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SEC Filings

S-1/A
PROTEON THERAPEUTICS INC filed this Form S-1/A on 10/07/2014
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Proteon Therapeutics, Inc.

Notes to Financial Statements (Continued)

13. Income Taxes (Continued)

recorded as an increase in additional paid-in capital. As of December 31, 2012 and 2013, the Company has state net operating loss carryforwards of approximately $50.4 million and $45.4 million, respectively, to offset future state taxable income, which will expire at various times between 2014 and 2033. As of December 31, 2012 and 2013, the Company has tax credit carryforwards of approximately $3.1 million and $10.3 million, respectively, to offset future federal and state income taxes, which will expire at various times between 2022 and 2033.

        Net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service (the "IRS") and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50% as defined under Sections 382 and 383 in the Internal Revenue Code. This could substantially limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the Company's value immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years.

        The Company had no unrecognized tax benefits or related interest and penalties accrued during the years ended December 31, 2012 and 2013. The Company will recognize interest and penalties related to uncertain tax positions in income tax expense.

        The Company is subject to U.S. federal income tax and primarily Massachusetts state income tax. The statute of limitations for assessment by the IRS and state tax authorities is open for tax years ending December 31, 2010 through 2013, although carryforward attributes that were generated prior to tax year 2010 may still be adjusted upon examination by the IRS or state tax authorities if they either have been or will be used in a future period. Currently, no federal or state income tax returns are under examination by the respective taxing authorities.

14. Net loss Per Share Attributable to Common Stockholders

        As described in Note 2, Summary of Significant Accounting Policies, the Company computes basic and diluted earnings (loss) per share using a methodology that gives effect to the impact of outstanding participating securities (the "two-class method"). As the years ended December 31, 2012 and 2013 and the six months ended June 30, 2013 and 2014 (unaudited) resulted in net losses, there is no income allocation required under the two-class method or dilution attributed to weighted average shares outstanding in the calculation of diluted loss per share.

F-31