Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of Alpha Teknova, Inc.'s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements reflecting our current expectations, estimates, and assumptions concerning events and financial trends that may affect its future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections titled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" appearing elsewhere in this Annual Report on Form 10-K. Unless the context otherwise requires, references in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" to "the Company," "Teknova," "we," "us," and "our" are intended to mean the business and operations of Alpha Teknova, Inc.

Overview

Since our founding in 1996, we have been producing critical reagents for the discovery, development, and commercialization of novel therapies, vaccines, and molecular diagnostics. Our more than 3,000 customers span the entire continuum of the life sciences market, including leading pharmaceutical and biotechnology companies, contract development and manufacturing organizations, in vitro diagnostics franchises, and academic and government research institutions. Our Company is built around our knowledge, methods, and know-how in our proprietary manufacturing processes, which are highly adaptable and configurable. These proprietary processes enable us to manufacture and deliver high-quality, custom, made-to-order products with short turnaround times and at scale, across all stages of our customers' product development, from early research through commercialization.

We have two primary product categories: Lab Essentials; and Clinical Solutions. Our products cross all stages of development, from early research through commercialization. We offer three primary product types: (i) pre-poured media plates for cell growth and cloning; (ii) liquid microbial culture media and supplements for cellular expansion; and (iii) molecular biology reagents for sample manipulation, resuspension, and purification. Our liquid cell culture media and supplements and molecular biology reagents are available in both of our two primary product categories; pre-poured media plates are available in our Lab Essentials category only.

We are ISO 13485:2016 certified, enabling us to manufacture products for use in diagnostic and therapeutic applications. Our certification allows us to offer solutions across the entire customer product development workflow, supporting our customers'need for materials in greater volume and that meet increasingly stringent quality requirements as they scale from research to commercialization.

We manufacture our products at our Hollister, California headquarters and stock inventory of raw materials, components, and finished goods at that campus. We rely on a limited number of suppliers for certain raw materials, and we have no long-term supply arrangements with our suppliers, as we order on a purchase order basis. We ship our products directly from our warehouse in Hollister, California, to our customers and distributors, generally pursuant to purchase orders. We typically recognize revenue when products are shipped.

We generated revenue of $40.5 million in 2025, which represents an increase of $2.8 million as compared to $37.7 million in 2024. In 2025 and 2024, only 5.6% and 4.8%, respectively, of our revenue was generated from customers located outside of the U.S. Our sales outside of the U.S. are denominated in U.S. dollars. We primarily generate sales through direct channels and a small salesforce, however, some of our sales are generated through distributors.

We had an operating loss of $17.0 million in 2025 compared to $26.1 million in 2024. While our expenses may fluctuate over the short term, we expect our expenses will increase in future periods, but at a slower rate, in connection with our ongoing activities as we:

Key Developments

Impact of Broader Economic Trends on Our Business

We continue to closely monitor economic uncertainty in the U.S. and abroad. General inflation in the U.S. rose in recent years to levels not experienced in recent decades. While the rate of inflation moderated in 2024, general inflation, including rising prices for our raw materials and other inputs, tariffs, as well as rising salaries and other expenses, can negatively impact our business by increasing our cost of sales and operating expenses. Inflation, together with uncertainty regarding future interest rate changes, and broader macroeconomic uncertainty, may cause our customers to reduce, delay, or cancel orders for our goods and services, thereby causing a decrease in or change in the timing of sales of our products and services. We cannot predict the impact of future inflation and interest rate changes on the results of our operations. Furthermore, changes to tariff and related international trade policy that began in 2025 has created uncertainty about the broader economy and our business. For further information regarding the impact of these economic factors on us, please see Item 1A., "Risk Factors" in this report, which is incorporated herein by reference.

Results of Operations

The following tables set forth our results of operations for the years ended December 31, 2025 and 2024 (dollars in thousands):

Revenue

Our revenue disaggregated by product category, for the years ended December 31, 2025 and 2024 was as follows (dollars in thousands):

Total revenue was $40.5 million in 2025, an increase of $2.8 million, or 7.4%, compared with $37.7 million in 2024.

Lab Essentials revenue was $31.0 million in 2025, an increase of $2.2 million, or 7.5%, compared with $28.9 million in 2024. The increase in Lab Essentials revenue was attributable to an increased number of customers, partially offset by lower average revenue per customer.

Clinical Solutions revenue was $7.7 million in 2025, an increase of $0.6 million, or 7.8%, compared with $7.1 million in 2024. The increase in Clinical Solutions revenue was attributable to an increased number of customers, partially offset by lower average revenue per customer.

Our revenue disaggregated by geographic region, which is determined based on customer location, for the years ended December 31, 2025 and 2024, was as follows (dollars in thousands):

Revenue from sales to customers in the U.S. was $38.2 million in 2025, and $35.9 million in 2024. Revenue from U.S. sales was consistent year over year, representing 94.4% and 95.2% of our total revenue in 2025 and 2024, respectively.

Revenue from sales to customers in markets outside of the U.S. was $2.3 million in 2025, and $1.8 million in 2024. Revenue from international sales was also consistent year over year, representing 5.6% and 4.8% of our total revenue in 2025 and 2024, respectively. Revenue from sales to customers in markets outside of the U.S. was primarily derived from the United Kingdom, Canada, and Singapore in both 2025 and 2024.

Gross profit

Our gross profit for the years ended December 31, 2025 and 2024 was as follows (dollars in thousands):

Gross profit percentage was 33.2% in 2025, and 19.2% in 2024. The increase was primarily driven by $2.8 million of non-recurring and non-cash charges during 2024 related to the disposal of expired inventory and write

down of excess inventory. Excluding those non-recurring and non-cash charges, gross profit would have been $10.0 million and gross profit percentage would have been 26.5%, respectively, in the year ended December 31, 2024. The improvement in gross profit percentage from 26.5% to 33.2% was primarily driven by higher revenue and manufacturing efficiency gains.

Operating expenses

Our operating expenses for the years ended December 31, 2025 and 2024 were as follows (dollars in thousands):

Research and development expenses were $2.2 million in 2025 and $2.8 million in 2024. The decrease was primarily driven by lower salaries and wages resulting from the reduction in workforce that was completed in early 2024.

Sales and marketing expenses were $6.8 million in 2025 and $6.3 million in 2024. The increase was primarily driven by higher marketing costs during 2025, partially offset by lower salaries and wages resulting from the reduction in workforce that occurred in early 2024.

General and administrative expenses were $20.3 million in 2025 and $23.2 million in 2024. Excluding the non-recurring charges of $0.5 million in 2025 related to non-recurring transaction costs and $1.4 million in 2024 of which $1.3 million related to the reduction in workforce and $0.1 million loss contingency, general and administrative expenses decreased $2.1 million. The decrease was driven primarily by facility costs, insurance, freight, depreciation, and professional fees as well as lower stock-based compensation expense due to one-time costs incurred in connection with the repricing that occurred in early 2024. See "Notes to Financial Statements-Note 12. Stock-Based Compensation" for a more detailed discussion of the stock option repricing.

Amortization of intangible assets was consistent in 2025 and 2024, at $1.1 million.

Other expenses, net

Other expenses, net for the years ended December 31, 2025 and 2024 were as follows (dollars in thousands):

Total other expenses, net was $0.2 million in 2025, compared to total other expenses, net of $0.7 million in 2024. The decrease in total other expense, net was primarily attributable to a $0.5 million adjustment recognized on the exit fee concurrent with the refinancing of our credit agreement in early 2025 coupled with lower interest income, largely offset by lower interest expense.

Provision for (benefit from) income taxes

Our provision for (benefit from) income taxes for the years ended December 31, 2025 and 2024 was as follows (dollars in thousands):

Our provision for income taxes was $0.1 million in 2025, compared to a benefit of $0.1 million in 2024. The change from benefit from income taxes to provision for income taxes was attributable to operating losses not expected to produce a benefit.

Liquidity and Capital Resources

The primary sources of financing for our operations are our (i) registered direct offering and concurrent private placement completed in September 2023 (collectively, the September 2023 Offerings), which resulted in aggregate gross proceeds of $22.9 million before deducting offering expenses of $0.4 million and the prepayment of $10.0 million of the Term Loan, and (ii) private placement completed in July 2024 (the July 2024 Offering), which resulted in aggregate gross proceeds of $15.4 million before deducting offering expenses of $0.2 million.

Our principal liquidity requirements are to fund our operations and capital expenditures. During the year ended December 31, 2025, we incurred net losses of $17.3 million. In addition, as of December 31, 2025, we had an accumulated deficit of $135.8 million and $13.2 million in borrowings outstanding under our Term Loan (defined below). As of December 31, 2025, we had $27.0 million of working capital, which included $5.9 million in cash and cash equivalents and $15.4 million in short-term investments.

On March 3, 2025, we entered into the Second Amended and Restated Credit Agreement with MidCap Financial (Midcap) Trust which provides for loan commitments in an aggregate amount of up to $28.245 million consisting of a $23.245 million senior secured term loan (Term Loan) and a $5.0 million working capital facility (Revolver). The Term Loan consists of the $12.135 million balance outstanding under the previous term loan, plus an additional $1.110 million related to the exit fee that would otherwise have been due upon closing of the Second Amended and Restated Term Loan Credit Agreement, as well as an additional tranche of $10.0 million that may become available for use in an acquisition, with MidCap's consent. The Second Amended and Restated Credit Agreement includes minimum net revenue requirements that are measured on a trailing twelve-month basis and a minimum cash requirement throughout the term of the agreement. For example, ourminimum net revenue requirement for the twelve months ending December 31, 2025, was $39.0 million. The minimum cash requirement is $8.0 million, which includes cash and cash equivalents as well as short-term investments in U.S. Treasuries. We were in compliance with our financial covenants under the terms of the Second Amended and Restated Credit Agreement as of December 31, 2025. See "Notes to Financial Statements-Note 10. Long-Term Debt, Net" for a more detailed discussion of the material terms of our Second Amended and Restated Credit Agreement.

On July 10, 2025, we filed a "shelf" registration statement on Form S-3 (Reg. No. 333-288613) with the SEC, which was declared effective on July 16, 2025. This shelf registration statement, which includes a base prospectus, allows us at any time to offer any combination of securities described in the prospectus in one or more offerings for our own account in an aggregate amount up to $225 million. The Form S-3 is intended to provide us flexibility to conduct registered sales of our securities, subject to market conditions and our future capital needs. The terms of any future offering under the shelf registration statement will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.

As of December 31, 2025, our material cash requirements from known contractual obligations and commitments relate primarily to operating leases for our office, manufacturing, warehouse, and distribution facilities. See "Notes to Financial Statements-Note 7. Leases," for a discussion of our lease obligations reflected on our balance sheet.

The following table sets forth, for the periods indicated, net cash flows used in operating activities, used in investing activities and provided by financing activities (in thousands):

Operating Activities

Net cash used in operating activities consists primarily of net loss adjusted for certain non-cash items (including depreciation and amortization, bad debt expense, deferred taxes, loss on disposal of property, plant, and equipment, inventory reserve, amortization of debt issuance costs, and stock-based compensation expense), and the effect of changes in working capital and other operating activities.

Net cash used in operating activities was $8.6 million in 2025, which primarily consisted of net loss of $17.3 million plus net adjustments for non-cash charges of $11.3 million, offset by net changes in operating assets and liabilities of $2.7 million. The primary non-cash adjustments to net loss included $6.3 million of depreciation and amortization, $3.4 million of stock-based compensation, a $2.1 million provision for inventory, and amortization of debt financing costs of $0.2 million, partially offset by amortization of the discount on short-term investments of $0.6 million, and an adjustment to the loan exit fee of $0.5 million. The main drivers of the changes in operating assets and liabilities were a $2.4 million increase in inventories, a $0.6 million increase in prepaid expenses and other current assets, and a $0.4 million increase in accounts receivable, partially offset by a $0.5 million increase in accounts payable.

Net cash used in operating activities was $12.4 million in 2024, which primarily consisted of net loss of $26.7 million plus net adjustments for non-cash charges of $15.2 million, offset by net changes in operating assets and liabilities of $0.9 million. The primary non-cash adjustments to net loss included $6.6 million of depreciation and amortization, a $4.5 million provision for inventory, $3.7 million of stock-based compensation, amortization of debt financing costs of $0.4 million, and loss on disposal of property, plant, and equipment of $0.2 million, partially offset by amortization of the discount on short-term investments of $0.3 million. The main drivers of the changes in operating assets and liabilities were a $0.6 million decrease in accounts payable, an increase of $0.5 million in accounts receivable, a $0.4 million decrease in accrued liabilities, partially offset by a decrease in other non-current assets of $0.5 million and a decrease in inventories of $0.2 million.

Investing Activities

Net cash provided by (used in) investing activities relates primarily to the purchase and maturity of short-term investments as well as capital expenditures and proceeds from the sale of any long-lived assets.

Net cash provided by investing activities was $10.7 million in 2025, which consisted of maturities of short-term investments of $29.0 million, partially offset by purchases of short-term investments of $17.2 million and purchases of property, plant, and equipment of $1.1 million.

Net cash used in investing activities was $27.3 million in 2024, which consisted of purchases of short-term investments of $30.3 million and purchases of property, plant, and equipment of $1.1 million, partially offset by maturities of short-term investments of $4.0 million and proceeds from the sale of certain long-lived assets of $0.1 million.

Financing Activities

Net cash provided by financing activities primarily relates to proceeds from our July 2024 Offering, proceeds and payments related to our long-term debt, the exercise of stock options, issuance of common stock under our employee stock purchase plan, and other financing activities.

Net cash provided by financing activities was $0.2 million in 2025, which was primarily attributable to proceeds from long-term debt of $1.1 million, proceeds from financed insurance premiums of $0.3 million, proceeds of $0.1 million from the issuance of common stock under our employee stock purchase plan, and $0.1 million of proceeds from the exercise of stock options, largely offset by the payment of exit fee costs of $1.1 million, repayment of financed insurance premiums of $0.3 million, and payment of debt issuance costs of $0.1 million.

Net cash provided by financing activities was $14.9 million in 2024, which was primarily attributable to net proceeds from the July 2024 Offering of $15.1 million, proceeds from financed insurance premiums of $0.4 million and proceeds of $0.1 million from the issuance of common stock under our employee stock purchase plan, partially offset by the repayment of financed insurance premiums of $0.7 million.

Critical Accounting Policies and Estimates

Our financial statements have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on other assumptions that are 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 that are not readily apparent from other sources. However, future events may cause us to change our assumptions and estimates, which may require adjustment. Actual results could differ from these estimates.

We believe the following critical accounting policies involve significant areas where management applies judgments and estimates in the preparation of our financial statements.

Revenue Recognition

We account for revenue in accordance with ASC 606. This process involves identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract, and recognizing revenue when or as we satisfy performance obligations.

We recognize revenue from the sale of manufactured products and services when control of promised goods or services is transferred to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. The majority of our sales agreements contain performance obligations satisfied at a point in time when control is transferred to the customer.

Occasionally, we offer rebates, discounts, and returns on our products, however, returns and refunds occur rarely. We record rebates, discounts, and returns at the time they occur. The difference between recording these as they occur and estimating the amount of consideration in exchange for the transfer of promised goods would not have a material impact on the financial statements.

Intangible Assets and Other Long-Lived Assets

We review our definite-lived intangible assets and other long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated. Significant judgment is required to estimate the amount and timing of future cash flows and the relative risk of achieving those cash flows.

Indefinite lived intangible assets are also subject to an impairment test at least annually, as of October 1, or more frequently if events or circumstances indicate that it is more likely than not that the asset is impaired. If the fair value of the asset is less than the carrying amount, an impairment loss would be recognized in an amount equal to the difference between the carrying amount and the fair value. We completed our assessment in the fourth quarter of 2025 and determined that it is not more likely than not that the fair value of our indefinite-lived intangible assets is less than the carrying amount.

Assumptions and estimates about future values and remaining useful lives are complex and often subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts.

Income Taxes

The asset and liability method is used in accounting for deferred income taxes. Under this method, deferred income taxes are provided for differences between the carrying amounts of assets and liabilities for financial reporting and tax purposes using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accordingly, our tax provision contemplates tax rates currently in effect to determine our current tax provision as well as enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be realized or settled to determine our deferred tax provision. Any significant fluctuation in rates or changes in tax laws could lead to either increases or decreases in our effective tax rate.

Our provision for income taxes, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect our best assessment of estimated future taxes to be paid. Significant judgments and estimates based on interpretations of existing tax laws or regulations are required in determining our provision for income taxes. Changes in tax laws, statutory tax rates, and estimates of our future taxable income could impact the deferred tax assets and liabilities provided for in the financial statements and would require an adjustment to the provision for income taxes.

Stock-Based Compensation

Stock-based compensation expense is recognized based on the fair value and is expensed on a straight-line basis over the requisite service periods of the award, which generally represents the scheduled vesting period. Forfeitures are recognized as they occur. We account for stock-based compensation expense based on the estimated grant date fair value, using the Black-Scholes option-pricing model which requires us to make a number of assumptions, including expected volatility, the expected risk-free interest rate, the expected term and the expected dividend.

These inputs are subjective and generally require significant analysis and judgment to develop. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation is recognized.

Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), which requires disaggregation of specific expense categories in the notes to the financial statements and a qualitative description of the remaining expense amounts not separately disaggregated. This standard is effective for annual reporting periods beginning after December 15, 2026, and requires prospective application with the option to apply it retrospectively. We are currently evaluating the impact of adopting this standard to determine its impact on our disclosures.

In July 2025, the FASB issued ASU 2025-05, amending Accounting Standards Codification (ASC) 326, Financial Instruments-Credit Losses, to provide an optional practical expedient when applying the guidance related to the estimation of expected credit losses for current accounts receivable and current contract assets resulting from transactions arising from contracts with customers. Under this practical expedient, entities may elect to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The guidance is effective for fiscal years beginning after December 15, 2025, and interim reporting periods, with early adoption permitted. We do not expect the adoption of this standard to have a material effect on our financial statements.

In September 2025, the FASB issued ASU 2025-06, that clarifies and modernizes the accounting for costs related to internal-use software in ASC 350-40, Intangibles-Goodwill and Other-Internal-Use Software. The guidance removes all references to project stages in ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. Additionally, the guidance specifies disclosure requirements for capitalized software costs accounted for under ASC 350-40, regardless of how those costs are presented in the financial statements. The guidance is effective for fiscal years beginning after December 15, 2027, and interim reporting periods, with early adoption permitted. We are currently evaluating the impact of this standard on our financial statements.

Emerging Growth Company and Smaller Reporting Company

We qualify as an "emerging growth company" as defined in the JOBS Act. As long as we qualify as an emerging growth company, we may take advantage of certain exemptions from various reporting requirements and other burdens that are otherwise applicable generally to public companies. These provisions include, but are not limited to:

In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to avail ourselves of this exemption from adopting new or revised accounting standards, and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies or that have opted out of using such extended transition period, which may make comparison of our financial statements with those of other public companies more difficult. We may take advantage of these reporting exemptions until we no

longer qualify as an emerging growth company, or, with respect to adoption of certain new or revised accounting standards, until we irrevocably elect to opt out of using the extended transition period.

Under the JOBS Act, we will remain an emerging growth company until the earliest to occur of: