Alpha Teknova Inc

Previous wording

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 2,500 active 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.

Current wording

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 approximately 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.

Previous wording

We generated revenue of $36.7 million in 2023, which represents a decrease of $4.7 million as compared to 2022. In 2023 and 2022, only 4.6% and 3.2%, 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.

Current wording

We generated revenue of $37.7 million in 2024, which represents an increase of $1.1 million as compared to $36.7 million in 2023. In 2024 and 2023, only 4.8% and 4.6%, 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.

Previous wording

We had an operating loss of $35.6 million in 2023 compared to $49.7 million in 2022. Excluding non-recurring charges, we had an operating loss of $29.8 million in 2023 (excluding the following non-recurring charges: $0.7 million related to the reduction in workforce, $2.2 million tradename impairment, $2.2 million long-lived asset impairment, $0.4 million write-off of ATM Facility costs, and $0.3 million loss contingency) compared to an operating loss of $28.9 million in 2022 (excluding the goodwill impairment of $16.6 million and long-lived asset impairment of $4.2 million). While our expenses may fluctuate over the short term, we expect our expenses will continue to increase in future periods, but at a slower rate, in connection with our ongoing activities as we:

Current wording

We had an operating loss of $26.1 million in 2024 compared to $35.6 million in 2023. Excluding non-recurring charges, we had an operating loss of $24.8 million in 2024 (excluding the following non-recurring charges: $1.3 million related to the reduction in workforce and $0.1 million loss contingency) compared to an operating loss of $29.8 million in 2023 (excluding the following non-recurring charges: $0.7 million related to the reduction in workforce, $2.2 million tradename impairment, $2.2 million long-lived asset impairment, $0.4 million write-off of ATM Facility costs, and $0.3 million loss contingency). 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:

Previous wording

invest in processes and infrastructure to enable manufacturing automation and expand capacity, including the ramp up of our new, state-of-the-art manufacturing, warehouse, and distribution facilities; and

Current wording

invest in processes and infrastructure to improve operating efficiency and expand capacity at our facilities, including the ramp up of our new, state-of-the-art manufacturing, warehouse, and distribution facilities; and

Previous wording

On January 11, 2024, we announced a reduction in workforce that affected approximately 15% of our employees at that time. We estimate that we will incur approximately $1.2 million of costs in connection with the reduction in workforce related to severance pay and other termination benefits. We expect the majority of the costs to be incurred and payments made during the first quarter of 2024. Total annual cost savings from this reduction in workforce are estimated at $6.4 million.

Current wording

On January 11, 2024, we announced a reduction in workforce that affected approximately 15% of our employees at that time. We incurred approximately $1.3 million of costs in connection with the reduction in workforce related to severance pay and other termination benefits during the first quarter of 2024. Total annual cost savings from this reduction in workforce are estimated at $6.4 million.

Previous wording

On January 16, 2024, our board of directors approved a stock option repricing effective on March 14, 2024. The option repricing applies to outstanding options to purchase shares of our common stock as of the repricing date provided that the holder remains employed by us or continues to serve as a member of the board of directors through at least September 14, 2025. Outstanding options with an exercise price that is less than our closing stock price will be reduced to the fair market value on that date. There will be no changes to the number of shares, the vesting schedule, or the expiration date of the repriced options. The option repricing will result in additional share-based compensation expense that will be recognized in our statements of operations in future periods; however, the amount of additional share-based compensation expense and the periods over which it will be recognized have not yet been determined.

Current wording

On January 16, 2024, our board of directors approved a stock option repricing effective on March 14, 2024. The option repricing applies to outstanding options to purchase shares of our common stock as of the repricing date provided that the holder remains employed by us or continues to serve as a member of the board of directors through at least September 14, 2025. Outstanding options with an exercise price that is greater than our closing stock price on March 14, 2024 will be reduced to the fair market value on that date. There will be no changes to the number of shares, the vesting schedule, or the expiration date of the repriced options. The option repricing resulted in additional share-based compensation expense of $0.9 million, of which $0.5 million related to vested stock option awards and was expensed on the repricing date. The remaining $0.4 million related to unvested stock option awards and is being amortized on a straight-line basis over the weighted-average vesting period of those awards of approximately 2.38 years as of March 14, 2024.

Previous wording

On March 8, 2024, we entered into Amendment No. 5 to the Credit Agreement which includes a waiver of the minimum net revenue covenant violations for each of the periods ending November 30, 2023 and January 31, 2024 and reduced these requirements for future periods up to and including for the twelve months ending December 31, 2024, from $42 million to $34 million. Additionally, Amendment No 5 removed these requirements for the periods ending January 31, 2025 through December 31, 2025, instead requiring that the minimum net revenue requirement will be determined by MidCap in its reasonable discretion in consultation with our senior management subject to provisions contained therein. See "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for more information regarding Amendment No. 5 to the Credit Agreement and the credit facility.

Current wording

On March 8, 2024, we entered into Amendment No. 5 to our Amended and Restated Credit Agreement which included a waiver of the minimum net revenue covenant violations for each of the periods ending November 30, 2023 and January 31, 2024 and reduced those requirements for future periods up to and including for the twelve months ending December 31, 2024, from $42 million to $34 million. Additionally, Amendment No. 5 removed those requirements for the periods ending January 31, 2025 through December 31, 2025, instead requiring that the minimum net revenue requirement would be determined by MidCap Financial Trust in its reasonable discretion in consultation with our senior management subject to provisions contained therein. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for more information regarding Amendment No. 5 to the Amended and Restated Credit Agreement and the credit facility.

Previous wording

On March 8, 2024, as a condition to the effectiveness of Amendment No. 5, we issued a warrant to MidCap to purchase up to an aggregate of 125,000 shares (the Common Warrant) of common stock with an exercise price of $2.9934 per share, subject to adjustment as provided therein. See “Notes to Financial Statements—Note 17. Subsequent Events,” for a more detailed discussion of the material terms of the Common Warrant.

Current wording

On March 8, 2024, as a condition to the effectiveness of Amendment No. 5, we issued a warrant to MidCap to purchase up to an aggregate of 125,000 shares (the Common Warrant) of common stock with an exercise price of $2.9934 per share, subject to adjustment as provided therein. On October 15, 2024, MidCap exercised the Common Warrant in full and we issued 65,036 shares of common stock through a cashless exercise in accordance with the conversion terms.

Previous wording

We are closely monitoring economic uncertainty in the U.S. and abroad. General inflation in the U.S. has risen to levels not experienced in recent decades. General inflation, including rising prices for our raw materials and other inputs, as well as rising salaries and other expenses, negatively impact our business by increasing our cost of sales and operating expenses. In addition, the U.S. Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation. Inflation, together with increased interest rates, may cause our customers to reduce, delay, or cancel orders for our goods and services thereby causing a decrease in or change in timing of sales of our products and services. We cannot predict the impact of future inflation and interest rate increases on the results of our operations. For further information regarding the impact of these economic factors on the Company, please see Item 1A., "Risk Factors" in this report, which is incorporated herein by reference.

Current wording

We are closely monitoring economic uncertainty in the U.S. and abroad. General inflation in the U.S. has risen 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, as well as rising salaries and other expenses, negatively impact our business by increasing our cost of sales and operating expenses. In addition, during 2023 and early 2024, the U.S. Federal Reserve has raised interest rates in response to concerns about inflation, and although the U.S. Federal Reserve lowered interest rates in September of 2024, the direction and timing of future interest rate changes remains uncertain. Inflation, together with increased interest rates, may cause our customers to reduce, delay, or cancel orders for our goods and services thereby causing a decrease in or change in 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. 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.

Previous wording

Lab Essentials revenue was $28.8 million in 2023, a decrease of $3.0 million, or 9.4%, compared with $31.8 million in 2022. The decrease in Lab Essentials revenue was attributable to a decreased number of customers, partially offset by higher average revenue per customer.

Current wording

Lab Essentials revenue was $28.9 million in 2024, an increase of $0.1 million, or 0.3%, compared with $28.8 million in 2023. The slight increase in Lab Essentials revenue was attributable to an increased number of customers, partially offset by lower average revenue per customer.

Previous wording

Clinical Solutions revenue was $6.7 million in 2023, a decrease of $1.7 million, or 20.2%, compared with $8.4 million in 2022. The decrease in Clinical Solutions revenue was attributable to lower average revenue per customer, partially offset by an increased number of customers.

Current wording

Clinical Solutions revenue was $7.1 million in 2024, an increase of $0.4 million, or 5.3%, compared with $6.7 million in 2023. The increase in Clinical Solutions revenue was attributable to an increased number of customers, partially offset by lower average revenue per customer. Excluding revenue of $2.7 million from a single large order in 2023, Clinical Solutions revenue was up 76% in 2024.

Previous wording

Our revenue disaggregated by geographic region for the years ended December 31, 2023 and 2022, was as follows (dollars in thousands):

Current wording

Our revenue disaggregated by geographic region, which is determined based on customer location, for the years ended December 31, 2024 and 2023, was as follows (dollars in thousands):

Previous wording

Revenue from sales to customers in the United States was $35.0 million in 2023, and $40.1 million in 2022. Revenue from U.S. sales was consistent year over year, representing 95.4% and 96.8% of our total revenue in 2023 and 2022, respectively.

Current wording

Revenue from sales to customers in the United States was $35.9 million in 2024, and $35.0 million in 2023. Revenue from U.S. sales was consistent year over year, representing 95.2% and 95.4% of our total revenue in 2024 and 2023, respectively.

Previous wording

Revenue from sales to customers in markets outside of the U.S. was $1.7 million in 2023, and $1.3 million in 2022. Revenue from international sales was also consistent year over year, representing 4.6% and 3.2% of our total revenue in 2023 and 2022, respectively.

Current wording

Revenue from sales to customers in markets outside of the U.S. was $1.8 million in 2024, and $1.7 million in 2023. Revenue from international sales was also consistent year over year, representing 4.8% and 4.6% of our total revenue in 2024 and 2023, respectively.

Previous wording

Research and development expenses were $5.6 million in 2023 and $7.7 million in 2022. The decrease was primarily driven by reduced headcount and professional fees as well as reduced supplies and equipment expenses.

Current wording

Research and development expenses were $2.8 million in 2024 and $5.6 million in 2023. The decrease was primarily driven by reduced headcount and supplies expense.

Previous wording

Sales and marketing expenses were $9.3 million in 2023 and $9.2 million in 2022. The increase was primarily driven by higher labor and benefit costs as well as stock-based compensation, partially offset by lower marketing expenses.

Current wording

Sales and marketing expenses were $6.3 million in 2024 and $9.3 million in 2023. The decrease was primarily driven by reduced headcount.

Previous wording

General and administrative expenses were $25.5 million in 2023 and $28.3 million in 2022. Excluding the one-time, non-recurring charges related to the reduction in workforce of $0.7 million, the $0.4 million write off of ATM Facility costs, and $0.3 million accrual for legal claim recorded in 2023, general and administrative expenses decreased $4.3 million compared to 2022. The decrease was driven by reduced spending, primarily in professional fees and occupancy costs, partially offset by higher stock-based compensation expense.

Current wording

General and administrative expenses were $23.2 million in 2024 and $25.5 million in 2023. Excluding the one-time, non-recurring charges in 2024 of $1.4 million of which $1.3 million related to our reduction in workforce and $0.1 million increase in a loss contingency accrual and a total of $1.4 million of one-time non-recurring charges in 2023 of which $0.7 million related to our reduction in workforce, $0.4 million in charges related to our write off of at-the-market facility costs, and $0.3 million related to a loss contingency accrual, general and administrative expenses decreased $2.3 million. The decrease was driven by reduced compensation and benefits and spending, primarily on professional fees and insurance, partially offset by increased stock-based compensation expense related to the stock option repricing as well as facility costs. See “Notes to Financial Statements—Note 12. Stock-Based Compensation” for a more detailed discussion of the stock option repricing.

Previous wording

We recorded long-lived asset impairment charges of $2.2 million in 2023 and $4.2 million in 2022. Refer to “Notes to Financial Statements—Note 6. Property, Plant, and Equipment, Net,” in our financial statements for details regarding the long-lived asset impairment.

Current wording

We recorded long-lived asset impairment charges of $2.2 million in 2023, with no comparable charges in 2024. Refer to “Notes to Financial Statements—Note 6. Property, Plant, and Equipment, Net,” in our financial statements for details regarding the long-lived asset impairment.

Previous wording

Other (expenses) income, net for the years ended December 31, 2023 and 2022 was as follows (dollars in thousands):

Current wording

Other expenses, net for the years ended December 31, 2024 and 2023 was as follows (dollars in thousands):

Previous wording

Total other expenses, net was $1.5 million in 2023, compared to total other income, net of $0.3 million in 2022. The increase in total other expenses, net was attributable to higher interest expense primarily driven by an increase in our average debt balance coupled with higher interest rates, as well as by a $0.8 million loss on extinguishment of debt related to the partial repayment on the Term Loan. We capitalized a portion of the interest on funds borrowed to finance certain of our capital expenditures. Capitalized interest costs were $0.9 million and $1.6 million in 2023 and 2022, respectively. Offsetting these other expenses is other income, which increased due to higher interest rates and thus income earned on short-term liquid investments.

Current wording

Total other expenses, net was $0.7 million in 2024, compared to total other expenses, net of $1.5 million in 2023. The decrease in total other expenses, net was primarily due to the $0.8 million loss on extinguishment of debt in 2023 coupled with lower capitalized interest. We capitalized a portion of the interest on funds borrowed to finance certain of our capital expenditures. Capitalized interest costs were zero and $0.9 million in 2024 and 2023, respectively. Additionally, interest expense was lower due to a lower debt balance outstanding despite higher interest rates as well as higher interest income earned on short-term liquid investments.

Previous wording

Our benefit from income taxes was $0.3 million in 2023, compared to a $1.9 million in 2022. The decrease in our benefit from income taxes was attributable to operating losses not expected to produce a benefit.

Current wording

Our benefit from income taxes was $0.1 million in 2024, compared to a $0.3 million in 2023. The decrease in our benefit from income taxes was attributable to operating losses not expected to produce a benefit.

Previous wording

The primary sources of financing for our operations were our (i) initial public offering, which we completed in June 2021 (IPO) and resulted in net proceeds to us of $99.1 million, after deducting underwriting discounts and commissions of $7.7 million and offering expenses of $3.6 million, and (ii) registered direct offering and concurrent private placement (collectively, the Offerings), which we completed in September 2023 and which resulted in aggregate gross proceeds of $22.915 million before deducting offering expenses of $0.4 million and the prepayment of $10.0 million owed under the Term Loan as discussed below.

Current wording

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 owed under the Term Loan as discussed below, 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.

Previous wording

Our principal liquidity requirements are to fund our operations and capital expenditures. As of December 31, 2023, we have limited capital resources to fund ongoing operations. During the year ended December 31, 2023, we incurred net losses of $36.8 million. In addition, as of December 31, 2023, we had an accumulated deficit of $91.8 million and borrowings outstanding under our Term Loan (defined below). As of December 31, 2023, we had $36.8 million of working capital, which included $28.5 million in cash and cash equivalents. Our available capital resources may not be sufficient for us to continue to meet our obligations as they become due over the next twelve months if we cannot improve our operating results or increase our operating cash inflows. If these capital resources are not sufficient, we may need to raise additional capital through the sale of equity or debt securities, enter into strategic business collaboration agreements with other companies, seek other funding sources, or sell assets. However, there can be no assurance that we will be able to accomplish any of the foregoing or do so on favorable terms. If we are unable to meet our obligations when they become due over the next twelve months through our available capital resources, or obtain new sources of capital when needed, we may have to delay expenditures, reduce the scope of our manufacturing operations, reduce or eliminate one or more of our development programs, make significant changes to our operating plan, or cease our operations.

Current wording

Our principal liquidity requirements are to fund our operations and capital expenditures. During the year ended December 31, 2024, we incurred net losses of $26.7 million. In addition, as of December 31, 2024, we had an accumulated deficit of $118.5 million and $12.1 million in borrowings outstanding under our Term Loan (defined below). As of December 31, 2024, we had $31.6 million of working capital, which included $3.7 million in cash and cash equivalents and $26.7 million in short-term investments.

Previous wording

Net cash used in operating activities was $27.4 million in 2022, which primarily consisted of net loss of $47.5 million plus net adjustments for non-cash charges of $27.4 million, offset by net changes in operating assets and liabilities of $7.3 million. The primary non-cash adjustments to net loss included a $16.6 million goodwill impairment charge, a $4.2 million impairment charge related to long-lived assets, $3.7 million of stock-based compensation, $3.2 million of depreciation and amortization, a $0.7 million provision related to our inventory reserve, partially offset by $1.9 million in deferred taxes. The main drivers of the changes in operating assets and liabilities were a $7.6 million increase in inventories and $2.1 million increase in other non-current assets, partially offset by a $1.2 million decrease in income taxes receivable, $0.6 million increase in accounts payable, and $0.4 million decrease in accounts receivable.

Current wording

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.

Previous wording

Net cash used in investing activities relates primarily to capital expenditures, partially offset by proceeds from the sale of certain long-lived assets.

Current wording

Net cash 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.

Previous wording

Net cash used in investing activities was $28.1 million in 2022, which consisted of purchases of property, plant, and equipment.

Current wording

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.

Previous wording

Net cash provided by financing activities primarily relates to proceeds from our Offerings, 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.

Current wording

Net cash provided by financing activities primarily relates to proceeds from our September 2023 Offerings and 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.

Previous wording

Net cash provided by financing activities was $10.3 million in 2022, which was primarily attributable to proceeds from long-term debt of $10.1 million, partially offset by payment of debt issuance costs of $0.2 million and payment of exit fee costs of $0.1 million related to our debt refinancing. We also received proceeds of $0.1 million from the exercise of stock options and $0.3 million from issuance of common stock under our employee stock purchase plan.

Current wording

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.

Previous wording

Net cash provided by financing activities was $12.8 million in 2023, which was primarily attributable to net proceeds from the Offerings of $22.5 million and proceeds from financed insurance premiums of $1.0 million, partially offset by repayment of long-term debt of $10.0 million, repayment of financed insurance premiums of $0.6 million, and payment of offering costs of $0.4 million related to the ATM Facility. We also received proceeds of $0.1 million from the exercise of stock options and $0.3 million from issuance of common stock under our employee stock purchase plan.

Current wording

Net cash provided by financing activities was $12.8 million in 2023, which was primarily attributable to net proceeds from the September 2023 Offerings of $22.5 million and proceeds from financed insurance premiums of $1.0 million, partially offset by repayment of long-term debt of $10.0 million, repayment of financed insurance premiums of $0.6 million, and payment of $0.4 million related to the ATM Facility which were written off during the quarter ended September 30, 2023 as the facility was not utilized. We also received proceeds of $0.1 million from the exercise of stock options and $0.3 million from issuance of common stock under our employee stock purchase plan.

Previous wording

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.

Current wording

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.

Previous wording

Dividend yield. We have never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future. Therefore, we use an expected dividend yield of zero. In addition, the terms of the Amended Credit Agreement prohibit us from paying dividends, other than dividends payable in our common stock, without the prior consent of the lender.

Current wording

Dividend yield. We have never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future. Therefore, we use an expected dividend yield of zero. In addition, the terms of the Second Amended and Restated Credit Agreement prohibit us from paying dividends, other than dividends payable in our common stock, without the prior consent of the lender.

Previous wording

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure in the rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciliation items in some categories if the items meet a quantitative threshold. The guidance also requires disclosure of income taxes paid, net of refunds, disaggregated by federal (national), state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold. The guidance is effective for fiscal years beginning after December 15, 2024. We are currently evaluating the impact of this standard to determine its impact on our disclosures.

Current wording

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure in the rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciliation items in some categories if the items meet a quantitative threshold. The guidance also requires disclosure of income taxes paid, net of refunds, disaggregated by federal (national), state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold. The guidance is effective for fiscal years beginning after December 15, 2024. We are currently evaluating the impact of this standard to determine its impact on our disclosures.