−Removed: We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable future.
−Removed: As of September 30, 2020, we had an accumulated deficit of approximately $201.9 million and a reported net loss of $2.1 million for the three months ended September 30, 2020.
−Removed: We are unable to predict the extent of any future losses or when we will become profitable, if at all.
−Removed: If we are unable to achieve and then maintain profitability, the market value of our common stock will likely experience significant decline.
−Removed: Our business units are in development stage.
−Removed: They have earned limited revenues and it is uncertain whether they will earn any revenues in the future or whether any of them will ultimately be profitable.
−Removed: Our business units are in an early stage with a limited operating history.
−Removed: Their future operations are subject to all of the risks inherent in the establishment of a new business including, but not limited to, risks related to capital requirements, failure to establish business relationships, and competitive disadvantages against larger and more established companies.
−Removed: These business units will require substantial amounts of funding to continue to commercialize their products.
−Removed: If such funding comes in the form of equity financing, such equity financing may involve substantial dilution to existing shareholders.
−Removed: Even with funding, our products may fail to be effective or attractive to the market or lack the necessary financial or other resources or relationships to be successful.
−Removed: These business units can be expected to experience continued operating losses until they can generate sufficient revenues to cover their operating costs.
−Removed: Furthermore, these business units may not be able to develop, manufacture, or market additional products in the future, that future revenues will be significant, that any sales will be profitable, or that the business units will have sufficient funds available to complete their commercialization efforts.
−Removed: Any products and technologies developed and manufactured by our business units may require regulatory approvals prior to being made, marketed, sold, and used.
−Removed: Regulatory approval of any products may not be obtained.
−Removed: In particular, FDA approval will be required to market the BreathTest-1000 in the United States.
−Removed: Obtaining FDA approval is a complex and lengthy process, and FDA approval for the BreathTest-1000 may not be granted on a timely basis or at all.
−Removed: The commercial success of any of our business units will depend, in part, on obtaining patent and other intellectual property protection for the technologies contained in any products it developed.
−Removed: In addition, our business units may need to license intellectual property to commercialize future products or avoid infringement of the intellectual property rights of others.
−Removed: Licenses may not be available on acceptable terms and conditions, if at all.
−Removed: Our business units may suffer if any licenses terminate, if the licensors fail to abide by the terms of the license or fail to prevent infringement by third parties, if the licensed patents or other rights are found to be invalid, or if our respective business unit is unable to enter into necessary licenses on acceptable terms.
−Removed: If such business unit, or any third-party, from whom it licenses intellectual property, fails to obtain adequate patent or other intellectual property protection for intellectual property covering its products, or if any protection is reduced or eliminated, others could use the intellectual property covering the products, resulting in harm to the competitive business position of this business unit.
−Removed: In addition, patent and other intellectual property protection may not provide our business units with a competitive advantage against competitors that devise ways of making competitive products without infringing any patents that this business unit owns or has rights to.
−Removed: Such competition could adversely affect the prices for any products or the market share of any of our business units and could have a material adverse effect on its results of operations and financial condition.
−Removed: Our cash and cash equivalents may not be sufficient to fund our operating expenses, capital equipment requirements, and other expected liquidity requirements.
−Removed: Our future capital requirements will depend on a number of factors, including our success in developing and expanding markets for our products, payments under possible future strategic arrangements, continued progress of our research and development of potential products, the need to acquire licenses to new technology, costs associated with increasing our manufacturing and development facilities, costs associated with strategic acquisitions including integration costs and assumed liabilities, litigation expense, the status of competitive products, and potential cost associated with both protecting and defending our intellectual property.
−Removed: Additionally, actions taken as a result of the ongoing internal evaluation of our business could result in expenditures that are not currently contemplated.
−Removed: Factors that could affect our capital requirements, in addition to those listed above include
−Removed: continued collections of accounts receivable consistent w ith our historical experience and our ability to manage product development efforts.
−Removed: We may not be able to successfully develop the BreathTest-1000™ or any other new products or services.
−Removed: Our business strategy outlines the use of the decades of experience we have accumulated to expand the services and products we offer to both U.S.
−Removed: government agencies and commercial industries.
−Removed: These services and products are in the development stage and involve new and untested technologies and business models.
−Removed: These technologies and business models may not be successful, which could result in the loss of any investment we make in developing them, including the development of the BreathTest-1000.
−Removed: Furthermore, we are subject to risks including, but not limited to, the following with respect to the development of the BreathTest-1000:
−Removed: the governmental approval process could be lengthy, time consuming and is inherently unpredictable, and we cannot guarantee that the required approvals for our products, including FDA approvals, will be granted on a timely basis or at all or that we will ever have a marketable product;
−Removed: customers must be persuaded that using our products are effective alternatives to other existing detection methods available for COVID-19 in order for our products to be commercially successful;
−Removed: if we fail to comply with healthcare regulations, we could face substantial enforcement actions, including civil and criminal penalties and our business, operations and financial condition could be adversely affected.
−Removed: Product development involves a high degree of risk and uncertainty, and our potential products may not be successfully developed, achieve their intended benefits, receive full market authorization, or be commercially successful.
−Removed: Moreover, as the COVID-19 pandemic persists and further information continues to develop, we are learning of increased risks and uncertainties in developing and commercializing new products and services in these unprecedented and evolving circumstances.
−Removed: We face various risks related to health epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations, and/or cash flows.
−Removed: We face various risks related to health epidemics, pandemics an d similar outbreaks, including the global outbreak of COVID-19.
−Removed: The COVID-19 pandemic has significantly reduced airline passenger traffic, which reduces demand for certain of our security screening products and services.
−Removed: To slow and limit the transmission of COVID-19, governments across the world have imposed significant air travel restrictions and businesses and individuals have canceled air travel plans.
−Removed: These restrictions and cancelations have reduced demand for security screening products and related services at airport checkpoints globally as the number of airline passengers requiring screening has fallen.
−Removed: The pandemic has also hampered our ability to meet with our customers and prospective customers.
−Removed: The continued spread of COVID-19 has also led to recent disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital.
−Removed: If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures or other restrictions in connection with the COVID-19 pandemic, our operations will likely be impacted.
−Removed: We may be unable to perform fully on our contracts and our costs may increase as a result of the COVID-19 outbreak.
−Removed: These costs may not be recoverable or adequately covered by insurance.
−Removed: It is possible that the continued spread of COVID-19 could also further cause disruption in our supply chain;
−Removed: cause delay, or limit the ability of customers to perform, including in making timely payments to us;
−Removed: cause delay in regulatory certification testing of our instruments;
−Removed: and cause other unpredictable events.
−Removed: If any of our supply chain phases were interrupted or terminated, we could experience delays in our product development including the availability of products for clinical testing.
−Removed: The occurrence of one or more of these items could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.
−Removed: The effects of the COVID-19 pandemic may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.
−Removed: These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial condition.
−Removed: In addition, any future clinical trials may be affected by the COVID-19 pandemic.
−Removed: Clinical site initiation and patient enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 pandemic.
−Removed: Also, some patients may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services.
−Removed: Similarly, our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 and adversely impact our clinical trial operations.
−Removed: If we fail to comply with the continued listing requirements of The Nasdaq Capital Market LLC, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.
−Removed: As previously noted in our Form 10-K for the fiscal year ended June 30, 2020, we were not in compliance with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1) for continued listing on The Nasdaq Capital Market because our stockholders’ equity was below the required minimum of $2.5 million at June 30, 2020.
−Removed: On September 11, 2020, we received a notice from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) stating that we were not in compliance with the required stockholder’s equity of $2.5 million.
−Removed: The Notice has no immediate effect on our listing on The Nasdaq Capital Market.
−Removed: The Company originally had until October 26, 2020 to submit a plan to regain compliance with the minimum stockholders’ equity r equirement;
−Removed: however, Nasdaq granted an extension of the deadline to submit a plan until November 2, 2020.
−Removed: If our plan to regain compliance is accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the Notice to evidence complia nce (the “Compliance Period”).
−Removed: On October 23, 2020, the Company closed a public offering of its common stock for gross proceeds of $18.0 million.
−Removed: On November 3, 2020, the Company received a letter from NASDAQ stating that based on the Form 8-K filed by the Company on October 30, 2020, Nasdaq has determined that the Company complies with the Listing Rule 5550(b)(1).
−Removed: There is substantial doubt about our ability to continue as a going concern, indicating the possibility that we may not be able to operate in the future.
−Removed: The report of our independent registered public accounting firm also includes an explanatory paragraph about our ability to continue as a going concern.
−Removed: Our annual report on Form 10-K for the fiscal year ended June 30, 2020 indicated substantial doubt as to our ability to continue as a going concern.
−Removed: On October 23, 2020, we completed a public offering of our common stock, raising gross proceeds of $18.0 million, and on October 30, 2020, we also completed a registered direct offering of our common stock, raising gross proceeds of $6.2 million.
−Removed: We believe this solves our liquidity issue, and we no longer have substantial doubt about our ability to continue as a going concern.
−Removed: Our success depends significantly on the establishment and maintenance of successful relationships with our customers.
−Removed: Our customer base is limited;
−Removed: therefore, we continue to work on diversifying our customer base, while going to great lengths to satisfy the needs of our current customer base.
−Removed: Due to the limited number of customers, if any of our customers terminate their relationship with us, it could materially harm our business and results of operations.
−Removed: Third parties may claim we are infringing their intellectual property rights, and we could suffer significant litigation or licensing expenses or be prevented from selling products.
−Removed: As we introduce any new and potentially promising product or service, or improve existing products or services with new features or components, companies possessing competing technologies, or other companies owning patents or other intellectual property rights, may be motivated to assert infringement claims in order to generate royalty revenues, delay or diminish potential sales, and challenge our right to market such products or services.
−Removed: Even if successful in defending against such claims, patent and other intellectual property related litigation is costly and time consuming.
−Removed: In addition, we may find it necessary to initiate litigation in order to protect our patent or other intellectual property rights, and even if the claims are well-founded and ultimately successful, such litigation is typically costly and time-consuming and may expose us to counterclaims, including claims for intellectual property infringement, antitrust, or other such claims.
−Removed: Third parties could also obtain patents or other intellectual property rights that may require us to either redesign products or, if possible, negotiate licenses from such third parties.
−Removed: Adverse determinations in any such litigation could result in significant liabilities to third parties or injunctions, or could require us to seek licenses from third parties, and if such licenses are not available on commercially reasonable terms, prevent us from manufacturing, importing, distributing, selling, or using certain products, any one of which could have a material adverse effect on us.
−Removed: In addition, some licenses may be non-exclusive, which could provide our competitors access to the same technologies.
−Removed: Under any of these circumstances, we may incur significant expenses.
−Removed: Our ongoing success is dependent upon the continued availability of certain key employees.
−Removed: We are dependent in our operations on the continued availability of the services of our employees, many of whom are individually key to our current and future success, and the availability of new employees to implement our growth plans.
−Removed: The market for skilled employees is highly competitive, especially for employees in technical fields.
−Removed: While our compensation programs are intended to attract and retain the employees required for us to be successful, ultimately, we may not be able to retain the services of all of our key employees or a sufficient number to execute on our plans.
−Removed: In addition, we may not be able to continue to attract new employees as required.
−Removed: Our operating results may be adversely affected by increased competition.
−Removed: We generally sell our products in industries that have increased competition through frequent new product and service introductions, rapid technological changes, and changing industry standards.
−Removed: Without the timely introduction of new products, services, and enhancements, our products and services will become technologically obsolete over time, in which case our revenue and operating results would suffer.
−Removed: The success of our new products and services will depend on several factors, including our ability to:
−Removed: properly identify customer needs and predict future needs;
−Removed: innovate and develop new technologies, services, and applications;
−Removed: successfully commercialize new technologies in a timely manner;
−Removed: manufacture and deliver our products in sufficient volumes and on time;
−Removed: differentiate our offering from our competitors’ offerings;
−Removed: price our products competitively;
−Removed: anticipate our competitors’ development of new products, services, or technological innovations;
−Removed: control product quantity in our manufacturing process.
−Removed: Our insurance coverage may be inadequate to cover all significant risk exposures.
−Removed: We are exposed to liabilities that are unique to the products and services we provide.
−Removed: We maintain insurance for certain risks, and we believe our insurance coverage is consistent with general practices within our industry.
−Removed: However, the amount of our insurance coverage may not cover all claims or liabilities and we may be forced to bear substantial costs.
−Removed: Increased cybersecurity requirements, vulnerabilities, threats, and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, services, and data.
−Removed: Increased global cybersecurity vulnerabilities, threats, and more sophisticated and targeted cyber-related attacks pose a risk to the security of our and our customers’, suppliers’, and third-party service providers’ products, systems, and networks and the confidentiality, availability, and integrity of our and our customers’ data.
−Removed: Although we have implemented policies, procedures, and controls to protect against, detect, and mitigate these threats, we remain potentially vulnerable to additional known or unknown threats.
−Removed: We also have access to sensitive, confidential, or personal data or information that is subject to privacy and security laws, regulations, and customer-imposed controls.
−Removed: Despite our efforts to protect sensitive, confidential, or personal data or information, we may be vulnerable to material security breaches, theft, misplaced or lost data, programming errors, employee errors, and/or malfeasance that could potentially lead to the compromising of sensitive, confidential, or personal data or information, improper use of our systems or networks, unauthorized access, use, disclosure, modification, or destruction of information, defective products, production downtimes, and operational disruptions.
−Removed: In addition, a cyber-related attack could result in other negative consequences, including damage to our reputation or competitiveness and remediation or increased protection costs, and could subject us to fines, damages, litigation, and enforcement actions.
−Removed: Our facilities located in Houston are susceptible to damage caused by hurricanes or other natural disasters.
−Removed: Our 1 st Detect facilities in Houston are susceptible to damage caused by hurricanes or other natural disasters.
−Removed: Although we insure our properties and maintain business interruption insurance, there can be no guarantee that the coverage would be sufficient or a claim will be fulfilled.
−Removed: A natural disaster could result in a temporary or permanent closure of our business operations, thus impacting our future financial performance.
−Removed: If we are unable to anticipate technological advances and customer requirements in the commercial and governmental markets, our business and financial condition may be adversely affected.
−Removed: Our business strategy employs our personnel’s decades of experience to expand the services and products we offer to our customers.
−Removed: We believe that our growth and future financial performance depend upon our ability to anticipate technological advances and customer requirements.
−Removed: We may not be able to achieve the necessary technological advances for us to remain competitive.
−Removed: Our failure to anticipate or respond adequately to changes in technological and market requirements, or delays in additional product development or introduction, could have a material adverse effect on our business and financial performance.
−Removed: Additionally, the cost of capital to fund these businesses will likely require dilution of shareholders.
−Removed: Significant safety concerns could arise for our BreathTest-1000™ product, which could have a material adverse effect on our future revenues and financial condition.
−Removed: If the development of the BreathTest-1000 is successfully completed, FDA approval will need to be obtained to market the BreathTest-1000 in the United States.
−Removed: Health care products typically receive regulatory approval based on data obtained in controlled clinical trials of limited duration.
−Removed: Following regulatory approval, these products will be used over longer periods of time in many patients.
−Removed: Investigators may also conduct additional, and perhaps more extensive, studies.
−Removed: If new safety issues are reported, we may be required to amend the conditions of use.
−Removed: For example, we may be required to provide additional warnings on the BreathTest-1000 label or narrow its approved intended use, either of which could reduce the product’s market acceptance.
−Removed: If serious safety issues arise with the BreathTest-1000 product, sales of the product could be halted by us or by regulatory authorities.
−Removed: Safety issues affecting suppliers’ or competitors’ products also may reduce the market acceptance of our products.
−Removed: We incur substantial upfront, non-reimbursable costs in preparing proposals to bid on contracts or to receive research and development grants that we may not be awarded.
−Removed: Preparing a proposal to bid on a contract or to receive a research and development grant is labor-intensive and results in the incurrence of substantial costs that are generally not retrievable.
−Removed: Additionally, although we may be awarded a contract or grant, work performance does not commence for several months following completion of the bidding process.
−Removed: If funding problems by the party awarding the contract or grant or other matters further delay our commencement of work, these delays may lower the value of the contract or grant, or possibly render it unprofitable.
−Removed: A failure of a key information technology system, process, or site could have a material adverse impact on our ability to conduct business.
−Removed: We rely extensively on information technology systems to interact with our employees and our customers.
−Removed: These interactions include, but are not limited to, ordering and managing materials from suppliers, converting materials to finished products, shipping product to customers, processing transactions, summarizing and reporting results of operations, transmitting data used by our service personnel and by and among our personnel and facilities, complying with regulatory, legal, and tax requirements, and other processes necessary to manage our business.
−Removed: If our systems are damaged or cease to function properly due to any number of causes, ranging from the failures of third-party service providers, to catastrophic events, to power outages, to security breaches, and our business continuity plans do not effectively compensate on a timely basis, we may suffer interruptions in our ability to manage operations which may adversely impact our results of operations and/or financial condition.
−Removed: A sale of a substantial number of shares of the common stock may cause the price of our common stock to decline.
−Removed: If our shareholders sell, or the market perceives that our shareholders intend to sell for various reasons, substantial amounts of our common stock in the public market may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
−Removed: We are a smaller reporting company and, as a result of the reduced disclosure and governance requirements applicable to such companies, our common stock may be less attractive to investors.
−Removed: We are a smaller reporting company, (i.e.
−Removed: a company with less than $250 million of public float) and we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies.
−Removed: We have elected to adopt these reduced disclosure requirements.
−Removed: We cannot predict if investors will find our common stock less attractive as a result of our taking advantage of these exemptions.
−Removed: If some investors find our common stock less attractive as a result of our choices, there may be a less active trading market for our common stock and our stock price may be more volatile.
−Removed: We are required to evaluate the effectiveness of our internal control over financial reporting on an annual basis and publicly disclose any material weaknesses in our controls.
−Removed: Any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and significant expense to remediate, and ultimately could have an adverse effect on our stock price.
−Removed: Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to assess the effectiveness of our internal control over financial reporting and to disclose if such controls were unable to provide assurance that a material error would be prevented or detected in a timely manner.
−Removed: We have an ongoing program to review the design of our internal controls framework in keeping with changes in business needs, implement necessary changes to our controls design, and test the system and process controls necessary to comply with these requirements.
−Removed: Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our Company will have been detected.
−Removed: If we or our independent registered public accounting firm identifies material weaknesses in our internal controls, the disclosure of that fact, even if quickly remedied, may cause investors to lose confidence in our financial statements and our stock price may decline.
−Removed: Remediation of a material weakness could require us to incur significant expenses and, if we fail to remedy any material weakness, our ability to report our financial results on a timely and accurate basis may be adversely affected, our access to the capital markets may be restricted, our stock price may decline, and we may be subject to sanctions or investigation by regulatory authorities, including the SEC or Nasdaq.
−Removed: We may also be required to restate our financial statements from prior periods.
−Removed: Execution of restatements create a significant strain on our internal resources and could cause delays in our filing of quarterly or annual financial results, increase our costs, and cause management distraction.
−Removed: Restatements may also significantly affect our stock price in an adverse manner.
−Removed: We can sell additional shares of common stock without consulting shareholders and without offering shares to existing shareholders, which would result in dilution of shareholders’ interests in the Company and could depress our stock price.
−Removed: Our Certificate of Incorporation authorizes 50,000,000 shares of common stock, of which 18,557,754 were outstanding as of November 9, 2020, and our Board is authorized to issue additional shares of our common stock.
−Removed: In addition, our Certificate of Incorporation authorizes 2,500,000 shares of “blank check preferred stock.” Shares of “blank check preferred stock” may be issued in such series and with such rights, privileges, and limitations as the Board may, in its sole discretion, determine.
−Removed: Our Board has designated 300,000 shares as Series A Junior Preferred Stock, none of which are outstanding.
−Removed: The Board has also designated Series C and Series D Preferred Stock, of which no shares and 280,898 shares are outstanding, respectively, as of November 9, 2020.
−Removed: Although our Board intends to utilize its reasonable business judgment to fulfill its fiduciary obligations to our then existing shareholders in connection with any future issuance of our capital stock, the future issuance of additional shares of our capital stock would cause immediate, and potentially substantial, dilution to our existing shareholders, which could also have a material effect on the market value of the shares.
−Removed: Furthermore, our Board may authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock, and the right to the redemption of the shares, together with a premium, prior to
−Removed: the redemption of the common stock.
−Removed: In addition, our Board could authorize the issuance of a series of preferred stock that has greater voting power than the common stock or that is convertible into our common stock, which could decrease t he relative voting power of the common stock or result in dilution to our existing shareholders.
−Removed: Our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for many disputes between us and our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors or officers.
−Removed: Our Certificate of Incorporation provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery for the State of Delaware is the sole and exclusive forum for claims brought by a stockholder, including claims in the right of the corporation, (i) that are based upon a violation of a duty by a current or former director or officer or stockholder in such capacity or (ii) as to which the Delaware General Corporation Law (the “DGCL”) confers jurisdiction upon the Court of Chancery of the State of Delaware.
−Removed: The provision indicates that if the Court of Chancery does not have jurisdiction, then the Superior Court of the State of Delaware, or, if such other court does not have jurisdiction, the United States District Court for the District of Delaware, shall be the exclusive forum for such action.
−Removed: 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 or officers, which may discourage such lawsuits against us and our directors and officers.
−Removed: Alternatively, if a court were to find our choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
−Removed: Our products and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer.
−Removed: The medical technology industry is regulated extensively by governmental authorities, principally the FDA, and state regulatory agencies with oversight of various aspects of drug and device distribution, sale, and use.
−Removed: The regulations are very complex, have become more stringent over time, and are subject to rapid change and varying interpretations.
−Removed: Regulatory restrictions or changes could limit our ability to carry on or expand our operations or result in higher than anticipated costs or lower than anticipated sales.
−Removed: The FDA and other federal and state governmental agencies regulate numerous elements of our business, including:
−Removed: product design and development;
−Removed: pre‑clinical and clinical testing and trials;
−Removed: product safety;
−Removed: establishment registration and product listing;
−Removed: labeling and storage;
−Removed: marketing, manufacturing, sales and distribution;
−Removed: pre‑market clearance or approval;
−Removed: servicing and post‑marketing surveillance, including reporting of deaths or serious injuries and malfunctions that, if they recurred, could lead to death or serious injury;
−Removed: advertising and promotion;
−Removed: post‑market approval studies;
−Removed: product import and export;
−Removed: recalls and field‑safety corrective actions.
−Removed: Before we can market or sell a new regulated product or a significant modification to an existing product in the United States, we must obtain either clearance under Section 510(k) of the FDCA, grant of a de novo classification request, or approval of a pre‑market approval, or PMA, application from the FDA, unless an exemption from pre‑market review applies.
−Removed: In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a legally marketed “predicate” device (in most cases Class II devices, with a few exceptions), with respect to intended use, technology and safety and effectiveness, in order to clear the proposed device for marketing.
−Removed: Class III devices approved under the PMA process cannot serve as predicates.
−Removed: Clinical data are sometimes required to support substantial equivalence.
−Removed: In the de novo process, the FDA must determine that general and special controls are sufficient to provide reasonable assurance of the safety and effectiveness of a device, which is low to moderate risk and has no predicate (in other words, the applicant must justify the “down-classification” to Class I or II for a new product type that would otherwise automatically be placed into Class III, but is lower risk).
−Removed: The PMA process requires an applicant to demonstrate the safety and effectiveness of the device based on extensive data, including, but not limited to, technical, preclinical, clinical trial, manufacturing and labeling data.
−Removed: The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life‑sustaining, life‑supporting or implantable devices.
−Removed: Products that are approved through a PMA application generally need FDA approval before they can be modified.
−Removed: Similarly, some modifications made to products cleared through a 510(k) may require a new 510(k).
−Removed: The 510(k), de novo, and PMA processes can be expensive and lengthy and require the payment of significant fees, unless an exemption applies.
−Removed: The FDA’s 510(k) clearance process usually takes from 3 to 12 months, but may take longer.
−Removed: The FDA’s stated goal is to review de novo classification requests within 150 days, 50% of the time, but in reality the process for many applicants generally takes even longer, up to a year or more.
−Removed: The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or longer, from the time the application is submitted to the FDA until an approval is obtained.
−Removed: The process of obtaining regulatory clearances, approvals, and emergency use authorization to market a medical device can be costly and
−Removed: time‑consuming, and we may not be able to obtain these clearance s, approvals, or authorizations on a timely basis, or at all for our proposed products.
−Removed: If the FDA requires us to go through a lengthier, more rigorous examination for marketing authorization of the BreathTest-1000 or future modifications to the BreathTest-1000 than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline or to not increase in line with our forecasts.
−Removed: In addition, the FDA may determine that future products will require the more costly, lengthy and uncertain PMA process.
−Removed: Although we do not market any devices under PMA, the FDA may demand that we obtain a PMA prior to marketing certain of our future products.
−Removed: Further, even with respect to those future products where a PMA is not required, we cannot assure you that we will be able to obtain the 510(k) clearances with respect to those products.
−Removed: The FDA can delay, limit or deny clearance, approval, or authorization of a device for many reasons, including:
−Removed: we may not be able to demonstrate that our products are safe and effective for their intended users;
−Removed: the data from our clinical trials may be insufficient to support clearance, approval, or authorization;
−Removed: the manufacturing process or facilities we use may not meet applicable requirements.
−Removed: In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our products under development.
−Removed: Any delay in, or failure to obtain or maintain, clearance or approval for our products under development could prevent us from generating revenue from these products and adversely affect our business operations and financial results.
−Removed: Additionally, the FDA and other regulatory authorities have broad enforcement powers.
−Removed: Regulatory enforcement or inquiries, or other increased scrutiny on us, could dissuade some customers from using our products and adversely affect our reputation and the perceived safety and efficacy of our product.
−Removed: Failure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement actions such as fines, civil penalties, injunctions, warning letters, recalls of products, delays in the introduction of products into the market, refusal of the FDA or other regulators to grant future clearances or approvals, and the suspension or withdrawal of existing clearances or approvals by the FDA or other regulators.
−Removed: Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and negatively impact our reputation, business, financial condition and operating results.
−Removed: Furthermore, any operations or product applications outside of the United States will subject us to various additional regulatory and legal requirements under the applicable laws and regulations of the international markets we enter.
−Removed: These additional regulatory requirements may involve significant costs and expenditures and, if we are not able to comply with any such requirements, our international expansion and business could be significantly harmed.
−Removed: Failure to obtain clearance or authorization for the BreathTest-1000, or other delays in the development of the BreathTest-1000, would adversely affect our ability to grow our business.
−Removed: Commercialization of the BreathTest-1000 may require an Emergency Use Authorization (EUA), FDA clearance of a 510(k) premarket notification submission, or authorization of a de novo submission.
−Removed: The process for submitting and obtaining FDA clearance of a 510(k), authorization of a de novo submission, or EUA can be expensive and lengthy.
−Removed: The FDA’s review process can take several months or longer, and we may not be able to obtain FDA clearance, de novo authorization, or Emergency use Authorization for the BreathTest-1000 on a timely basis, if at all.
−Removed: The FDA’s refusal of, or any significant delays in receiving 510(k) clearance, de novo authorization, or Emergency use Authorization of the BreathTest-1000, would have an adverse effect on our ability to expand our business.
−Removed: Thus far, we have not performed any clinical testing of the BreathTest-1000, which will likely be required before the device can be marketed.
−Removed: Even if a clinical trial is completed, there can be no assurance that the data generated during a clinical trial will meet the safety and effectiveness endpoints or otherwise produce results that will lead the FDA to grant marketing clearance, approval, or authorization.
−Removed: In addition, any other delays in the development of the BreathTest-1000, for example, unforeseen issues during product validation, would have an adverse effect on our ability to commercialize the BreathTest-1000.
−Removed: FDA’s policy with respect to Emergency Use Authorizations is evolving and may limit the ability for medical products, including the BreathTest-1000, to be eligible for commercialization under an Emergency Use Authorization.
−Removed: We intend to submit an application with the FDA for Emergency Use Authorization (EUA) for the BreathTest-1000.
−Removed: The FDA has the authority to grant an Emergency Use Authorization to allow unapproved medical products to be used in an emergency to diagnose, treat or prevent serious or life-threatening diseases or conditions when there are no adequate, approved and available alternatives.
−Removed: If we are granted an Emergency Use Authorization for the BreathTest-1000 for the diagnosis of COVID-19, we would be able to commercialize the BreathTest-1000 for the diagnosis of COVID-19 prior to FDA clearance or authorization of a 510(k) or de novo submission, respectively.
−Removed: However, the FDA does not have review deadlines with respect to such submissions and, therefore, the timing of any approval of an EUA submission is uncertain.
−Removed: We cannot guarantee that the FDA will review our data in a timely manner, or that the FDA will accept the data when reviewed.
−Removed: The FDA may decide that our data are insufficient for an EUA and require additional pre-clinical, clinical or other studies and refuse to approve our application.
−Removed: In addition, the FDA may revoke an Emergency Use Authorization where it is determined that the underlying health emergency no longer exists or warrants such authorization, and we cannot predict how long, if ever, an Emergency Use Authorization would remain in place.
−Removed: Further, the FDA’s policy with respect to EUAs related to COVID-19 is continuously evolving and may in the future limit the ability for medical products, including the BreathTest-1000, to be eligible for an EUA.
−Removed: If we are unsuccessful in obtaining an EUA for the BreathTest-1000 in a timely manner or at all, or if any granted EUA is revoked after a short period of time, it could have a material adverse effect on our future business, financial condition, operating results and cash flows.
−Removed: Modifications to our products may require new 510(k) clearances, de novo submissions, or pre‑market approvals, or may require us to cease marketing or recall the modified products until clearances are obtained.
−Removed: Any modification to a 510(k)‑cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design, or manufacture, requires a new 510(k) clearance or, possibly, a de novo or PMA.
−Removed: The FDA requires every manufacturer to make this determination in the first instance, and provides some guidance on decision making, but the FDA may review any manufacturer’s decision at any time.
−Removed: The FDA may not agree with our decisions regarding whether new clearances or approvals are necessary.
−Removed: If the FDA disagrees with our determination and requires us to submit new 510(k) notifications, de novo submissions or PMAs for modifications to our previously cleared or approved products for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval, and we may be subject to significant regulatory fines or penalties.
−Removed: If we or our third‑party suppliers fail to comply with the FDA’s good manufacturing practice regulations or fail to adequately, timely, or sufficiently respond to an FDA Form 483 or subsequent Warning Letter, this could impair our ability to market our products in a cost‑effective and timely manner and could result in FDA enforcement action.
−Removed: We and our third‑party suppliers are required to comply with the FDA’s Quality System Regulation, or QSR, and Current Good Manufacturing Practices (cGMP) which covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our product.
−Removed: The FDA audits compliance with the QSR, cGMP and related regulations through periodic announced and unannounced inspections of manufacturing and other facilities.
−Removed: The FDA may conduct these inspections or audits at any time.
−Removed: If, during the inspection, FDA identifies issues which, in FDA’s judgment, may constitute violations of the Federal Food, Drug, and Cosmetic Act or FDA’s regulations, the FDA inspector may issue an FDA Form 483 listing these observations.
−Removed: Note that if an entity does not address observations found in an FDA Form 483 to FDA’s satisfaction, the FDA could take enforcement action, including any of the following sanctions:
−Removed: untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
−Removed: customer notifications or repair, replacement, refunds, recall, detention or seizure of our product;
−Removed: operating restrictions or partial suspension or total shutdown of production;
−Removed: refusing or delaying our requests for 510(k) clearance or pre‑market approval of new products or modified products;
−Removed: withdrawing 510(k) clearances or pre‑market approvals that have already been granted;
−Removed: refusal to grant export approval for our product;
−Removed: criminal prosecution.
−Removed: Any of the foregoing actions could have a material adverse effect on our reputation, business, financial condition and operating results.
−Removed: A recall of our product, or the discovery of serious safety issues with our product, could have a significant adverse impact on us.
−Removed: The FDA has the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture or in the event that a product poses an unacceptable risk to health.
−Removed: Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found.
−Removed: A government‑mandated or voluntary recall by us or one of our distributors could occur as a result of an unacceptable risk to health, component failures, manufacturing errors, design or labeling defects or other deficiencies and issues.
−Removed: Recalls of our products would divert managerial and financial resources and have an adverse effect on our reputation, financial condition and operating results, which could impair our ability to produce our products in a cost‑effective and timely manner.
−Removed: Further, under the FDA’s medical device reporting, or MDR regulations, we are required to report to the FDA any incident in which our products may have caused or contributed to a death or serious injury or in which our products malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury.
−Removed: Repeated product malfunctions may result in a voluntary or involuntary product recall, which could divert managerial and financial resources, impair our ability to manufacture our products in a cost‑effective and timely manner and have an adverse effect on our reputation, financial condition and operating results.
−Removed: Depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA may require, or we may decide, that we will need to obtain new approvals or clearances for the device before we may market or distribute the corrected device.
−Removed: Seeking such approvals or clearances may delay our ability to replace the recalled devices in a timely manner.
−Removed: Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal fines.
−Removed: We may also be required to bear other costs or take other actions that may have a negative impact on our sales as well as face significant adverse publicity or regulatory consequences, which could harm our business, including our ability to market our products in the future.
−Removed: Any adverse event involving our products could result in future voluntary corrective actions, such as recalls or customer notifications, or regulatory agency action, which could include inspection, mandatory recall or other enforcement action.
−Removed: corrective action, whether voluntary or involuntary, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial res ults.
−Removed: We may be liable if the FDA or other U.S.
−Removed: enforcement agencies determine we have engaged in the off‑label promotion of our products or have disseminated false or misleading labeling or promotional materials.
−Removed: Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including laws and regulations prohibiting marketing claims that promote the off‑label use of our products or that make false or misleading statements.
−Removed: Healthcare providers may use our products off‑label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine.
−Removed: FDA also could conclude that a performance claim is misleading if it determines that there are inadequate non‑clinical and/or clinical data supporting the claim.
−Removed: If the FDA determines that our promotional materials or training promote of an off‑label use or make false or misleading claims, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fines and criminal penalties.
−Removed: It is also possible that other federal, state or foreign enforcement authorities might take action if they determine that our promotional or training materials promote an unapproved use or make false or misleading claims, which could result in significant fines or penalties.
−Removed: Although our policy is to refrain from statements that could be considered off‑label promotion of our products or false or misleading, the FDA or another regulatory agency could disagree.
−Removed: Violations of the FDCA may also lead to investigations alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws, which may lead to costly penalties and may adversely impact our business.
−Removed: Recent court decisions have impacted FDA’s enforcement activity regarding off-label promotion in light of First Amendment Considerations;
−Removed: however, there are still significant risks in this area, in part due to the potential for False Claims Act exposure.
−Removed: In addition, the off‑label use of our products may increase the risk of product liability claims.
−Removed: Product liability claims are expensive to defend and could result in substantial damage awards against us and harm our reputation.
−Removed: Legislative or regulatory healthcare reforms may make it more difficult and costly for us to obtain reimbursement for our products or regulatory clearance or approval of our future products, and to produce, market and distribute those products after clearance or approval is obtained.
−Removed: Recent political, economic and regulatory influences are subjecting the healthcare industry to fundamental changes.
−Removed: Both the federal and state governments in the United States and foreign governments continue to propose and pass new legislation and regulations designed to contain or reduce the cost of healthcare.
−Removed: Such legislation and regulations may result in decreased reimbursement for our product, which may further exacerbate industry‑wide pressure to reduce the prices charged for our product.
−Removed: This could harm our ability to market our products and generate sales.
−Removed: In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our current products and future products.
−Removed: Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of our products.
−Removed: Delays in receipt of or failure to receive regulatory clearances or approvals for any future products would negatively impact our long‑term business strategy.
−Removed: In the U.S., there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that restrict or regulate post‑approval activities, which may affect our ability to profitably sell product candidates for which we obtain marketing approval.
−Removed: Such government‑adopted reform measures may adversely impact the pricing of healthcare products and services in the United States or internationally and the amount of reimbursement available from third‑party payors.
−Removed: Our financial performance may be adversely affected by medical device tax provisions in healthcare reform laws.
−Removed: The Patient Protection and Affordable Care Act (the “PPACA”) imposed, among other things, an excise tax of 2.3% on any entity that manufactures or imports medical devices offered for sale in the United States.
−Removed: Under these provisions, the Congressional Research Service predicted that the total cost to the medical device industry may be up to $20 billion over a decade.
−Removed: The Internal Revenue Service issued final regulations implementing the tax in December 2012, which required, among other things, bi-monthly payments and quarterly reporting.
−Removed: The Consolidated Appropriations Act, 2016 (Pub.
−Removed: 114-113), signed into law in December 2015, included a two-year moratorium on the medical device excise tax.
−Removed: A second two-year moratorium on the medical device excise tax was signed into law in January 2018 as part of the Extension of Continuing Appropriations Act, 2018 (Pub.
−Removed: 115-120), extending the moratorium through December 31, 2019.
−Removed: On December 20, 2019, President Trump signed into law a permanent repeal of the medical device tax under the PPACA, but there is no guarantee that Congress or the President will not reverse course in the future.
−Removed: If such an excise tax on sales of our products in the United States is enacted, it could have a material adverse effect on our business, results of operations and financial condition.
−Removed: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
−Removed: DEFAULTS UPON SENIOR SECURITIES
−Removed: MINE SAFETY DISCLOSURE
−Removed: Not applicable.
+Added: Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future, and as a result, investors in our common stock could incur substantial losses.
+Added: Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future.
+Added: By way of example, on February 1, 2021, the price of our common stock closed at $2.11 per share, while on February 10, 2021, our stock price closed at $4.05 per share with no discernable announcements or developments by the Company or third parties.
+Added: On January 14, 2021, the intra-day sales price of our common stock fluctuated between a reported low sale price of $2.24 and a reported high sales price of $2.58.
+Added: We may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance or prospects.
+Added: In addition, the recent outbreak of the novel strain of coronavirus (COVID-19) has caused broad stock market and industry fluctuations.
+Added: The stock market in general and the market for companies such as ours in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
+Added: As a result of this volatility, investors may experience losses on their investment in our common stock.
+Added: The market price for our common stock may be influenced by many factors, including the following:
+Added: investor reaction to our business strategy;
+Added: the success of competitive products or technologies;
+Added: our continued compliance with the NASDAQ listing standards;
+Added: regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products;
+Added: actions taken by regulatory agencies with respect to our products, manufacturing process or sales and marketing terms;
+Added: variations in our financial results or those of companies that are perceived to be similar to us;
+Added: the success of our efforts to acquire or in-license additional products or product candidates;
+Added: developments concerning our collaborations or partners;
+Added: developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products;
+Added: our ability or inability to raise additional capital and the terms on which we raise it;
+Added: declines in the market prices of stocks generally;
+Added: trading volume of our common stock;
+Added: sales of our common stock by us or our stockholders;
+Added: general economic, industry and market conditions;
+Added: other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the recent outbreak of the novel coronavirus (COVID-19), and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability.
+Added: These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.
+Added: Further, recent increases are significantly inconsistent with any improvements in actual or expected operating performance, financial condition or other indicators of value, including our loss per share of $1.31 and $0.27 for our fiscal year ended June 30, 2020 and the three months ended September 30, 2020.
+Added: Since the stock price of our common stock has fluctuated
+Added: in the past, has been recently volatile and may be volatile in the future, investors in our common stock could incur substantial losses.
+Added: In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies.
+Added: Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.
+Added: There can be no guarantee that our stock price will remain at current levels or that future sales of our common stock will not be at prices lower than those sold to investors.
+Added: Additionally, securities of certain companies have recently experienced significant and extreme volatility in stock price due short sellers of shares of common stock, known as a “short squeeze.” These short squeezes have caused extreme volatility in both the stock prices of those companies and in the market, and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.
+Added: Many investors who have purchased shares in those companies at an inflated rate face the risk of losing a significant portion of their original investment, as in many cases the price per share has declined steadily as interest in those stocks have abated.
+Added: While we have no reason to believe our shares would be the target of a short squeeze, there can be no assurance that we won’t be in the future, and you may lose a significant portion or all of your investment if you purchase our shares at a rate that is significantly disconnected from our underlying value.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.