Item 1A. Risk Factors
Item 1A.
Risk Factors
We are subject to various risks that may harm
our business, prospects, financial condition and results of operation or prevent us from achieving our goals. If any of these risks occur,
our business, financial condition or results of operation may be materially adversely affected. In such case, the trading price of our
common stock could decline and investors could lose all or part of their investment.
Risks Related to Our Business
We only recently commenced
limited revenue producing operations, so it is difficult for potential investors to evaluate our business. To date, our operations
have consisted of technology research and development, testing, and joint development work with customers, potential customers and strategic
partners. Our business model is to derive our revenue primarily from license fees and royalties, but to date we have only recognized minimal
engineering services and licensing revenues. Our limited operating history makes it difficult to evaluate the commercial value of our
technology or our prospective operations. As an early-stage company, we are subject to all the risks inherent in the initial organization,
financing, expenditures, complications and delays in a new business, including, without limitation:
·
the timing and success of our plan of commercialization and the fact that we have not entered into a royalty-based manufacturing or distribution license with a potential customer;
·
our ability to replicate on a large commercial scale the benefits of our MST technology that we have demonstrated in preliminary testing;
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·
our ability to execute joint development agreements with potential customers;
·
our ability to structure, negotiate and enforce license agreements that will allow us to operate profitably;
·
our ability to advance the licensing arrangements with our initial integration licensees, Asahi Kasei Microdevices, STMicroelectronics and our RF licensee, to royalty-based manufacturing and distribution licenses;
·
our success in achieving the milestones included in the JDA and our success at negotiating distribution and royalty agreements, which are not committed, with our JDA customer;
·
our ability to successfully operate, the epitaxial deposition reactor for processing 300mm wafers that we recently began using for internal research and development and to support customer activities;
·
our ability to protect our intellectual property rights; and
·
our ability to raise additional capital as and when needed.
Investors should evaluate
an investment in us in light of the uncertainties encountered by developing companies in a competitive environment. There can be no assurance
that our efforts will be successful or that we will ultimately be able to attain profitability.
We have a history of
significant operating losses and anticipate continued operating losses for at least the near term. For the years ended December
31, 2021 and 2020, we have incurred net losses of approximately $15.7 million and $14.9 million, respectively, and our operations have
used approximately $12.4 million and $12.1 million of cash, respectively. As of December 31, 2021, we had an accumulated deficit of approximately
$165.9 million. We will continue to experience negative cash flows from operations until at least such time as we are able to secure manufacturing
and distribution license agreements with one or more foundries, IDMs or fabless semiconductor manufacturers. While management will endeavor
to generate positive cash flows from the commercialization of our MST technology, there can be no assurance that we will be successful
doing so. If we are unable to generate positive cash flow within a reasonable period of time, we may be unable to further pursue our business
plan or continue operations.
While we have
entered into four integration license agreements and a joint development agreement, there can be no assurance that any of these
relationships will advance to further licensing stages or to royalty-based distribution license agreements . In September and
October 2018, respectively, we entered into separate license agreements with AKM and ST, both of which are leading IDMs. In October
2019, we entered into a license agreement with a leading RF semiconductor supplier. In February 2022, we entered into an integration
license agreement with a semiconductor foundry. Our licensees have paid us licensing fees for the right to build products that
integrate MST technology onto their semiconductor wafers, but the agreements do not grant the licensees the right to sell products
incorporating MST. Such rights require our integration licensees to enter into additional license agreements that, if executed,
would allow each licensee or their foundry to manufacture MST-enabled products and to sell them to their customers. We expect that
the manufacturing and distribution agreements will provide for substantially larger upfront license fee payments than integration
license fees and that the agreements will require the respective licensees to make royalty payments to us based the number and sales
price of MST-enabled products they sell to their customers. However, our ability to enter into royalty-based manufacturing and
distribution agreements with our current integration licensees or with new customers will depend, in large part, on the performance
of devices they build using MST and the successful integration of our MST technology on a high-volume production scale. Our JDA
customer paid us for a manufacturing license in the first quarter of 2021 when we delivered our MST recipe to them. In February
2022, we successfully achieved all the development milestones in the JDA. Nevertheless, the JDA does not commit the customer to take
MST to production. There can be no assurance that our MST technology will deliver the performance, power or other requirements our
customers seek for their products or that the integration of our technology with our customers’ manufacturing process will be
successful in high volume. In addition, even if our MST technology is successfully integrated into the licensees’ products,
any or all of our licensees may decide, for reasons unrelated to the price or performance of our MST technology, not to enter the
subsequent license agreements required to take MST to commercial production.
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AKM, one of our licensees,
suffered substantial damage to one of its fabs from a fire, impacting their production capability and potentially delaying their work
with us. On October 20, 2020, a fire broke out in AKM’s factory in Nobeoka, Japan which lasted three days, causing substantial
damage to the building and equipment. As of the date of this Annual Report, the Nobeoka fab remains closed and it is unclear whether or
when it will re-open. Although Atomera’s work under our integration license agreement with AKM did not involve wafers in commercial
production in this fab, the fire substantially disrupted AKM’s business and interrupted their integration and testing of MST. We
expect that cooperation on integrating MST into AKM’s products will continue, but the fire has cast doubt on the timing for moving
toward a manufacturing license or commercial distribution. The timing of additional wafer runs with AKM will depend upon, among other
things, the timing of either re-opening the Nobeoka fab, moving production to another fab or external foundry, and AKM’s ability
to devote personnel and equipment to MST integration.
We expect that our product
qualification and licensing cycle will be lengthy and costly, and our marketing, engineering and sales efforts may be unsuccessful. We
have incurred significant engineering, marketing and sales expenses during customer engagements without entering into license agreements,
generating a license fee or establishing a royalty stream from the customer and we expect that such investments ahead of license revenue
will continue to be necessary in the future. The introduction of any new process technology into semiconductor manufacturing is a lengthy
process and we cannot forecast with any degree of assurance the length of time it takes to establish a new licensing relationship. However,
based on our engagements with potential customers to date, we believe the time from initial engagement until our customers incorporate
our technologies in their semiconductor products, can take 18 to 36 months or longer. Our integration license agreements with our current
licensees do not commit them to manufacturing or distribution licenses and we expect those licensees to perform additional tests on evaluation
wafers under their respective integration licenses before deciding whether to enter the next stages of licensing MST. As such, we will
incur additional expenses in our engagements with our licensees before we receive license fees, if any, for manufacturing and distribution
and before any subsequent royalty stream begins. Although we have successfully completed the objectives of our JDA and granted that customer
a manufacturing license, the agreement does not commit our customer to a distribution license. While we believe our JDA and our integration
license agreements should accelerate licensing decisions by other customers, the evaluation process for new technologies in the semiconductor
industry is inherently long and complex and there can be no assurance that we will successfully convert other customer prospects into
paying customers or that any of these customers will generate sufficient revenue to cover our expenses.
Our business may be
adversely affected by the recent coronavirus outbreak. The ongoing global COVID-19 pandemic—including both the resulting
public health crisis as well as the measures being taken by governments, businesses, and individuals in an effort to limit COVID-19’s
spread—has adversely affected, and continues to adversely affect, our business operations. The impacts of the COVID-19 pandemic
on our business operations and workforce, and the duration of such impacts, are uncertain, constantly evolving,
and difficult to quantify, but have thus far included,
or in the future may include, the following:
·
We have implemented certain measures at our facilities in an effort to protect our employees’ health and well-being (including social distancing, allowing many employees to work remotely, limiting the number of employees attending meetings, screening employees and visitors when entering facilities, educating employees about the virus and preventative measures, enhancing cleaning protocols, and limiting employee travel), some of which have reduced the overall efficiency of our operations and increased costs. The expected duration of such protective measures remains uncertain, and we may be required to implement additional measures in the future, further impacting our business operations.
·
Restrictions on travel imposed by us, our customers and countries to which we would otherwise travel, have required that contract negotiations and customer presentations be conducted by video or phone conferences, which have inherent limitations as compared to in-person meetings. Accordingly, new customer acquisition and completion of contracts have taken longer than we believe would be possible if we were able to meet with customers in the manner we had prior to the pandemic outbreak.
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Qualification of our
MST technology requires access to our potential customers’ manufacturing tools and facilities, as well as to leased tools and facilities,
which may not be available on a timely basis or at all. The qualification of a new process technology like MST entails the integration
of our MST film into the complex manufacturing processes employed by our potential customers. In order to validate the benefits of MST,
our customer engagement process involves fabrication of wafers that incorporate MST deposited by us using our epitaxial deposition tools
and then completing the manufacturing of the wafers in our customers’ facilities using their tools. The semiconductor industry in
2021 exceeded $550 billion in sales, and in recent months the industry has been characterized by product shortages as strong demand has
outstripped supply, resulting in tight capacity among our potential customers. Accordingly, we have experienced delays in completing the
processing of evaluation wafers by our customers as those customers prioritize utilization of their equipment for production use. If our
customers do not dedicate their equipment and facilities to testing our products in a timely fashion, we may experience delays that will
increase our expenses and delay our customers’ decisions on entering into a commercial license with us. Additionally, we conduct
our ongoing research and development and portions of our customer evaluation activities using a leased epitaxial (epi) deposition tool.
We recently entered into a lease for a new epi tool that we believe will accelerate internal development work and customer engagements.
However, epi tools require ongoing, complex maintenance and they have been and will continue to be subject to both planned and unplanned
downtime. Any interruption in our epi tool availability may negatively impact the progress of customer work as well as our internal research
and development and accordingly could delay or prevent customers from entering into commercial licenses.
The long-term success
of our business is dependent on a royalty-based business model, which is inherently risky. The long-term success of our business
is dependent on future royalties paid to us by licensee-customers, whose business requires them to market products to their end customers.
Royalty payments under our licenses are generally expected to be based on a percentage (i) in the case of foundries, the selling price
of wafers made using MST and (ii) in the case of IDMs and fabless vendors, the selling price of MST-enabled semiconductor die sold. We
will depend upon our ability to structure, negotiate and enforce agreements for the determination and payment of royalties, as well as
upon our licensees’ compliance with their agreements. We face risks inherent in a royalty-based business model, many of which are
outside of our control, such as the following:
·
the rate of adoption and incorporation of our technology by semiconductor designers and manufacturers and the manufacturers of semiconductor fabrication equipment;
·
customers’ willingness to agree to an ongoing royalty model, which may impact their wafer or chip costs and margins;
·
our licensee customers’ ability to successfully market MST-enabled products to their end customers;
·
the length of the design cycle and the ability to successfully integrate our MST technology into integrated circuits;
·
the demand for products incorporating semiconductors that use our licensed technology;
·
the cyclicality of supply and demand for products using our licensed technology;
·
the impact of economic downturns; and
·
the timing of receipt of royalty reports and the applicable revenue recognition criteria, which may result in fluctuation in our results of operations.
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We may need additional
financing to execute our business plan and fund operations, which additional financing may not be available on reasonable terms or at
all. As of December 31, 2021, we had total assets of approximately $36.1 million, cash and cash-equivalents of approximately
$28.7 million and working capital of approximately $26.3 million. We believe that we have sufficient capital to fund our current
business plans and obligations over, at least, the 12 months following the date of this Annual Report. However, even after installation
of MST in a customer’s fab under a manufacturing license, the full production qualification of a new technology like MST can take
more than an additional year, and we have limited ability to influence our customers’ testing and qualification processes. Accordingly,
we may require additional capital prior to obtaining a royalty-based license or prior to such a license generating sufficient royalty
income to cover our ongoing operating expenses. In the event we require additional capital over and above the amount of our presently
available working capital, we will endeavor to seek additional funds through various financing sources, including the sale of our equity
and debt securities, licensing fees for our technology and joint ventures with industry partners. In addition, we will consider alternatives
to our current business plan that may enable to us to achieve material revenue with a smaller amount of capital. However, there can be
no guarantees that such funds will be available on commercially reasonable terms, if at all. If such 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.
Our revenues may be
concentrated in a few customers and if we lose any of these customers, or these customers do not pay us, our revenues could be materially
adversely affected. If we are able to secure the adoption of our MST by one or more foundries, IDMs or fabless semiconductor
manufacturers, we expect that for at least the first few years substantially all of our revenue will be generated from license fees and
engineering services before customers commence royalty-bearing shipments. Due to the concentration and ongoing consolidation within the
semiconductor industry, we may also find that over the longer term our royalty-based revenues are dependent on a relatively few customers.
If we lose any of these customers, or these customers do not pay us, our revenues could be materially adversely affected.
If we are unable to
manage future expansion effectively, our business, operations and financial condition may suffer significantly, resulting in decreased
productivity. If our MST proves to be commercially valuable, it is likely that we will experience a rapid growth phase that could
place a significant strain on our managerial, administrative, technical, operational and financial resources. Our organization, procedures
and management may not be adequate to fully support the expansion of our operations or the efficient execution of our business strategy.
If we are unable to manage future expansion effectively, our business, operations and financial condition may suffer significantly, resulting
in decreased productivity.
It may be difficult
for us to verify royalty amounts owed to us under our licensing agreements, and this may cause us to lose revenues. We will
endeavor to provide that the terms of our license agreements require our licensees to document their use of our technology and report
related data to us on a regular basis. We will endeavor to provide that the terms of our license agreements give us the right to audit
books and records of our licensees to verify this information, however audits can be expensive, time consuming, and may not be cost justified
based on our understanding of our licensees’ businesses. We will endeavor to audit certain licensees to review the accuracy of the
information contained in their royalty reports in an effort to decrease the likelihood that we will not receive the royalty revenues to
which we are entitled under the terms of our license agreements, but we cannot give assurances that such audits will be effective to that
end.
Our business operations
could suffer in the event of information technology systems’ failures or security breaches . While we believe that we
have implemented adequate security measures within our internal information technology and networking systems, our information technology
systems may be subject to security breaches, damages from computer viruses, natural disasters, terrorism, and telecommunication failures.
Any system failure or security breach could cause interruptions in our operations, including but not limited to our technology computer-aided
design, or TCAD, modeling using Synopsys software, in addition to the possibility of losing proprietary information and trade secrets.
To the extent that any disruption or security breach results in inappropriate disclosure of our confidential information, our competitive
position may be adversely affected, and we may incur liability or additional costs to remedy the damages caused by these disruptions or
security breaches.
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If integrated
circuits incorporating our technologies are used in defective products, we may be subject to product liability or other claims. If
our MST technology is used in defective or malfunctioning products, we could be sued for damages, especially if the defect or malfunction
causes physical harm to people. While we will endeavor to carry product liability insurance, contractually limit our liability and obtain
indemnities from our customers, there can be no assurance that we will be able to obtain insurance at satisfactory rates or in adequate
amounts or that any insurance and customer indemnities will be adequate to defend against or satisfy any claims made against us. The costs
associated with legal proceedings are typically high, relatively unpredictable and not completely within our control. Even if we consider
any such claim to be without merit, significant contingencies may exist, similar to those summarized in the above risk factor concerning
intellectual property litigation, which could lead us to settle the claim rather than incur the cost of defense and the possibility of
an adverse judgment. Product liability claims in the future, regardless of their ultimate outcome, could have a material adverse effect
on our business, financial condition and reputation, and on our ability to attract and retain licensees and customers.
Risks Related to Intellectual Property
If we fail to protect
and enforce our intellectual property rights and our confidential information, our business will suffer. We rely primarily
on a combination of nondisclosure agreements and other contractual provisions and patent, trade secret and copyright laws to protect our
technology and intellectual property. If we fail to protect our technology and intellectual property, our licensees and others may seek
to use our technology and intellectual property without the payment of license fees and royalties, which could weaken our competitive
position, reduce our operating results and increase the likelihood of costly litigation. The growth of our business depends in large part
on our ability to secure intellectual property rights in a timely manner, our ability to convince third parties of the applicability of
our intellectual property rights to their products, and our ability to enforce our intellectual property rights. In certain instances,
we attempt to obtain patent protection for portions of our technology, and our license agreements typically include both issued patents
and pending patent applications as well as our proprietary know-how. If we fail to obtain patents in a timely manner or if the patents
issued to us do not cover all of the inventions disclosed in our patent applications, others could use portions of our technology and
intellectual property without the payment of license fees and royalties.
We also rely on trade secret
laws rather than patent laws to protect other portions of our proprietary technology. However, trade secrets can be difficult to protect.
The misappropriation of our trade secrets or other proprietary information could seriously harm our business. We protect our proprietary
technology and processes, in part, through confidentiality agreements with our employees, consultants, suppliers and customers. We cannot
be certain that these contracts have not been and will not be breached, that we will be able to timely detect unauthorized use or transfer
of our technology and intellectual property, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise
become known or be independently discovered by competitors. If we fail to use these mechanisms to protect our technology and intellectual
property, or if a court fails to enforce our intellectual property rights, our business will suffer. We cannot be certain that these protection
mechanisms can be successfully asserted in the future or will not be invalidated or challenged.
Further, the laws and enforcement
regimes of certain countries do not protect our technology and intellectual property to the same extent as do the laws and enforcement
regimes of the U.S. In certain jurisdictions, we may be unable to protect our technology and intellectual property adequately against
unauthorized use, which could adversely affect our business.
A court invalidation
or limitation of our key patents could significantly harm our business . Our patent portfolio contains some patents that are particularly
significant to our MST technology. If any of these key patents are invalidated, or if a court limits the scope of the claims in any of
these key patents, the likelihood that companies will take new licenses and that any current licensees will continue to agree to pay under
their existing licenses could be significantly reduced. The resulting loss in license fees and royalties could significantly harm our
business. Moreover, our stock price may fluctuate based on developments in the course of ongoing litigation.
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We may become involved
in material legal proceedings in the future to enforce or protect our intellectual property rights, which could harm our business. From
time to time, we may identify products that we believe infringe our patents. In that event, we expect to initially seek to license the
manufacturer of the infringing products, however if the manufacturer is unwilling to enter into a license agreement, we may have to initiate
litigation to enforce our patent rights against those products. Litigation stemming from such disputes could harm our ability to gain
new customers, who may postpone licensing decisions pending the outcome of the litigation or who may, as a result of such litigation,
choose not to adopt our technologies. Such litigation may also harm our relationships with existing licensees, who may, because of such
litigation, cease making royalty or other payments to us or challenge the validity and enforceability of our patents or the scope of our
license agreements.
In addition, the costs associated
with legal proceedings are typically high, relatively unpredictable and not completely within our control. These costs may be materially
higher than expected, which could adversely impair our working capital, affect our operating results and lead to volatility in the price
of our common stock. Whether or not determined in our favor or ultimately settled, litigation would divert our managerial, technical,
legal and financial resources from our business operations. Furthermore, an adverse decision in any of these legal actions could result
in a loss of our proprietary rights, subject us to significant liabilities, require us to seek licenses from others, limit the value of
our licensed technology or otherwise negatively impact our stock price or our business and financial position, results of operations and
cash flows.
Even if we prevail in our
legal actions, significant contingencies may exist to their settlement and final resolution, including the scope of the liability of each
party, our ability to enforce judgments against the parties, the ability and willingness of the parties to make any payments owed or agreed
upon and the dismissal of the legal action by the relevant court, none of which are completely within our control. Parties that may be
obligated to pay us royalties could be insolvent or decide to alter their business activities or corporate structure, which could affect
our ability to collect royalties from such parties.
Our technologies may
infringe on the intellectual property rights of others, which could lead to costly disputes or disruptions . The semiconductor
industry is characterized by frequent allegations of intellectual property infringement. Any allegation of infringement could be time
consuming and expensive to defend or resolve, result in substantial diversion of management resources, cause suspension of operations
or force us to enter into royalty, license, or other agreements rather than dispute the merits of such allegation. Furthermore, third
parties making such claims may be able to obtain injunctive or other equitable relief that could block our ability to further develop
or commercialize some or all of our technologies, and the ability of our customers to develop or commercialize their products incorporating
our technologies, in the U.S. and abroad. If patent holders or other holders of intellectual property initiate legal proceedings, we
may be forced into protracted and costly litigation. We may not be successful in defending such litigation and may not be able to procure
any required royalty or license agreements on acceptable terms or at all.
Risks Related to Owning Our Common Stock
The market price of
our shares may be subject to fluctuation and volatility. You could lose all or part of your investment . The market price of our
common stock is subject to wide fluctuations in response to various factors, some of which are beyond our control. Between January 1,
2021 and February 9, 2022, the reported high and low sales prices of our common stock have ranged from $11.32 to $47.13. The market price
of our shares on the NASDAQ Capital Market may fluctuate as a result of a number of factors, some of which are beyond our control, including,
but not limited to:
·
actual or anticipated variations in our results of operations and financial condition;
·
market acceptance of our MST technology;
·
success or failure of our research and development projects;
·
announcements of technological innovations by us;
·
failure by us to achieve a publicly announced milestone;
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·
failure by us to meet expectations of investors, some of which may not be within our control or related to our public announcements;
·
delays between our expenditures to develop and market new or enhanced technological innovations and the generation of licensing revenue from those innovations;
·
developments concerning intellectual property rights, including our involvement in litigation brought by or against us;
·
changes in the amounts that we spend to develop, acquire or license new technologies or businesses;
·
our sale or proposed sale, or the sale by our significant stockholders, of our shares or other securities in the future;
·
changes in our key personnel;
·
changes in earnings estimates or recommendations by securities analysts, if we continue to be covered by analysts;
·
the trading volume of our shares; and
·
general economic and market conditions and other factors, including factors unrelated to our operating performance.
These factors and any corresponding
price fluctuations may materially and adversely affect the market price of our shares and result in substantial losses being incurred
by our investors. In the past, following periods of market volatility, public company stockholders have often instituted securities class
action litigation. If we were involved in securities litigation, it could impose a substantial cost upon us and divert the resources and
attention of our management from our business.
We have not paid dividends
in the past and have no immediate plans to pay dividends. We plan to reinvest all of our earnings, to the extent we have earnings,
to cover operating costs and otherwise become and remain competitive. We do not plan to pay any cash dividends with respect to our securities
in the foreseeable future. We cannot assure you that we would, at any time, generate sufficient surplus cash that would be available for
distribution to the holders of our common stock as a dividend. Therefore, you should not expect to receive cash dividends on our common
stock.
We expect to continue
to incur significant increased costs as a result of being a public company that reports to the Securities and Exchange Commission and
our management will be required to devote substantial time to meet compliance obligations . As a public company reporting to the
Securities and Exchange Commission, we incur significant legal, accounting and other expenses that we did not incur as a private company.
We are subject to reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented
by the Securities and Exchange Commission that impose significant requirements on public companies, including requiring establishment
and maintenance of effective disclosure and financial controls and changes in corporate governance practices. In addition, on July 21,
2010, the Dodd-Frank Wall Street Reform and Protection Act was enacted. There are significant corporate governance and executive compensation-related
provisions in the Dodd-Frank Act that increased our legal and financial compliance costs, make some activities more difficult, time-consuming
or costly and may also place undue strain on our personnel, systems and resources. Our management and other personnel devote a substantial
amount of time to these compliance initiatives.
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Our charter documents
and Delaware law may inhibit a takeover that stockholders consider favorable . Provisions of our certificate of incorporation
and bylaws and applicable provisions of Delaware law may delay or discourage transactions involving an actual or potential change in control
or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions
that our stockholders might otherwise deem to be in their best interests. The provisions in our certificate of incorporation and bylaws:
·
limit who may call stockholder meetings;
·
do not permit stockholders to act by written consent;
·
allow us to issue blank check preferred stock without stockholder approval;
·
do not provide for cumulative voting rights; and
·
provide that all vacancies may be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum.
In addition, Section 203 of
the Delaware General Corporation Law may limit our ability to engage in any business combination with a person who beneficially owns 15%
or more of our outstanding voting stock unless certain conditions are satisfied. This restriction lasts for a period of three years following
the share acquisition. These provisions may have the effect of entrenching our management team and may deprive you of the opportunity
to sell your shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a control premium could
reduce the price of our common stock.
Our bylaws designate
the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain litigation that may be initiated by our stockholders,
which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with the Company . Our
bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware
shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim
of breach of fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting
a claim against us or any our directors, officers or other employees arising pursuant to any provision of the Delaware General Corporation
Law or our certificate of incorporation or bylaws, or (iv) any action asserting a claim against us or any our directors, officers or other
employees governed by the internal affairs doctrine. This forum selection provision in our bylaws may limit our stockholders’ ability
to obtain a favorable judicial forum for disputes with us or any our directors, officers or other employees.
Our board of directors
may issue blank check preferred stock, which may affect the voting rights of our holders and could deter or delay an attempt to obtain
control of us. Our board of directors is authorized, without stockholder approval, to issue preferred stock in series and to fix
and state the voting rights and powers, designation, preferences and relative, participating, optional or other special rights of the
shares of each such series and the qualifications, limitations and restrictions thereof. Preferred stock may rank prior to our common
stock with respect to dividends rights, liquidation preferences, or both, and may have full or limited voting rights. If issued, such
preferred stock would increase the number of outstanding shares of our capital stock, adversely affect the voting power of holders of
our common stock and could have the effect of deterring or delaying an attempt to obtain control of us.
Item 1B.
Unresolved Staff Comments
None.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.