−Removed: We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control.
−Removed: Our business, financial condition and results of operations could be materially adversely affected by a number of factors.
−Removed: In addition to the factors discussed elsewhere in this report, the following risks and uncertainties could materially harm our business, financial condition, or results of operations, including causing our actual results to differ materially from those projected in any forward-looking statements.
−Removed: Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may materially adversely affect us in future periods.
−Removed: If any of the following risks or uncertainties actually occurs, our business, financial condition and operating results would likely be adversely affected.
−Removed: Risks Related to Potential Acquisitions
−Removed: We may acquire other businesses, products or technologies;
−Removed: if we do, we may be unable to integrate them with our business effectively or at all, which may adversely affect our business, financial condition and operating results.
−Removed: If we find appropriate opportunities and have adequate funding, we may acquire other businesses, product lines or technologies.
−Removed: However, if we acquire a business, product line or technology, the process of integration may produce unforeseen operating difficulties and expenditures and may absorb significant attention of our management that would otherwise be available for the ongoing development of our business.
−Removed: Further, the acquisition of a business may result in the assumption of unknown liabilities or create risks with respect to our existing relationships with suppliers and customers.
−Removed: If we make acquisitions, we may issue shares of stock that dilute other stockholders, expend cash, incur debt, assume contingent liabilities or create additional expenses related to amortizing intangible assets, any of which may adversely affect our business, financial condition or operating results.
−Removed: If we are unable to raise additional capital when needed, we may not be able to consummate the acquisition of other businesses.
−Removed: We may require additional capital to fund operations, capital expenditures and the acquisition of other businesses.
−Removed: We may finance future cash needs through public or private equity offerings, debt financings, or corporate collaborations.
−Removed: Additional funds may not be available when we need them on terms that are acceptable to us, or at all.
−Removed: If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one or more of our acquisition opportunities.
−Removed: To the extent that we raise additional funds by issuing equity securities, our stockholders may experience dilution, and debt financing, if available, may involve restrictive covenants.
−Removed: We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time.
−Removed: Recent, past and future acquisitions and investments could disrupt our business and harm our financial condition and operating results.
−Removed: Our success will depend, in part, on our ability to expand our platform and grow our business in response to changing technologies, customer demands and competitive pressures.
−Removed: In some circumstances, we may decide to do so through the acquisition of complementary businesses and technologies rather than through internal development, including, for example, our acquisitions of Tellenger and Gray Matters.
−Removed: The identification of suitable acquisition candidates can be difficult, time-consuming, and costly, and we may not be able to successfully complete acquisitions that we target in the future.
−Removed: The risks we face in connection with acquisitions, including the above-mentioned acquisitions, include:
−Removed: diversion of management time and focus from operating our business to addressing acquisition integration challenges;
−Removed: our ability to successfully achieve billings and revenue targets of acquired businesses;
−Removed: coordination of research and development and sales and marketing functions;
−Removed: integration of solution and service offerings;
−Removed: retention of key employees from the acquired company;
−Removed: changes in relationships with strategic partners as a result of product acquisitions or strategic positioning resulting from the acquisition;
−Removed: cultural challenges associated with integrating employees from the acquired company into our organization;
−Removed: integration of the acquired company’s accounting, management information, human resources and other administrative systems, as well as the acquired operations, technology and rights to our offerings, and any unanticipated expenses related to such integration;
−Removed: the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures and policies;
−Removed: financial reporting, revenue recognition or other financial or control deficiencies of the acquired company that we do not adequately address and that cause our reported results to be incorrect;
−Removed: liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;
−Removed: completing the transaction and achieving or utilizing the anticipated benefits of the acquisition within the expected timeframe, or at all;
−Removed: unanticipated write-offs or charges;
−Removed: litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties which may differ from or be more significant than the risks our business faces.
−Removed: Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.
−Removed: Future acquisitions could also result in dilutive issuances of equity securities.
−Removed: There is also a risk that future acquisitions will result in the incurrence of debt, contingent liabilities, amortization expenses, incremental operating expenses or the write-off of goodwill, any of which could harm our financial condition or operating results.
−Removed: Risks Related to our Business
−Removed: The following risk factors relate to our consulting and software development services, which we provide through our wholly-owned subsidiary, Tellenger.
−Removed: We have had operating losses in four of the last five years and may not achieve or maintain profitability in the future.
−Removed: We have incurred losses in four of the last five years, including net losses of $2,034,435, $17,753,838, $1,131,449, and $717,246 during the years ended December 31, 2023, 2022, 2021, and 2019, respectively.
−Removed: Any failure to increase our revenue and manage our cost structure as we grow our business could prevent us from achieving or, if achieved, maintaining profitability.
−Removed: Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
−Removed: If we are unable to become and remain profitable, the value of our company could decrease and our ability to raise capital, maintain our research and development efforts, and expand our business could be negatively impacted.
−Removed: We are subject to the seasonality of U.S.
−Removed: government spending.
−Removed: We derive a substantial portion of our revenues from U.S.
−Removed: government contracting, and as a result, we are subject to the annual seasonality of the U.S.
−Removed: government purchasing.
−Removed: Because the U.S.
−Removed: government fiscal year ends on September 30, it is not uncommon for U.S.
−Removed: government agencies to award extra tasks in the weeks immediately prior to the end of its fiscal year in order to avoid the loss of unexpended fiscal year funds.
−Removed: As a result of this seasonality, we have historically experienced higher revenues in the third and fourth fiscal quarters, ending September 30 and December 31, respectively, with the pace of orders typically substantially reduced during the first and second fiscal quarters ending March 31 and June 30, respectively.
−Removed: We depend on computing infrastructure operated by Amazon Web Services ( “ AWS ” ), Microsoft, and other third parties to support some of our solutions and customers, and any errors, disruption, performance problems, or failure in their or our operational infrastructure could adversely affect our business, financial condition, and results of operations.
−Removed: We rely on the technology, infrastructure, and software applications of certain third parties, such as AWS and Microsoft Azure, in order to host or operate some of certain key platform features or functions of our business.
−Removed: Additionally, we rely on computer hardware and cloud capabilities purchased in order to deliver our solutions and services.
−Removed: We do not have control over the operations of the facilities of the third parties that we use.
−Removed: If any of these third-party services experience errors, disruptions, security issues, or other performance deficiencies, if they are updated such that our solutions become incompatible, if these services, software, or hardware fail or become unavailable due to extended outages, interruptions, defects, or otherwise, or if they are no longer available on commercially reasonable terms or prices (or at all), these issues could result in errors or defects in our solutions, cause our solutions to fail, our revenue and margins could decline, or our reputation and brand to be damaged, we could be exposed to legal or contractual liability, our expenses could increase, our ability to manage our operations could be interrupted, and our processes for managing our sales and servicing our customers could be impaired until equivalent services or technology, if available, are identified, procured, and implemented, all of which may take significant time and resources, increase our costs, and could adversely affect our business.
−Removed: Many of these third-party providers attempt to impose limitations on their liability for such errors, disruptions, defects, performance deficiencies, or failures, and if enforceable, we may have additional liability to our customers or third-party providers.
−Removed: We have experienced, and may in the future experience, disruptions, failures, data loss, outages, and other performance problems with our infrastructure and cloud-based offerings due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, employee misconduct, capacity constraints, denial of service attacks, phishing attacks, computer viruses, malicious or destructive code, or other security-related incidents, and our disaster recovery planning may not be sufficient for all situations.
−Removed: If we experience disruptions, failures, data loss, outages, or other performance problems, our business, financial condition, and results of operations could be adversely affected.
−Removed: Our systems and the third-party systems upon which we and our customers rely are also vulnerable to damage or interruption from catastrophic occurrences such as earthquakes, floods, fires, power loss, telecommunication failures, cybersecurity threats, terrorist attacks, natural disasters, public health crises such as the COVID-19 pandemic, geopolitical events such as the conflict in Ukraine, and similar events, or acts of misconduct.
−Removed: Despite any precautions we may take, the occurrence of a catastrophic disaster or other unanticipated problems at our or our third-party vendors’ hosting facilities, or within our systems or the systems of third parties upon which we rely, could result in interruptions, performance problems, or failure of our infrastructure, technology, or solutions, which may adversely impact our business.
−Removed: In addition, our ability to conduct normal business operations could be severely affected.
−Removed: In the event of significant physical damage to one of these facilities, it may take a significant period of time to achieve full resumption of our services, and our disaster recovery planning may not account for all eventualities.
−Removed: In addition, any negative publicity arising from these disruptions could harm our reputation and brand and adversely affect our business.
−Removed: Furthermore, our solutions are in many cases important or essential to our customers’ operations, including in some cases, their cybersecurity or oversight and compliance programs, and subject to service level agreements (“SLAs”).
−Removed: Any interruption in our service, whether as a result of an internal or third-party issue, could damage our brand and reputation, cause our customers to terminate or not renew their contracts with us or decrease use of our solutions and services, require us to indemnify our customers against certain losses, result in our issuing credit or paying penalties or fines, subject us to other losses or liabilities, cause our solutions to be perceived as unreliable or unsecure, and prevent us from gaining new or additional business from current or future customers, any of which could harm our business, financial condition, and results of operations.
−Removed: Moreover, to the extent that we do not effectively address capacity constraints, upgrade our systems as needed, and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, financial condition, and results of operations could be adversely affected.
−Removed: The provisioning of additional cloud hosting capacity requires lead time.
−Removed: AWS, Microsoft Azure, and other third parties have no obligation to renew their agreements with us on commercially reasonable terms, or at all.
−Removed: If AWS, Microsoft Azure, or other third parties increase pricing terms, terminate or seek to terminate our contractual relationship, establish more favorable relationships with our competitors, or change or interpret their terms of service or policies in a manner that is unfavorable with respect to us, we may be required to transfer to other cloud providers or invest in a private cloud.
−Removed: If we are required to transfer to other cloud providers or invest in a private cloud, we could incur significant costs and experience possible service interruption in connection with doing so, or risk loss of customer contracts if they are unwilling to accept such a change.
−Removed: A failure to maintain our relationships with our third-party providers (or obtain adequate replacements), and to receive services from such providers that do not contain any material errors or defects, could adversely affect our ability to deliver effective products and solutions to our customers and adversely affect our business and results of operations.
−Removed: We are dependent on a few key customer contracts for a significant portion of our future revenue, and a significant reduction in services to one or more of these contracts would reduce our future revenue and harm our anticipated operating results.
−Removed: The services we provide to the Small Business Administration in connection with its 7A and 504 loan programs are expected to comprise a significant portion of our future revenue.
−Removed: Our business will likely be harmed if the services we provide do not generate as much revenue as we forecast, and the termination or delay of the related contracts could have a material adverse effect on our revenue and profitability.
−Removed: Adverse events affecting the programs subject to these contracts could also negatively affect our ability to process transactions under those contracts, which could adversely affect our revenue and results of operations.
−Removed: Changes in the funding priorities of the U.S.
−Removed: federal government, and changes in the way the U.S.
−Removed: federal government contracts with businesses, may materially and adversely affect our revenue and earnings.
−Removed: Since the U.S.
−Removed: federal government is our largest customer, both directly and with us as a subcontractor, changes in the funding priorities of the U.S.
−Removed: federal government may materially and adversely affect us if funding is cut or shifted away from the information technology services that we are equipped to provide.
−Removed: Additionally, changes in the way the government awards contracts may create a disadvantage for us to compete in certain markets.
−Removed: Temporary or extended budget-related shutdowns of parts of the U.S.
−Removed: federal government may materially and adversely affect our revenue and earnings.
−Removed: Since the U.S.
−Removed: federal government is our largest customer, both directly and with us as a subcontractor, budget impasses that lead to temporary or extended shutdowns of agencies of the U.S.
−Removed: federal government with which we contract or for which we provide services may adversely affect cash flow and earnings as we carry key personnel during periods in which they are unable to perform work which can be invoiced to the customers.
−Removed: federal government contracts are generally subject to terms more favorable to the customer than commercial contracts.
−Removed: federal government contracts generally contain provisions and are subject to laws and regulations that give the federal government rights and remedies not typically found in commercial contracts, including provisions permitting the federal government to:
−Removed: terminate our existing contracts;
−Removed: reduce potential future income from our existing contracts;
−Removed: modify some of the terms and conditions in our existing contracts;
−Removed: suspend or permanently prohibit us from doing business with the federal government or with any specific government agency;
−Removed: impose fines and penalties;
−Removed: subject the award of some contracts to protest or challenge by competitors, which may require the contracting federal agency or department to suspend our performance pending the outcome of the protest or challenge and which may also require the government to solicit new proposals for the contract or result in the termination, reduction or modification of the awarded contract;
−Removed: suspend work under existing multiple year contracts and related task orders if the necessary funds are not appropriated by Congress;
−Removed: decline to exercise an option to extend an existing multiple year contract;
−Removed: claim rights in technologies and systems invented, developed, or produced by us.
−Removed: federal government may terminate a contract either “for convenience” (for instance, due to a change in its perceived needs or its desire to consolidate work under another contract) or if a default occurs by failing to perform under the contract.
−Removed: If the federal government terminates a contract for convenience, we generally would be entitled to recover only our incurred or committed costs, settlement expenses and profit on the work completed prior to termination.
−Removed: If the federal government terminates a contract based upon a default, we generally would be denied any recovery for undelivered work, and instead may be liable for excess costs incurred by the federal government in procuring undelivered items from an alternative source and other damages as authorized by law.
−Removed: The failure to generate a sufficient level of professional fees will cause us to sustain losses.
−Removed: Although software sales constituted a significant part of our overall revenue until recently, the gross profit we derive from such sales is very modest, generally less than three percent.
−Removed: Consequently, we are reliant on professional fee revenue to maintain and operate our business.
−Removed: The number of our professional services engagements is limited and we have relied upon several key engagements to provide us with the level of revenue we require to breakeven or gain a modest degree of profitability.
−Removed: Any loss of a key contract will have a detrimental effect on the Company.
−Removed: The opportunities among our existing customers for forms modernization is nearing maturity.
−Removed: Over the last several years, we have modernized nearly all of the forms for which modernization was needed to meet compliance standards within agencies that have been our key electronic forms customers.
−Removed: While we continue to assist these customers with incremental changes on their internal and external forms, we must position ourselves to find forms business within some new agencies.
−Removed: While we do not anticipate a material effect on our overall results of operations, we may experience a material decline in revenue.
−Removed: We are subject to intense competition from other companies engaged in software development, cloud services, and other computer-related services.
−Removed: The market for our products and services is competitive, rapidly evolving, and can be affected by new product introductions and other market activities of industry participants.
−Removed: Some of these companies have longer operating histories, greater financial, marketing and other resources, greater name recognition in other markets and a larger base of customers than the Company.
−Removed: In addition, some companies have well-established relationships with our current and prospective customers.
−Removed: As a result, these competitors may be able to devote greater resources to the development, promotion and sale of their products and services than we can.
−Removed: Should we not be able to maintain our competitive advantages in light of these factors, it could have a material negative impact on the results of our operations.
−Removed: Additionally, federal government customers are increasingly utilizing systems to accept software bids that make it easier for a larger number of sellers to participate in the bid process, which puts downward pressure on prices.
−Removed: At the same time, we obtain software licenses and related software maintenance contracts for resale from third-party suppliers.
−Removed: Increases in costs from these suppliers may affect our ability to bid winning prices to potential customers, which could have a material effect on software sales revenue.
−Removed: Also, any delay in our suppliers’ fulfillment of our orders could impair our ability to deliver products and maintenance to customers and, accordingly, could have a material adverse effect on business, results of operations, financial condition, and reputation.
−Removed: If we are unable to accurately estimate the cost of services and the timeline for completion of contracts, the profitability of our contracts may be materially and adversely affected.
−Removed: Our contracts are typically awarded on a competitive basis.
−Removed: Our bids are based upon, among other items, the cost of providing the services.
−Removed: To generate an acceptable return on our investment in these contracts we must be able to accurately estimate our costs to provide the services required by the contract and be able to complete the contracts in a timely manner.
−Removed: If we fail to accurately estimate our costs or the time required to complete a contract the profitability of our contracts may be materially and adversely affected.
−Removed: Contracts on which we utilize subcontractors or suppliers may be adversely affected if our subcontractors or suppliers fail to perform required obligations under the contract.
−Removed: We frequently utilize subcontract labor on contracts where we lack specific functional expertise or where the subcontractor has brought the opportunity to us.
−Removed: If our subcontractors or suppliers fail to perform as specified, it may adversely affect our contracts and subject us to loss of the contracts, unintended expenses, and/or the inability to secure future contracts due to our nonperformance.
−Removed: Our federal government contracts typically have terms of one or more base years and one or more option years.
−Removed: Federal governmental agencies generally have the right not to exercise options to extend a contract.
−Removed: A decision to terminate or not to exercise options to extend our existing contracts could have a material adverse effect on our business, prospects, financial condition and results of operations.
−Removed: Risks Related to Intellectual Property and Technology Licensing
−Removed: Our proprietary rights may be difficult to enforce or protect, which could enable others to copy or use aspects of our products or services without compensating us.
−Removed: Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or subscriptions or obtain and use information that we regard as proprietary.
−Removed: We generally enter into confidentiality or license agreements with our employees, consultants, vendors, and end-customers, and generally limit access to and distribution of our proprietary information.
−Removed: However, we cannot be certain that we have entered into such agreements with all parties who may have or have had access to our confidential information or that the agreements we have entered into will not be breached.
−Removed: We cannot guarantee that any of the measures we have taken will prevent misappropriation of our technology.
−Removed: Because we may be an attractive target for computer hackers, we may have a greater risk of unauthorized access to, and misappropriation of, our proprietary information.
−Removed: In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of the United States, and many foreign countries do not enforce these laws as diligently as government agencies and private parties in the United States.
−Removed: From time to time, we may need to take legal action to protect our intellectual property rights, to protect our trade secrets, if any, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity.
−Removed: Such litigation could result in substantial costs and diversion of resources and could negatively affect our business, operating results, and financial condition.
−Removed: Attempts to enforce our rights against third parties could also provoke these third parties to assert their own intellectual property or other rights against us or result in a holding that invalidates or narrows the scope of our rights, in whole or in part.
−Removed: If we are unable to protect our proprietary rights, we may find ourselves at a competitive disadvantage to others who need not incur the additional expense, time, and effort required to create the innovative products that have enabled us to be successful to date.
−Removed: Any of these events would have a material adverse effect on our business, financial condition, and operating results.
−Removed: Risks Related to Cybersecurity Incidents, Privacy and Data Protection
−Removed: We are dependent on information technology, and disruptions, failures or security breaches of our information technology infrastructure could have a material adverse effect on our operations.
−Removed: In addition, increased information technology security threats and more sophisticated computer crime pose a risk to our systems, networks, products, and services.
−Removed: We rely on information technology networks and systems, including the Internet and cloud services, many of which are managed by third parties, to securely process, transmit and store electronic information of financial, marketing, legal and regulatory nature to manage our business processes and activities.
−Removed: Although we have implemented enhanced controls around our information technology systems, these systems may be susceptible to damage, disruptions, or shutdowns due to failures during the process of upgrading or replacing software, databases, power outages, hardware failures, telecommunication failures, user errors, natural disasters, terrorist attacks or other catastrophic events.
−Removed: If any of our significant information technology systems suffer severe damage, disruption or shutdown, and our disaster recovery and business continuity plans do not effectively resolve the issues in a timely manner, our product and services sales, financial condition and results of operations may be materially and adversely affected, and we could experience delays in reporting our financial results, or our operations may be disrupted, exposing us to performance failures with customers.
−Removed: In addition, cybersecurity threats, such as computer viruses, attacks by computer hackers or other cybersecurity threats pose a risk to the security of our systems and networks and the confidentiality, availability, and integrity of our data.
−Removed: There can be no assurance that our security controls and safeguard measures taken to improve our cybersecurity protection will be sufficient to mitigate all potential risks to our systems, networks and data.
−Removed: Potential consequences of a cybersecurity attack include disruption to systems, corruption of data, unauthorized release of confidential or otherwise protected information, reputational damage, and litigation with third parties, any of which could have a material adverse effect on our business, financial condition, and results of operations.
−Removed: The amount of insurance coverage we maintain may be inadequate to cover losses or liabilities related to a cybersecurity attack.
−Removed: Internal system or service failures, or failures in the systems or services of third parties on which we rely, could disrupt our business, and impair our ability to effectively provide our services and products to our customers, which could damage our reputation and adversely affect our revenues and profitability.
−Removed: Any system or service disruptions, including those caused by ongoing projects to improve our information technology systems and the delivery of services, including outsourced services, if not anticipated and appropriately mitigated, could materially and adversely affect our business including, among other things, an adverse effect on our ability to perform on contracts, bill our customers for work performed on our contracts, collect the amounts that have been billed and produce accurate financial statements in a timely manner.
−Removed: We, and the service providers, suppliers and subcontractors on which we rely, are also subject to systems failures, including network, software or hardware failures, whether caused by us, third-party service providers, cybersecurity threats, malicious insiders, natural disasters, power shortages, terrorist attacks, pandemics or other events, which could cause loss of data and interruptions or delays in our business, cause us to incur remediation costs, subject us to claims and damage our reputation.
−Removed: In addition, the failure or disruption of our communications, or those of our service providers, suppliers, or subcontractors, could cause us to interrupt or suspend our operations or otherwise adversely affect our business.
−Removed: Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure or disruption.
−Removed: Risks Related to Tax, Accounting, Compliance and Regulation
−Removed: We must maintain effective internal controls over financial reporting, and if we are unable to do so, the accuracy and timeliness of our financial reporting may be adversely affected, which could have a material adverse effect on our business and stock price.
−Removed: We must maintain effective internal control over financial reporting in order to accurately and timely report our results of operations and financial condition.
−Removed: In addition, as a public company, the Sarbanes-Oxley Act requires, among other things, that we assess the effectiveness of our disclosure controls and procedures quarterly and the effectiveness of our internal control over financial reporting at the end of each fiscal year.
−Removed: The rules governing the standards that must be met for our management to assess our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act are complex and require significant documentation, testing and possible remediation.
−Removed: These stringent standards require that our audit committee be advised and regularly updated on management’s review of internal control over financial reporting.
−Removed: Our management may not be able to effectively and timely implement controls and procedures which respond to the increased regulatory compliance and reporting requirements that are applicable to us as a public company.
−Removed: If we fail to staff our accounting, finance and information technology functions adequately or maintain internal control over financial reporting adequate to meet the demands that are placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, or to otherwise prevent material weaknesses in internal control over financial reporting, or identify any additional material weaknesses, our business and reputation may be harmed, and our stock price may decline.
−Removed: Furthermore, investor perceptions of us may be adversely affected, which could cause a decline in the market price of our common stock.
−Removed: Changes in accounting principles or their application to us could result in unfavorable accounting charges or effects, which could adversely affect our results of operations and growth prospects.
−Removed: We prepare consolidated financial statements in accordance with GAAP.
−Removed: In particular, we make certain estimates and assumptions related to the adoption and interpretation of these principles including the recognition of our revenue and the accounting of our stock-based compensation expense with respect to our consolidated financial statements.
−Removed: If these assumptions turn out to be incorrect, our revenue or our stock-based compensation expense could materially differ from our expectations, which could have a material adverse effect on our financial results.
−Removed: A change in any of these principles or guidance, or in their interpretations or application to us, may have a significant effect on our reported results, as well as our processes and related controls, and may retroactively affect previously reported results or our forecasts, which may negatively impact our financial statements.
−Removed: For example, recent new standards issued by the Financial Accounting Standards Board (“FASB”) could materially impact our consolidated financial statements.
−Removed: The adoption of these new standards may potentially require enhancements or changes in our processes or systems and may require significant time and cost on behalf of our financial management.
−Removed: This may in turn adversely affect our results of operations and growth prospects.
−Removed: Failure to comply with governmental laws and regulations could harm our business.
−Removed: Our business is subject to regulation by various federal, state, local, and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, privacy and data-protection laws, anti-bribery laws (including the U.S.
−Removed: Foreign Corrupt Practices Act and the U.K.
−Removed: Anti-Bribery Act), import/export controls, federal securities laws, and tax laws and regulations.
−Removed: Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties, or injunctions.
−Removed: If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation resulting from any alleged noncompliance, our business, operating results, and financial condition could be materially adversely affected.
−Removed: In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees.
−Removed: Enforcement actions, litigation, and sanctions could harm our business, operating results, and financial condition.
−Removed: Risks Related to Our Common Stock
−Removed: The issuance of additional stock in connection with financings, acquisitions, investments, our stock incentive plans, or exercise of the related warrants, or otherwise will dilute all other stockholders.
−Removed: Our certificate of incorporation authorizes us to issue up to 100 million shares of common stock and up to 10.0 million shares of preferred stock with such rights and preferences as may be determined by our board of directors.
−Removed: Subject to compliance with applicable rules and regulations, we may issue shares of common stock or securities convertible into shares of our common stock from time to time in connection with a financing, acquisition, investment, our stock incentive plans, the settlement of our warrants, or otherwise.
−Removed: Any such issuance could result in substantial dilution to our existing stockholders and cause the market price of our common stock to decline.
−Removed: We do not intend to pay dividends for the foreseeable future.
−Removed: We have never declared or paid any dividends on our common stock.
−Removed: We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the future.
−Removed: As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases.
−Removed: Our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment, which could also reduce the market price of our common stock.
−Removed: Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change in control of our company or changes in our management.
−Removed: Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that:
−Removed: establish that our board of directors is divided into three classes, Class I, Class II and Class III, with three-year staggered terms;
−Removed: authorize our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval;
−Removed: provide our board of directors with the exclusive right to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director;
−Removed: specify that special meetings of our stockholders may be called only by the chairman of our board of directors, our president, our secretary, or a majority vote of our board of directors;
−Removed: authorize our board of directors to amend our bylaws by majority vote;
−Removed: establish advance notice procedures with which our stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting.
−Removed: These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for our stockholders to replace members of our board of directors, which is responsible for appointing the members of management.
−Removed: In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law.
−Removed: These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time.
−Removed: The exercise of outstanding options and warrants to purchase our common stock could substantially dilute shareholders ’ investments.
−Removed: Under the terms of outstanding options and warrants to acquire our common stock issued to employees and others, the holders thereof are given an opportunity to profit from a rise in the market price of our common stock that, upon the exercise of such options and warrants, could result in dilution in the interests of our other shareholders.
−Removed: The extent to which we can reach and encourage the participation of enough of our investors to secure minimum thresholds for shareholder approval for matters subject to shareholder approval is uncertain.
−Removed: Given the limited amount trading our shares have experienced over the last several years, we have relied on relationships with investors owning material amounts of shares to reach minimum thresholds needed for shareholder approval of matters that were subject to a shareholder vote.
−Removed: The voting control over some of those shares has changed, and there is some question as to whether we can garner enough votes to decide shareholder matters by simple proxy solicitation.
−Removed: We may need to engage a third-party proxy solicitor if we obtain too little response to a proxy solicitation.
−Removed: Risks Related to Financing
−Removed: In the future, we may seek to enter into credit facilities to help fund our working capital needs.
−Removed: These credit facilities may expose us to additional risks associated with leverage and may inhibit our operating flexibility.
−Removed: We may seek to enter into credit facilities with third-party lenders to help fund our business.
−Removed: Such credit facilities will likely require us to pay a commitment fee on the undrawn amount and will likely contain a number of affirmative and restrictive covenants.
−Removed: If we violate any such covenants, our lenders could accelerate the maturity of any debt outstanding, and we may be prohibited from making any distributions to our stockholders.
−Removed: Such debt may be secured by our assets, including the stock we may own in subsidiaries and the rights we have under intercompany loan agreements that we may enter into in the future with our businesses.
−Removed: Our ability to meet our debt service obligations may be affected by events beyond our control and will depend primarily upon cash produced by our business.
−Removed: Any failure to comply with the terms of our indebtedness may have a material adverse effect on our financial condition.
−Removed: In addition, we expect that such credit facilities will bear interest at floating rates which will generally change as interest rates change.
−Removed: We will bear the risk that the rates that we are charged by our lenders will increase faster than we can grow the cash flow from our businesses, which could reduce profitability, materially adversely affect our ability to service our debt and cause us to breach covenants contained in our third-party credit facilities.
−Removed: Our failure to raise additional capital or generate the significant capital necessary to expand our operations and invest in new service offerings could reduce our ability to compete and could harm our business.
−Removed: We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new features, improve our operating infrastructure, or acquire complementary businesses and technologies.
−Removed: Accordingly, we may need to engage in equity or debt financings to secure additional funds.
−Removed: If we raise additional equity or equity-linked financing, our stockholders may experience significant dilution of their ownership interests and the market price of our common stock could decline.
−Removed: If we engage in future debt financings, the holders of such additional debt would also have priority over the holders of our common stock.
−Removed: Current and future indebtedness may also contain terms that, among other things, restrict our ability to incur additional indebtedness.
−Removed: We may also be required to take other actions that would otherwise be in the interests of the debt holders and would require us to maintain specified liquidity or other ratios, any of which could harm our business, operating results, and financial condition.
−Removed: We may not be able to obtain additional financing on terms favorable to us, if at all.
−Removed: If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be adversely affected.
−Removed: General Risk Factors
−Removed: The requirements of being a public company may strain our resources, divert management ’ s attention, and affect our ability to attract and retain qualified board members.
−Removed: As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the Nasdaq Stock Market, and other applicable securities rules and regulations.
−Removed: Compliance with these rules and regulations have increased our legal and financial compliance costs, made some activities more difficult, time-consuming, or costly, and increased demand on our systems and resources.
−Removed: Among other things, the Exchange Act requires that we file annual, quarterly, and current reports with respect to our business and operating results.
−Removed: In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
−Removed: In order to meet the requirements of this standard, significant resources and management oversight may be required.
−Removed: As a result, management’s attention may be diverted from other business concerns, which could harm our business and operating results.
−Removed: Although we have already hired additional employees to comply with these requirements, we may need to hire even more employees in the future, which will increase our costs and expenses.
−Removed: In addition, changing laws, regulations, and standards related to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time-consuming.
−Removed: These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.
−Removed: This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
−Removed: We intend to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expense and a diversion of management’s time and attention from revenue-generating activities to compliance activities.
−Removed: If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies, regulatory authorities may initiate legal proceedings against us and our business may be harmed.
−Removed: We rely on our management team and other key employees and will need additional personnel to grow our business, and the loss of one or more key employees or our inability to hire, integrate, train and retain qualified personnel, including members for our board of directors, could harm our business.
−Removed: Our future success is substantially dependent on our ability to hire, integrate, train, retain and motivate the members of our management team and other key employees throughout our organization, including key employees obtained through our acquisitions.
−Removed: Competition for highly skilled personnel is intense where we have a substantial presence and need for highly skilled personnel.
−Removed: We may not be successful in hiring or retaining qualified personnel to fulfill our current or future needs, and potential changes in U.S.
−Removed: immigration and work authorization laws and regulations, including those that restrain the flow of technical and professional talent, may make it difficult to renew or obtain visas for highly skilled personnel that we have hired or are actively recruiting.
−Removed: In addition, we believe that it is important to establish and maintain a corporate culture that facilitates the maintenance and transfer of institutional knowledge within our organization and also fosters innovation, teamwork, a passion for customers and a focus on execution.
−Removed: Any of our organizational changes may result in a loss of institutional knowledge and cause disruptions to our business.
−Removed: Furthermore, if we are not successful in identifying and recruiting new key employees and integrating them into our organization and creating effective working relationships among them and our other key employees, such failure could delay or hinder our development and the achievement of our strategic objectives, which could adversely affect our business, financial condition and results of operations.
−Removed: Our employees work for us on an “at-will” basis, which means they may terminate their employment with us at any time.
−Removed: Our continued success is dependent upon our ability to hire, retain and utilize qualified personnel.
−Removed: The success of our business and our ability to operate profitably is dependent upon our ability to hire, retain and utilize qualified personnel, including personnel with expertise in very old computing languages, for which there is a limited supply, and personnel with expertise in cutting-edge immature technologies.
−Removed: We also must be able to hire and retain corporate management professionals who have the required experience and expertise at a reasonable cost.
−Removed: The market for these and other personnel is competitive.
−Removed: From time to time, it may be difficult to attract and retain qualified individuals with the expertise, and in the timeframe, demanded by our clients, or to replace such personnel when needed in a timely manner.
−Removed: In certain geographic areas, for example, we may not be able to satisfy the demand for our services because of our inability to successfully hire and retain a sufficient number of qualified personnel.
−Removed: Furthermore, some of our personnel may be required to obtain or hold government-granted clearances to obtain government projects.
−Removed: Loss of the services of, or failure to recruit, qualified technical and management personnel could limit our ability to successfully complete existing projects and compete for new projects.
−Removed: Our results of operations may vary significantly from period to period, which could cause the trading price of our common stock to decline or fluctuate materially.
−Removed: Our results of operations have varied significantly from period to period, and we expect that our results of operations, including, but not limited to our GAAP and non-GAAP measures, will continue to vary as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including:
−Removed: our ability to attract new and retain existing customers or sell additional services to our existing customers;
−Removed: budgeting cycles, seasonal buying patterns and purchasing practices of customers;
−Removed: changes in customer, distributor or reseller requirements or market needs;
−Removed: the timing of new contracts for our services and length of our sales cycles;
−Removed: our ability to successfully and continuously expand our business;
−Removed: changes in our pricing policies or those of our competitors;
−Removed: the timing and costs related to the development or acquisition of technologies or businesses or strategic partnerships;
−Removed: the lack of synergy or the inability to realize expected synergies, resulting from acquisitions or strategic partnerships;
−Removed: our inability to execute, complete or integrate efficiently any acquisition that we may undertake;
−Removed: increased expenses, unforeseen liabilities, or write-downs and any impact on our operating results from any acquisitions we consummate;
−Removed: the cost and potential outcomes of future litigation;
−Removed: the departure of key employees;
−Removed: seasonality or cyclical fluctuations in our business;
−Removed: cyber attacks, security breaches, or other technical difficulties;
−Removed: political, economic and social instability, including with respect to the conflicts in Ukraine and the Middle East;
−Removed: public health crises, such as the COVID-19 pandemic, and related measures to protect the public health;
−Removed: future accounting pronouncements or changes in our accounting policies or practices;
−Removed: the amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our business, operations and infrastructure;
−Removed: the amount and timing of costs related to any cost reduction initiatives and the impact of such initiatives.
−Removed: Any of the above factors, individually or in aggregate, may result in significant fluctuations in our financial and other operating results from period to period.
−Removed: As a result of this variability, our historical results of operations should not be relied upon as an indication of future performance.
−Removed: Moreover, this variability and unpredictability could result in our failure to meet our operating plan or the expectations of investors or analysts for any period.
−Removed: If we fail to meet such expectations for these or other reasons, the market price of our common stock could fall substantially, and we could face costly lawsuits, including securities class action suits.
−Removed: Any litigation against us could be costly and time-consuming to defend.
−Removed: From time to time, we are and may become subject to legal proceedings and claims, such as claims brought by our customers in connection with commercial disputes, employment claims made by our current or former employees, intellectual property claims, or securities class actions or other claims related to our business or any volatility in the trading price of our common stock.
−Removed: Litigation might result in substantial costs and may divert management’s attention and resources, which might seriously harm our business, financial condition, and results of operations.
−Removed: Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to us (including premium increases or the imposition of large deductible or co-insurance requirements).
−Removed: A claim brought against us that is uninsured or underinsured could result in unanticipated costs, potentially harming our business, financial position, and results of operations.
−Removed: In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.
−Removed: Our business is subject to the risks of natural disasters, such as fire, power outages, floods, health risks and other catastrophic events, and to interruption by man-made problems such as terrorism.
−Removed: Natural disasters, such as fire or floods, a significant power outage, telecommunications failure, terrorism, an armed conflict, cyberattacks, epidemics and pandemics such as COVID-19, or other geo-political unrest could affect our supply chain, manufacturers, logistics providers, or end-customers or the economy as a whole and such disruption could impact our shipments and sales.
−Removed: These risks may be further increased if the disaster recovery plans for us and our suppliers prove to be inadequate.
−Removed: To the extent that any of the above should result in delays or cancellations of customer orders, the loss of customers, or the delay in the manufacture, deployment, or shipment of our products, our business, financial condition, and operating results would be adversely affected.
−Removed: Failure to keep pace with a changing technological environment could negatively impact our business.
−Removed: The IT industry in general, and the market for our application software offerings and services, is characterized by rapidly changing technology, frequent new technology introductions, and significant competition.
−Removed: In order to keep pace with this rapidly changing market environment, we must continually develop and incorporate into our services new technological advances and features desired by the marketplace at acceptable prices.
−Removed: If we are unsuccessful in identifying, developing and marketing our services and technology or adapting our business to rapid technological change, it will have a material negative impact on our results of operations.
+Added: RISK FACTORS.
+Added: An investment in our securities involves a high degree of risk.
+Added: You should carefully read and consider all of the risks described below, together with all of the other information contained or referred to in this report, before making an investment decision with respect to our securities.
+Added: If any of the following events occur, our financial condition, business and results of operations (including cash flows) may be materially adversely affected.
+Added: In that event, the market price of our shares could decline, and you could lose all or part of your investment.
+Added: Risks Related to the Company ’ s Business, Operations and Industry
+Added: We are facing significant liquidity risks that raise substantial doubt about our ability to continue as a going concern.
+Added: We have incurred recurring losses and experienced negative cash flows from operations since our inception, and we may continue to incur operating losses.
+Added: For the fiscal year ended December 31, 2024, we had an accumulated deficit of $87.1 million and negative cash flows from operating activities of approximately $6.2 million.
+Added: We have generated minimal revenue to date, and our ability to generate recurring revenue depends on the successful commercialization of our BNA Platform, which remains in the early stages of market adoption.
+Added: Our financial position raises significant liquidity concerns.
+Added: Our existing capital resources may be insufficient to fund our operations for the next twelve months, and we may be unable to realize our assets or discharge our liabilities in the normal course of business.
+Added: These conditions raise substantial doubt about our ability to continue as a going concern.
+Added: To mitigate these risks, we are actively pursuing additional capital through equity or debt financings and implementing cost-reduction measures.
+Added: However, there is no assurance that we will be able to secure such funding on favorable terms or at all.
+Added: Failure to obtain additional financing would materially and adversely affect our ability to continue operations and could force us to delay, reduce, or eliminate our commercialization efforts, product development activities, or other key initiatives.
+Added: Our continued existence is dependent on our ability to raise additional capital and ultimately achieve and maintain profitable operations.
+Added: Even if we are successful in raising additional funds, our expenses may exceed expectations, or we may deplete our available capital resources more quickly than anticipated.
+Added: The report of our independent registered public accounting firm for the fiscal year ended December 31, 2024, includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern, which may further impair our ability to raise capital and negatively impact investor confidence.
+Added: We are subject to operating risks, including excess or constrained capacity and operational inefficiencies, which could adversely affect our results of operations.
+Added: We are subject to operating risks, including excess or constrained capacity and pressure on our internal systems and personnel.
+Added: In order to manage current and anticipated future operations effectively, we must continually implement and improve our operational, financial and management information systems, hire, train, motivate, manage and retain employees.
+Added: We may be unable to balance near-term efforts to meet existing demand with future customer demand, including adding personnel, creating scalable, secure and robust systems and operations, and automating processes needed for long term efficiencies.
+Added: Any such failure could have a material impact on our business, operations and prospects.
+Added: Our products and information technology systems are critical to our business.
+Added: Issues with product development or enhancements, IT system integration, implementation, updates and upgrades could disrupt our operations and have a material impact on our business and operating results.
+Added: We rely on the efficient, uninterrupted and secure operation of our IT systems and are dependent on key third-party software embedded in our products and IT systems as well as third-party hosted IT systems to support our operations.
+Added: All software and IT systems are vulnerable to damage, cyber attacks or interruption from a variety of sources.
+Added: To effectively manage and improve our operations, our IT systems and applications require an ongoing commitment of significant expenditures and resources to maintain, protect, upgrade, enhance and restore existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving industry and regulatory standards, increasingly sophisticated cyber threats, and changing consumer preferences.
+Added: Failure to adequately protect and maintain the integrity of our products and IT systems may result in a material effect on our financial position, results of operations and cash flows.
+Added: We plan to continuously upgrade and issue new releases of our products and customer-facing software applications, upon which our operations depend.
+Added: Software applications and products containing software frequently contain errors or defects, especially when first introduced or when new versions are released.
+Added: Additionally, the third-party software integrated into or interoperable with our products and services will routinely reach end of life, and as a consequence, may be exposed to additional vulnerabilities, including increased security risks, errors and malfunctions that may be irreparable or difficult to repair.
+Added: The discovery of a defect, error or security vulnerability in our products, software applications or IT systems, incompatibility with future customers’ computer operating systems and hardware configurations with a new release or upgraded version or the failure of our products or primary IT systems may cause adverse consequences, including:
+Added: delay or loss of revenues, significant remediation costs, delay in market acceptance, loss of data, disclosure of financial, health or other personal information of any customers or patients, product recalls, damage to our reputation, or increased service costs, any of which could have a material effect on our business, financial condition or results of our operations and the operations of our potential customers or our business partners.
+Added: Our operations and financial performance depend on global and regional economic conditions.
+Added: Inflation, fluctuations in currency exchange rates, changes in consumer confidence and demand, and weakness in general economic conditions and threats, or actual recessions, could materially affect our business, results of operations, and financial condition.
+Added: Macroeconomic conditions impact consumer confidence and discretionary spending, which could adversely affect demand for any products we bring to market.
+Added: Consumer spending habits are affected by, among other things, inflation, fluctuations in currency exchange rates, weakness in general economic conditions, threats or actual recessions, pandemics, wars and military actions, levels of employment, wages, debt obligations, discretionary income, interest rates, volatility in capital, and consumer confidence and perceptions of current and future economic conditions.
+Added: Changes and uncertainty can, among other things, reduce or shift spending away from treatments and procedures to address mental illness and cognitive disorders, and could drive patients and clinicians towards other options in the marketplace that may cost less than our products, reduce patient traffic in clinicians’ offices or reduce demand for services to treat mental illness and cognitive disorder generally.
+Added: The recent declines in, or uncertain economic outlooks for, the U.S., European and certain other international economies has and may continue to adversely affect consumer and healthcare practice spending.
+Added: The increase in the cost of fuel and energy, food and other essential items along with elevated interest rates could reduce consumers’ disposable income, resulting in less discretionary spending for products like ours.
+Added: Decreases in disposable income and discretionary spending or change in consumer confidence and spending habits may adversely affect our revenues and operating results.
+Added: Inflation continues to adversely impact spending and trade activities and we are unable to predict the impacts of higher inflation on global and regional economies.
+Added: Higher inflation has also increased domestic and international shipping costs, raw material prices, and labor rates, which could adversely impact the costs of producing, procuring and shipping any products we bring to market.
+Added: If similar trends continue once we begin marketing our BNA Platform, our ability to recover these cost increases through price increases may have limited effectiveness, resulting in downward pressure on our operating results.
+Added: Attempts to offset cost increases with price increases could reduce sales, increase customer dissatisfaction or otherwise harm our reputation.
+Added: Further, we are unable to predict the impact of efforts by central banks and federal, state and local governments to combat elevated levels of inflation.
+Added: If their efforts to reduce inflation are too aggressive, they may lead to a recession.
+Added: Alternatively, if they are insufficient or are not sustained long enough to lower inflation to more acceptable levels, consumer spending may be adversely impacted for a prolonged period of time.
+Added: Any of these events could materially affect our business and operating results.
+Added: Our business could be impacted by political events, trade and other international disputes, war, and terrorism, including the military conflict between Russia and Ukraine.
+Added: Political events, trade and other international disputes, war, and terrorism could harm or disrupt international commerce and the global economy and could have a material effect on our business as well as our potential customers, suppliers, contract manufacturers, distributors, and other business partners.
+Added: Political events, trade and other international disputes, wars, and terrorism can lead to unexpected tariffs or trade restrictions, which could adversely impact our business.
+Added: Once we begin marketing our products, these increased costs could adversely impact our gross margin and make our products less competitive or reduce demand.
+Added: Countries could also adopt other measures, such as controls on imports or exports of goods, technology or data, that could adversely impact our operations and supply chain and limit our ability to offer products and services.
+Added: These measures could require us to take various actions, including changing suppliers or restructuring business relationships.
+Added: Complying with new or changed trade restrictions is expensive, time-consuming and disruptive to our operations.
+Added: Such restrictions can be announced with little or no advance notice and we may be unable to effectively mitigate the adverse impacts of such measures.
+Added: If disputes and conflicts escalate in the future, actions by governments in response could be significantly more severe and restrictive and could materially affect our business.
+Added: Political unrest, threats, tensions, actions and responses to any social, economic, business, geopolitical, military, terrorism, or acts of war involving key commercial, development or manufacturing markets such as China, Mexico, Israel, Europe, or other countries or regions could materially impact any international operations we undertake.
+Added: For example, our employees in Israel could be obligated to perform annual reserve duty in the Israeli military and be called for additional active duty under emergency circumstances.
+Added: If any of these events or conditions occur, the impact on us, our employees and potential customers is uncertain, particularly if emergency circumstances, armed conflicts or an escalation in political instability or violence disrupts our product development, data or information exchange, payroll or banking operations, product or materials shipping by us or our suppliers and other unanticipated business disruptions, interruptions and limitations in telecommunication services or critical systems or applications reliant on a stable and uninterrupted communications infrastructure.
+Added: and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine.
+Added: On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported.
+Added: In response to the military conflict, the United States and other North Atlantic Treaty Organization member states, as well as non-member states, announced targeted economic sanctions on Russia, including certain Russian citizens and enterprises, and the continuation of the conflict may trigger additional economic and other sanctions.
+Added: The potential impacts of the conflict and related sanctions could include supply chain and logistics disruptions, macro financial impacts resulting from the exclusion of Russian financial institutions from the global banking system, volatility in foreign exchange rates and interest rates, inflationary pressures on raw materials and energy and heightened cybersecurity threats.
+Added: We have no way to predict the progress or outcome of the conflict in Ukraine or the reactions by governments, businesses or consumers.
+Added: A prolonged conflict, intensified military activities or more extensive sanctions impacting the region and the resulting economic impact could have a material effect on our business, results of operations, financial condition, liquidity, growth prospects and business outlook.
+Added: We conduct certain of our operations in Israel.
+Added: Conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel ’ s war against them, may affect our operations.
+Added: We currently have seven full-time employees, who are located in and/or reside in Israel.
+Added: As a result, our business and operations are directly affected by economic, political, geopolitical and military conditions in Israel.
+Added: Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and terrorist organizations active in the region.
+Added: These conflicts have involved missile strikes, hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions in Israel.
+Added: In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets.
+Added: Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel.
+Added: Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks.
+Added: Moreover, the clash between Israel and Hezbollah in Lebanon, may escalate in the future into a greater regional conflict.
+Added: Any hostilities involving Israel could adversely affect our operations and results of operations.
+Added: Shelter-in-place and work-from-home measures, government-imposed restrictions on movement and travel and other precautions taken to address the ongoing conflict may temporarily disrupt our employees ’ ability to effectively perform their daily tasks.
+Added: The Israel Defense Force (the “IDF”), the national military of Israel, is a conscripted military service, subject to certain exceptions.
+Added: Several of our employees are subject to military service in the IDF and have been and may be called to serve.
+Added: It is possible that there will be further or longer military reserve duty call-ups in the future, which may affect our business due to a shortage of skilled labor and loss of institutional knowledge, and necessary mitigation measures we may take to respond to a decrease in labor availability, such as overtime and third-party outsourcing, for example, which may have unintended negative effects and adversely impact our results of operations, liquidity or cash flows.
+Added: It is currently not possible to predict the duration or severity of the ongoing conflict or its effects on our business, operations and financial conditions.
+Added: The ongoing conflict is rapidly evolving and developing, and could disrupt our business and operations.
+Added: Our operations may be impacted by natural disaster and may adversely impact our business and operating results as well as those of our potential customers and suppliers.
+Added: Natural disasters and other extreme weather events may impact us and our potential customers, as well as suppliers critical to our operations.
+Added: Natural disasters include earthquakes, tsunamis, floods, droughts, hurricanes, wildfires, and other extreme weather conditions that can cause deaths, injuries, and critical health crises, power outages, restrictions and shortages of food, water, shelter, and medical supplies, telecommunications failures, materials scarcity, price volatility and other ramifications.
+Added: The frequency and severity of such events can vary over time and by region.
+Added: Regardless of their cause, natural disasters and extreme weather may pose ongoing operational and financial risks to us and others within our supply chain.
+Added: These events can lead to facility shutdowns, shipping and logistics disruptions, increased insurance or operating costs, and potential loss of revenue.
+Added: In addition, changes in the broader economic environment due to environmental factors may affect the supply, demand, or availability of energy and other critical resources used in our operations.
+Added: Any of these factors could have a material adverse effect on our business, financial condition, or results of operations.
+Added: Risks Related to the BNA Platform
+Added: If we are not successful in enhancing awareness of our BNA Platform, driving adoption across our current target population and expanding the population of eligible patients, our sales, business, financial condition and results of operations will be negatively affected.
+Added: Our business currently depends primarily on our ability to successfully market our BNA Platform, which involves successfully launching our commercialization program, increasing adoption of and driving utilization our BNA Platform by target clinicians, namely neurologists in the United States.
+Added: We are aiming to increase awareness about our BNA Platform, as well as grow the number of clinicians that utilize our BNA Platform after the launch of our commercialization program, but there can be no assurance that we will succeed.
+Added: The commercial success of our BNA Platform will continue to depend on a number of factors, including the following:
+Added: the actual and perceived effectiveness and clinical benefit, of our BNA Platform;
+Added: the prevalence and severity of any adverse patient events involving our BNA Platform;
+Added: our ability to provide earlier awareness of and education about our BNA Platform to patients and clinicians;
+Added: the degree to which clinicians and patients adopt our BNA Platform;
+Added: the availability, relative cost and perceived advantages and disadvantages of alternative technologies or treatment methods for cognitive disorders;
+Added: the results of future clinical and other studies relating to the health, economic or other benefits of our BNA Platform;
+Added: whether key thought leaders in the medical community accept that our future clinical utility is sufficiently meaningful to influence their decision to adopt our BNA Platform;
+Added: the extent to which we are successful in educating clinicians and patients about the benefits of our BNA Platform;
+Added: our reputation among clinicians and patients;
+Added: our ability to predict product performance;
+Added: the strength of our marketing and distribution infrastructure, including our ability to drive adoption and utilization of our BNA Platform;
+Added: our ability to obtain, maintain, protect, enforce and defend our intellectual property rights, including those covering our BNA Platform;
+Added: our ability to maintain compliance with all legal and regulatory requirements, including those applicable to our BNA Platform;
+Added: our ability to continue to attract and retain key talent.
+Added: If we fail to successfully initiate our broad commercialization program, market and sell our BNA Platform cost-effectively, our sales, business, financial condition and results of operations will be negatively affected.
+Added: Our commercial success will depend on the future adoption of the BNA Platform into patient work streams in clinics.
+Added: If we are unable to successfully drive interest in our BNA Platform, our business, financial condition and results of operations would be harmed.
+Added: Our commercial success will depend in large part on the future adoption of the BNA Platform into patient work streams in clinics.
+Added: We cannot predict how quickly, if at all, clinicians and patients will adopt our BNA Platform.
+Added: Moreover, we cannot predict how quickly, if at all, those currently living with mental illness or cognitive disorders but who are not being treated will seek treatment.
+Added: Our ability to grow sales of our BNA Platform and drive market acceptance will depend on successfully educating clinicians and patients of the relative benefits of our BNA Platform.
+Added: If we are unable to successfully drive interest in our BNA Platform, our business, financial condition and results of operations would be harmed.
+Added: We may be unable to compete successfully with competitive technologies, which could harm our sales, business, financial condition and results of operations.
+Added: Our industry is competitive and has been evolving rapidly.
+Added: Our BNA Platform is indicated for use in in individuals 12 to 85 years of age for the post-hoc statistical analysis of the human electroencephalogram, including event-related potentials.
+Added: Our initial market entry strategy is focused on neurologists in the United States.
+Added: Once we commence a broad commercialization program of our BNA Platform, we will face competition in the market for our BNA Platform from competing technologies, and we expect competition from new companies that may enter the market or introduce new technologies in the future.
+Added: Third-party payors may encourage the use of competitors’ products due to lower costs of competing products or alternatives.
+Added: Additionally, treating neurologists may promote the use of other competitors’ products or alternative therapies.
+Added: Our current and future competitors may include large, well-capitalized companies with significant market share and resources.
+Added: They may have more established sales and marketing programs than we do and have greater name recognition.
+Added: In addition to competing for market share, competitors may develop or acquire patents or other rights that may limit our ability to compete.
+Added: Our current and future competitors may include large, well-capitalized companies with significant market share and resources.
+Added: They may have more established sales and marketing programs than we do and have greater name recognition.
+Added: In addition to competing for market share, competitors may develop or acquire patents or other rights that may limit our ability to compete.
+Added: We believe that the competitive advantages of our BNA Platform will be important factors in our future success.
+Added: Our continued success depends on, among other things, our ability to:
+Added: successfully launch our commercialization program to target clinicians (i.e.
+Added: neurologists in the United States);
+Added: drive awareness to increase the number of mental illness and cognitive impairment patients referred to target clinicians, namely neurologists in the United States;
+Added: attract and retain skilled research, development, sales, marketing and clinical personnel;
+Added: continue to innovate in order to improve our BNA Platform and enhance the patient and provider experience;
+Added: adequately predict product performance;
+Added: obtain and maintain regulatory clearances and approvals, including for expanded indications;
+Added: cost-effectively market and sell our BNA Platform;
+Added: obtain, maintain, protect, enforce and defend our intellectual property rights and operate our business without infringing, misappropriating or otherwise violating the intellectual property rights of others;
+Added: acquire products or technologies complementary to or necessary for our business.
+Added: The medical device industry is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants.
+Added: There can be no assurance that other companies or institutions will not succeed in developing or marketing devices and products that are more effective than our BNA Platform or that would render our BNA Platform obsolete or noncompetitive.
+Added: Patient and product variability may produce misleading BNA results
+Added: Misled clinical decision due to incorrect score results is a known risk and is continually mitigated.
+Added: EEG is subject to external “noise” or artifact that contaminates waveforms such as Electrical grid;
+Added: nearby medical/other devices which cause interference in frequencies near EEG frequencies., or excessive patient movement.
+Added: Artifact-free data cannot always be guaranteed.
+Added: This variability may lead to customer dissatisfaction which could harm our sales, business, financial condition, and results of operations.
+Added: Use of our BNA Platform requires appropriate training and inadequate training may lead to negative clinician experiences, which could harm our business, financial condition, and results of operations.
+Added: The successful use of our BNA Platform depends in part on the training and skill of the clinician performing EEG recording and reading BNA reports.
+Added: Clinicians could experience difficulty interpreting the results of BNA reports.
+Added: Moreover, clinicians rely on their previous medical training and experience when recommending or utilizing our BNA Platform, and we cannot guarantee that all clinicians will have the necessary skills to properly utilize the BNA Platform.
+Added: We cannot be certain that clinicians that will use our BNA Platform will have received sufficient training, and clinicians who have not received adequate training may nonetheless attempt to use our BNA Platform with their patients.
+Added: If clinicians utilize our BNA Platform incorrectly, or without adhering to or completing all relevant training, their patient outcomes may not be consistent with the outcomes achieved in our research studies and any future clinical studies.
+Added: Adverse safety outcomes that arise from improper or incorrect use of our BNA Platform may negatively impact the perception of patient benefit and the safety of our BNA Platform, notwithstanding results from our research studies and any future clinical studies.
+Added: These results could limit adoption of our BNA Platform, which would harm our sales, business, financial condition, and results of operations.
+Added: We are highly dependent on our senior management team and key personnel, and our business could be harmed if we are unable to attract and retain personnel necessary for our success.
+Added: We are highly dependent on our senior management and key personnel.
+Added: Our success will depend on our ability to retain senior management and to attract and retain qualified personnel in the future, including sales and marketing professionals, engineers, scientists, data science specialists and other highly skilled personnel and to integrate current and additional personnel in all departments.
+Added: Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms, or at all.
+Added: To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have issued stock options that vest over time, restricted share units subject to vesting conditions, and certain performance warrants.
+Added: The value to employees of stock options that vest over time may be significantly affected by fluctuations in our stock price that are beyond our control, and may at any time be insufficient to counteract more lucrative offers from other companies.
+Added: Despite our efforts to retain valuable employees, members of our management and other key personnel may terminate their employment with us on short notice.
+Added: Our employment arrangements with our employees provide for at-will employment, which means that any of our employees could leave our employment at any time, with or without notice.
+Added: We also do not maintain “key man” insurance policies on the lives of these individuals or the lives of any of our other employees.
+Added: As we launch the commercialization program for our BNA Platforms, expand our product offerings in the future and increase our future marketing efforts, we will need to build and expand the reach of our marketing and sales networks.
+Added: Our future success will depend largely on our ability to continue to hire, train, retain and motivate skilled employees with significant technical knowledge in various areas.
+Added: An inability to attract, hire, train and retain employees will harm our sales, business, financial condition, and results of operations.
+Added: We expect to increase the size of our organization in the future, and we may experience difficulties in managing the operational elements or timing of this growth.
+Added: If we are unable to manage or appropriately time the anticipated growth of our business, our future revenue and operating results may be harmed.
+Added: As of the date of this report, we have thirteen full time employees and one contractor.
+Added: As our sales and marketing strategies evolve and as we launch commercialization of our BNA Platform, we may need additional managerial, operational, sales, marketing, financial and other personnel.
+Added: Future growth would impose significant added responsibilities on members of management, including:
+Added: identifying, recruiting, integrating, maintaining and motivating additional employees;
+Added: managing our internal development efforts effectively, while complying with our contractual obligations to contractors and other third parties;
+Added: improving our operational, financial and management controls, reporting systems and procedures.
+Added: Our future financial performance and our ability to successfully market and sell our BNA Platform will depend, in part, on our ability to effectively manage or time any future growth, and our management may also have to divert a disproportionate amount of attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.
+Added: As demand for our BNA Platform increases in the future, we will need to expand customer service, billing and systems processes and enhance our internal quality assurance program.
+Added: We cannot be certain that any increases in scale, related improvements and quality assurance will be successfully implemented or that appropriate personnel will be available to facilitate the growth of our business.
+Added: If we encounter difficulty meeting market demand, quality standards or clinician expectations, our reputation will be harmed and our business will suffer.
+Added: Additionally, additional growth may result in higher fixed costs and may slow our ability to reduce costs in the face of a sudden decline in demand for our products.
+Added: We may not be able to achieve or maintain satisfactory pricing and margins for our BNA Platform, which could harm our business and results of operations.
+Added: The medical device industry has a history of price competition, and we can give no assurance that we will be able to maintain satisfactory prices for our BNA Platform or any future products at competitive levels.
+Added: The pricing of our products could be impacted by several factors, including pressure to reduce prices by our customers due to a decline in the amount that third-party payors reimburse for EEG tests for clinicians utilizing our BNA Platform.
+Added: If we are forced to lower or are unable to increase the price we charge for our BNA Platform, our gross margins will decrease, which will harm our ability to invest in and grow our business.
+Added: If we are unable to maintain our prices, or if our costs increase and we are unable to offset such increase with an increase in our prices, our margins could erode, which could harm our business and results of operations.
+Added: Future sales of our BNA Platform may depend on healthcare providers ’ or patients ’ ability to obtain reimbursement from third-party payors, such as insurance carriers.
+Added: Future sales of our BNA Platform may depend on healthcare providers’ or patients’ ability to obtain reimbursement from third-party payors, such as insurance carriers.
+Added: Where such insurance or third-party reimbursement becomes available in the future, any reduction in insurance or other third-party payor reimbursement for our BNA Platform may cause negative price pressure, which would reduce our revenues.
+Added: Without a corresponding reduction in the cost to produce such products, the result would be a reduction in our overall gross profit.
+Added: Similarly, any increase in the cost of such products would reduce our overall gross profit unless there was a corresponding increase in third-party payor reimbursement.
+Added: Failure by our patients or healthcare provider customers to obtain or maintain coverage or to secure adequate reimbursement for our treatment by third-party payors could have an adverse effect on our business, results of operations, and financial condition.
+Added: Our results of operations may be harmed if we are unable to accurately forecast clinician demand for our BNA Platform or any future products.
+Added: Our ability to accurately forecast demand for our BNA Platform or our future our products could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, our inability to forecast the lifecycle of our products, an increase or decrease in customer demand for our products or for competitor products, our failure to accurately forecast customer adoption of new products, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions.
+Added: Inventory levels in excess of customer demand may result in inventory write-downs or write-offs, which would cause our gross margin to be adversely affected and could impair the strength of our brand, which may negatively affect our business, financial condition, and results of operations.
+Added: Adoption of our BNA Platform depends on positive clinical data as well as clinician acceptance of the data and our products, and negative clinical data or perceptions among these clinicians would harm our sales, business, financial condition, and results of operations.
+Added: The rate of adoption and sales of our products is heavily influenced by clinical data.
+Added: Although we have positive research data from a 2023 white paper study, there can be no assurance that future clinical studies, including those to demonstrate the efficacy of our BNA Platform or future products in current target patient populations and those to support label retention and expansion for our products, will demonstrate clinical utility and effectiveness.
+Added: Unfavorable or inconsistent clinical data from future clinical studies conducted by us, our competitors, or third parties, or the negative interpretation of our clinical data internally and externally, including by customers, competitors, patients, and regulators could harm our business, financial condition, and results of operations.
+Added: The rate of adoption and sales of our products are also influenced by clinician perceptions.
+Added: Negative perceptions of our products by clinicians, including due to negative clinical data, could result in decreased adoption or use of our products, which would harm our business, financial condition, and results of operations.
+Added: Further, if we are not able to attain strong working relationships with clinicians and receive their advice and input, the marketing of our products could suffer, which could harm our business, financial condition and results of operations.
+Added: Our future success also depends upon patients having an experience with our products that meets their expectations in order to increase clinician demand for our products as a result of positive feedback and word-of-mouth.
+Added: Patients may be dissatisfied if their expectations of the BNA Platform are not met or if the performing clinicians are not adequately trained on use of our BNA Platform.
+Added: If the results of our products do not meet the expectations of the patient it could discourage the patient and/or their healthcare provider from continuing to use our device or referring our products to others.
+Added: Dissatisfied patients may express negative opinions through social media, advocacy, or other publicity.
+Added: Any failure to meet patient expectations and any resulting negative publicity could harm our reputation and future sales.
+Added: We may acquire businesses or products, or form strategic alliances, in the future, and may not realize the benefits of such acquisitions.
+Added: We may acquire additional businesses or products, form strategic alliances, or create joint ventures with third parties that we believe will complement or augment our existing business.
+Added: If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of acquiring such businesses if we are unable to successfully integrate them with its existing operations and company culture.
+Added: We may encounter numerous difficulties in developing, manufacturing, and marketing any new products resulting from a strategic alliance or acquisition that delay or prevent it from realizing our expected benefits or enhancing our business.
+Added: There is no assurance that, following any such acquisition, we will achieve the synergies expected to justify the transaction, which could result in a material adverse effect on our business and prospects.
+Added: Risks Related to Legal, Regulatory and Compliance Matters
+Added: Complying with regulations enforced by FDA and other regulatory authorities is expensive and time consuming, and failure to comply could result in substantial penalties.
+Added: Our product, the BNA Platform (for which we have obtained FDA 510(k) clearance), and our future products are considered medical devices and, accordingly, are subject to rigorous regulation by government agencies in the U.S.
+Added: and other countries in which we intend to sell our products.
+Added: Compliance with these rigorous regulations will affect capital expenditures, earnings and the competitive position of the Company.
+Added: These regulations vary from country to country but cover, among other things, the following activities with respect to medical devices:
+Added: design, development and manufacturing;
+Added: testing, labeling, content and language of instructions for use and storage;
+Added: product storage and safety;
+Added: marketing, sales and distribution;
+Added: pre-market clearance and approval;
+Added: record keeping procedures;
+Added: advertising and promotion;
+Added: recalls and field safety corrective actions;
+Added: post-market surveillance;
+Added: post-market approval studies;
+Added: product import and export.
+Added: The regulations to which we are subject are complex.
+Added: Regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs, or lower than anticipated sales.
+Added: Our failure to comply with applicable regulatory requirements could result in enforcement action by FDA or state agencies, which may include any of the following sanctions:
+Added: warning letters, fines, injunctions, consent decrees, and civil penalties;
+Added: repair, replacement, refunds, recall, or seizure of our products;
+Added: operating restrictions or partial suspension or total shutdown of production;
+Added: refusing our requests for 510(k) clearance or pre-market approval of new products, new intended uses, or modifications to existing products;
+Added: withdrawing clearance or pre-market approvals that have already been granted;
+Added: criminal prosecution.
+Added: If any of these events were to occur, they could harm our business.
+Added: We may not receive the necessary authorizations to market our BNA Platform or any future new products, and any failure to timely do so may adversely affect our ability to grow our business.
+Added: Before we can sell a new medical device in the U.S., or market a new use of, new claim for, or significant modification to a legally marketed device, we must first obtain either FDA 510(k) clearance or approval, unless an exemption applies.
+Added: In the 510(k) clearance process, before a device may be marketed, the applicant must submit a premarket notification to FDA under Section 510(k) of the FD&C Act, and FDA must determine that a proposed device is “substantially equivalent” to a legally-marketed “predicate” device.
+Added: To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics, not raise different questions of safety or effectiveness than the predicate device, and be as safe and as effective as the predicate device.
+Added: The 510(k) clearance process can be expensive and uncertain and typically takes from three to 12 months, but may last significantly longer.
+Added: Clinical data may be required in connection with an application for 510(k) clearance.
+Added: Furthermore, even if we are granted regulatory clearances or approvals, they may include limitations on the indications for use or intended uses of the device, which may limit the market for the device.
+Added: Our BNA Platform is a Class II medical device, which was cleared by FDA for commercialization in the U.S.
+Added: pursuant to the 510(k) notification process for the post-hoc statistical analysis of the human electroencephalogram in December 2020 for use in individuals 12 to 85 years of age.
+Added: FDA can delay, limit, or deny 510(k) clearance, or other approval or reclassification, of a device for many reasons, including:
+Added: we may be unable to demonstrate to FDA’s satisfaction that the products or modifications are substantially equivalent to a proposed predicate device or safe and effective for their intended uses;
+Added: we may be unable to demonstrate that the clinical and other benefits of the device outweigh the risks;
+Added: the applicable regulatory authority may identify deficiencies in our submissions or in the facilities or processes of our third party contract manufacturers.
+Added: Any delay or failure to obtain necessary regulatory clearances or approvals could harm our business.
+Added: For example, if we decide to market the BNA Platform for a broader or additional indication(s) for use and/or make any material modifications to any element of the device and/or the manufacturing or distribution thereof in the future, an additional 510(k) submission, and FDA clearance thereof, will be required prior to making any promotional communications expressly or impliedly claiming that the device may be used for such indication(s) and/or prior to making such modification, respectively.
+Added: In addition, FDA may change its policies, adopt additional regulations, revise existing regulations, or take other actions, or Congress may enact different or additional statutory requirements, which may prevent or delay clearance of our future products under development or impact our ability to modify our currently marketed products on a timely basis.
+Added: Such policy, statutory, or regulatory changes could impose additional requirements upon us that could delay our ability to obtain new 510(k) clearances, increase the costs of compliance, or restrict our ability to maintain our current marketing authorizations.
+Added: We received our European CE mark, indicating that we affirm our product’s conformity with European health, safety and environmental protection standards, in 2021.
+Added: We will also need to obtain regulatory approval in other foreign jurisdictions in which we plan to market and sell our products.
+Added: The time required to obtain registrations or approvals, if required by other countries, may be longer than that required for FDA clearance, and requirements for such registrations, clearances, or approvals may significantly differ from FDA requirements.
+Added: If we modify our products, we may need to apply for additional regulatory approvals before we are permitted to sell the modified product.
+Added: In addition, we may not continue to meet the quality and safety standards required to maintain the authorizations that we have received.
+Added: If we are unable to maintain our authorizations in a particular country, we will no longer be able to sell the applicable product in that country.
+Added: Failure to comply with these rules, regulations, self-regulatory codes, circulars, and orders could result in significant civil and criminal penalties and costs and could have a material adverse impact on our business.
+Added: Also, these regulations may be interpreted or applied by a prosecutorial, regulatory, or judicial authority in a manner that could require us to make changes in our operations or incur substantial defense and settlement expenses.
+Added: Even unsuccessful challenges by regulatory authorities or private relators could result in reputational harm and the incurring of substantial costs.
+Added: In addition, many of these laws are vague or indefinite and have not been interpreted by the courts and have been subject to frequent modification and varied interpretation by prosecutorial and regulatory authorities, increasing compliance risks.
+Added: Certain modifications to our products may require new 510(k) clearance or other marketing authorizations.
+Added: Once a medical device is permitted to be legally marketed in the U.S.
+Added: pursuant to a 510(k) clearance, a medical device developer may be required to notify FDA of certain modifications to the device.
+Added: Medical device developers determine in the first instance whether a change to a product requires a new premarket submission, but FDA may review any such decision.
+Added: While our BNA Platform received 510(k) clearance in December 2020, we may in the future apply for 510(k) clearance for updated components of our BNA Platform, which must, then, be found by the FDA to be substantially equivalent to the cleared BNA Platform and, thus, may not be lawfully marketed in the U.S.
+Added: until FDA make a substantial equivalence determination and issues the requisite 510(k) clearance for the updated BNA Platform.
+Added: Although the development of our BNA Platform has been carefully monitored and documented by professionals who are experienced in the FDA clearance process, there is no assurance that the FDA will agree that an updated component of our BNA Platform is substantially equivalent to the cleared BNA Platform and allow the updated BNA Platform to be marketed in the United States.
+Added: The FDA may determine that the device is not substantially equivalent and require a premarket approval (“PMA”) or, more likely, a de novo reclassification, and/or require further information, such as additional test data, including data from clinical studies, before it is able to make a determination regarding substantial equivalence.
+Added: By requesting additional information, the FDA can delay market introduction of an updated BNA Platform.
+Added: Delays in receipt of or failure to receive any necessary 510(k) clearance, de novo classification, or PMA, or the imposition of stringent restrictions for our BNA Platform, could have a material adverse effect on our business, results of operations and financial condition.
+Added: In the future, we may make other modifications to our products, including our BNA Platform, and determine, based on our review of the applicable FDA regulations and guidance, that in certain instances new 510(k) clearances or other premarket submissions are not required.
+Added: If FDA disagrees with our determinations, we may be subject to a wide range of enforcement actions, including, for example, a warning letter, among other consequences, after which we will likely have to cease marketing the applicable modified product and/or to recall distributed units of such modified product until we obtain the requisite clearance or approval.
+Added: Ongoing changes in healthcare regulation could negatively affect our revenues, business and financial condition.
+Added: We could be affected by potential changes to healthcare laws, rules and regulations, including changes to subsidies, healthcare insurance marketplaces and Medicaid expansion and contraction.
+Added: All federal and state government health care programs, including for example Medicare, Medicaid and the ACA, may be subject to change as a result of political, legislative, regulatory, and administrative developments, as well as judicial proceedings.
+Added: The results of the 2024 federal election, including the election of President Trump and Republican control of both houses of Congress, may result in significant changes in, and have resulted in uncertainty with respect to, legislation, regulation, implementation or repeal of laws and rules related to government health programs, including Medicare and Medicaid.
+Added: In addition, the staff of the Department of Government Efficiency (the "DOGE"), an executive administrative agency created by the second Trump Administration, have been provided access to key payment and contracting systems at CMS to look for opportunities for improving efficiency and to identify fraud and ineffective use of resources.
+Added: While we cannot predict the actions of the DOGE, there is a possibility that changes will be made to CMS spending, which could ultimately affect our financial condition and results of operation.
+Added: Healthcare reform initiatives will continue to be proposed and may reduce healthcare related funding.
+Added: It is impossible to predict the ultimate content and timing of any healthcare reform legislation and its resulting impact on us.
+Added: If significant reforms are made to the healthcare system in the United States, or in other jurisdictions, those reforms may increase our costs or otherwise negatively effect on our business, results of operations, and financial condition.
+Added: On April 5, 2017, the European Parliament passed the Medical Devices Regulation (Regulation 2017/745), which repeals and replaces the EU Medical Device Directive and became effective on May 26, 2021.
+Added: The Medical Devices Regulation, among other things, is intended to establish a uniform, transparent, predictable, and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation.
+Added: The new regulations, among other things:
+Added: strengthen the rules on placing devices on the market and reinforce surveillance once they are available;
+Added: establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market;
+Added: improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;
+Added: set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the European Union;
+Added: strengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market.
+Added: These modifications may have an effect on the way we conduct our business in the EEA.
+Added: Any change in the laws or regulations that govern the clearance and approval processes relating to our current, planned and future products could make it more difficult and costly to obtain clearance or approval for new products or to produce, market and distribute existing products.
+Added: Significant delays in receiving clearance or approval or the failure to receive clearance or approval for our new products would have an adverse effect on our ability to expand our business.
+Added: Our products may cause or contribute to adverse medical events that we are required to report to FDA and other governmental authorities, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, results of operations, and financial condition.
+Added: The discovery of serious safety issues with our products, or a recall of our products either voluntarily or at the direction of FDA or another governmental authority, could have a negative impact on us.
+Added: We are required to timely file various reports with FDA, including reports required by the medical device reporting regulations which require us to report to FDA when we receive or become aware of information that reasonably suggests that one of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur in the device or a similar device that we market, could cause or contribute to a death or serious injury.
+Added: If we fail to comply with our reporting obligations, FDA or other governmental authorities could take action, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our device clearance, seizure of our products, or delay in clearance of future products.
+Added: FDA and certain foreign regulatory bodies have the authority to require the recall of commercialized products under certain circumstances.
+Added: A government-mandated or voluntary recall by us could occur as a result of an unacceptable risk to health, component failures, malfunctions, labeling or design deficiencies, packaging defects, or other deficiencies, or failures to comply with applicable regulations.
+Added: If we do not adequately address problems associated with our devices, we may face additional regulatory requirements or enforcement action, including required new marketing authorizations, FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal proceedings.
+Added: We may initiate voluntary withdrawals, removals, or corrections for our products in the future that we determine do not require notification of FDA because no material compliance issue or safety risk is involved.
+Added: If FDA disagrees with our determinations, it could require us to report those actions and we may be subject to enforcement action.
+Added: A future recall announcement or other corrective action could harm our financial results and reputation, potentially lead to product liability claims against us, require the dedication of our time and capital, and negatively affect our sales.
+Added: In addition, FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our future products.
+Added: For example, in November 2018, FDA announced that it plans to develop proposals to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates.
+Added: It is unclear the extent to which any proposals, if adopted, could impose additional regulatory requirements on us that could delay our ability to obtain new 510(k) clearances, increase the costs of compliance, or restrict our ability to maintain our current clearances.
+Added: We also cannot predict the likelihood, nature, or extent of government regulation that may arise from future legislation or administrative or executive action, either in the U.S.
+Added: For example, the Trump Administration previously enacted several executive actions that could impose significant burdens on, or otherwise materially delay, FDA’s ability to engage in routine regulatory and oversight activities.
+Added: It is difficult to predict how these executive actions and executive actions that may be taken under the Biden Administration may affect FDA’s ability to exercise its regulatory authority.
+Added: If these executive actions impose constraints on FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.
+Added: Changes in internet regulations could adversely affect our business.
+Added: Laws, rules, and regulations governing internet communications, advertising, and e-commerce are dynamic, and the extent of future government regulation is uncertain.
+Added: Federal and state regulations govern various aspects of our online business, including intellectual property ownership and infringement, trade secrets, the distribution of electronic communications, marketing and advertising, user privacy and data security, search engines, and internet tracking technologies.
+Added: Future taxation on the use of the internet or e-commerce transactions could also be imposed.
+Added: Existing or future regulation or taxation could increase our operating expenses and expose us to significant liabilities.
+Added: Disruptions at the FDA, other agencies or notified bodies caused by funding shortages or global health concerns could hinder their ability to hire, retain, or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, cleared or approved, or commercialized in a timely manner, or at all, which could negatively impact our business.
+Added: The ability of the FDA, other agencies and notified bodies to review and authorize or certify for marketing new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, agency’s or notified body’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the agency’s or notified body’s ability to perform routine functions.
+Added: Average review times at the FDA and other agencies and notified bodies have fluctuated in recent years as a result.
+Added: In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
+Added: Disruptions at the FDA, other agencies and notified bodies may also slow the time necessary for new medical devices or modifications to be reviewed and/or cleared, approved or certified by necessary agencies or notified bodies, which would adversely affect our business.
+Added: For example, over the last several years, the U.S.
+Added: government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.
+Added: In addition, in recent years, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points in response to the global COVID-19 pandemic.
+Added: If a prolonged government shutdown occurs, or if global health concerns, including pandemics, were to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
+Added: In the EU, notified bodies must be officially designated to certify products and services in accordance with the MDR, which regulates the development and sale of medical devices in Europe.
+Added: While several notified bodies have been designated, the COVID-19 pandemic significantly slowed down their designation process and the current designated notified bodies are facing a large amount of requests with the new regulation, as a consequence of which review times have lengthened although a regulation amending the EU MDR was adopted in March 2023, extending existing transitional provisions to December 31, 2028.
+Added: This situation could significantly impact the ability of notified bodies to timely review and process our regulatory submissions, which could have a material adverse effect on our business in the EU and EEA (which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland).
+Added: The misuse or off-label use of our BNA Platform may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies, particularly if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.
+Added: Our BNA Platform is a Class II medical device cleared by FDA for commercialization in the U.S.
+Added: pursuant to the 510(k) notification process for the post-hoc statistical analysis of the human electroencephalogram in December 2020 for use in individuals 12 to 85 years of age.
+Added: We, thus, are not currently able to promote the BNA Platform for any other indications for use or make any promotional claims that are inconsistent with, or outside the scope of, such FDA clearance (often referred to as “off-label” claims).
+Added: However, the assessment of whether a given claim is or is not consistent with a given FDA clearance or approval can often be subjective, and we cannot guarantee that FDA will always agree with our position regarding a particular claim or that all of our employees, representatives, and agents will abide by our marketing policies.
+Added: If FDA determines that we have promoted any product without the requisite clearance or approval and/or for an off-label or unapproved use, it could take any number of enforcement actions against us, including (among others), issuing untitled or warning letters and/or pursuing an injunction, seizure, civil fine and/or criminal penalties.
+Added: It is also possible that other federal, state or foreign enforcement authorities might take action under other regulatory authority, such as laws prohibiting false claims for reimbursement, any of which would have a material adverse effect on our financial condition and/or business as a whole.
+Added: Additionally, we must have competent and reliable scientific evidence or, where applicable, other adequate substantiation for each reasonable interpretation of every promotional claim we make.
+Added: In particular, comparative or superiority claims generally require adequate, well controlled, head-to-head clinical studies, comparing the product to the applicable competing products.
+Added: To the extent we make any claims, or are otherwise held responsible for third-party claims about any product we may market in the United States, without the requisite clinical substantiation, we could be subject to enforcement action by FDA and/or the Federal Trade Commission (FTC), as well as a competitor challenge via the National Advertising Division (NAD) of the Better Business Bureau.
+Added: Our plans to utilize social media as a primary promotional tool for our device(s) increases the applicable enforcement risk, as it makes it easier for our employees, affiliates, and any third parties with which we may have a relationship and/or arrangement under which we are deemed responsible for such party’s claims about our product(s) to disseminate promotional claims about our product(s) that may be inconsistent with applicable regulations governing device promotions.
+Added: Further, consumers can bring private false-advertising lawsuits, including class actions, against us for any material misrepresentations and/or deceptive or unsubstantiated claims (among other similar causes of action) in our promotional materials or other advertising.
+Added: Any of the foregoing could have a material adverse effect on our business.
+Added: We may be subject to certain federal, state, and foreign fraud and abuse laws, health information privacy and security laws, and transparency laws, which, if violated, could subject us to substantial penalties.
+Added: Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business.
+Added: There are numerous U.S.
+Added: federal and state, as well as foreign, laws pertaining to healthcare fraud and abuse, including anti-kickback, false claims, and physician transparency laws.
+Added: Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations may involve substantial costs.
+Added: Our business practices and relationships with providers and patients are subject to scrutiny under these laws.
+Added: We may also be subject to patient information privacy and security regulation by both the federal government and the states and foreign jurisdictions in which we conduct our business.
+Added: The healthcare laws and regulations that may affect our ability to operate include:
+Added: the federal healthcare Medicare and Medicaid Patient Protection Act of 1987 (the “Anti-Kickback Statute”), which prohibits, among other things, persons, and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease, order, or arrange for or recommend a good or service, for which payment may be made, in whole or in part, under federal healthcare programs, such as Medicare and Medicaid.
+Added: The term “remuneration” has been broadly interpreted to include anything of value.
+Added: The government can establish a violation of the Anti-Kickback Statute without proving that a person or entity had actual knowledge of the law or a specific intent to violate.
+Added: Moreover, the government may assert that a claim including items or services resulting from a violation of the federal healthcare Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.
+Added: Although there are a number of statutory exceptions and regulatory safe harbors to the federal healthcare Anti-Kickback Statute protecting certain common business arrangements and activities from prosecution or regulatory sanctions, the exceptions and safe harbors are drawn narrowly.
+Added: Practices that involve remuneration to those who prescribe, purchase, or recommend medical device products, including discounts, or engaging individuals as speakers, consultants, or advisors, may be subject to scrutiny if they do not fit squarely within an exception or safe harbor.
+Added: Our practices may not in all cases meet all of the criteria for safe harbor protection from anti- kickback liability.
+Added: Moreover, there are no safe harbors for many common practices, such as reimbursement support programs, educational or research grants, or charitable donations;
+Added: the federal civil False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment of federal government funds, and knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government.
+Added: Private individuals, commonly known as “whistleblowers,” can bring civil False Claims Act qui tam actions, on behalf of the government and such individuals and may share in amounts paid by the entity to the government in recovery or settlement.
+Added: False Claims Act liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties for each false or fraudulent claim or statement.
+Added: The government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim under the federal civil False Claims Act.
+Added: Many pharmaceutical and medical device manufacturers have been investigated and have reached substantial settlements under the federal civil False Claims Act in connection with alleged off-label promotion of their products and allegedly providing free products to customers with the expectation that the customers would bill federal health care programs for the product.
+Added: In addition, manufacturers can be held liable under the federal civil False Claims Act even when they do not submit claims directly to government payers if they are deemed to “cause” the submission of false or fraudulent claims.
+Added: There are also criminal penalties, including imprisonment and criminal fines, for making or presenting false, fictitious or fraudulent claims to the federal government;
+Added: Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created additional federal criminal statutes that prohibit, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program, including private third-party payers, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statements or representations, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry in connection with the delivery of, or payment for, healthcare benefits, items or services.
+Added: Similar to the federal healthcare Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;
+Added: the federal Physician Payments Sunshine Act under the Affordable Care Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and applicable manufacturers and group purchasing organizations, as well as ownership and investment interests held by physicians and their immediate family members.
+Added: Since January 2022, applicable manufacturers are also required to report information regarding payments and transfers of value provided to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives;
+Added: HIPAA, as amended by Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their respective implementing regulations, which imposes privacy, security, and breach reporting obligations with respect to Protected Health Information (“PHI”), upon entities subject to the law, such as health plans, healthcare clearinghouses and certain healthcare providers, and their respective business associates that perform services on their behalf that involve PHI.
+Added: HITECH also created new tiers of civil monetary penalties, amended HIPAA to make HIPAA compliance as well as civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions;
+Added: analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers or patients;
+Added: state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;
+Added: state and local laws that require the licensure of sales representatives;
+Added: state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information;
+Added: data privacy and security laws and regulations in foreign jurisdictions that may be more stringent than those in the United States (such as the EU, which adopted the General Data Protection Regulation, which became effective in May 2018);
+Added: state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts;
+Added: and state laws related to insurance fraud in the case of claims involving private insurers.
+Added: These laws and regulations, among other things, may constrain our business, marketing, and other promotional activities by limiting the kinds of financial arrangements, including sales programs, we may have with physicians or other potential purchasers of our products and consulting agreements we enter into with physicians.
+Added: Further, while we do not submit claims and our future customers will make the ultimate decision on whether or how to submit any potential claims, we may provide reimbursement guidance and support regarding our products, to the extent reimbursement may be available, which could implicate these laws.
+Added: Due to the breadth of these laws, the narrowness of statutory exceptions and regulatory safe harbors available, and the range of interpretations to which they are subject, it is possible that some of our current or future practices might be challenged under one or more of these laws.
+Added: To enforce compliance with healthcare regulatory laws, certain enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.
+Added: For example, U.S.
+Added: federal and state regulatory and enforcement agencies continue to actively investigate violations of healthcare laws and regulations, including pursuing novel theories of liability under these laws.
+Added: These government agencies recently have increased regulatory scrutiny and enforcement activity with respect to manufacturer reimbursement support activities and patient support programs, including bringing criminal charges or civil enforcement actions under the federal healthcare Anti-Kickback statute, federal civil False Claims Act, the health care fraud statute, and HIPAA privacy provisions.
+Added: Responding to investigations can be time and resource consuming and can divert management’s attention from the business.
+Added: Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.
+Added: Even an unsuccessful challenge or investigation into our practices could cause adverse publicity, and be costly to respond to.
+Added: If our operations are found to be in violation of any of the healthcare laws or regulations described above or any other healthcare regulations that may apply to us, we may be subject to administrative, civil and criminal penalties, damages, fines, disgorgement, substantial monetary penalties, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, imprisonment, additional reporting obligations, and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, reputational harm, and the curtailment or restructuring of our operations.
+Added: Since our BNA Platform will utilize cloud-based information systems and the exchange of information between patents and doctors, we will be subject to numerous U.S.
+Added: federal and state laws and regulations related to the privacy and security of personally identifiable information, including health information.
+Added: Among other data-privacy and/or confidentiality laws to which we may be subject, HIPAA establishes privacy and security standards that limit the use and disclosure of PHI and require covered entities and business associates to implement administrative, physical, and technical safeguards to ensure the confidentiality, integrity, and availability of individually identifiable health information in electronic form, among other requirements.
+Added: Violations of HIPAA may result in civil and criminal penalties.
+Added: We must also comply with HIPAA’s breach notification rule which requires notification to affected individuals and the Secretary of Health and Human Services (“HHS”), and in certain cases to media outlets, in the case of a breach of unsecured PHI.
+Added: The regulations also require business associates of covered entities to notify the covered entity of breaches by the business associate.
+Added: State attorneys general also have the right to prosecute HIPAA violations committed against residents of their states, and HIPAA standards have been used as the basis for the duty of care in state civil suits, such as those for negligence or recklessness in misusing personal information.
+Added: In addition, HIPAA mandates that HHS conduct periodic compliance audits of HIPAA covered entities and their business associates for compliance.
+Added: Many states also have laws that protect the privacy and security of sensitive and personal information, including health information.
+Added: These laws may be similar to or even more protective than HIPAA and other federal privacy laws.
+Added: For example, the laws of the State of California are more restrictive than HIPAA.
+Added: Where state laws are more protective than HIPAA, we must comply with the state laws we are subject to, in addition to HIPAA.
+Added: For example, California passed the California Consumer Privacy Act or CCPA on June 28, 2018, which went into effect January 1, 2020.
+Added: On November 3, 2020, the California Privacy Rights Act of 2020 (“CPRA”), which amends the CCPA and adds new privacy protections that became effective on January 1, 2023, was enacted through a ballot initiative.
+Added: While information we maintain that is covered by HIPAA may be exempt from the CCPA, other records and information we maintain related to patients or personnel may be subject to the CCPA.
+Added: In certain cases, it may be necessary to modify our planned operations and procedures to comply with these more stringent state laws.
+Added: Not only may some of these state laws impose fines and penalties upon violators, but also some, unlike HIPAA, may afford private rights of action to individuals who believe their personal information has been misused.
+Added: In addition, state and federal privacy laws subject to frequent change.
+Added: In addition to HIPAA and state health information privacy laws, we may be subject to other state and federal privacy laws, including laws that prohibit unfair privacy and security practices and deceptive statements about privacy and security, laws that place specific requirements on certain types of activities, such as data security and texting, and laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach.
+Added: Cybersecurity incidents, including data security breaches or computer viruses, could harm our business by disrupting our delivery of services, damaging our reputation, or exposing us to liability.
+Added: We receive, process, store, and transmit, often electronically, data of our customers and others which may be confidential.
+Added: Unauthorized access to our computer systems or stored data could result in the theft or improper disclosure of confidential information, the deletion or modification of records, or could cause interruptions in our operations.
+Added: These cybersecurity risks increase when we transmit information from one location to another, including transmissions over the Internet or other electronic networks.
+Added: Despite implemented security measures, our facilities, systems, and procedures, and those of our third-party service providers, may be vulnerable to security breaches, phishing scams, acts of vandalism, software viruses, misplaced or lost data, programming and/or human errors, or other similar events which may disrupt our delivery of services or expose the confidential information of the Company, our customers and others.
+Added: Any security breach involving the misappropriation, loss, or other unauthorized disclosure or use of confidential information of our customers or others, whether by us or a third party, could:
+Added: (i) subject us to civil and criminal penalties;
+Added: (ii) have a negative impact on our reputation;
+Added: or (iii) expose us to liability to our customers, third parties, or government authorities.
+Added: Any of these developments could have a material adverse effect on our business, financial condition, and results of operations.
+Added: Foreign data protection, privacy, and other laws and regulations are often more restrictive than those in the U.S.
+Added: The E.U., for example, traditionally has imposed stricter obligations under its laws and regulations relating to privacy, data protection and consumer protection than the U.S.
+Added: In May 2018, the GDPR, governing data practices and privacy in the E.U., became effective and replaced the data protection laws of the individual member states.
+Added: GDPR requires companies to meet stringent requirements regarding the handling of personal data of individuals in the E.U.
+Added: These more stringent requirements include expanded disclosures to inform members about how we may use their personal data, increased controls on profiling members, and increased rights for members to access, control and delete their personal data.
+Added: In addition, there are mandatory data breach notification requirements.
+Added: The law also includes significant penalties for non-compliance, which may result in monetary penalties of up to 20 million Euros or 4% of a company’s worldwide turnover, whichever is higher.
+Added: GDPR and other similar regulations require companies to give specific types of notice, and informed consent is required for the placement of a cookie or similar technologies on a user’s device for online tracking for behavioral advertising and other purposes and for direct electronic marketing.
+Added: The GDPR also imposes additional conditions in order to satisfy such consent, such as a prohibition on pre-checked consents.
+Added: It remains unclear how the U.K.
+Added: data protection laws or regulations will develop in the medium to longer term and how data transfer to the U.K.
+Added: from the E.U.
+Added: will be regulated.
+Added: Outside of the E.U., there are many other countries with data protection laws, and new countries are adopting data protection legislation with increasing frequency.
+Added: Many of these laws may require consent from individuals for the use of data for various purposes, including marketing, which may reduce our ability to market our products.
+Added: There is no harmonized approach to these laws and regulations globally.
+Added: Consequently, we increase our risk of non-compliance with applicable foreign data protection laws and regulations when we expand internationally.
+Added: We may need to change and limit the way we use personal information in operating our business and may have difficulty maintaining a single operating model that is compliant.
+Added: Compliance with such laws and regulations will result in additional costs and may necessitate changes to our business practices and divergent operating models, limit the effectiveness of our marketing activities, adversely affect our business, results of operations, and financial condition, and subject us to additional liabilities.
+Added: Our business could be adversely affected by professional and legal challenges to our business model or by new state actions restricting our ability to provide our products and services in certain states.
+Added: Since the success of our business will be dependent on the widespread adaptation of our BNA Platform as a valid method for statistical analysis of EEG scans, neurologists across multiple geographies will be needed to use our BNA Platform and provide positive feedback and results.
+Added: This will expose us to legal risk of patients or neurologists who may have a negative experience with our BNA Platform filing lawsuits claiming damages or other claims.
+Added: Although we will seek insurance coverage for such legal actions, there is no assurance that the amount of coverage will be sufficient to cover these claims.
+Added: In addition, such legal actions from consumers and neurologists may result in material and adverse effects on our ability to continue to conduct business due to negative press.
+Added: Security breaches, data breaches, cyber attacks, other cybersecurity incidents or the failure to comply with privacy, security and data protection laws could materially impact our operations, patient care could suffer, we could be liable for damages, and our business, operations and reputation could be harmed.
+Added: We expect to retain confidential customer personal and financial, patient health information and our own proprietary information and data essential to our business operations.
+Added: We will rely upon the effective operation of our IT systems, and those of our service providers, vendors, and other third parties to safeguard the information and data.
+Added: Additionally, our success may be dependent on the success of healthcare providers, many of whom are comprised of individual or small operations with limited IT experience and inadequate or untested security protocols, in managing data privacy and data security requirements.
+Added: It is critical that the facilities, infrastructure and IT systems on which we depend to run our business and the products we develop remain secure and be perceived by the marketplace and our potential customers to be secure.
+Added: Despite the implementation of security features in our products and security measures in our IT systems, we and our service providers, vendors, and other third parties may become subject to physical break-ins, computer viruses or other malicious code, unauthorized or fraudulent access, programming errors or other technical malfunctions, hacking or phishing attacks, malware, ransomware, employee error or malfeasance, cyber attacks, and other breaches of IT systems or similar disruptive actions, including by organized groups and nation-state actors.
+Added: For example, we may experience cybersecurity incidents and unauthorized internal employee exfiltration of company information.
+Added: Further, the frequency of third-party cyber-attacks has increased over the last several years.
+Added: The military conflict in Ukraine may cause nation-state actors or hackers sympathetic to either side of the conflict to carry out cyber-attacks to achieve their goals, which may include espionage, information gathering operations, monetary gain, ransomware, disruption, and destruction.
+Added: Significant service disruptions, breaches in our infrastructure and IT systems or other cybersecurity incidents could expose us to litigation or regulatory investigations, impair our reputation and competitive position, be distracting to our management, and require significant time and resources to address.
+Added: Affected parties or regulatory agencies could initiate legal or regulatory action against us, which could prevent us from resolving the issues quickly or force us to resolve them in unanticipated ways, cause us to incur significant expense and liability, or result in judicial or governmental orders forcing us to cease operations or modify our business practices in ways that could materially limit or restrict the products and services we provide.
+Added: Concerns over our privacy practices could adversely affect others’ perception of us and deter potential customers, patients and partners from using our products.
+Added: In addition, patient care could suffer, and we could be liable if our products or IT systems fail to deliver accurate and complete information in a timely manner.
+Added: We have internal monitoring and detection systems as well as cybersecurity and other forms of insurance coverage related to a breach event covering expenses for notification, credit monitoring, investigation, crisis management, public relations and legal advice.
+Added: However, damages and claims arising from such incidents may not be covered or may exceed the amount of any coverage and do not cover the time and effort we may incur investigating and responding to any incidents, which may be material.
+Added: The costs to eliminate, mitigate or recover from security problems and cyber attacks and incidents could be material and depending on the nature and extent of the problem and the networks or products impacted, may result in network or systems interruptions, decreased product sales, or data loss that may have a material impact on our operations, net revenues and operating results.
+Added: Our business will expose us to potential liability for the quality and safety of our products and services, how we advertise and market those products and services and how and to whom we sell them, and we may incur substantial expenses or be found liable for substantial damages or penalties if we are subject to claims or litigation.
+Added: Our products and services involve an inherent risk of claims concerning their design, manufacture, safety and performance, how they are marketed and advertised in a complex framework of highly regulated domestic and international laws and regulations, how we package, bundle or sell them to potential customers, who may be private individuals or companies or public entities such as hospitals and clinics, and how we train and support doctors, their staffs and patients who administer or use our products.
+Added: Moreover, consumer products and services are routinely subject to claims of false, deceptive or misleading advertising, consumer fraud and unfair business practices.
+Added: Additionally, we may be held liable if any product we develop or manufacture or services we offer or perform causes injury or is otherwise found unhealthy.
+Added: If our products are safe but they are promoted for off-label usage, we may be investigated, fined or have our products or services enjoined or approvals rescinded or we may be required to defend ourselves in litigation.
+Added: Although we maintain insurance for product liability, business practices and other types of activities we make or offer, coverage may not be available on acceptable terms, if at all, and may be insufficient for actual liabilities.
+Added: Any claim for product liability, sales, advertising and business practices, regardless of its merit or eventual outcome, could result in material legal defense costs and damage our reputation, increase our expenses and divert management’s attention.
+Added: Increased focus on current and anticipated environmental, social and governance ( “ ESG ” ) laws and increased scrutiny of our ESG policies and practices may materially increase our costs, expose us to potential liability, adversely impact our reputation, employee retention, willingness of potential customers and suppliers to do business with us and willingness of investors to invest in us.
+Added: Our operations are subject to a variety of existing local, regional and global ESG laws and regulations, and we will likely be required to comply with new, broader, more complex and more costly laws and regulations that focus on ESG matters.
+Added: Our compliance obligations will likely span all aspects of our business and operations, including product design and development, materials sourcing and other procurement activities, product packaging, product safety, energy and natural resources usage, facilities design and utilization, recycling and collection, transportation, disposal activities and workers’ rights.
+Added: Environmental regulations related to greenhouse gases are expected to have an increasingly larger impact on our or our suppliers’ energy sources.
+Added: and foreign regulators have enacted or are considering enacting new or additional disclosure requirements or limits on the emissions of greenhouse gases, including, but not limited to, carbon dioxide and methane, from power generation units using fossil fuels.
+Added: The effects of greenhouse gas emission limits on power generation are subject to significant uncertainties, including the timing of any new requirements, levels of emissions reductions and the scope and types of emissions regulated.
+Added: These limits may have the effect of increasing our costs and those of our suppliers and could result in manufacturing, transportation and supply chain disruptions and delays if clean energy alternatives are not readily available in adequate amounts when required.
+Added: Moreover, alternative energy sources, coupled with reduced investments in traditional energy sources and infrastructure, may fail to provide the predictable, reliable, and consistent energy that we, our suppliers and other businesses need for operations.
+Added: Meeting our obligations under existing ESG laws, rules, or regulations is already costly to us and our suppliers, and we expect those costs to increase as new laws are enacted, possibly materially.
+Added: Additionally, we expect regulators to perform investigations, inspections and periodically audit our compliance with these laws and regulations, and we cannot provide assurance that our efforts or operations will be compliant.
+Added: If we fail to comply with any requirements, we could be subject to significant penalties or liabilities and we may be required to implement new and materially more costly processes and procedures to come into compliance.
+Added: Further, these laws are subject to unpredictable changes.
+Added: Even if we successfully comply with these laws and regulations, our suppliers may fail to comply.
+Added: We may also suffer financial and reputational harm if future customers require, and we are unable to deliver, certification that our products are conflict free.
+Added: In all of these situations, our future customers may stop purchasing products from us, and may take legal action against us, which could harm our reputation, revenues and results of operations.
+Added: Investor advocacy groups, institutional investors, investment funds, proxy advisory services, stockholders, and consumers are also increasingly focused on corporate ESG practices.
+Added: Additionally, public interest and legislative pressure related to public companies’ ESG practices continues to grow.
+Added: If our ESG practices fail to meet investors’ or other industry stakeholders’ evolving expectations and standards, including environmental stewardship, support for local communities, board of director and employee diversity, human capital management, employee health and safety practices, product quality, supply chain management, corporate governance and transparency and employing ESG strategies in our operations, our brand, reputation and employee retention may be negatively impacted, potential customers and suppliers may be unwilling to do business with us and investors may be unwilling to invest in us.
+Added: In addition, as we work to align our ESG practices with industry standards, we have expanded and will likely continue to expand our disclosures in these areas.
+Added: We also expect to incur additional costs and require additional resources to monitor, report, and comply with our various ESG practices.
+Added: If we fail to adopt ESG standards or practices as quickly as stakeholders desire, report on our ESG efforts or practices accurately, or satisfy the disclosure and other expectations of stakeholders, our reputation, business, financial performance, growth, and stock price may be adversely impacted.
+Added: We are subject to consumer protection laws that regulate our marketing practices and prohibit unfair or deceptive acts or practices.
+Added: Our actual or perceived failure to comply with such obligations could harm our business, and changes in such regulations or laws could require us to modify our products, marketing or advertising efforts.
+Added: In connection with the marketing or advertisement of our products and services, we could be the target of claims relating to false, misleading, deceptive, or otherwise noncompliant advertising or marketing practices, including under the auspices of the FTC and state consumer protection statutes.
+Added: If we rely on third parties to provide any marketing and advertising of our products and services, we could be liable for, or face reputational harm as a result of, their marketing practices if, for example, they fail to comply with applicable statutory and regulatory requirements.
+Added: If we are found to have breached any consumer protection, advertising, unfair competition, or other laws or regulations, we may be subject to enforcement actions that require us to change our marketing and business practices in a manner which may negatively impact us.
+Added: This could also result in litigation, fines, penalties, and adverse publicity that could cause reputational harm and loss of patient trust, which could have an adverse effect on our business.
+Added: Risks related to out Intellectual Property
+Added: Our success depends in part on our proprietary technology, and if we are unable to successfully enforce our intellectual property rights, our competitive position may be harmed.
+Added: Our success will depend in part on our ability to maintain existing intellectual property and to obtain and maintain further intellectual property protection for our products and services, both in the U.S.
+Added: and in other countries.
+Added: We intend to protect our intellectual property rights, including our AI technology and related algorithms, through a combination of patent, trademark, copyright, and trade secret laws, as well as third-party confidentiality and assignment agreements.
+Added: Our inability to do so could harm our competitive position.
+Added: We rely on our portfolio of issued and pending patent applications in the U.S.
+Added: and other countries to protect a large part of our intellectual property and our competitive position;
+Added: however, our currently pending or future patent filings may not result in the issuance of patents.
+Added: While we generally apply for patents in those countries where we intend to make, have made, use, or sell patented products, we may not accurately predict all of the countries where patent protection will ultimately be desirable.
+Added: If we fail to timely file for a patent, we may be precluded from doing so at a later date.
+Added: Economic and trade policy, including tariffs and customs regulations, could have a material and adverse effect on our business.
+Added: has established free trade laws and regulations that set certain duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements.
+Added: Changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where components of our products may be sourced , such as China, could have a material adverse effect on our business and financial results.
+Added: In recent years, the U.S.
+Added: and Chinese governments have imposed a series of significant incremental retaliatory tariffs to certain imported products.
+Added: Most notably with respect to the automotive industry, the U.S.
+Added: imposed tariffs on imports of certain steel, aluminum and automotive components, and China imposed retaliatory tariffs on imports of U.S.
+Added: vehicles and certain automotive components.
+Added: Further, the U.S.
+Added: administration recently has proposed and begun to enact additional or enhanced tariffs in various jurisdictions relevant to our business.
+Added: Implementation of tariffs or other restrictive trade measures by the United States and potentially reciprocally by other countries subject to such to tariffs remains highly uncertain.
+Added: Due to the global nature of our business, specifically in the jurisdictions impacted by the recent tariffs announcements, if the actual and potential tariffs and reciprocal tariffs are implemented as currently proposed, our results of operations could be materially negatively impacted, both directly and indirectly through negative effects to our supply chain, as a result of increased costs, decreased demand and other adverse economic impacts, and we may not be able to successfully mitigate or offset such impacts.
+Added: Depending upon their implementation and duration, as well as our ability to mitigate their impact, these tariffs and any other future regulatory actions implemented on a broader range of products or raw materials could materially affect our business, including in the form of increased cost of goods sold, decreased margins, increased pricing for customers, reduced sales and disruption in our supply chain.
+Added: Furthermore, additional trade restrictions could be adopted with little to no advanced notice, and we may not be able to effectively mitigate the adverse impacts from such measures, which could further increase the cost of our products, disrupt our supply chain and impair our ability to effectively operate and compete in the countries where we do business.
+Added: In addition, various countries regulate cross-border transactions of certain products through import permitting and licensing requirements.
+Added: The exportation, re-exportation, transfers within foreign countries and importation of our products, including by our suppliers and vendors, must comply with these laws and regulations, and any violations may result in reputational harm, government investigations and penalties, and a denial or curtailment of importing or exporting activities.
+Added: Complying with U.S.
+Added: export, sanctions and import laws, including ongoing and rapidly changing sanctions against certain countries, regions, governments and related persons and entities, may be time consuming, may increase our costs, and may result in the delay or loss of sales opportunities.
+Added: If we are found to be in violation of U.S.
+Added: export, sanctions or import laws, or similar laws in other jurisdictions, we and the individuals working for us could incur substantial fines and penalties.
+Added: Changes in export, sanctions or import laws or regulations may delay the sale of complementary products in the U.S.
+Added: and international markets, and require us to spend resources to seek necessary alternatives, or, in some cases, prevent the export or import of complementary products to certain countries, regions, governments, persons or entities, which could adversely affect our business, financial condition and operating results.
+Added: Patent rights are territorial, and patent protection extends only to those countries where we have issued patents.
+Added: Filing, prosecuting and defending patents on our products and our future products in all countries and jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those in the United States.
+Added: Many countries do not protect intellectual property to the same extent as the U.S.
+Added: or Europe, and their litigation processes differ.
+Added: Competitors may successfully challenge or avoid our patents, or manufacture products in countries where we have not applied for patent protection.
+Added: Changes in the patent laws in the U.S.
+Added: or other countries may diminish the value of our patent rights.
+Added: As a result of these and other factors, the scope, validity, enforceability, and commercial value of our patent rights are uncertain and unpredictable.
+Added: Furthermore, the patent positions of medical device companies involve complex legal and factual questions, and, therefore, the issuance, scope, validity and enforceability of any patent claims that we may obtain cannot be predicted with certainty.
+Added: The issuance of a patent, while presumed valid and enforceable, is not conclusive as to its validity or its enforceability and it may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products.
+Added: Any patents issued to us may be challenged, invalidated, held unenforceable, circumvented, or may not be sufficiently broad to prevent third parties from producing competing products similar in design to our products.
+Added: In addition, any protection afforded by foreign patents may be more limited than that provided under U.S.
+Added: patent and intellectual property laws.
+Added: There can be no assurance that any of our patents, any patents licensed to us, or any patents which we may be issued in the future, will provide us with a competitive advantage or afford us protection against infringement by others, or that the patents will not be successfully challenged or circumvented by third parties, including our competitors.
+Added: Further, there can be no assurance that we will have adequate resources to enforce our patents.
+Added: Competitors may also be able to design around our patents.
+Added: Other parties may develop and obtain patent protection for more effective technologies, designs or methods.
+Added: Our ability to enforce our patent rights depends on our ability to detect infringement.
+Added: It is difficult to detect infringers who do not advertise the components that are used in their products.
+Added: Moreover, it may be difficult or impossible to obtain evidence of infringement in a competitor’s or potential competitor’s product, particularly in litigation in countries other than the U.S.
+Added: that do not provide an extensive discovery procedure.
+Added: Any litigation to enforce or defend our patent rights, if any, even if we were to prevail, could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations.
+Added: We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded if we were to prevail may not be commercially meaningful.
+Added: Moreover, advances in AI technology may generate developments that existing IP laws do not adequately protect.
+Added: The legislative and regulatory environment is out of our control, may change rapidly and unpredictably, and may negatively influence our revenue, costs, earnings, and growth.
+Added: Some rules and regulations may be subject to litigation or other challenges that delay or modify their implementation and impact on us.
+Added: We also may seek to rely on protection of copyright, trade secrets, know how, and confidential and proprietary information.
+Added: We generally enter into confidentiality and non-compete agreements with our employees, consultants, and collaborative partners upon their commencement of a relationship with us.
+Added: However, these agreements may not provide meaningful protection against the unauthorized use or disclosure of our trade secrets or other confidential information, and adequate remedies may not exist if unauthorized use or disclosure were to occur.
+Added: The exposure of our trade secrets and other proprietary information would impair our competitive advantages and could have a material adverse effect on our operating results, financial condition, and future growth prospects.
+Added: In particular, a failure to protect our proprietary rights might allow competitors to copy our technology, which could adversely affect our pricing and market share.
+Added: We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets by consultants, vendors, former employees and current employees.
+Added: Further, other parties may independently develop substantially equivalent know-how and technology.
+Added: We currently own registered trademarks for our BNA Platform, and we intend to rely on both registered and common law rights for our trademarks in the future.
+Added: There can be no assurance that our future trademark applications will be approved.
+Added: Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks.
+Added: In the event that our trademarks are successfully challenged, we could be forced to rebrand our products and services, which could result in loss of brand recognition, and could require us to devote resources to advertising and marketing new brands.
+Added: Further, there can be no assurance that competitors will not infringe our trademarks, or that we will have adequate resources to enforce our trademarks.
+Added: Litigation, interferences, oppositions, re-exams, inter partes reviews, post grant reviews, or other proceedings are, have been, and may in the future be necessary in some instances to determine the validity and scope of certain of our proprietary rights, and in other instances to determine the validity, scope, or non-infringement of certain proprietary rights claimed by third parties to be pertinent to the manufacture, use, or sale of our products or provision of our services.
+Added: These types of proceedings are unpredictable and may be protracted, expensive, and distracting to management.
+Added: The outcome of such proceedings could adversely affect the validity and scope of our patent or other proprietary rights, hinder our ability to manufacture and market our products and provide our services, require us to seek a license for the infringed product or technology, or result in the assessment of significant monetary damages.
+Added: An unfavorable ruling could include monetary damages or, in cases where injunctive relief is sought, an injunction prohibiting us from selling our products or providing our services.
+Added: Any of these results from litigation could adversely affect our business, financial condition, and results of operations.
+Added: Successful cybersecurity attacks, data breaches, unapproved use of machine learning or AI tools, or other security incidents could result in the loss of IP and key technological advantages.
+Added: Security incidents could result in, for example, unauthorized access to, disclosure, modification, misuse, loss, or destruction of company, patient, or other third party data;
+Added: theft or import of sensitive, regulated, or confidential data including personal information and IP, such as key innovations in AI;
+Added: the loss of access to critical data or systems through ransomware;
+Added: and business delays.
+Added: If we infringe or violate the patents or proprietary rights of other parties or are subject to an intellectual property infringement or misappropriation claim, our ability to grow our business may be severely limited.
+Added: Our commercial success also depends upon our ability, and the ability of any third party with which we may partner, to develop, manufacture, market and sell our products, if approved, and use our patent-protected technologies without infringing the patents of third parties.
+Added: Extensive litigation over patents and other intellectual property rights is common in the medical device industry.
+Added: We may not have identified all patents, published applications or published literature that affect our business either by blocking our ability to commercialize our products, by preventing the patentability of one or more aspects of our products, or by covering the same or similar technologies that may affect our ability to market our products.
+Added: For example, we may not have conducted a patent clearance search sufficient to identify potentially obstructing third party patent rights.
+Added: Moreover, patent applications in the United States are maintained in confidence for up to 18 months after their filing.
+Added: In some cases, however, patent applications remain confidential in the U.S.
+Added: Patent and Trademark Office, or the USPTO, for the entire time prior to issuance as a U.S.
+Added: Patent applications filed in countries outside of the United States are not typically published until at least 18 months from their first filing date.
+Added: Similarly, publication of discoveries in the scientific or patent literature often lags behind actual discoveries.
+Added: We cannot be certain that we were the first to invent, or the first to file, patent applications covering our products.
+Added: We also may not know if our competitors filed patent applications for technology covered by our pending applications or if we were the first to invent the technology that is the subject of our patent applications.
+Added: Competitors may have filed patent applications or received patents and may obtain additional patents and proprietary rights that block or compete with our patents.
+Added: We may therefore in the future be the subject of patent or other litigation.
+Added: From time to time, we may in the future receive letters from third parties drawing our attention to their patent rights.
+Added: While we do not believe that we infringe upon any valid and enforceable rights that have been brought to our attention, and we take necessary steps to ensure that we do not infringe on the rights of others, there may be other more pertinent rights of which we are presently unaware.
+Added: The defense and prosecution of intellectual property suits, interference proceedings, and related legal and administrative proceedings could result in substantial expense to us and significant diversion of effort by our technical and management personnel.
+Added: An adverse determination of any litigation or interference proceeding to which we may become a party could subject us to significant liabilities.
+Added: An adverse determination of this nature could also put our patents at risk of being invalidated or interpreted narrowly or require us to seek licenses from third parties.
+Added: Licenses may not be available on commercially reasonable terms or at all, in which event, our business would be materially adversely affected.
+Added: Intellectual property litigation or claims could force us to cease developing, selling or otherwise commercializing one or more of our products;
+Added: to pay substantial damages for past use of the asserted intellectual property;
+Added: and redesign, or rename in the case of trademark claims, our product(s) to avoid such third party rights, which may not be possible or which could be costly and time-consuming.
+Added: Any of these risks coming to fruition could have a material adverse effect on our business, results of operations, financial condition and prospects.
+Added: Our failure to secure trademark registrations could adversely affect our ability to market our products and operate our business.
+Added: Any future trademark applications in the United States and any other jurisdictions where we may file may not be allowed registration, and we may not be able to maintain or enforce our registered trademarks.
+Added: During trademark registration proceedings, we may receive rejections.
+Added: Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections.
+Added: In addition, in the USPTO and in corresponding foreign agencies, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks.
+Added: Opposition or cancellation proceedings may be filed against our applications and/or registrations, and our applications and/or registrations may not survive such proceedings.
+Added: Failure to secure such trademark registrations in the United States and in foreign jurisdictions could adversely affect our ability to market our products and our business.
+Added: We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
+Added: As is common in the medical device industry, we may employ individuals who were previously employed at other companies similar to ours, including our competitors or potential competitors.
+Added: We may become subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers.
+Added: Litigation may be necessary to defend against these claims.
+Added: Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.
+Added: Obtaining and maintaining patent protection depends on compliance with various procedures and other requirements, and our patent protection could be reduced or eliminated in case of non-compliance with these requirements.
+Added: Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to the relevant patent agencies in several stages over the lifetime of the patents and /or applications.
+Added: The relevant patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent application process.
+Added: In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules.
+Added: However, there are situations in which the failure to comply with the relevant requirements can result in the abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
+Added: In such an event, our competitors might be able to use our technologies and know-how which could have a material adverse effect on our business, prospects, financial condition and results of operation.
+Added: Patent terms may be inadequate to protect our competitive position on our products for an adequate amount of time.
+Added: Patents have a limited lifespan.
+Added: In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S.
+Added: non-provisional filing date.
+Added: Various extensions may be available, but the life of a patent, and the protection it affords, is limited.
+Added: Even if patents covering our products are obtained, once the patent life has expired for a product, we may be open to competition from competitive products.
+Added: Given the amount of time required for the development, testing and regulatory review of new products, patents protecting such products might expire before or shortly after such products are commercialized.
+Added: As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
+Added: We may be subject to claims challenging the inventorship of our patents and other intellectual property.
+Added: We may be subject to claims that former employees, collaborators or other third parties have an interest in our patents or other intellectual property as an inventor or co-inventor or an author.
+Added: For example, we may have inventorship or ownership disputes arise from conflicting obligations of consultants or others who are involved in developing our products.
+Added: Litigation may be necessary to defend against these and other claims challenging inventorship or our ownership of our patents or other intellectual property.
+Added: If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property.
+Added: Such an outcome could have a material adverse effect on our business.
+Added: Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
+Added: We use AI in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.
+Added: We incorporate AI solutions into our BNA platform, services, and features, and these applications are important in our operations.
+Added: Our competitors or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
+Added: Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations may be adversely affected.
+Added: Our use of AI and machine learning is subject to risks related to flaws in our algorithms and datasets that may be insufficient or contain biased information.
+Added: The development of AI technologies is complex, and there are several challenges associated with achieving the desired level of accuracy, efficiency, and reliability.
+Added: The algorithms and models used in our AI systems may have limitations, including biases, errors, or inability to handle certain data types or scenarios.
+Added: There is a risk of system failures, disruptions, or vulnerabilities that could compromise the integrity, security, or privacy of our platform.
+Added: These failures could result in reputational damage, legal liabilities, or loss of user confidence, which could materially affect our business.
+Added: The use of AI applications has resulted in, and may in the future result in, cybersecurity incidents that implicate the personal data of patients and users of such applications.
+Added: Any such cybersecurity incidents related to our use of AI applications could adversely affect our reputation and results of operations.
+Added: AI also presents emerging ethical issues, and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability.
+Added: The rapid evolution of AI, including potential government regulation of AI, will require significant resources to develop, test and maintain our platform, services, and features to help us implement AI ethically in order to minimize unintended, harmful impact.
+Added: Legislative and governmental activity in the privacy area may result in new laws or regulations that are applicable to us and that may hinder our business, for example, by restricting use or sharing of patient data, limiting our ability to provide certain data to our customers, limiting our ability to develop or modify our AI systems, or otherwise regulating AI and machine learning, including the use of algorithms and automated processing in ways that could materially affect our business, or which may lead to significant increases in the cost of compliance.
+Added: General Risks Related To Us
+Added: Our limited access to sufficient funding may hinder our ability to conduct planned operations and realize potential profits.
+Added: To date, we have primarily funded our operations through the sale of equity securities and the issuance of convertible notes.
+Added: These funding sources have been critical to supporting our ongoing research and development initiatives, maintaining our workforce, and financing our early commercialization efforts.
+Added: However, the capital we have raised to date has not been sufficient to cover our long-term operational needs, and we continue to rely on external funding to sustain and grow our business.
+Added: Although we have had success in raising funds previously, the availability of capital markets is subject to a variety of factors beyond our control, including macroeconomic conditions, investor sentiment, and market volatility.
+Added: There is no assurance that future financing will be available to us on acceptable terms.
+Added: Market conditions or changes in our financial performance may limit our ability to attract new investment.
+Added: If we are unable to raise sufficient funds through equity or debt financing or other strategic alternatives, we may be forced to delay, scale back, or discontinue our product development and commercialization efforts, reduce our workforce, or suspend or curtail planned operations altogether.
+Added: Moreover, the report of our independent registered public accounting firm for the fiscal year ended December 31, 2024, includes a statement that substantial doubt exists about our ability to continue as a going concern, which may also limit our ability to access the capital markets or obtain favorable financing terms.
+Added: The going concern qualification may raise concerns among potential investors, creditors, and business partners, making it more challenging to secure future funding or enter into strategic relationships.
+Added: Without adequate financing, we may be unable to achieve our planned milestones, capitalize on market opportunities, or execute our growth strategy in a timely and effective manner.
+Added: We may not continue to meet the continued listing requirements of Nasdaq, which could result in a delisting of our Common Stock.
+Added: Our Common Stock is listed on Nasdaq.
+Added: While we are currently in compliance, WaveDancer has been in the past been, and we may in the future be, unable to comply with certain of the listing standards that we are required to meet to maintain the listing of our Common Stock on Nasdaq.
+Added: For instance, on August 8, 2024, WaveDancer received a letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC (the “Staff”) indicating that in the former WaveDancer’s Quarterly Report on Form 10-Q filed with the SEC on May 14, 2024, WaveDancer reported stockholders’ equity of $1,708,520 for the period ended March 31, 2024, which did not comply with Listing Rule 5550(b)(1) (the “Minimum Stockholders’ Equity Requirement”).
+Added: Additionally, as previously reported, in a decision dated November 14, 2023, a Nasdaq Hearings Panel (the “Panel”) confirmed that we had regained compliance with the Minimum Stockholders’ Equity Requirement for a prior outstanding deficiency under the Minimum Stockholders’ Equity Requirement as related to the WaveDancer’s stockholders’ equity for the period ended March 31, 2023.
+Added: In the decision, the Panel imposed a Mandatory Panel Monitor for a period of one year or until November 14, 2024, which would require the Staff to issue a Delist Determination Letter in the event that WaveDancer, prior to the consummation of the Merger, or we, following the consummation of the Merger, failed to maintain compliance with the Minimum Stockholders’ Equity Rule.
+Added: On August 13, 2024, we received a notice from the Nasdaq Stock Market LLC indicating that following the Staff’s review of the Merger, the Staff determined that we now comply with the Minimum Stockholders’ Equity Requirement and that the matter is now closed.
+Added: While we have regained compliance with the continued listing requirements for Nasdaq, it cannot be assured that we will continue to do so.
+Added: If Nasdaq delists our Common Stock from trading on its exchange for failure to meet the listing standards, an investor would likely find it significantly more difficult to dispose of or obtain our shares, and our ability raise future capital through the sale of our shares could be severely limited.
+Added: Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.
+Added: Additionally, if we are unable to list on Nasdaq, it would likely be more difficult to trade in or obtain accurate quotations as to the market price of our Common Stock.
+Added: If our securities are delisted from trading on Nasdaq, and we are not able to list its securities on another exchange or to have them quoted on Nasdaq, our securities could be quoted on the OTC Bulletin Board or on the “pink sheets.” As a result, we could face significant adverse consequences including:
+Added: a limited availability of market quotations for its securities;
+Added: a determination that our Common Stock is a “penny stock,” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
+Added: a limited amount of news and analyst coverage for us;
+Added: a decreased ability to issue additional securities (including pursuant to short-form registration statements on Form S-3) or to obtain additional financing in the future.
+Added: The market price of our Common Stock may be subject to significant fluctuations and volatility, and the stockholders of the company may be unable to resell their shares at a profit and may incur losses.
+Added: Prior to the Merger, there has not been a public market for our Common Stock.
+Added: The market price of our Common Stock could be subject to significant fluctuation.
+Added: The previous business of WaveDancer differs from our business in important respects and, accordingly, our results of operations and the market price of our Common Stock following the Merger may be affected by factors different from those currently affecting the results of operations of WaveDancer.
+Added: Market prices for securities of life sciences and medical technology companies in particular have historically been particularly volatile and have shown extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.
+Added: Broad market and industry factors, as well as general economic, political and market conditions such as recessions or interest rate changes, may seriously affect the market price of our Common Stock, regardless of our actual operating performance.
+Added: Some of the factors that may cause the market price of our Common Stock to fluctuate include:
+Added: investors reacting negatively to the effect of our business and prospects from the Merger;
+Added: the announcement of new products, new developments, services or technological innovations by us or our competitors;
+Added: actual or anticipated quarterly increases or decreases in revenue, gross margin or earnings, and changes in our business, operations or prospects;
+Added: announcements relating to strategic relationships, mergers, acquisitions, partnerships, collaborations, joint ventures, capital commitments, or other events by us or our competitors;
+Added: conditions or trends in the life sciences and medical technology industries;
+Added: changes in the economic performance or market valuations of other life sciences and medical technology companies;
+Added: general market conditions or domestic or international macroeconomic and geopolitical factors unrelated to our performance or financial condition;
+Added: sale of our Common Stock by stockholders, including executives and directors;
+Added: volatility and limitations in trading volumes of our Common Stock;
+Added: volatility in the market prices and trading volumes of the life sciences and medical technology stocks;
+Added: our ability to finance our business;
+Added: ability to secure resources and the necessary personnel to pursue our plans;
+Added: failure to meet external expectations or management guidance;
+Added: changes in our capital structure or dividend policy, future issuances of securities, sales or distributions of large blocks of Common Stock by stockholders;
+Added: our cash position;
+Added: announcements and events surrounding financing efforts, including debt and equity securities;
+Added: analyst research reports, recommendations and changes in recommendations, price targets, and withdrawals of coverage;
+Added: departures and additions of key personnel;
+Added: disputes and litigation related to intellectual properties, proprietary rights, and contractual obligations;
+Added: investigations by regulators into our operations or those of our competitors;
+Added: changes in applicable laws, rules, regulations, or accounting practices and other dynamics;
+Added: other events or factors, many of which may be out of our control.
+Added: In the past, following periods of volatility in the overall market and the market prices of particular companies’ securities, securities class action litigation has often been instituted against these companies.
+Added: Litigation of this type, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
+Added: Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require us to make significant payments.
+Added: We currently take advantage of reduced disclosure and governance requirements applicable to smaller reporting companies, which could result in our Common Stock being less attractive to investors.
+Added: We have a public float of less than $250 million and therefore qualify as a smaller reporting company under the rules of the SEC.
+Added: As a smaller reporting company, we are able to take advantage of reduced disclosure requirements, such as simplified executive compensation disclosures and reduced financial statement disclosure requirements in our SEC filings.
+Added: Decreased disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects.
+Added: We cannot predict if investors will find our Common Stock less attractive if we rely on these exemptions.
+Added: If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile.
+Added: We may take advantage of the reporting exemptions applicable to a smaller reporting company until we are no longer a smaller reporting company, which status would end once we have a public float greater than $250 million.
+Added: In that event, we could still be a smaller reporting company if our annual revenues were below $100 million and we have a public float of less than $700 million.
+Added: Our Charter provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders ’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
+Added: Our Charter provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or stockholder to us or our stockholders, (iii) any action asserting a claim against the Company, its current or former directors, officers or employees arising pursuant to any provision of the DGCL or the Charter or the Bylaws, (iv) any action as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (v) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine.
+Added: This exclusive forum provision would not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction.
+Added: To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
+Added: Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
+Added: This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or employees, which may discourage such lawsuits against us and our directors, officers or employees.
+Added: If a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
+Added: We will issue additional equity securities in the future, which may result in dilution to existing investors.
+Added: To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution.
+Added: We will, from time to time, sell additional equity securities in one or more transactions at prices and in a manner it determines.
+Added: If we sell additional equity securities, existing stockholders may be materially diluted.
+Added: In addition, new investors could gain rights superior to existing stockholders, such as liquidation and other preferences.
+Added: In addition, the number of shares available for future grant under our equity compensation plans may be increased in the future.
+Added: In addition, the exercise or conversion of outstanding options or warrants to purchase shares of capital stock may result in dilution to our stockholders upon any such exercise or conversion.
+Added: All of WaveDancer’s outstanding shares of common stock, and any shares of WaveDancer Common Stock that were issued in the Merger are, freely tradable without restrictions or further registration under the Securities Act, except for any shares held by our affiliates, as defined in Rule 144 under the Securities Act.
+Added: Rule 144 defines an affiliate as a person who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, us and would include persons such as our directors and executive officers and large stockholders.
+Added: In turn, resales, or the perception by the market that a substantial number of resales could occur, could have the effect of depressing the market price of our Common Stock.
+Added: The concentration of the capital stock ownership with our insiders will likely limit the ability of our stockholders to influence corporate matters.
+Added: Our executive officers, directors, five percent or greater stockholders, and the respective affiliated entities beneficially own approximately 20% of our outstanding Common Stock.
+Added: As a result, these stockholders, acting together, have control over matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions.
+Added: Corporate actions might be taken even if other stockholders oppose them.
+Added: This concentration of ownership might also have the effect of delaying or preventing a corporate transaction that other stockholders may view as beneficial.
+Added: Certain stockholders could attempt to influence changes, which could adversely affect our operations, financial condition and the value of our Common Stock.
+Added: Our stockholders may from time to time seek to acquire a controlling stake, engage in proxy solicitations, advance stockholder proposals or otherwise attempt to effect changes.
+Added: Campaigns by stockholders to effect changes at publicly traded companies are sometimes led by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases or sales of assets or the entire company.
+Added: Responding to proxy contests and other actions by activist stockholders can be costly and time-consuming and could disrupt our operations and divert the attention of the Board and senior management from our business and operations.
+Added: These actions could adversely affect our operations, financial condition and the value of our Common Stock.
+Added: The sale or availability for sale of a substantial number of shares of Common Stock of could adversely affect the market price of such shares.
+Added: Sales of a substantial number of shares of Common Stock in the public market and other legal restrictions on resale, or the perception that these sales could occur, could adversely affect the market price of such shares and could materially impair our ability to raise capital through equity offerings in the future.
+Added: As of March 25, 2025 we have approximately 11,622,952 shares of Common Stock outstanding, without giving effect to the Reverse Stock Split, excluding securities underlying options and warrants, and based on the Exchange Ratio of 0.1040.
+Added: This includes the shares being issued to our stockholders as merger consideration, which may be resold in the public market immediately without restriction.
+Added: We are unable to predict what effect, if any, market sales of securities held by our significant stockholders, directors or officers or the availability of these securities for future sale will have on the market price of our Common Stock.
+Added: If securities analysts do not publish research or reports about our business, or if they publish negative evaluations, the price of our Common Stock could decline.
+Added: The trading market for our Common Stock will rely in part on the availability of research and reports that third-party industry or financial analysts publish about us.
+Added: There are many large, publicly traded companies active in the life sciences and medical technology industries, which may mean it will be less likely that we receive widespread analyst coverage.
+Added: Furthermore, if one or more of the analysts who do cover us downgrades our stock, our stock price would likely decline.
+Added: If one or more of these analysts cease coverage of us, we could lose visibility in the market, which in turn could cause our stock price to decline.
+Added: Additionally, if securities analysts publish negative evaluations of competitors in the life sciences and medical technology industries, the comparative effect could cause our stock price to decline.
+Added: Our management will be required to devote substantial time to comply with public company regulations.
+Added: As a public company, we will incur significant legal, accounting and other expenses we did not incur as a private company.
+Added: The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), as well as rules implemented by the SEC and Nasdaq, impose various requirements on public companies, including those related to corporate governance practices.
+Added: Our management and other personnel will need to devote a substantial amount of time to these requirements.
+Added: Moreover, these rules and regulations will increase our legal and financial compliance costs relative to those of we incurred as a private company, and will make some activities more time consuming and costly.
+Added: The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures.
+Added: In particular, we must perform system and process evaluation and testing of its internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act (“Section 404”).
+Added: Our compliance with these requirements will require that we incur substantial accounting and related expenses and expend significant management efforts.
+Added: We will likely need to hire additional accounting and financial staff to satisfy the ongoing requirements of Section 404.
+Added: The costs of hiring such staff may be material and there can be no assurance that such staff will be immediately available to us.
+Added: Moreover, if we are not able to comply with the requirements of Section 404, or if we or our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, investors could lose confidence in the accuracy and completeness of our financial reports, the market price of our Common Stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.
+Added: As a non-accelerated filer, we will not be required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act.
+Added: We are not an “accelerated filer” or a “large accelerated filer” under the Exchange Act.
+Added: Rule 12b-2 under the Exchange Act defines an “accelerated filer” to mean any company that first meets the following conditions at the end of each fiscal year:
+Added: The company had a public float of $75 million or more, but less than $700 million, as of the last business day of the company’s most recently completed second fiscal quarter;
+Added: the company has been subject to the reporting requirements of the Exchange Act for at least twelve calendar months;
+Added: the company has filed at least one annual report under the Exchange Act;
+Added: and the company is not eligible to use the requirements for a “smaller reporting company” under the revenue test in paragraph (2) or (3)(iii)(B), as applicable, of the “smaller reporting company” definition in Rule 12b-2 of the Exchange Act.
+Added: Rule 12b-2 under the Exchange Act defines a “large accelerated filer” in the same way as an “accelerated filer” except that the company meeting the definition must have a public float of $700 million or more as of the last business day of the company’s most recently completed second fiscal quarter.
+Added: A non-accelerated filer is not required to file an auditor attestation report on internal control over financial reporting that is otherwise required under Section 404(b) of the Sarbanes-Oxley Act.
+Added: Therefore, our internal control over financial reporting will not receive the level of review provided by the process relating to the auditor attestation included in annual reports of issuers that are subject to the auditor attestation requirements.
+Added: In addition, we cannot predict if investors will find our common stock less attractive because we are not required to comply with the auditor attestation requirements.
+Added: If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and the trading price for our common stock may be negatively affected.
+Added: If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
+Added: As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our Common Stock.
+Added: Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud.
+Added: Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations.
+Added: In addition, any testing by us conducted in connection with Section 404 or any subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.
+Added: Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our Common Stock.
+Added: A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
+Added: Prior to the Merger in August 2024, we were a private company with limited accounting personnel and other resources with which to address our internal controls and procedures.
+Added: In preparing our consolidated financial statements for the ended December 31, 2024, we and our independent registered public accounting firm identified material weaknesses in our internal control over financial reporting as related to the (i) not having adequate Information Technology General Controls ("ITGC") or related Information Produced by Entity ("IPE") Controls, and (ii) lack of segregation of duties
+Added: To remediate our material weaknesses, we expect to incur substantially more additional costs for addressing our material weaknesses and deficiencies.
+Added: Our remedial measures will include:
+Added: (a) developing, maintaining and revising impacted ITGC and IPE controls as necessary, including reviewing the names and functions of each individual involved in the overall control environment to ensure there is proper segregation of duties and (b) development of policies and procedures that require approval of journal entries by the appropriate supervisor of, or an individual that is in an oversight role to, the individuals who prepare them and retain such documentation.
+Added: We have commenced the implementation of several aforementioned remedial measures, which we expect to complete in 2025.
+Added: The implementation of any or all of these aforementioned measures, however, still may not fully address the material weaknesses in our internal control over financial reporting.
+Added: Additionally, as most of our documentation will be prepared internally, we do not expect there to be significant material costs to implement our remedial measures.
+Added: Our failure to correct the material weaknesses or our failure to discover and address any other material weaknesses or control deficiencies could result in inaccuracies and material misstatements in our financial statements, which could result in a restatement of our consolidated financial statements, cause us to fail to meet our reporting obligations, reduce our ability to obtain financing or cause investors to lose confidence in our reported financial information, leading to a decline in our stock price.
+Added: Material weaknesses could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis, reduce our ability to obtain financing or cause investors to lose confidence in our reported financial information, leading to a decline in our stock price, and significantly hinder our ability to prevent fraud.
+Added: As a recently public company, we may not be able to timely and effectively implement controls and procedures required by Section 404 that are applicable to us as public company.
+Added: The standards required for a public company under Section 404 of the Sarbanes-Oxley Act are significantly more stringent than those required of a privately held company.
+Added: Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable to us as a public company.
+Added: If management is not able to implement the additional requirements of Section 404 in a timely manner or with adequate compliance, it may not be able to assess whether its internal control over financial reporting is effective, which may subject us to adverse regulatory consequences and could harm investor confidence and cause the market price of our Common Stock to decline.
+Added: We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.
+Added: Although WaveDancer and Private Firefly had conducted due diligence on each other prior to the consummation of the Merger, there can be no assurances that their diligence revealed all material issues that may be present in our business, that all material issues through a customary amount of due diligence will be uncovered, or that factors outside of our control will not later arise.
+Added: As a result, we may be forced to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in losses.
+Added: Even if due diligence successfully identifies certain risks, unexpected risks may arise, and previously known risks may materialize in a manner not consistent with each company’s preliminary risk analysis.
+Added: Even though these charges may be non-cash items and may not have an immediate impact on liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities.
+Added: In addition, charges of this nature may make future financing difficult to obtain on favorable terms or at all.
+Added: Anti-takeover provisions under Delaware corporate law may make it difficult for our stockholders to replace or remove our Board, and could deter or delay third parties from acquiring us, which may be beneficial to our stockholders.
+Added: We are subject to the anti-takeover provisions of Delaware law, including Section 203 of the DGCL.
+Added: Under these provisions, which became effective upon the closing of the Merger, if anyone becomes an “interested stockholder,” we may not enter into a “business combination” with that person for three (3) years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change of control.
+Added: For purposes of Section 203 of the DGCL, “interested stockholder” means, generally, someone owning fifteen percent (15%) or more of our outstanding voting stock during the past three (3) years, subject to certain exceptions as described in Section 203 of the DGCL.
+Added: We do not anticipate that we will pay any cash dividends in the foreseeable future.
+Added: The current expectation is that we will retain our future earnings, if any, to fund the development and growth of our business.
+Added: As a result, capital appreciation, if any, of our Common Stock will be your sole source of gain, if any, for the foreseeable future.
+Added: It is not possible to predict the actual number of shares of the Common Stock we will sell under the ELOC Purchase Agreement to Arena, or the actual gross proceeds resulting from those sales.
+Added: On December 20, 2024, we entered into the ELOC Purchase Agreement with Arena, pursuant to which Arena has committed to purchase up to $10,000,000 of our Common Stock, subject to certain limitations and conditions set forth in the ELOC Purchase Agreement.
+Added: The Common Stock that may be issued under the ELOC Purchase Agreement may be sold by us to Arena at our discretion from time to time over the 36-month period beginning on the Commencement Date.
+Added: We generally have the right to control the timing and amount of any sales of our Common Stock to Arena under the ELOC Purchase Agreement.
+Added: Sales of our Common Stock, if any, to Arena under the ELOC Purchase Agreement will depend upon market conditions and other factors to be determined by us.
+Added: We may ultimately decide to sell to Arena all, some or none of our Common Stock that may be available for us to sell to Arena pursuant to the ELOC Purchase Agreement.
+Added: Because the purchase price per share to be paid by Arena for our Common Stock that we may elect to sell to Arena under the ELOC Purchase Agreement, if any, will fluctuate based on the market prices of our Common Stock at the time we elect to sell shares to Arena pursuant to the ELOC Purchase Agreement, if any, it is not possible for us to predict, as of the date of this filing and prior to any such sales, the number of our Common Stock that we will sell to Arena under the ELOC Purchase Agreement, the purchase price per share that Arena will pay for shares purchased from us under the ELOC Purchase Agreement, or the aggregate gross proceeds that we will receive from those purchases by Arena under the ELOC Purchase Agreement.
+Added: Although the ELOC Purchase Agreement provides that we may sell up to an aggregate of $10,000,000 of our Common Stock to Arena, up to 2,934,666 Common Stock have been registered for resale under a prior registration statement .
+Added: The number of Common Stock ultimately offered for resale by Arena is dependent upon the number of the shares of Common Stock, if any, we ultimately elect to sell to Arena pursuant to the ELOC Purchase Agreement.
+Added: If we elect to issue and sell to Arena pursuant to the ELOC Purchase Agreement more Common Stock than have been registered for resale in order to receive aggregate gross proceeds equal to an aggregate of $10,000,000 available under the ELOC Purchase Agreement, we will file with the SEC one or more additional registration statements to register under the Securities Act the resale by Arena of any such additional Common Stock we elect to sell to Arena from time to time under the ELOC Purchase Agreement, and the SEC must declare such additional registration statements effective before we can sell any additional Common Stock to Arena under the ELOC Purchase Agreement.
+Added: Any issuance and sale by us under the ELOC Purchase Agreement of a substantial amount of Common Stock in addition to the 2,934,666 Common Stock already registered for resale could cause additional substantial dilution to our shareholders.
+Added: In addition, pursuant to the terms of the ELOC Purchase Agreement, (i) the number of Common Stock we will sell to Arena under each Advance Notice will not exceed the ELOC Beneficial Ownership Limitation which is 9.99% of the then total outstanding Common Stock and (ii) the aggregate number of Common Stock we will sell to Arena will not exceed the “Exchange Cap” which is 19.99% of the then outstanding Common Stock before such proposed sale, unless we obtain shareholders’ approval to issue shares in excess of the Exchange Cap.
+Added: Our inability to access a portion or the full amount available under the ELOC Purchase Agreement, in the absence of any other financing sources, could have a material adverse effect on our business.
+Added: The sale and issuance of our Common Stock to Arena will cause dilution to our existing shareholders, and the sale of Common Stock acquired by Arena or the perception that such sales may occur could cause the price of our Common Stock to fall.
+Added: The purchase price for the Common Stock that we may sell to Arena under the ELOC Purchase Agreement will fluctuate based on the price of our Common Stock.
+Added: Depending on market liquidity at the time, sales of such shares may cause the trading price of our Common Stock to fall.
+Added: If and when we do sell shares to Arena, after Arena has acquired the shares, Arena may resell all, some, or none of those shares at any time or from time to time in its discretion.
+Added: Therefore, sales to Arena by us could result in substantial dilution to the interests of other holders of our Common Stock.
+Added: Additionally, the sale of a substantial number of Common Stock to Arena, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.
+Added: Investors who buy shares at different times will likely pay different prices.
+Added: Pursuant to the ELOC Purchase Agreement, we will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares of Common Stock sold to Arena.
+Added: If and when we do elect to sell Common Stock to Arena pursuant to the ELOC Purchase Agreement, after Arena has acquired such shares, Arena may resell all, some or none of such shares at any time or from time to time in its discretion and at different prices.
+Added: As a result, investors who purchase shares from Arena at different times will likely pay different prices for those shares, and so may experience different levels of dilution and in some cases substantial dilution and different outcomes in their investment results.
+Added: Investors may experience a decline in the value of the shares they purchase from Arena as a result of future sales made by us to Arena at prices lower than the prices such investors paid for their shares.
+Added: In addition, if we sell a substantial number of shares to Arena under the ELOC Purchase Agreement, or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with Arena may make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect such sales.
+Added: Arena will pay less than the then-prevailing market price for the Common Stock, which could cause the price of the Common Stock to decline.
+Added: The purchase price of the Common Stock sold to Arena under the ELOC Purchase Agreement is derived from multiplying the market price of our Common Stock on Nasdaq by 88%.
+Added: Our Common Stock to be sold to Arena pursuant to the ELOC Purchase Agreement will be purchased at a discounted price.
+Added: As a result of the pricing structure, Arena may sell the Common Stock it receives immediately after receipt of such shares, which could cause the price of our Common Stock to decline.
+Added: Our management team will have broad discretion over the use of the net proceeds from the sales of our Common Stock to Arena, if any, and investors may not agree with how we use the proceeds and the proceeds may not be invested successfully.
+Added: Our management team will have broad discretion as to the use of the net proceeds from our sale of our Common Stock to Arena, if any, and we could use such proceeds for purposes other than those contemplated at the time of commencement of this offering.
+Added: Accordingly, investors will be relying on the judgment of our management team with regard to the use of those net proceeds, and investors will not have the opportunity, as part of their investment decision, to assess whether the proceeds are being used appropriately.
+Added: It is possible that, pending their use, we may invest those net proceeds in a way that does not yield a favorable, or any, return for us.
+Added: The failure of our management team to use such funds effectively could have a material adverse effect on our business, financial condition, operating results and cash flows.
+Added: Substantial future sales or issuances of the Common Stock or securities convertible into, or exercisable or exchangeable for, the Common Stock, or the perception in the public markets that these sales or issuances may occur, may depress our stock price.
+Added: Also, future issuances of the Common Stock or rights to purchase Common Stock could result in additional dilution of the percentage ownership of our shareholders and could cause our stock price to fall.
+Added: The conversion or exercise of our outstanding convertible or exercisable securities and resale of the underlying Common Stock, and any other future issuances of the Common Stock or securities convertible into, or exercisable or exchangeable for, the Common Stock, would result in a decrease in the ownership percentage of existing shareholders, i.e., dilution, which may cause the market price of the Common Stock to decline.
+Added: We cannot predict the effect, if any, of future issuances, conversions, or exercises of our securities, on the price of the Common Stock.
+Added: In all events, future issuances of the Common Stock would result in the dilution of your holdings.
+Added: In addition, the perception that new issuances of our securities are likely to occur, or the perception that holders of securities convertible or exercisable for Common Stock are likely to sell their securities, could adversely affect the market price of the Common Stock.
+Added: The effect of such dilution may be magnified as to all shares that are not or may eventually not be subject to restrictions on resale as enumerated below.
+Added: We also expect that significant additional capital may be needed in the future to continue our planned operations, including expanding research and development, hiring new personnel, marketing our products, and continuing activities as an operating public company.
+Added: To the extent we raise additional capital by issuing equity securities, our shareholders may experience substantial dilution.
+Added: We may sell Common Stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time.
+Added: If we sell Common Stock, convertible securities, or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales.
+Added: Such sales may also result in material dilution to our existing shareholders, and new investors could gain rights superior to our existing shareholders.
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