
Other income, net59 1,740 881 3,392 
Total other income, net1,341 2,532 3,081 5,654 
Loss before income taxes(7,186)(6,595)(16,179)(15,635)
Provision for (benefit from) income taxes3,248 (2,207)424 (4,440)
Net loss(10,434)(4,388)(16,603)(11,195)
Net loss, basic and diluted$(10,434)$(4,388)$(16,603)$(11,195)
Net loss per share, basic$(0.08)$(0.03)$(0.13)$(0.08)
Net loss per share, diluted$(0.08)$(0.03)$(0.13)$(0.08)
Weighted-average shares used in calculating net loss per share, basic 131,440,486135,918,707131,180,734135,705,139
Weighted-average shares used in calculating net loss per share, diluted131,440,486135,918,707131,180,734135,705,139
Comprehensive loss:
Net loss$(10,434)$(4,388)$(16,603)$(11,195)
Foreign currency translation adjustment, net of tax1,375 (980)1,131 (1,022)
Unrealized loss on marketable securities(16)(192)(51)(40)
Net comprehensive loss$(9,075)$(5,560)$(15,523)$(12,257)
The accompanying notes are an integral part of these unaudited interim consolidated financial statements
4

Cytek Biosciences, Inc
Consolidated Statements of Stockholders’ Equity
(unaudited)
 Common stock




(In thousands, except share data)
Shares
AmountAdditional
paid-in
capital
Accumulated
deficit
Accumulated other
comprehensive
income (loss)
Total
stockholders’
equity
Balances at December 31, 2023130,714,906$131 $423,386 $(29,178)$(1,275)$393,064 
Shares issued in connection with employee stock plans559,325— 506 — — 506 
Shares of Common Stock withheld related to net share settlement(20,050)— (148)— — (148)
Stock-based compensation— — 5,640 — — 5,640 
Unrealized loss on marketable securities— — — — (35)(35)
Foreign currency translation adjustment, net of tax— — — — (244)(244)
Net loss— — — (6,169)— (6,169)
Balances at March 31, 2024131,254,181$131 $429,384 $(35,347)$(1,554)$392,614 
Shares issued in connection with employee stock plans506,3751224225 
Proceeds from Employee Stock Purchase Plan210,4961,0071,007 
Shares of Common Stock withheld related to net share settlement(21,532)(130)(130)
Repurchase of shares(444,319)(2,670)(2,670)
Stock-based compensation7,1527,152 
Unrealized loss on marketable securities(16)(16)
Foreign currency translation adjustment, net of tax1,3751,375 
Net loss(10,434)(10,434)
Balances at June 30, 2024131,505,201$132 $434,967 $(45,781)$(195)$389,123 
Common stock
(In thousands, except share data)
Shares
AmountAdditional
paid-in
capital
Accumulated
deficit
Accumulated other
comprehensive
income (loss)
Noncontrolling
interest in consolidated
subsidiary
Total
stockholders’
equity
Balances at December 31, 2022135,365,381$135 $442,887 $(17,030)$(697)$251 $425,546 
Shares issued in connection with employee stock plans283,8561 203 — — — 204 
Shares of Common Stock withheld related to net share settlement(5,182)— (57)— — — (57)
Stock-based compensation— — 4,699 — — — 4,699 
Unrealized gain on marketable securities— — — — 152 — 152 
Foreign currency translation adjustment, net of tax— — — — (42)— (42)
Net loss— — — (6,807)— — (6,807)
Noncontrolling interest— — 16 — — (251)(235)
Balances at March 31, 2023135,644,055$136 $447,748 $(23,837)$(587)$ $423,460 
Shares issued in connection with employee stock plans697,670 — 483 — — — 483 
Proceeds from Employee Stock Purchase Plan145,569 — 966 — — — 966 
Shares of Common Stock withheld related to net share settlement(16,604)— (111)— — — (111)
Repurchase of shares(125,782)— (981)— — — (981)
Stock-based compensation— — 5,922 — — — 5,922 
Unrealized loss on marketable securities— — — — (192)— (192)
Foreign currency translation adjustment, net of tax— — — — (980)— (980)
Net loss— — — (4,388)— — (4,388)
Balances at June 30, 2023136,344,908$136 $454,027 $(28,225)$(1,759)$ $424,179 
The accompanying notes are an integral part of these unaudited interim consolidated financial statements
5

Cytek Biosciences, Inc
Consolidated Statements of Cash Flows
(unaudited)
 Six months ended June 30,
(In thousands)20242023
Cash flows from operating activities:
Net loss$(16,603)$(11,195)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization3,507 2,650 
Amortization of operating lease-right-of use assets1,433 1,596 
Stock-based compensation12,792 10,621 
Loss on disposal of property and equipment52  
(Benefits from) provision for credit losses(73)14 
Provision for excess and obsolete inventory1,037 596 
Gain on investments, accretion, and amortization, net(2,385)(3,704)
Interest expenses for accretion of the legal settlement liabilities447 831 
Change in operating assets and liabilities:
Trade accounts receivable10,153 (745)
Inventories9,199 (159)
Prepaid expenses and other assets543 (3,169)
Trade accounts payable96 (1,699)
Accrued expenses and other liabilities(9,389)275 
Legal settlement liabilities(70)(210)
Operating lease liabilities(1,160)(1,415)
Deferred revenue582 5,721 
Net cash provided by operating activities10,161 8 
Cash flows from investing activities:
Purchases of marketable securities(113,985)(129,081)
Proceeds from maturities of marketable securities112,000 10,000 
Proceeds from sale of property and equipment76  
Purchase of property and equipment(1,620)(1,818)
Acquisition of business (44,895)
Purchase of intangible assets(203)(55)
Payment for additional investment in Cytek Japan (235)
Net cash used in investing activities(3,732)(166,084)
Cash flows from financing activities:
Repayment of loan(278)(287)
Proceeds from Employee Stock Purchase Plan1,007 966 
Payments for taxes related to net share settlement of equity awards(278)(168)
Proceeds from issuance of common stock under employee stock plans730 686 
Proceeds from line of credit1,391  
Payments for repurchase of shares(2,670)(981)
Net cash (used in) provided by financing activities(98)216 
Effect of exchange rate changes on cash, cash equivalents and restricted cash3,957 (2,096)
Cash, cash equivalents and restricted cash:
Net increase (decrease) in cash, cash equivalents and restricted cash10,288 (167,956)
Cash, cash equivalents and restricted cash at beginning of period167,630 299,500 
Cash, cash equivalents and restricted cash at end of period$177,918 $131,544 
Supplemental disclosure of cash flow information:
Cash paid for taxes

$1,058 $683 
Non-cash investing and financing activities:
Fixed asset purchases in accounts payable or accrued purchase at period end$123 $30 
Intangible asset in accounts payable or accrued expenses at period end$ $8 
The accompanying notes are an integral part of these unaudited interim consolidated financial statements
6

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 research and clinical 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's goal is to become 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 core FSP instruments, 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”), 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 unaudited interim 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 unaudited interim consolidated financial statements include the accounts of Cytek Biosciences, Inc., its wholly-owned subsidiaries, Cytek Limited (HK), Cytek Biosciences B.V. (Europe), Cytek (Shanghai) Biosciences Co., Ltd., Cytek Biosciences (Wuxi) Co., Ltd.("Cytek Wuxi"), Cytek Japan Kabushiki Kaisha (“Cytek Japan”), Cytek Biosciences Ltd (UK), Cytek Biosciences GmbH (Germany), Cytoville Biosciences Shanghai Co., Ltd. and Cytek (Shanghai) Software Development Technology Co., Ltd. Cytoville Biosciences Shanghai Co., Ltd. and Cytek (Shanghai) Software Development Technology Co., Ltd. were closed in the fourth quarter of 2023. All intercompany accounts and transactions have been eliminated in consolidation.
Use of estimates
The preparation of the unaudited interim 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 unaudited interim consolidated financial statements and accompanying notes as of the date of the unaudited interim 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 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.
7

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 unaudited interim consolidated statements of operations and comprehensive loss 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 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 unaudited interim consolidated statements of operations and comprehensive loss.
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 and cash equivalents consist of money held in demand depository accounts and money market funds. The carrying amount of cash and cash equivalents, and restricted cash was $177.9 million and $167.6 million as of June 30, 2024 and December 31, 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 June 30, 2024.
The Company classifies restricted cash as current on the accompanying unaudited interim 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):
June 30,
2024
December 31,
2023
Cash$33,797 $22,407 
Money market funds144,091 144,892 
Restricted cash30 331 
Total cash, cash equivalents and restricted cash as presented on the consolidated statements of cash flows$177,918 $167,630 
Short-term restricted cash
As of December 31, 2023, a customer made an advance payment of $0.3 million to Cytek Biosciences B.V., provided that the Customer receives a bank guarantee for the same amount as security for refund of said amount in the event that Cytek Biosciences B.V. fails to fulfill its delivery commitment. After the delivery, the restricted cash will be released into the Company's normal cash account. As of June 30, 2024, restricted cash of $0.3 million was released.
As of June 30, 2024, advance payments to Cytek Biosciences B.V. totaled $30,000. The restricted cash will be released into the Company's normal cash account upon Cytek Biosciences B.V.'s fulfillment of its delivery commitment.
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. 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 and other income, 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
8

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 three months ended June 30, 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 45 days of the period in which the corresponding sales occur and do not bear interest 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 six months ended June 30, 2024 were as follows (in thousands):
Allowance for credit losses
Balance at December 31, 2023$372 
Utilization of allowance for credit losses(198)
Provision for credit losses125 
Balance at June 30, 2024$299 
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 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
9

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
Building20 years
Furniture and fixtures7 years
Laboratory equipment5 years
Office and computer equipment3 years
Leasehold improvementsShorter 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. 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
Patent20 years
Trademarks10 years
Tradename
3 - 15 years
FCI developed technology
1 - 6 years
Customer relationship
7 - 9 years
Reagent licenses7 years
IP license5 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 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.
10

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 unaudited interim 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 delivery and payment terms are 30 to 45 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. 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-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 three months ended June 30, 2024 and 2023, the Company recorded $0.0 million and $1.0 million of revenue under bill-and-hold arrangements, respectively.
11

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 relating to the Company’s planned initial public offering (“IPO”), are capitalized, and are offset against proceeds from an offering upon the effectiveness of the offering. In the event an anticipated offering is terminated, deferred offering costs will be expensed.
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 June 30, 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 used in research and development activities are recorded as prepaid expenses until the related goods or services are received.
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Advertising costs
The cost of advertising, marketing and media is expensed as incurred. For the three and six months ended June 30, 2024, advertising, marketing and media expenses were $1.3 million and $2.2 million, respectively. For the three and six months ended June 30, 2023, advertising, marketing and media expenses were $1.3 million and $2.1 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 studying the volatility of selected industry peers deemed to be comparable to the Company's business corresponding 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 unaudited interim consolidated financial statements.
Net loss per share
Basic net loss per share and diluted net loss per share are computed using the weighted-average number of shares of common stock outstanding for the period. Net loss per share is calculated using the two-class method, which is an
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earnings allocation formula that determines net 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 loss per share in the periods in which net loss is recorded.
Diluted net loss 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 loss 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 loss 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. The Company's 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 allows 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 June 30, 2024, the program has no outstanding balance, and no supplier has transferred their receivables to the Bank of Communications Co., Ltd.
Any transferred suppliers’ account receivable under the program in the future will be included in the outstanding line of credit with the financial institution.
Recently adopted accounting pronouncements
In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations ("ASU 2022-04"), which requires a buyer in a supplier finance program to disclose qualitative and quantitative information about its program to allow a user of the financial statements to understand the program’s nature, activity during the period, changes from period to period and potential magnitude. The amendments in ASU 2022-04 are effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with the exception for the amendment on roll-forward information, which is effective for fiscal years beginning after December 15, 2023. The guidance should be applied retrospectively, except for the amendment on roll-forward information, which should be applied prospectively. In the second quarter of 2024, the Company implemented a supplier financing arrangement and adopted ASU 2022-04. The adoption did not have a material effect on the Company's consolidated financial statements.
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Recently issued accounting pronouncements
In November 2023, the FASB issued Accounting Standards Update ("ASU") No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 looks to provide improvements to the segment disclosure by providing users with more decision-useful information about reportable segments in a public entity. The main provisions require a company to disclose, on an annual and interim basis, significant expenses included within each reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition. ASU 2023-07 is to be applied retrospectively to all prior periods presented in the financial statements with an effective date for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this pronouncement.
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.
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):
Three months ended June 30,Six Months Ended June 30,
2024202320242023
Sales channel mix
Direct sales channel$34,549 $37,854 $68,869 $63,307 
Distributor channel12,068 11,839 22,608 23,474 
Total revenue, net$46,617 $49,693 $91,477 $86,781 
  
Customer mix  
Academia and government$20,239 $20,405 $52,834 $35,602 
Biotechnology, pharmaceutical, distributor and contract research organizations26,378 29,288 38,643 51,179 
Total revenue, net$46,617 $49,693 $91,477 $86,781 
Revenue by geographical markets is presented in Note 22.
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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 June 30, 2024 (in thousands):
Less than 1 yearGreater than 1 yearTotal
Product revenue$1,079 $ $1,079 
Service revenue22,889 14,064 36,953 
Total revenue$23,968 $14,064 $38,032 
Contract balances
The following table provides information about receivables, deferred revenue from contracts with customers, and customer deposits (in thousands):
June 30,
2024
December 31,
2023
Trade accounts receivable$44,643 $55,928 
Contract liabilities:  
Deferred revenue$38,032 $37,827 
Customer deposits, which are included in 'Other current liabilities'1,069 1,438 
Total contract liabilities$39,101 $39,265 
The following provides a roll-forward of the contract liabilities (in thousands):
Contract liabilities
Balance at December 31, 2022$27,665 
Revenue recognized(36,298)
Revenue deferred47,898 
Balance at December 31, 2023$39,265 
Revenue recognized(22,779)
Revenue deferred22,615 
Balance at June 30, 2024$39,101 
5.    Balance sheet details
Inventories
The following table shows the components of inventory (in thousands):
June 30,
2024
December 31,
2023
Raw materials$29,831 $35,718 
Work in progress6,028 10,454 
Finished goods14,211 14,705 
Total inventories$50,070 $60,877 
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Prepaid expenses and other current assets
The following table shows the components of prepaid expenses and other current assets (in thousands):
June 30,
2024
December 31,
2023
Prepaid expenses:
Prepaid inventory$47 $292 
Prepaid rent123 255 
Prepaid insurance128 990 
Prepaid income tax7,264 5,813 
Other2,550 2,742 
Other current assets:
Tax refund receivable109 192 
Other1,909 2,230 
Total prepaid expenses and other current assets$12,130 $12,514 
Accrued expenses
The following table shows the components of accrued expenses (in thousands):
June 30,
2024
December 31,
2023
Accrued expenses:
Accrued compensation and related benefits$10,302 $13,748 
Professional service fees483 665 
Purchases1,745 1,871 
Product warranty2,238 2,805 
Other721 946 
Total accrued expenses$15,489 $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):
June 30,
2024
December 31,
2023
Other current liabilities:
Customer deposits$1,069 $1,438 
Income tax payable358 1,297 
Sales and use tax payable1,127 1,763 
Operating lease liability, current2,407 2,444 
Current portion of loan and line of credit1,926 565 
Other341 396 
Total other current liabilities$7,228 $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
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measurement. The following table sets forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy (in thousands):
Description:June 30,
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$144,091 $144,091 $ $ 
Short-term investments:   
U.S. Treasury85,439 85,439   
Commercial paper13,884  13,884  
Total$243,414 $229,530 $13,884 $ 
Description: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. Treasury47,366 47,366   
Federal agency securities35,818  35,818  
Commercial paper11,927  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 June 30, 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 June 30, 2024 (in thousands):
June 30, 2024
Amortized CostGross Unrealized Gains
Gross Unrealized Loss
Estimated Fair Value
U.S. Treasury$85,481 $- $(42)$85,439 
Commercial paper13,905  (21)13,884 
Total available-for-sale investments$99,386 $ $(63)$99,323 
The following table summarizes the contractual maturities of the Company's available-for-sale securities at June 30, 2024 (in thousands):
June 30, 2024
Amortized CostFair Value
Mature in less than one year$99,386 $99,323 
Total$99,386 $99,323 

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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 CostGross Unrealized Gains
Gross Unrealized Loss
Estimated Fair Value
U.S. Treasury$47,347 $19 $ $47,366 
Federal agency securities35,840  (22)35,818 
Commercial paper11,937  (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 CostFair 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):
June 30,
2024
December 31,
2023
Laboratory equipment$10,459 $9,472 
Leasehold improvements3,243 3,623 
Building and land7,797 7,653 
Construction in progress272 256 
Office and computer equipment1,258 1,235 
Furniture and fixtures2,091 2,086 
Total property and equipment25,120 24,325 
Less: accumulated depreciation(7,006)(5,920)
Property and equipment, net$18,114 $18,405 
Total depreciation expense for the three and six months ended June 30, 2024 was $0.9 million and $1.6 million, respectively. Total depreciation expense for the three and six months ended June 30, 2023 was $0.6 million and $1.1 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 the Company'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 the Company 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 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, 2023, 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
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Deferred tax assets increased by $0.6 million
Customer relationships increased by $0.1 million
Developed technologies increased by a total $0.7 million
Trade names increased by $0.2 million

The measurement period adjustments noted above decreased goodwill by $3.0 million.
The following 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 equipment3,040 
Prepaid expenses70 
Deferred tax assets570 
Intangible assets
Customer Relationships8,600 
Amnis ImageStream developed technology10,000 
Guava easyCyte and Muse developed technology140 
Amnis FlowSight and CellStream developed technology20 
Amnis tradename2,900 
Guava tradename90 
Goodwill6,038 
Deferred revenue(4,952)
Other current liabilities(316)
Fair value of net assets acquired$44,895 
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.

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 ValueUseful life (years)
(In thousands, except for years)
Customer relationships$8,600 9
Amnis ImageStream Developed Technology10,000 6
Guava easyCyte and Muse Developed Technology140 2
Amnis FlowSight and CellStream Developed Technology20 1
Amnis Tradename2,900 15
Guava Tradename 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.
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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 operations for the FCI Business are included in the consolidated financial statements of the Company from the date of the acquisition.
10.    Goodwill and intangible assets, net
The following table shows the components of intangible assets, net (in thousands):
June 30,
2024
December 31,
2023
Patents and trademarks$888 $638 
Tradename3,774 3,823 
IP license10,636 10,636 
Customer relationships10,800 10,800 
Reagent license1,800 1,800 
Total intangible assets27,898 27,697 
Less: accumulated amortization(6,478)(4,613)
Intangible assets, net$21,420 $23,084 
Total amortization expense for the three and six months ended June 30, 2024 was approximately $0.9 million and $1.9 million, respectively. Total amortization expense for the three and six months ended June 30, 2023 was approximately $1.0 million and $1.5 million, respectively.
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 million, (ii) a low single digit royalty payment for ten years, based on net sales of certain of its products, (iii) $6 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
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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 with the second quarter of 2022, the remaining contractual payments were classified as operating expenses as they were considered deferred litigation settlement. The Company recorded $0.1 million and $0.4 million of interest expense for the three and six months ended June 30, 2024, respectively, and $0.5 million and $0.8 million of interest expense for the three and six months ended June 30, 2023, 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 $19.4 million and $19.0 million as of June 30, 2024 and December 31, 2023, respectively, and will record licensing expense in future periods.
The following table shows the components of the legal settlement liability (in thousands):
June 30,
2024
December 31,
2023
Current:
Legal settlement liability$2,503 $2,561 
Noncurrent:
Legal settlement liability16,912 16,477 
Total legal settlement liability$19,415 $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 is denominated in Chinese renminbi and collateralized by Cytek Wuxi's cash deposit to the bank. The deposit is in a separate account with Cytek Wuxi's name, but the use of such account is restricted. The Company presented the deposit as restricted cash on the audited consolidated balance sheets as of December 31, 2022. In 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 June 30, 2024, the total loan amount is $1.9 million. The current portion of the loan, $0.6 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 will be 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.
13.    Common stock
As of June 30, 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 Board of Directors 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 the “2022 Sales Agreement”-with Piper Sandler & Co. (“Piper”) as sales agent to sell from
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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 June 30, 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 $44.0 million at an average price per share of $6.66. The commissions costs related with 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.
On June 6, 2024, the Board of Directors approved a program for the repurchase by the Company of up to an aggregate of $50 million of its outstanding common stock. The program will end on December 31, 2024. During the three months ended June 30, 2024, the Company repurchased 444,319 shares of its outstanding common stock for a total cost of approximately $2.7 million at an average price per share of $5.99. As of June 30, 2024, the Company has a remaining authorized amount of $47.3 million in the repurchase program.

To date, pursuant to the Company repurchase programs, the Company has purchased the aggregate of 7,058,099 shares of its outstanding common stock for a total cost of approximately $46.7 million at an average price per share of $6.61. The repurchase programs were 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.
On August 16, 2022, the Inflation Reduction Act of 2022 ("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, 2023 and June 30, 2024, the Company accrued $0.3 million and $0.3 million in excise taxes related with its share repurchases. As of June 30, 2024, these excise taxes are still outstanding.
14.    Stock-based compensation plan
Stock Plans
As of June 30, 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 Company’s
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Board of Directors elects to authorize a lesser number of shares prior to the applicable January 1. As of June 30, 2024, the total number of shares of common stock available for issuance under the 2021 Plan was 21,790,770 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 six months ended June 30, 2024, 210,496 shares were issued pursuant to purchases under the ESPP. As of June 30, 2024, the total number of shares of common stock available for issuance under the ESPP was 5,298,874 shares.
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 priceWeighted-average remaining contractual term
(in years)
Aggregate intrinsic value
Balance as of December 31, 20237,219,702$8.74 6.90$23,574 
Options granted1,916,6706.86 
Options exercised(483,157)1.51 
Options forfeited(95,210)13.25 
Options expired(133,785)16.18 
Balance as of June 30, 20248,424,220$8.56 7.28$10,232 
Options exercisable as of June 30, 20244,949,291$7.95 6.19$10,034 
The weighted-average grant date fair value of options granted during the three months ended June 30, 2024 and 2023 were $4.07 and $5.28 per share, respectively. The weighted-average grant date fair value of options granted during the six months ended June 30, 2024 and 2023 were $4.61 and $6.72 per share, respectively.
There was $22.1 million of unrecognized stock-based compensation expense related to unvested stock options as of June 30, 2024. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 2.59 years as of June 30, 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 June 30, 2024.
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RSU Awards
The following table shows RSU awards activity during the periods indicated:
Shares
Weighted-average grant date fair value per shareWeighted-average remaining contractual term (in years)Aggregate intrinsic value (in thousands)
Unvested balance at December 31, 20232,608,257$10.88 1.51$23,787 
Granted3,358,4676.97   
Vested(582,543)10.18   
Forfeited(232,552)10.24   
Unvested balance at June 30, 20245,151,629$8.44 1.68$28,746 
There was $41.2 million of unrecognized stock-based compensation expense related to unvested RSU awards as of June 30, 2024. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 3.21 years as of June 30, 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):
Three months ended June 30,Six months ended June 30,
2024202320242023
Cost of sales$1,200 $868 $2,145 $1,560 
Research and development1,677 1,805 2,999 3,239 
Sales and marketing1,280 1,171 2,287 2,107 
General and administrative2,995 2,078 5,361 3,715 
Total stock-based compensation$7,152 $5,922 $12,792 $10,621 
The following table shows the weighted-average valuation assumptions used in determining the fair value of employee stock options:
Three months ended June 30,Six months ended June 30,
2024202320242023
Expected term (in years)5.915.56.05.96
Expected volatility74 %70 %73 %71 %
Risk-free interest rate4 %4 %4 %4 %
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:
Three months ended June 30,Six months ended June 30,
2024202320242023
Expected term (in years)0.50.50.50.5
Expected volatility63 %70 %58 %76 %
Risk-free interest rate5 %4 %5 %4 %
Dividend yield- - - - 
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 (“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 $569,732 and $974,025 for the
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three and six months ended June 30, 2024, respectively. The Company’s contributions to the 401(k) Plan were approximately $432,000 and $770,000 for the three and six months ended June 30, 2023, respectively.
16.    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 unaudited interim consolidated financial statements.
The Company's effective income tax rate from continuing operations was (2.6)% and 28.4% for the six months ended June 30, 2024 and 2023, respectively. The Company’s effective income tax rate for the six months ended June 30, 2024 is lower than the US federal statutory tax rate due to the impact of non-deductible stock-based compensation, and the Company's mix of earnings between various taxing jurisdictions, partially offset by a deduction for foreign-sourced revenue, stock compensation, and federal and state research credits. The effective income rate for the six months ended June 30, 2023 was higher than the US federal statutory tax rate primarily due to state income taxes, non-deductible stock-based compensation, the Company's mix of earnings between various taxing jurisdictions, partially offset by a deduction for foreign-sourced revenue, and federal and state research credits.
Realization of the Company's deferred tax assets is dependent primarily on the generation of future taxable income. In considering the need for a valuation allowance, the Company considers its historical, as well as future projected, taxable income along with other objectively verifiable evidence. Objectively verifiable evidence includes the Company's realization of tax attributes, assessment of tax credits, and utilization of net operating loss carryforwards during the year.
Components of our results of operations:
Income Taxes:
The Company's benefit from income taxes consists primarily of provision for federal taxes and local taxes in the United States as well as foreign taxes. As the Company plans to expand the scale and scope of its international business activities, any changes in the United States and foreign taxation of such activities may increase the Company's overall provision for income taxes in the future.
Results of operations:
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The following table displays the benefit from income taxes for the three and six months ended June 30, 2024 and 2023 (in thousands):
Three months ended June 30,Change
20242023Amount%
Provision for (benefit from) income taxes
$3,248 $(2,207)$5,455 (247)%

Six months ended June 30, Change
20242023Amount%
Provision for (benefit from) income taxes$424 $(4,440)$4,864 (110)%
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.