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ITEM 1A. RISK FACTORS.
A reduction of our federal income tax research activities credits may have a material adverse effect on our business and financial condition.
There have been no material changes to Company regularly claims federal income tax credits for the research activities it conducts related to its manufacturing activities. The Company has recognized a total of $38.0 million as of the second quarter of 2025 in federal income tax credits for the research activities from 2015 thru 2025. The Internal Revenue Service (IRS) is conducting an examination of the Companys U.S. federal income tax returns for its 2018 tax year. The Company received Notices of Proposed Adjustment in October 2024, which if sustained, would result in a loss of federal income tax credits for research activities claimed by the Company during that tax year. The Company intends to vigorously defend its reported positions. The Company has currently accrued a reserve relating to the potential tax adjustments. However, the outcome of this dispute involves a number of uncertainties, including those relating to the application of the Internal Revenue Code and other federal income tax authorities and judicial precedent. Accordingly, the risre can be no assurance that the dispute with the IRS will be resolved favorably.If the IRS materially reduces or disallows our federal income tax credits for research activities, it may have a material adverse effect on our business and financial condition.
Other than the risk factors as noted above, there have been no other material changes to the risk factors as previously disclosed in Part I. Item 1A. Risk Factors in our Annual Report on Form 10-K for the year end December 31, 2024.