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The outcome of such claims or other proceedings cannot be predicted with certainty and may have a material effect on our financial condition, results of operations or cash flows.
−Removed: Other than as described below, we were not a party to any material legal proceedings as of March 31, 2024 or as of the date of this report.
−Removed: We have initiated multiple legal proceedings in Europe in response to business practices of Tageos SAS (“Tageos”) that we allege to be anti-competitive, including the misappropriation of trade secrets and confidential information.
−Removed: A hearing at the regional court in Munich, Germany is currently scheduled for the middle of May 2024.
Ri sk Factors
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As a result, we may incur substantial costs and we may not be successful in any such litigation.
−Removed: For example, in April 2024, we initiated legal proceedings in Germany against Tageos for the alleged possession and misappropriation of our trade secrets and confidential information.
Despite our efforts to protect our proprietary rights, unauthorized third parties may copy aspects of our products, obtain and use information that we regard as proprietary, or infringe upon our patents.
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Risks Related to the Asset Sale
−Removed: The proposed Asset Sale is subject to a number of conditions beyond our control.
+Added: The pending Asset Sale is subject to a number of conditions beyond our control.
Failure to complete the Asset Sale could materially and adversely affect our future business, results of operations, financial condition and stock price .
−Removed: The closing of the Asset Sale is conditioned on the receipt of the required stockholder approval, as well as the satisfaction of other closing conditions, including receipt of regulatory approvals and performance in all material respects by each party of its obligations under the Purchase Agreement .
+Added: The closing of the Asset Sale is conditioned on the satisfaction of certain closing conditions, including receipt of regulatory approvals and performance in all material respects by each party of its obligations under the Purchase Agreement .
We cannot predict whether and when the conditions will be satisfied.
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we may be required to pay a termination fee of $5.075 million to Buyer if the Purchase Agreement is terminated under certain circumstances, the payment of which would negatively affect our financial results and liquidity;
−Removed: we have agreed to reimburse Buyer for certain expenses up to $3.0 million in the aggregate if the Purchase Agreement is terminated by Buyer or us for failure to obtain the required stockholder approval, the payment of which would negatively affect our financial results and liquidity;
activities related to the Asset Sale and related uncertainties may lead to a loss of revenue and market position unrelated to the Asset Sale that we may not be able to regain if the Asset Sale does not occur;
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Upon the termination of the Purchase Agreement to pursue an alternative transaction, including in connection with a Superior Proposal (as defined in the Purchase Agreement), we will be required to pay Buyer $5.075 million as a termination fee.
−Removed: These provisions could discourage a potential third-party acquirer from considering or proposing an acquisition transaction, even if it
−Removed: were prepared to pay a higher price than what would be received in the Asset Sale, or propose to acquire our entire company.
+Added: These provisions could discourage a potential third-party acquirer from considering or proposing an acquisition transaction, even if it were prepared to pay a higher price than what would be received in the Asset Sale, or propose to acquire our entire company.
These provisions might also result in a potential third-party acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable.
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Humphreys has entered into an offer letter with Buyer effective upon the closing of the Asset Sale, pursuant to which he will depart from his positions with the Company and become Deputy Chief Executive Officer of, and a member of the Executive Committee of, Vitaprotech .
−Removed: Upon the closing of the Asset Sale, RSUs relating to unvested shares held by our employees who are employed by the Physical Security Business and remain employed by the Company through the closing of the Asset Sale and, effective immediately following the Asset Sale, become employees of Buyer (or an affiliate of Buyer) will become vested at Closing, while RSUs held by our non-employee directors will remain outstanding and continue to vest according to their terms .
+Added: Upon the closing of the Asset Sale, RSUs relating to unvested shares held by our employees who are employed by the Physical Security Business and remain employed by the Company through the closing of the Asset Sale and, effective immediately following the Asset Sale, become employees of Buyer (or an affiliate of Buyer) will become vested at Closing, while RSUs held by our remaining employees and non-employee directors will continue to vest according to their terms .
We will incur significant expenses in connection with the Asset Sale, whether or not it is consummated.
We have and will continue to incur substantial expenses related to the Asset Sale, whether or not it is completed.
−Removed: We recorded transaction-related costs of approximately $1.4 million through March 31, 2024, and we will incur additional costs and expenses until completion of the Asset Sale.
+Added: We recorded transaction-related costs of approximately $3.0 million through June 30, 2024, and we will incur additional costs and expenses until completion of the Asset Sale.
In addition, we will incur additional financial advisory fees that are payable upon consummation of the Asset Sale.
We may also be required to pay $5.075 million to Buyer if we terminate the Purchase Agreement in certain circumstances.
−Removed: We have also agreed to reimburse Buyer for certain expenses up to $3.0 million in the aggregate in the event that the Purchase Agreement is terminated by Buyer or us for failure to obtain the required stockholder approval.
Payment of these expenses if the Asset Sale is not completed would adversely affect our operating results and financial condition, our plans on further investment into the IoT Business, and would likely adversely affect our stock price.
We cannot be sure if or when the Asset Sale will be completed.
−Removed: The consummation of the Asset Sale is subject to the satisfaction or waiver of various conditions, including :
−Removed: obtaining the required stockholder approval of the Asset Sale;
−Removed: the filings pursuant to the HSR Act, if any, having been made by each party and any applicable waiting period (and any extension thereof) under the HSR Act having expired or been terminated;
+Added: The consummation of the Asset Sale is subject to the satisfaction or waiver of various conditions which have yet to be satisfied, including :
the absence of any order that has the effect of enjoining or otherwise prohibiting the completion of the Asset Sale;
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obtaining clearance from CFIUS .
−Removed: obtaining approval under the NSI Act .
We cannot guarantee that the closing conditions set forth in the Purchase Agreement will be satisfied.
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These may include retaining and operating the Physical Security Business or pursuing an alternate sale transaction that would yield reduced consideration or involve significant delays.
−Removed: Any future sale of substantially all of the assets of the Company or other transactions may be subject to further stockholder approval .
−Removed: We may be subject to litigation related to the Asset Sale, which is expensive and could divert our attention.
+Added: Any future sale of substantially all of the assets of the Company or other transactions may be subject to stockholder approval .
+Added: We may be subject to litigation related to the Asset Sale, which is expensive and could divert our attention and resources.
We may be subject to litigation in connection with the Asset Sale.
Litigation against us could result in substantial costs and divert our management’s attention from closing the Asset Sale, which could harm our business and increase our expenses, which could decrease our net proceeds from the Asset Sale .
+Added: For example, in June 2024, two purported stockholders filed stockholder actions in the New York Supreme Court for the County of New York, alleging breach of fiduciary duty in connection with the board of directors’ agreement to sell the Physical Security Business to Buyer by allegedly omitting certain information from the Company’s definitive proxy statement with respect to the Asset Sale (the “Proxy Statement”), and seeking injunctive relief to enjoin the Asset Sale until the allegedly omitted information was disclosed.
+Added: The Company has not been served in either action.
+Added: While we believe that the disclosures set forth in the Proxy Statement comply fully with all applicable law and denies the allegations in the actions, this type of litigation could result in substantial costs, divert our management’s attention and resources, and could adversely affect our business, financial condition and results of operations.
Risks Related to the Company’s IoT Business if the Asset Sale is Completed
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Uncertainty regarding the use of proceeds from the Asset Sale and our future operations may negatively impact the value and liquidity of our common stock.
−Removed: We will receive $145.0 million in cash from Buyer, subject to customary adjustments pursuant to the terms of the Purchase Agreement.
+Added: Upon the closing of the Asset Sale, we will receive $145.0 million in cash from Buyer, subject to customary adjustments pursuant to the terms of the Purchase Agreement.
Our board of directors will have discretion regarding the use of proceeds from the Asset Sale and plans to use a portion of the net proceeds to pursue growth opportunities for the IoT Business.
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The amount of net proceeds that we receive from the Asset Sale is subject to decrease .
−Removed: We will receive aggregate cash consideration of $145.0 million subject to certain upward adjustments related to cash and cash equivalents and working capital and certain downward adjustments related to the working capital of the Physical Security Business, indebtedness, and selling expenses.
+Added: Upon the closing of the Asset Sale, we will receive aggregate cash consideration of $145.0 million subject to certain upward adjustments related to cash and cash equivalents and working capital and certain downward adjustments related to the working capital of the Physical Security Business, indebtedness, and selling expenses.
The amount of the working capital of the Physical Security Business at any given point in time is dependent upon a number of factors beyond our control.
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If the Asset Sale is completed, our business prospects may diminish and our stock price may decline.
−Removed: If the requisite stockholder vote to approve the Asset Sale is obtained and the Asset Sale closes, we will continue to operate our IoT Business despite the sale of assets that have historically generated a significant portion of our revenue.
+Added: If the Asset Sale closes, we will continue to operate our IoT Business despite the sale of assets that have historically generated a significant portion of our revenue.
For example, the Physical Security Business generated approximately 63% of the Company’s revenue for the fiscal year ended December 31, 2023.
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If we do not successfully implement and adapt to these changes, we may be unable to successfully execute our long-term business development plans for our IoT Business, which could adversely affect our financial condition and results of operations.
−Removed: Further, the future performance of our IoT Business will depend, in part, on the
−Removed: successful transition of our workforce to our new operating and organizational structure following the Asset Sale, and our inability to successfully manage these transitions could be viewed negatively by our customers, employees, investors and other third-party partners, and could have an adverse impact on our business and results of operations .
+Added: Further, the future performance of our IoT Business will depend, in part, on the successful transition of our workforce to our new operating and organizational structure following the Asset Sale, and our inability to
+Added: successfully manage these transitions could be viewed negatively by our customers, employees, investors and other third-party partners, and could have an adverse impact on our business and results of operations .
We will be subject to five-year non-competition and non-solicitation covenants under the Purchase Agreement, which will prevent us from reentering the Physical Security Business.
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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.