Tax Attributes and Financial Liabilities - As of December 31, 2024, the company had 69.2 million of state net operating loss carryforwards (NOLs) available to reduce future taxable income[160]. - The deductibility of federal NOLs incurred after December 31, 2021, is limited to 80% of taxable income, affecting future tax planning[160]. - The company’s ability to utilize NOLs may be limited based on its operating performance and tax laws in effect at the time of proposed use[160]. - The company may experience ownership changes that could limit its ability to use pre-change NOLs and other tax attributes, potentially resulting in increased future tax liability[161]. - The company is subject to various tax liabilities, and changes in tax laws could adversely affect its financial condition and results of operations[230]. Intellectual Property and Competitive Position - The company relies on trade secret protection and confidentiality agreements to safeguard its intellectual property, which is critical for its competitive position[165]. - The company does not currently own any issued patents covering its proprietary products or manufacturing processes, which may hinder its ability to protect its innovations[166]. - The company may need to obtain licenses from third parties to advance its research or commercialize products, with no assurance of obtaining such licenses on favorable terms[185]. - The company may face challenges in protecting its trademarks and trade names, which could adversely affect its ability to compete effectively[182]. - Intellectual property litigation could result in significant expenses and distract personnel from their normal responsibilities, potentially impacting the company's financial condition[178]. - The company may face claims from third parties asserting misappropriation of intellectual property, which could lead to costly litigation[180]. - The company’s commercial success depends on obtaining and maintaining trade secret protection for its current and future products[165]. Financial Covenants and Debt Obligations - The company was out of compliance with the revenue covenant under its Amended and Restated Credit Agreement for the periods ending November 30, 2023, and January 31, 2024[196]. - On March 8, 2024, the company entered into Amendment No. 5 to the Amended and Restated Credit Agreement, which included a waiver from the lender for the covenant violations[196]. - The Second Amended and Restated Credit Agreement contains covenants that impose significant operating and financial restrictions on the company[194]. - The company may incur additional indebtedness in the future, which could exacerbate risks associated with its current substantial indebtedness[193]. - The company may be required to divert funds to service its debt, impairing its liquidity position and operational flexibility[190]. - The company expects to use cash on hand to meet current and future financial obligations, including funding operations and debt service requirements[192]. Corporate Governance and Stockholder Rights - THP controls approximately 70.6% of the voting power of the company's outstanding common stock, allowing it to influence corporate decisions significantly[197]. - The company has provisions in its corporate governance documents that could make it more difficult for third parties to acquire it, potentially affecting stockholder interests[212]. - The company has opted out of Section 203 of the Delaware General Corporation Law, which generally restricts business combinations with interested stockholders for three years[214]. - The company’s amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation, which may limit stockholders' options[216]. - The company’s governance provisions may discourage lawsuits against its directors and officers, potentially impacting accountability[218]. Financial Reporting and Compliance - The existence of material weaknesses in internal controls could lead to errors in financial statements, adversely affecting investor confidence and stock price[203]. - The company is required to disclose any material weaknesses in internal control over financial reporting, which could lead to restatements of financial statements[203]. - The company is classified as an "emerging growth company" and a "smaller reporting company," which allows it to take advantage of reduced disclosure requirements, potentially making its common stock less attractive to investors[204]. - The company has elected to utilize the extended transition period for complying with new or revised accounting standards, which may complicate financial comparisons with other public companies[206]. - The company will remain an "emerging growth company" until it exceeds $1.235 billion in annual revenue or meets other specified criteria[207]. - The company is subject to the reporting requirements of the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act, which may strain resources and distract management from growth strategies[210]. Market Conditions and Stock Performance - The company’s operating results and stock price may be volatile, influenced by various factors beyond its control[237]. - If securities or industry analysts do not publish favorable reports or cease coverage, the company's stock price and trading volume could decline[239]. - Analysts' projections may vary significantly from actual business results due to various uncontrollable factors[240]. - If operating results fail to meet expectations, the company's stock price could decline[241]. - The market price of the company's stock could decline if holders of currently restricted shares sell them or are perceived as intending to sell[222]. - The company may face challenges in raising additional funds through future offerings due to market conditions and the perception of its stock[220]. - The company may issue shares of preferred stock in the future, which could adversely affect holders of common stock and depress its market price[225]. - The company does not anticipate paying regular cash dividends on its common stock, as it is prohibited under the Second Amended and Restated Credit Agreement[224]. Shareholder Structure and Equity Plans - As of December 31, 2024, the company has 53,409,727 shares of common stock outstanding, with a significant portion held by directors and affiliates, subject to Rule 144 limitations[221]. - The company has 312,174, 1,527,105, and 2,280,667 shares reserved for issuance under the 2016 Stock Plan, 2020 Equity Incentive Plan, and 2021 Equity Incentive Plan, respectively[223].
Teknova(TKNO) - 2024 Q4 - Annual Report