Acrivon Therapeutics(ACRV)2025-03-27 20:06Financial Performance and Taxation - As of December 31, 2024, the company had approximately 62.4 million in state net operating loss carryforwards, with federal losses able to be carried forward indefinitely [624]. - The federal net operating losses generated after December 31, 2017, will not expire but are limited to 80% of the corporation's adjusted taxable income for taxable years beginning after December 31, 2020 [624]. - If an ownership change occurs, the company's ability to utilize its net operating loss carryforwards may be materially limited, potentially increasing future tax obligations [627]. - Changes in tax laws, including the Tax Act and the Inflation Reduction Act of 2022, could materially adversely affect the company's tax obligations and operations [628]. Company Structure and Growth - The company will remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of its IPO or until it meets certain revenue or market value thresholds, including total annual gross revenue of at least 700 million [604]. - The company has elected to take advantage of reduced disclosure requirements available to emerging growth companies, which may affect the attractiveness of its common stock to investors [605]. - The company’s amended and restated certificate of incorporation includes provisions that may discourage or delay mergers or acquisitions, potentially affecting stockholder interests [614]. Legal and Compliance Risks - The company may face significant costs and management diversion if subjected to securities class action litigation, particularly given the volatility in the biopharmaceutical sector [616]. - The company is subject to U.S. and foreign anti-corruption laws, which could result in liability for violations, impacting its operations and reputation [617]. - Being a public company has resulted in increased legal, accounting, and compliance costs, which may negatively impact financial results [630]. - Compliance with evolving laws and regulations may divert management's attention from revenue-generating activities, potentially harming the business [630]. - Failure to comply with regulations could lead to difficulties in obtaining insurance and attracting qualified board members and management [631]. Internal Controls and Reporting - The company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting, but past material weaknesses have been identified [622]. - The company's disclosure controls and procedures may not prevent all errors or acts of fraud, leading to potential misstatements [633]. - Inherent limitations in the control system may result in undetected misstatements or insufficient disclosures due to error or fraud [634]. - As a smaller reporting company, the company is not required to provide certain market risk disclosures under SEC rules [736]. Economic and Operational Challenges - Unfavorable global economic conditions, including potential economic downturns and geopolitical conflicts, could strain the company's operations and financial condition [629]. - The company has broad discretion in the use of its cash, cash equivalents, and investments, which may not yield a return and could compromise its growth strategy [607].