What changed in this filing

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Item 1. Legal Proceedings

2023-08-10 compared with 2023-05-11 · 37 added, 46 removed, 642 unchanged (11% of the section changed)

13 unchanged sentences

General economic factors

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.

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

Operational factors

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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 .

We are unable to predict the extent to which any future resurgence of the COVID-19 pandemic or other public health emergencies or outbreaks 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.

5 unchanged sentences

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.

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.

On May 11, 2023, the federal government ended the COVID-19 public health emergency, which ended a number of temporary changes made to federally funded programs while some continue to be in effect.

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 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 ultimate impact of the volatile macroeconomic conditions, including the COVID-19 pandemic and other public health emergencies or outbreaks, 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;

2 unchanged sentences

governmental, business and individuals’

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);

actions that have been and may continue to be taken in response to any future resurgence of the COVID-19 pandemic or other public health emergencies or outbreaks (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;

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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 (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.

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

Transferred Assets.

In the Asset Purchase Agreement, our company and TMLS made certain customary representations and warranties and agreed to certain customary covenants.

34 unchanged sentences

In addition, some of our products are combined with products from other vendors, which may contain defects.

As a result, should problems occur, it may be difficult to identify the source of the problem.

should problems occur, it may be difficult to identify the source of the problem.

If we are unable to identify and fix defects or other problems, we could experience, among other things:

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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.

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

We have increased and continue to increase our internal sales and marketing functions.

This growth may place a strain on our management, operating and financial systems and our sales, marketing, training and administrative resources.

As a result, our operating costs may escalate even faster than planned, and some of our internal systems may need to be enhanced or replaced.

For example, if we are unable to provide adequate training for our expanding sales force, our ability to fully utilize new sales and marketing resources may be adversely impacted, we could suffer reputational harm and our ability to maintain our installed base of customers may be negatively impacted.

If we cannot effectively manage our expanding operations and our costs, we may not be able to grow effectively or we may grow at a slower pace, and our business could be adversely affected.

It can take six months or longer before our internal sales representatives are fully trained and productive in selling our product to prospective clients.

This ramp up period presents a number of operational challenges as the cost of recruiting, hiring and carrying new sales representatives cannot be offset by the revenue such new sales representatives produce until after they complete their ramp up periods.

If we cannot reliably develop our sales representatives to a productive level, or if we lose productive representatives in whom we have heavily invested, our future growth rates and revenue may suffer.

We depend on international sales for a significant portion of our operating results.

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

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

For the second fiscal quarter of fiscal year 2023, our international sales were $6.1 million, or 47.6% 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 first fiscal quarter of 2023 have been denominated in U.S.

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

dollars except for sales transacted through our German subsidiary.

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Any failure in our ability to successfully develop and introduce new products or enhanced versions of existing products and achieve market acceptance of new products and new applications could have a material adverse effect on our operating results and would cause our net revenues to decline.

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

We continue to increase our internal sales and marketing functions.

This growth may place a strain on our management, operating and financial systems and our sales, marketing and administrative resources as well as increase operating costs.

For example, if we are unable to efficiently or effectively provide adequate training for our expanding sales force and marketing organization, we may not be able to immediately or fully utilize marketing resources, generate new sales and offset operational challenges such as the cost of recruiting and hiring sales and marketing personnel.

If we cannot effectively manage our expanding operations and our costs, our business may not be able to grow effectively or we may grow at a slower pace.

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

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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.

For example, any future resurgence of the COVID-19 pandemic or other public health emergencies 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.

1 unchanged sentence

Purchases of our products are often discretionary.

During uncertain economic times, customers or potential customers may delay, reduce or forego their purchases of our products and services, which may impact our business in a number of ways, including lower prices for our products and services and reducing or delaying sales.

During uncertain economic times, customers or potential customers may delay, reduce or forgo their purchases of our products and services, which may impact our business in a number of ways, including lower prices for our products and services and reducing or delaying sales.

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.

12 unchanged sentences

Factors contributing to these fluctuations include the following:

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;

general macroeconomic conditions, including inflationary pressures and rising interest rates, uncertainty in the global banking and financial services market, 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 foreign currency exchange rates;

introduction of new products, product enhancements and new applications by our competitors, including new drugs, entry of new competitors into our markets, pricing pressures and other competitive factors;

24 unchanged sentences

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

the impact of any future resurgence of the COVID-19 pandemic or other public health emergencies 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;

22 unchanged sentences

Some companies also have greater name recognition than us and long-standing customer relationships.

In addition, other medical device companies, academic and research institutions, or others, may develop new technologies or therapies, including medical devices, surgical procedures or pharmacological treatments and obtain regulatory approval for products utilizing such techniques that are more effective in treating the conditions targeted by us, or are less expensive than our current or future products.

In addition, other medical device companies, academic and research institutions, or others, may develop new technologies or

therapies, including medical devices, surgical procedures or pharmacological treatments and obtain regulatory approval for products utilizing such techniques that are more effective in treating the conditions targeted by us, or are less expensive than our current or future products.

Our technologies and products could be rendered obsolete by such developments.

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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 operations being found in violation of these laws is increased by the fact that the government’s 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.

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Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

We depend on collaborative relationships to develop, introduce and market new products, product enhancements and new applications.

We depend on collaborative relationships to develop, introduce and market new products, product enhancements and applications.

We depend on both clinical and commercial collaborative relationships.

We have entered into collaborative relationships with academic medical centers and physicians in connection with the research and innovation and clinical testing of our products.

Commercially, we currently have a distribution and licensing agreement with Alcon for our GreenTip SoftTip Cannula.

Sales of and royalties from the GreenTip SoftTip Cannula are dependent upon the sales performance of Alcon, which depends on their efforts and is beyond our control.

Commercially, we have licensing agreements with strategic partners.

The failure to obtain any additional future clinical or commercial collaborations and the resulting failure or success of such collaboration relationships could have a material adverse effect on our ability to introduce new products or applications and therefore could have a material adverse effect on our business, results of operations and financial condition.

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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 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.

As of July 1, 2023, our patent portfolio includes 64 active United States patents and 83 active international patents on the technologies related to our products and processes.

In addition, as of July 1, 2023, we have 13 patent applications pending in the United States and 21 international patent applications pending.

Our patent applications may not be approved.

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Any loss of certification would have a material adverse effect on our business, results of operations and financial condition.

There are several major regulatory changes occurring in the regulation of medical devices in the EU.

There are several major regulatory changes occurring in the regulation of medical devices in the European Union (the “EU”).

The revision of the quality system regulation (ISO 13485:2016) has been released that substantially increased the requirements for a medical device quality system.

12 unchanged sentences

Any of our products could produce undesirable side effects that could cause us or regulatory authorities to interrupt, delay or halt clinical trials of a product candidate.

We, the FDA, or another regulatory authority could suspend or terminate clinical trials at any time if they or we believed the trial participants faced unacceptable health risks.

We, the FDA, or another regulatory authority could suspend or terminate clinical trials at any time if we or they believed the trial participants faced unacceptable health risks.

If we fail to comply with the FDA’s quality system regulation and laser performance standards, our manufacturing operations could be halted, and our business would suffer.

2 unchanged sentences

Because our products involve the use of lasers, our products also are covered by a performance standard for lasers set forth in FDA regulations.

The laser performance standard imposes specific record-keeping, reporting, product testing and product labeling requirements.

The laser performance standard imposes specific recordkeeping, reporting, product testing and product labeling requirements.

These requirements include affixing warning labels to laser products, as well as incorporating certain safety features in the design of laser products.

14 unchanged sentences

difficulties integrating any acquired products into our existing business;

difficulties in integrating an acquired company’s technologies, services, employees, customers, partners, business operations and administrative and software management systems with ours;

difficulties in integrating an acquired company’s technologies, services, employees and other service providers, customers, partners, business operations and administrative and software management systems with ours;

delays in realizing the benefits of the acquired products;

10 unchanged sentences

In addition, non-physicians, particularly in countries outside of the United States, or poorly trained or inexperienced physicians, may make use of our products.

Our efforts to market our MicroPulse systems as a fovea-friendly alternative to traditional continuous wavelength systems or alternative treatment methods may result in users failing to implement adequate safety precautions and thereby increase the risks associated with the misuse of our product.

The lack of training and the purchase and use of our products by non-physicians or poorly trained or inexperienced physicians may result in product misuse and adverse treatment outcomes, which could harm our reputation and expose us to costly product liability litigation, or otherwise cause our business to suffer.

16 unchanged sentences

On March 22, 2019, we provided the FDA with a request for termination of Recall Number Z-1075-2018.

We submitted a follow up request for termination on September 29, 2021.

We submitted follow up requests for termination on September 29, 2021 and October 17, 2022.

Our termination request is pending.

23 unchanged sentences

The prior U.S.

presidential administration has imposed tariffs on various goods from various countries, including China, Canada and the European Union (“EU”).

presidential administration has imposed tariffs on various goods from various countries, including China, Canada and the EU.

As a result, Canada, the EU, China and other countries responded with retaliatory tariffs on certain United States exports.

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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 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.

During the second quarter of fiscal year 2023, the trading price of our common stock fluctuated from a low of $1.76 per share to a high of $2.43 per share.

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

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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.

In the event that we are not able to demonstrate compliance with Section 404 of the Sarbanes-Oxley Act in a timely manner, that our internal controls are perceived as inadequate or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and our stock price could decline.

Our charter documents, anti-takeover provisions of Delaware law, and contractual provisions could delay or prevent an acquisition or sale of our company.

16 unchanged sentences

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