Company: LENZ
Filing Date: 2025-11-05
Form Type: 10-Q
Source: 0001815776-25-000071
Chunk: 461

Company: LENZ Therapeutics, Inc.
Filing Date: 2025-11-05
Form: 10-Q
Item: Part I, Item 8
Chunk 461
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 of us or fail to publish reports on us regularly, demand for our common stock could decrease, which in turn could cause our stock price or trading volume to decline.

79

We may be subject to adverse legislative or regulatory tax changes that could negatively impact our financial condition.

The rules dealing with U.S. federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect us or our stockholders. We continually assess the impact of various tax reform proposals in all jurisdictions where we have operations to determine the potential effect on our business and any assumptions we will make about our future taxable income. For example, legislation commonly known as the “One Big Beautiful Bill Act” (OBBBA) was enacted in July 2025 and we are evaluating the tax impact of OBBBA to us. We cannot predict whether any specific proposals will be enacted, the terms of any such proposals or what effect, if any, such proposals would have on our business if they were to be enacted. Such changes, among others, may adversely affect our effective tax rate, results of operation, and general business condition.

Our ability to use net operating loss carryforwards and other tax attributes may be limited, including those obtained as a result of the Merger.

As of December 31, 2024, the Company had federal and state net operating loss (“NOL”) carryforwards of $72.9 million and $3.9 million, respectively. The federal NOL carryforwards of $72.9 million may be carried forward indefinitely. State NOL carryforwards totaling $3.9 million begin to expire in 2040, unless previously utilized. In addition, the Company had federal and state R&D credit carryforwards totaling $7.6 million and $0.7 million, respectively. The federal R&D credit carryforwards will begin to expire in 2040 unless previously utilized. The state R&D credit carryforward will begin to expire in 2042 unless previously utilized.

Under current law, U.S. federal NOLs generated in taxable periods beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such NOL carryforwards is limited to 80% of taxable income for taxable periods beginning after December 31, 2020. Many state jurisdictions conform to federal law for this purpose or