What changed in this filing

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Item 1. Legal Proceedings

2023-05-11 compared with 2022-11-10 · 76 added, 61 removed, 612 unchanged (18% of the section changed)

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General economic factors

the COVID-19 pandemic and responsive measures;

worldwide economic downturns and related uncertainties;

general macroeconomic conditions, including inflationary pressures and rising interest rates, uncertainty in the global banking and financial services market, potential federal debt default, any future resurgence in the COVID-19 pandemic and responsive measures and the war between Russia and Ukraine.

Operational factors

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the inability of our customers to obtain credit or material increases in interest rates;

adverse developments affecting financial institutions, including bank failures;

recalls of our products;

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Risks Relating to our Business

The effects of the COVID-19 pandemic have disrupted, and may continue to significantly disrupt, our operations, including our ability to manufacture and supply products and perform research and development activities, our customers’

usage of our products as demand declines in elective surgeries in response to COVID-19, all of which have had and expected to continue to have a material and adverse effect on our business, future revenues and financial condition.

We are unable to predict the extent to which the pandemic and related impacts will continue to adversely impact our business operations, financial performance, results of operations, financial position and the achievement of our strategic objectives.

Our business, results of operation and financial performance have been negatively impacted by the COVID-19 pandemic and related public health responses, such as social distancing protocols, and travel restrictions in countries and regions in which we have

operations or manufacturing partners.

The current macroeconomic conditions, including the effects of the COVID-19 pandemic and efforts to mitigate its impact have disrupted, and may continue to disrupt, our operations, including our ability to manufacture and supply products and perform research and development activities, and our customers’

usage of our products as demand declined in elective surgeries in response to the COVID-19 pandemic, all of which have had and may continue to have a material and adverse effect on our business, future revenues and financial condition.

We are unable to predict the extent to which any future resurgence of the COVID-19 pandemic and related macroeconomic impacts may continue to adversely impact our business operations, financial performance, results of operations, financial position and the achievement of our strategic objectives .

Our business, results of operation and financial performance were negatively impacted by the COVID-19 pandemic and related public health responses, such as travel restrictions in countries and regions in which we have operations or manufacturing partners.

Due to these impacts and measures, we have experienced and may continue to experience significant and unpredictable interruptions in the supply of raw materials, components and sub-assemblies necessary to manufacture and assemble our products and reductions in the demand for our products as healthcare customers continue to divert medical resources and priorities towards the treatment of COVID-19.

In addition, our customers may delay, cancel or redirect planned capital expenditures in order to focus resources on COVID-19 or in response to economic disruption related to COVID-19.

In addition, our customers may delay, cancel or redirect planned capital expenditures in order to focus resources on any future resurgence of COVID-19 or in response to macroeconomic disruption related to any future resurgence of the COVID-19 pandemic.

For example, during the fiscal year ended January 2, 2021, we experienced significant decline in treatment and procedure volume worldwide, as healthcare systems diverted resources to meet the increasing demands of managing COVID-19.

In the near term, we expect COVID-19 will continue to negatively impact the use of our products and the number of ophthalmic treatments and procedures performed.

In the near term COVID-19 pandemic may continue to negatively impact the use of our products and the number of ophthalmic treatments and procedures performed.

If the volume of elective procedures continues to remain lower than normal, our results of operations and financial condition will continue to be adversely affected.

As a result of the COVID-19 outbreak around the world, we have adopted several measures including allowing employees to work from home and slowing our manufacturing operations.

The COVID-19 pandemic has caused disruption and delays in our ability to operate and manufacture, test and assemble products in our internal facilities, particularly in our Mountain View, California facility, and has limited our ability to continue certain research and development activities which could materially and adversely affect our ability to develop new products and technologies on the timelines we previously anticipated.

The COVID-19 pandemic has created economic uncertainty and volatility in the financial markets around the world, resulting in an economic downturn that has affected and will likely continue to affect demand for our products and impact our results of operations.

In April 2023, President Biden signed legislation that will end the COVID-19 national emergency on May 11, 2023.

The full impact of this termination of the national emergency and the wind-down of the public health emergency on FDA and other regulatory policies and operations are unclear.

The volatile macroeconomic environment, including the COVID-19 pandemic has created economic uncertainty and volatility in the financial markets around the world, resulting in an economic downturn that has affected and may likely continue to affect demand for our products and impact our results of operations.

In addition, the failure of the U.S.

federal government to manage its fiscal matters or to raise the debt ceiling, may result in a default on U.S.

Such a default may further negatively impact the economic environment, cause a drop in the stock market and our stock price, and curtail spending on health and health care related matters and adversely impact our results of operations as a result.

As a result, this may lead to a period of regional, national, and global economic slowdown or regional, national, or global recessions that would curtail or delay spending by hospitals and affect demand for our products as well as increase the risk of customer defaults or delays in payments.

Our customers may terminate or amend their agreements for the purchase, lease, or service of our products due to bankruptcy, lack of liquidity, lack of funding, operational failures, or other reason.

The ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control, including, but not limited, to:

The ultimate impact of the volatile macroeconomic conditions, including the COVID-19 pandemic, on our operations and financial performance depends on many factors that are not within our control, including, but not limited, to:

the recommendations by medical authorities on whether hospitals should and may perform elective surgical procedures;

hospitals abilities and willingness to devote resources to elective surgical procedures;

hospitals’

abilities and willingness to devote resources to elective surgical procedures;

governmental, business and individuals’

actions that have been and continue to be taken in response to the pandemic (including restrictions on travel and transport and workforce pressures);

the impact of the pandemic and actions taken in response on global and regional economies, travel, and economic activity;

actions that have been and may continue to be taken in response to any future resurgence of the COVID-19 pandemic (including restrictions on travel and transport and workforce pressures);

the impact of the COVID-19 pandemic and actions taken in response on global and regional economies, travel, and economic activity;

the availability of federal, state, local or non-U.S.

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global economic conditions and levels of economic growth;

and the pace of recovery when the COVID-19 pandemic subsides.

Although the magnitude of the impact of COVID-19 on our business operations remains uncertain and difficult to predict, and this remains a highly dynamic situation, we have experienced and will continue to experience in subsequent periods, disruptions to our business that will likely continue to adversely impact our business, financial condition and results of operations.

and the pace of recovery when the current volatile macroeconomic conditions, including the impact of the COVID-19 pandemic, subside.

Although the magnitude of the impact of the COVID-19 pandemic on our business operations remains a highly dynamic situation, we have experienced and may continue to experience in subsequent periods, disruptions to our business that may adversely impact our business, financial condition and results of operations.

We may not be successful in our strategic partnership with Topcon and the relationship may divert resources away from existing operations or expose us to liabilities, which could adversely affect our business, results of operations and financial condition.

On March 2, 2021, we entered into a series of strategic transactions with Topcon, Topcon America Corporation (the “Investor”) and Topcon Medical Laser Systems, Inc., a subsidiary of Topcon (“TMLS”), which included an asset purchase agreement with TMLS, pursuant to which we acquired substantially all the assets (except for cash and cash equivalents) of TMLS, including rights to the PASCAL product (the “Asset Purchase Agreement”), (ii) Topcon and our company entered into a distribution agreement dated March 2, 2021, pursuant to which we granted Topcon the exclusive right to distribute our retina and glaucoma products in certain geographies outside the United States (the “Distribution Agreement”), (iii) pursuant to an investment agreement dated March 2, 2021 (the “Investment Agreement”) the Investor acquired 1,618,122 shares of the our Common Stock for an aggregate purchase price of $10 million (the “Shares”).

Pursuant to the Asset Purchase Agreement, the transferred assets include substantially all of TMLS' assets including the rights to the PASCAL product (the “Transferred Assets”).

On March 2, 2021, we entered into a series of strategic transactions with Topcon, Topcon America Corporation (the “Investor”) and Topcon Medical Laser Systems, Inc., a subsidiary of Topcon (“TMLS”), which included (i) an asset purchase agreement with TMLS, pursuant to which we acquired substantially all the assets (except for cash and cash equivalents) of TMLS, including rights to the PASCAL product (the “Asset Purchase Agreement”), (ii) a distribution agreement dated March 2, 2021, pursuant to which we granted Topcon the exclusive right to distribute our retina and glaucoma products in certain geographies outside the United States (the “Distribution Agreement”), and (iii) an investment agreement dated March 2, 2021 (the “Investment Agreement”), pursuant to which we sold the Investor 1,618,122 shares of our common stock for an aggregate purchase price of $10 million (the “Shares”).

Pursuant to the Asset Purchase Agreement, the transferred assets include substantially all of TMLS’

assets including the rights to the PASCAL product (the “Transferred Assets”).

We assumed only those liabilities arising after the closing in connection with the Transferred Assets.

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The Distribution Agreement and Topcon’s appointment will, unless terminated earlier, continue on a country-by-country basis for a period of ten (10) years from the date exclusivity is granted.

The Distribution Agreement includes customary termination rights and effects of termination, including a termination for convenience right in favor of Topcon and, subject to payment of a fee, a termination right in our favor upon a change of control of our company.

As a result of the Distribution Agreement, we terminated our relationships with our prior distributors in certain geographies and we are using Topcon as our exclusive distributor.

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These efforts may not result in the anticipated additional products, efficiencies or revenues for our company, which could adversely affect our business, operating results and financial condition as a result.

We face quality control and other production issues that could materially and adversely impact our sales and financial results and the acceptance of our products.

We may face quality control and other production issues that could materially and adversely impact our sales and financial results and the acceptance of our products.

The manufacture of our infrared and visible laser consoles and related delivery devices is a highly complex and precise process.

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If our sales increase substantially, we may need to increase our production capacity and may not be able to do so in a timely, effective or cost-efficient manner.

We may not be able to manufacture sufficient quantities of our products, which may require that we qualify other manufacturers for our products.

We may not be able (ourselves or through third parties) to manufacture or supply sufficient quantities of our products, which may require that we qualify other manufacturers for our products.

Furthermore, we may experience delays, disruptions, capacity constraints or quality control problems in our manufacturing operations.

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Currently our direct and independent sales forces within the United States consist of approximately 25 employees and two independent representatives, respectively, and our direct sales force in Germany consists of one employee.

Our international independent distributors are managed by a team of five people.

Our international independent distributors are managed by a team of eight people.

We generally grant our distributors exclusive territories for the sale of our products in specified countries and regions.

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Any loss of the members of our existing direct or indirect sales organizations, or any failure to execute on our plans to further develop our sales function, could have an adverse impact on our business, results of operations and financial condition.

Additionally, our sales forces’

operations have been disrupted by the COVID-19 pandemic, as travel is restricted and some services are being performed from home, all of which could have an impact on our ability to sell and distribute our products.

Growth in our sales and marketing organization may increase costs and create operational challenges without immediately offsetting benefits.

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We derive, and expect to continue to derive, a large portion of our revenues from international sales.

For the third fiscal quarter of fiscal year 2022, our international sales were $7.2 million, or 49.3% of total revenues.

For the first fiscal quarter of fiscal year 2023, our international sales were $6.9 million, or 50.6% of total revenues.

We anticipate that international sales will continue to account for a significant portion of our revenues in the foreseeable future.

All of our international revenues and costs for the third fiscal quarter of fiscal year 2022 have been denominated in U.S.

All of our international revenues and costs for the first fiscal quarter of 2023 have been denominated in U.S.

dollars except for sales transacted through our German subsidiary.

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Our international operations and sales are subject to a number of risks and potential costs, including:

the impact of the COVID-19 pandemic on the global economy and financial markets;

macroeconomic conditions, including the impact of any future resurgence of the COVID-19 pandemic on the global economy and financial markets;

fluctuations in foreign currency exchange rates;

uncertainty in the global banking and financial services market;

product and production issues;

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Due to the complexities and uncertainties associated with ophthalmic research and development, products we are currently developing may not complete the development process or obtain the regulatory approvals required to market such products successfully.

In addition, our research and development process has been delayed due to the impact of COVID-19, and should COVID-19 economic restrictions worsen, it could delay and disrupt our research and development processes even further.

In addition, our research and development process was delayed due to the impact of the COVID-19 pandemic, and should the current macroeconomic conditions worsen, it could delay and disrupt our research and development processes even further.

Successful commercialization of new products and new applications will require that we effectively transfer production processes from research and development to manufacturing and effectively coordinate with our suppliers.

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We are exposed to risks associated with worldwide economic slowdowns and related uncertainties.

We are subject to macro-economic fluctuations in the U.S.

We are subject to macroeconomic fluctuations in the U.S.

and worldwide economy including inflationary pressures that may cause the cost of manufacturing our products or servicing our products to increase.

Concerns about consumer and investor confidence, volatile corporate profits and reduced capital spending, international conflicts, terrorist and military activity, civil unrest and

pandemic-related illness could reduce customer orders or cause customer order cancellations.

For example, the COVID-19 pandemic has and may continue to cause adverse impacts on global economic activity which could negatively impact our business.

Concerns about consumer and investor confidence, volatile corporate profits and reduced capital spending, uncertainty in the global banking and financial services market, international conflicts, terrorist and military activity, civil unrest and pandemic-related illness could reduce customer orders or cause customer order cancellations.

For example, any future resurgence of the COVID-19 pandemic may cause adverse impacts on global economic activity which could negatively impact our business.

In addition, political and social turmoil related to international conflicts, such as that occurring in Russia and Ukraine, and terrorist acts may put further pressure on economic conditions in the United States and abroad.

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There could be a number of follow-on effects from economic uncertainty on our business, including insolvency of key suppliers resulting in product delays, delays in customer payments of outstanding accounts receivable and/or customer insolvencies, counterparty failures negatively impacting our operations, and increasing expense or inability to obtain future financing.

Further, there is ongoing uncertainty regarding the federal budget and federal spending levels, including the possible impacts of a failure to increase the “debt ceiling.”

government default on its debt could have broad macroeconomic effects including a drop in the stock market and our stock price.

In addition, negative macroeconomic conditions in the United States (including elevated interest rates) have had, and may continue to have, an adverse impact on capital market conditions, which could limit our ability to obtain additional debt or equity financing on acceptable terms or at all.

If economic uncertainty persisted, or if the economy entered a prolonged period of decelerating growth, our results of operations may be harmed.

We maintain cash deposits in excess of federally insured limits.

Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance.

We maintain cash deposits in financial institutions that may be higher than the $250,000 limit insured by the FDIC or similar agencies.

Bank failures, events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints.

For example, on March 10, 2023, SVB failed and was taken into receivership by the FDIC.

The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, could adversely impact our liquidity and financial performance.

There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S.

or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions, or by acquisition in the event of a failure or liquidity crisis.

Our operating results may fluctuate from quarter to quarter and year to year.

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Factors contributing to these fluctuations include the following:

general economic uncertainties, inflationary pressures and political concerns, including the impact of COVID-19 and the war between Russia and Ukraine;

general macroeconomic conditions, including inflationary pressures and rising interest rates, uncertainty in the global banking and financial services market, potential federal debt default, any future resurgence of the COVID-19 pandemic and responsive measures and the war between Russia and Ukraine;

changes in the prices at which we can sell our products, including the impact of changes in exchange rates;

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We believe that continued and increased sales, if any, of these medical laser systems is dependent upon a number of factors including the following:

the impact of COVID-19 pandemic on timing of ophthalmic treatment procedures;

the impact of any future resurgence of the COVID-19 pandemic on timing of ophthalmic treatment procedures;

acceptance of product performance, features, ease of use, scalability and durability, including with respect to our MicroPulse laser photocoagulation systems, and our PASCAL product;

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enhanced product performance and clinical outcomes, ease of use, durability, versatility, customer training services and rapid repair of equipment.

Our principal ophthalmic laser competitors are Alcon, Inc., Novartis AG, Bausch Health Companies Inc., Carl Zeiss Meditec AG, Ellex Medical Lasers, Ltd., Lumenis Ltd., Nidek Co.

Ltd., Quantel Medical SA, OD-OS GmbH and A.R.C.

Our principal ophthalmic laser competitors are Alcon Inc., Novartis AG, Bausch Health Companies Inc., Carl Zeiss Meditec AG, Lumenis Ltd., Nidek Co.

Ltd., Lumibird, and Norlase.

We also compete with alternative glaucoma surgical device companies such as Alcon, Inc., Allergan, Inc., Glaukos Corporation, New World Medical, Inc.

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Pharmaceuticals represent alternative treatments to our laser procedures.

Some of our principal pharmaceutical competitors are Alcon, Inc., Allergan, Inc., Astellas Pharma Inc., Pfizer Inc., Regeneron Pharmaceuticals, Inc., Roche Holdings Ltd.

Some of our principal pharmaceutical competitors are Alcon, Inc., Allergan, Inc., Astellas Pharma Inc., Pfizer Inc., Regeneron Pharmaceuticals, Inc., Roche Holding Ltd.

(Genentech) and Bausch Health Companies Inc.

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We periodically evaluate the performance and strategic fit of our businesses and may sell businesses or product lines.

Divestitures involve risks, including difficulties in the separation of operations, services, products and personnel, the diversion of management's attention from other business concerns, the disruption of our business, the potential loss of key employees and the retention of uncertain environmental or other contingent liabilities related to the divested business.

Divestitures involve risks, including difficulties in the separation of operations, services, products and personnel, the diversion of management’s attention from other business concerns, the disruption of our business, the potential loss of key employees and the retention of uncertain environmental or other contingent liabilities related to the divested business.

In addition, divestitures may result in significant asset impairment charges, including those related to goodwill and other intangible assets, and the loss of revenue which could have a material adverse effect on our financial condition and results of operations.

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We can provide no assurance that such capital will be available or available on terms that are acceptable to us.

We cannot assure you that we will be successful in managing these or any other

significant risks that we encounter in divesting a business or product line, and any divestiture we undertake could materially and adversely affect our business, financial condition, results of operations and cash flows, and may also result in a diversion of management attention, operational difficulties and losses.

We cannot assure you that we will be successful in managing these or any other significant risks that we encounter in divesting a business or product line, and any divestiture we undertake could materially and adversely affect our business, financial condition, results of operations and cash flows, and may also result in a diversion of management attention, operational difficulties and losses.

Our operating results may be adversely affected by uncertainty regarding healthcare reform measures and changes in third-party coverage and reimbursement policies.

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Furthermore, existing legislation and regulation related to the health care industry and third-party coverage reimbursement, including the Affordable Care Act, has been subject to judicial challenge, and may be subject to similar challenges from time to time in the future (such as the California v.

In June 2021, the U.S.

Supreme Court held that Texas and other challengers had no legal standing to challenge the Affordable Care Act, dismissing the case on procedural grounds without specifically ruling on the constitutionality of the Affordable Care Act.

Denial of coverage and reimbursement of our products, or the revocation or changes to coverage and reimbursement policies, could have a material adverse effect on our business, results of operations and financial condition.

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Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results.

The risk of our being found in violation of these laws is increased by the fact that their provisions are open to a variety of evolving interpretations and

enforcement discretion.

The risk of our being found in violation of these laws is increased by the fact that their provisions are open to a variety of evolving interpretations and enforcement discretion.

Compliance with Open Payments, commonly known as the Sunshine Act, has presented a number of challenges to companies such as ours, in terms of interpretation of the law and its implementation.

Under the Sunshine Act, Centers for Medicare & Medicaid Services (“CMS”) has the potential to impose penalties of up to $1.15 million per year for violations, depending on the circumstances, although enforcement has been negligible to date.

Under the Sunshine Act, Centers for Medicare & Medicaid Services (“CMS”) has the potential to impose penalties of up to $1.26 million per year for violations, depending on the circumstances and adjusted annually for inflation, although enforcement has been negligible to date.

Payments reported under the Sunshine Act also have the potential to draw scrutiny on payments to and relationships with physicians, which may have implications under the Anti-Kickback Statute and other healthcare laws.

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We file patent applications to protect technology, inventions and improvements that are significant to the development of our business.

As of October 1, 2022, our patent portfolio includes 62 active United States patents and 96 active international patents on the technologies related to our products and processes.

In addition, as of October 1, 2022, we have 12 patent applications pending in the United States and 24 international patent applications pending.

As of April 1, 2023, our patent portfolio includes 63 active United States patents and 83 active international patents on the technologies related to our products and processes.

In addition, as of April 1, 2023, we have 11 patent applications pending in the United States and 22 international patent applications pending.

Our patent applications may not be approved.

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Competition for these individuals is intense, and we may not be able to attract, assimilate or retain highly qualified personnel.

Competition for qualified personnel in our industry and the San Francisco Bay Area, as well as other geographic markets in which we recruit, is intense and characterized by increasing salaries, which may increase our operating expenses or hinder our ability to recruit qualified candidates.

Competition for qualified personnel in our industry and the San Francisco Bay Area, as well as other geographic markets in which we recruit, is highly competitive and characterized by increasing salaries, which may increase our operating expenses or hinder our ability to recruit qualified candidates.

In addition, the integration of replacement personnel could be time consuming, may cause additional disruptions to our operations, and may be unsuccessful.

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There are risks associated with the use of independent manufacturers, including the following:

the impact of COVID-19 on global supply chains and market stability;

the impact of macroeconomic conditions, including any future resurgence of the COVID-19 pandemic and inflationary pressures on global supply chains and market stability;

unavailability of shortages or limitations on the ability to obtain supplies of components and products in the quantities that we require, or that satisfy the environmental requirements to which we are subject;

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Our information technology systems and those of our third-party service providers are potentially vulnerable to disruption, breakdown, damage, service interruption, system malfunction, power outage, natural disaster, malicious intrusion, ransomware, denial-of-service attacks, phishing attacks, social engineering, computer viruses, security breaches and other cyber-attacks.

For example, companies have experienced an increase in phishing and spoofing attacks from third parties in connection with working remotely due to the COVID-19 pandemic.

For example, companies have experienced an increase in phishing and spoofing attacks from third parties in connection with working remotely, either permanently or temporarily, due to the COVID-19 pandemic or due to political uncertainty and military actions associated with the significant military action against Ukraine launched by Russia.

If we were to experience a prolonged system disruption in our information technology systems, it could negatively impact the coordination of our sales, planning and manufacturing activities, which could adversely affect our business.

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At the same time, relationships with these individuals and entities are the subject of heightened scrutiny and may present the potential for healthcare compliance risks.

We market our products to numerous health care providers, including physicians, hospitals, ambulatory surgery centers, government affiliated groups and group purchasing organizations.

We market our products to numerous health care providers, including physicians, hospitals, ambulatory surgical centers, government affiliated groups and group purchasing organizations.

We have developed and strive to maintain close relationships with members of each of these groups who assist in product research and development and advise us on how to satisfy the full range of surgeon and patient needs.

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through the 510(k) premarket notification process, or “approval”

through the lengthier premarket approval application (“PMA”) process.

through the lengthier premarket approval application (“PMA”) process or other processes such as the “de novo”

Not all devices are eligible for the 510(k) clearance process.

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Similarly, Switzerland has changed its relationship with the EU and in May 2022, will require medical device manufacturers, including us, to contract with a Swiss Authorized Representative.

Additionally, the new revision 4 of the clinical evaluation report guidance document (MEDDEV 2.7.1) severely restricts the use of substantial equivalence for new products, resulting in the need for formal clinical trial data for many products.

These changes will increase the cost for compliance and for product development, and they lengthen product introduction cycles.

Failure to comply with these changes can have an adverse effect on our ability to release new products in a timely manner.

Additionally, the new revision 4 of the clinical evaluation report guidance document (MEDDEV 2.7.1) and the Medical Device Coordination Group (MDCG) guidance regarding clinical evidence (MDCG 2020-6) severely restricts the use of substantial equivalence for new products, resulting in the need for formal clinical trial data for many products.

These and future changes will increase the cost for compliance and for product development, and they lengthen product introduction cycles.

Failure to comply with these changes and any future changes can have an adverse effect on our ability to release new products in a timely manner.

Any clinical trials necessary that we may undertake for regulatory approval or marketing reasons will be an expensive, lengthy, costly, and uncertain process, and could result in delays in new product introductions or even an inability to release a product.

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A recall would harm our reputation and adversely affect our operating results.

The FDA and similar governmental authorities in other countries in which we market and sell our products have the authority to require the recall of our products in the event of material deficiencies or defects in the design or manufacture of our products, or in other cases we may determine that we will recall a product because we have determined that the product is violative, in order to avoid further enforcement action and protect the public health.

other cases we may determine that we will recall a product because we have determined that the product is violative, in order to avoid further enforcement action and protect the public health.

A government mandated recall, or a voluntary recall by us, could occur as a result of actual or potential component failures, adverse event reports, manufacturing errors or design defects, including defects in labeling.

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Furthermore, changes in United States trade policy have resulted and could result in additional reactions from United States trading partners and other countries, including adopting responsive trade policies that make it more difficult or costly for us to export our products to those countries.

We sell a significant majority of our products into countries outside the United States and we purchase a significant portion of equipment and supplies from suppliers outside the United States.

We sell a significant majority of our products into countries outside the United States and we purchase a significant portion of equipment

and supplies from suppliers outside the United States.

These measures could also result in increased costs for goods imported into the United States or may cause us to adjust our worldwide supply chain.

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Changes in U.S.

tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions.

tax laws could have a material adverse effect on our business, consolidated cash flow, results of operations or financial conditions.

The comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) was enacted in the United States on December 22, 2017 and includes, among other items, a reduction in the federal corporate income tax rate from 35% to 21%, certain interest expense deduction limitations and changes in the timing of certain taxable income.

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We may sell shares or other securities in any offering at a price per share that is less than the price per share paid by existing investors, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders.

The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by existing investors.

price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by existing investors.

If we fail to comply with environmental requirements, our business, financial condition, operating results and reputation could be adversely affected.

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The trading price of our common stock has been subject to wide fluctuations in response to a variety of factors, some of which are beyond our control, including changes in foreign currency exchange rates, quarterly variations in our operating results, announcements by us or our competitors of new products or of significant clinical achievements, changes in market valuations of other similar companies in our industry and general market conditions, including deteriorating market conditions due to investor concerns regarding inflation and hostilities between Russia and Ukraine.

During the third quarter of fiscal year 2022, the trading price of our common stock fluctuated from a low of $2.41 per share to a high of $3.41 per share.

During the first quarter of fiscal year 2023, the trading price of our common stock fluctuated from a low of $2.00 per share to a high of $2.46 per share.

There can be no assurance that our common stock trading price will not suffer declines.

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Ineffective disclosure controls and procedures or internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which could likely have a negative effect on the trading price of our common stock.

Implementing any appropriate changes to our internal controls may require specific compliance training of our directors, officers and employees, entail substantial costs in order to modify our existing accounting systems, and take a significant period of

time to complete.

Such changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and could materially impair our ability to operate our 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.

What changed 10-Q

Item 1. Legal Proceedings