What changed in this filing

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Item 1A. Risk Factors

2021-09-21 compared with 2020-09-08 · 86 added, 93 removed, 245 unchanged (42% of the section changed)

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If we are unable to achieve and then maintain profitability, the market value of our common stock will likely experience significant decline.

We could face risks related to the potential outcomes of SEC inquiries, including potential regulatory action or private litigation, potential penalties, damages or other remedies that could be imposed on us, substantial legal costs and expenses, significant management distraction, and potential reputational damage that we could suffer as a result of adverse findings resulting from any SEC inquiry.

Since April 2020, the staff of the Fort Worth Regional Office of the SEC has been conducting an investigation relating to certain press releases issued by us in March 2020 regarding the BreathTest-1000™ lung disease screening device that we are currently developing.

The SEC has advised us that this informal, non-public, fact-finding inquiry should not be construed as an indication that we or anyone else has violated the law or that the SEC has any negative opinion of any person, entity or security.

In connection with this inquiry, the SEC staff has requested that we voluntarily provide certain information and documents relating to the development of BreathTest-1000, the common stock offerings completed by us in March 2020, and certain related matters.

We have been cooperating with the SEC staff regarding this inquiry and have provided information and documents in response to the SEC staff’s request.

We do not intend to comment further on this matter unless and until this matter is closed or further action is taken by the SEC that, in our judgment, merits further comment or public disclosure.

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.

Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future.

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.

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 $2.65.

We may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance or prospects.

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.

As a result of this volatility, investors may experience losses on their investment in our common stock.

The market price for our common stock may be influenced by many factors, including the following:

investor reaction to our business strategy;

the success of competitive products or technologies;

our continued compliance with the NASDAQ listing standards;

regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products;

actions taken by regulatory agencies with respect to our products, manufacturing process or sales and marketing terms;

the success of our efforts to acquire or in-license additional products or product candidates;

developments concerning our collaborations or partners;

developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products;

our ability or inability to raise additional capital and the terms on which we raise it;

declines in the market prices of stocks generally;

trading volume of our common stock;

sales of our common stock by us or our stockholders;

general economic, industry and market conditions;

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.

These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.

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.

Since the stock price of our common stock has fluctuated in the past, has been recently volatile and may be volatile in the future, investors in our common stock could incur substantial losses.

In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies.

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.

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.

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.

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.

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.

Our business units are in development stage.

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Regulatory approval of any products may not be obtained.

In particular, FDA approval will be required to market the BreathTest-1000 in the United States.

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.

In particular, TSA approval is required to begin selling the TRACER 1000 in the United States and FDA approval is required to market the BreathTest-1000 in the United States.

Obtaining approval from both TSA and FDA is a complex and lengthy process, and approvals for the TRACER 1000 and BreathTest-1000 may not be granted on a timely basis or at all.

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.

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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.

If such business unit, or any third-party, from whom it licenses intellectual prop erty, 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 h arm to the competitive business position of this business unit.

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 produc ts without infringing any patents that this business unit owns or has rights to.

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.

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.

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.

Our cash and cash equivalents may not be sufficient to fund our operating expenses, capital equipment requirements, and other expected liquidity requirements.

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.

Additionally, actions taken as a result of the ongoing internal evaluation of our business could result in expenditures that are not currently contemplated.

Factors that could affect our capital requirements, in addition to those listed above include continued collections of accounts receivable consistent with our historical experience and our ability to manage product development efforts.

We may not be able to successfully develop the BreathTest-1000 or any other new products or services.

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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.

We face various risks related to health epidemics, pandemics and similar outbreaks, including the global outbreak of COVID-19.

The COVID-19 pandemic has significantly reduced airline passenger traffic, which reduces demand for certain of our

security screening products and services.

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.

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.

The pandemic has also hampered o ur ability to meet with our customers and prospective customers.

T he 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.

I f 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.

We face various risks related to health epidemics, pandemics, and similar outbreaks, including the global outbreak of COVID-19 and its multiple variants.

The COVID-19 pandemic had numerous negative consequences for our business, including a reduction in demand for certain of our security screening products and services caused by a significant reduction in airline passenger traffic.

To slow and limit the transmission of COVID-19, governments across the world imposed air travel restrictions and businesses and individuals canceled air travel plans.

These restrictions and cancelations reduced demand for security screening products and related services at airport checkpoints globally as the number of airline passengers requiring screening fell.

The pandemic also hampered our ability to meet with our customers and prospective customers and created supply chain challenges as certain components had longer lead times.

The continued spread of COVID-19 also led to disruption and volatility in the global capital markets, which increased the cost of capital and adversely impacted access to capital.

While such negative impacts to our business have subsided to some degree, there is risk that new strains of COVID-19 may become more prevalent and cause an extension of or additional negative consequences.

In addition, 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.

We may be unable to perform fully on our contracts and our costs may increase as a result of the COVID-19 outbreak.

These cost s may not be recoverable or adequately covered by insurance.

It is possible that the continued spread of COVID-19 could also further cause disruption in our supply chain;

cause delay, or limit the ability of customers to perform, including in making timely payments to us;

These costs may not be recoverable or adequately covered by insurance.

It is possible that the continued spread of COVID-19 could also further cause delay, or limit the ability of customers to perform, including in making timely payments to us;

cause delay in regulatory certification testing of our instruments;

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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.

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.

our ability to conduct our business in the ordinary course.

These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial condition.

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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.

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.

Our stockholders’ equity as of June 30, 2020 was less than $2.5 million, which is less than the requirement under Nasdaq Listing Rule 5550(b)(1) for continued listing on The Nasdaq Capital Market.

As a result, though no assurance can be given, we anticipate that Nasdaq will provide notice of this development and require us to take steps in order to avoid the delisting of our common stock.

We cannot be certain that additional financing will be available on reasonable terms when needed, or at all, which could seriously harm our business.

We have incurred net losses and negative cash flow from operations in recent prior periods, and we may not achieve or maintain profitability in the future.

Our cash on hand at June 30, 2020 is expected to fund our operations into the second quarter of fiscal 2021.

As a result, we may need additional financing to execute our business plan.

We may pursue additional funding through various financing sources, including additional public offerings, the issuance of debt securities, fees associated with licensing some or all of our technology, joint ventures with capital partners and project type financing.

Our ability to obtain additional financing, if and when required, will depend on investor demand, our operating performance, the condition of the capital markets, and other factors.

Therefore, we may need to raise additional funds and we cannot assure investors that additional financing will be available to us on favorable terms when required, or at all.

If we raise additional funds through the issuance of equity, equity-linked, or debt securities, those securities may have rights, preferences, or privileges senior to the rights of our common stock, and our existing stockholders may experience dilution.

If financing is not available on satisfactory terms, we may be unable to further pursue our business plan and we may be unable to continue operations, in which case you may lose some or all of your investment.

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.

The report of our independent registered public accounting firm also includes an explanatory paragraph about our ability to continue as a going concern.

As of June 30, 2020, we had working capital of $0.3 million.

For the fiscal year 2020, we reported a net loss of $8.3 million and net cash used in operating activities of $6.9 million.

For the fiscal year 2019, we reported a net loss of $7.5 million and net cash used in operating activities of $8.5 million.

This raises substantial doubt about our ability to continue as a going concern.

Our ability to continue as a going concern is contingent upon, among other factors, the sale of the shares of our common stock or obtaining alternate financing.

On April 14, 2020, we entered into a $542 thousand Paycheck Protection Program Promissory Note and Agreement (the “PPP Promissory Note”) with a commercial bank under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) The PPP Promissory Note bears interest at a rate of 1.0% per annum.

Payments are due monthly beginning November 10, 2020.

The principal amount of the PPP Promissory Note along with any unpaid interest is due on April 1, 2022 The principal and interest may be forgiven if the proceeds are used for forgivable purposes as defined by the terms in the PPP Promissory Note, and we have used the proceeds from the PPP Promissory Note for forgivable purposes as defined by the terms of the PPP Promissory Note.

We intend to apply for forgiveness under the provisions of the CARES Act.

Forgiveness is subject to the sole approval of the Small Business Administration.

We remain resolute in identifying the optimal solution to its liquidity issue.

We are currently evaluating several potential sources of additional liquidity.

These include, but are not limited to, selling the Company or a portion thereof, debt financing, equity financing, merging, or engaging in a strategic partnership.

The Company is currently evaluating potential offerings of any combination of common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, or any combination of the foregoing, either individually or as units comprised of one or more of the other securities.

However, additional funding may not be available when needed or on terms acceptable to us.

If we are unable to generate funding within a reasonable timeframe, we may have to delay, reduce or terminate our research and development programs, limit strategic opportunities, or curtail our business activities.

Astrotech’s consolidated financial statements as of June 30, 2020 do not include any adjustments that might result from the outcome of this uncertainty.

Our success depends significantly on the establishment and maintenance of successful relationships with our customers.

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Our ongoing success is dependent upon the continued availability of certain key employees.

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, an d the availability of new employees to implement our growth plans.

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.

The market for skilled employees is highly competitive, especially for employees in technical fields.

While our compensation programs are intended to attract and retain the employees requir ed 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.

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.

In addition, we may not be able to continue to attract new employees as required.

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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.

Our facilities located in Houston are susceptible to damage caused by hurricanes or other natural disasters.

Our 1 st Detect facilities in Houston are susceptible to damage caused by hurricanes or other natural disasters.

Our facilities located in Austin are susceptible to damage caused by hurricanes or other natural disasters.

Our ATI facilities in Austin are susceptible to damage caused by hurricanes or other natural disasters.

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.

A natural disaster could result in a temporary or permanent closure of our business operations, thus impacting our future financial performance.

A natural disaster could result in a temporary or permanent closure of some of our business operations, thus impacting our future financial performance.

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.

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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.

Health care products typically receive regulatory approval based on data obtained in controlled clinical trials of limited duration.

Healthcare products typically receive regulatory approval based on data obtained in controlled clinical trials of limited duration.

Following regulatory approval, these products will be used over longer periods of time in many patients.

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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.

If serious safety issues arise with the BreathTest-1000 product, sales of the product could be halted by us or by regulatory authorities.

If serious safety issues arise with the BreathTest-1000 product, sales of the product could be halted by us or by

regulatory authorities.

Safety issues affecting suppliers’ or competitors’ products also may reduce the market acceptance of our products.

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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.

We are a smaller reporting company, (i.e.

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.

We are a smaller reporting company, (i.e., 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.

We have elected to adopt these reduced disclosure requirements.

We cannot predict if investors will find our common stock less attractive as a

result of our taking advantage of these exemptions.

If some investors find our common stock less attractive a s 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.

We cannot predict if investors will find our common stock less attractive as a result of our taking advantage of these exemptions.

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.

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.

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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.

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.

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 Security and Exchange Commission (“ SEC ”) or Nasdaq .

We may also be required to restate our financial statements from prior periods.

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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 June 30, 2021.

On May 26, 2021, the stockholders of the Company approved an amendment to the Company’s Certificate of Incorporation increasing the authorized number of shares of the Company’s common stock to 250,000,000 (the “2021 Certificate Amendment”).

Pursuant to an agreement in connection with the Stein action, the Company will not file the amendment until it is established in the section 205 action that the 2020 certificate amendment was valid.

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.

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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 the relative voting power of the common stock or result in dilution to our existing shareholders.

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.

Our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any 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.

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.

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.

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.

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.

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The regulations are very complex, have become more stringent over time, and are subject to rapid change and varying interpretations.

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.

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.

The FDA and other federal and state governmental agencies regulate numerous elements of our business, including :

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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.

The process of obtaining regulatory clearances, approvals, and emergency use

authorization to market a medical device can be costly and time‑consuming, and we may not be able to obtain these clearances, approvals, or authorizations on a timely basis, or at all for our proposed products.

The process of obtaining regulatory clearances, approvals, and emergency use authorization to market a medical device can be costly and time‑consuming, and we may not be able to obtain these clearances, approvals, or authorizations on a timely basis, or at all for our proposed products.

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.

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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.

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.

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.

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.

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.

Commercialization of the BreathTest-1000 may require an EUA, FDA clearance of a 510(k) premarket notification submission, or authorization of a de novo submission.

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.

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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.

We intend to submit an application with the FDA for Emergency Use Authorization (EUA) for the BreathTest-1000.

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.

We intend to submit an application with the FDA for EUA for the BreathTest-1000.

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.

However, the FDA does not have review deadlines with respect to such submissions and, therefore, the ti ming of any approval of an EUA submission is uncertain.

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.

We cannot guarantee that the FDA will review our data in a timely manner, or that the FDA will accept the data when reviewed.

The FDA may decide that our data are insufficient for an EUA and require a dditional pre-clinical, clinical or other studies and refuse to approve our application.

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 authorizat ion, and we cannot predict how long, if ever, an Emergency Use Authorization would remain in place.

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, i ncluding the BreathTest-1000, to be eligible for an EUA.

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 effec t on our future business, financial condition, operating results and cash flows.

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.

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.

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.

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.

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.

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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.

Recent political, economic and re gulatory influences are subjecting the healthcare industry to fundamental changes.

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 reduc e the cost of healthcare.

Recent political, economic and regulatory influences are subjecting the healthcare industry to fundamental changes.

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.

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.

This could harm our ability to market our pr oducts and generate sales.

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.

Any new regulations or revisions or reinterp retations of existing regulations may impose additional costs or lengthen review times of our products.

Delays in receipt of or failure to receive regulatory clearances or approvals for any future products would negatively impact our long‑term business str ategy.

This could harm our ability to market our products and generate sales.

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.

Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of our products.

Delays in receipt of or failure to receive regulatory clearances or approvals for any future products would negatively impact our long‑term business strategy.

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.

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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.

What changed 10-K

Item 1A. Risk Factors