AKAO 2017 Annual Report

60 otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and business continuity plans we have in place currently are limited and are unlikely to prove adequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which, particularly when taken together with our lack of earthquake insurance, could have a material adverse effect on our business. Furthermore, integral parties in our supply chain are geographically concentrated and operating from single sites, increasing their vulnerability to natural disasters or other sudden, unforeseen and severe adverse events. If such an event were to affect our supply chain, it could have a material adverse effect on our business. Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage points change (by value) in the ownership of its equity by certain significant stockholders over a rolling three year period), the corporation’s ability to use its pre- change net operating loss carryforwards and certain other pre-change tax attributes to offset its post-change income and taxes may be limited. We may have experienced such ownership changes in the past, and we may experience ownership changes in the future and/or subsequent shifts in our stock ownership, some of which would be outside our control. If our ability to use our net operating losses and other tax attributes is limited by ownership changes, we may be unable to utilize a material portion of our net operating losses and other tax attributes. Recently enacted tax legislation or other changes in tax laws could have a material adverse effect on our business, financial condition and results of operations. Recently enacted legislation has significantly changed U.S. federal income tax laws, including by reducing the U.S. corporate income tax rate and introducing new rules relating to international taxation, and could have an adverse effect on our business, financial condition and results of operations. The legislation is complex and is unclear in many respects, is subject to potential amendments and technical corrections, and is subject to interpretation and implementing regulations by the Treasury and Internal Revenue Service (“IRS”), any of which could mitigate or increase certain adverse effects of the legislation. We will continue to evaluate the effect of the various domestic and international provisions of this legislation and any additional interpretive guidance that is issued. Risks Related to Our U.S. Government Contracts and to Certain Grant Agreements Our use of government funding for certain of our programs adds uncertainty to our research and commercialization efforts with respect to those programs and may impose requirements that increase the costs of commercialization and production of product candidates developed under those government-funded programs. Our development of products has been funded in significant part through contracts with BARDA. We are also receiving funding from the National Institute of Allergy and Infectious Diseases (“NIAID”) for one of our pre- clinical programs and we in the past received funding for other programs from the Defense Threat Reduction Agency (“DTRA”) and from NIAID. Contracts funded by the U.S. government and its agencies include provisions that reflect the government’s substantial rights and remedies, many of which are not typically found in commercial contracts, including powers of the government to: • terminate agreements, in whole or in part, for any reason or no reason; • reduce or modify the government’s obligations under such agreements without the consent of the other party; • claim rights, including intellectual property rights, in products and data developed under such agreements; • audit contract-related costs and fees, including allocated indirect costs;