Company: NOTV
Filing Date: 2025-12-05
Form Type: 10-K
Source: 0001628280-25-055483
Chunk: 42

Company: Inotiv, Inc.
Filing Date: 2025-12-05
Form: 10-K
Item: Item 7
Chunk 42
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 restricting access to certain of its systems. We also notified law enforcement. We have restored availability and access to our networks and systems. The forensic investigation of the 2025 Cybersecurity Incident is now complete and determined that between approximately August 5-8, 2025, a threat actor gained unauthorized access to the Company’s systems and may have acquired certain data. The Company is in the process of providing notifications regarding the 2025 Cybersecurity Incident in accordance with applicable legal obligations. While we have identified the likely scope of the incident, the full operational and financial impacts are still being evaluated. Accordingly, we have not yet determined whether the 2025 Cybersecurity Incident is reasonably likely to have a material impact on the Company.

External Factors

We remain attentive to external factors, including tariffs, client research and development funding levels, and the recently announced efforts to accelerate implementation of the FDA Modernization Act 2.0, including a roadmap to reduce animal testing in preclinical safety studies with scientifically validated new approach methodologies, any of which may increase our costs and could continue to drive uncertainty and instability in global markets. Any or all of these external factors could impact both of our segments.

Our imported NHPs were subject to tariffs ranging from 10% to 20% during fiscal 2025. These tariffs were required to be paid within 30 days of import, which is a shorter timeframe than the average NHP research model inventory turnover. As a result, payment of tariffs negatively impacted the Company's cash flows during fiscal 2025 and is expected to impact the Company's cash flows in the future. However, we have and expect to continue to work with suppliers and customers to attempt to mitigate the financial impact of these additional costs. The current and future applicable tariff percentages are based on the country of origin of the imported NHPs. If tariff rates continue to increase, we expect to continue working with suppliers and customers to attempt to mitigate these potential additional costs as the NHPs are mission-critical to the safety testing of new medicines; however, there can be no assurance that we will be successful in any mitigation efforts.

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Client research and development funding levels, particularly those impacted by government sources like the U.S. National Institutes of Health ("NIH"), can be challenging to forecast. Funding of research and development is impacted by the political process, which is ever-changing. For example, on February 7, 2025, the NIH announced a policy that would reduce research grants by limiting payments for indirect overhead. Subsequently, on