What changed in this filing

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Item 1. Legal Proceedings

2024-08-08 compared with 2024-05-14 · 49 added, 52 removed, 604 unchanged (14% of the section changed)

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From time to time, we may be involved in legal proceedings arising in the ordinary course of business.

Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business, operating results, financial condition or cash flows.

Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business, condensed consolidated operating results, financial condition or cash flows.

Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

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General economic factors

• general macroeconomic conditions, including inflationary pressures and rising interest rates, uncertainty in the global banking and financial services market, potential U.S.

government shutdown, global pandemics and responsive measures and the wars between Russia-Ukraine and Israel-Hamas.

• general macroeconomic conditions, including inflationary pressures and changing interest rates, a reduction in business confidence and activity, global pandemics and responsive measures and the Russia-Ukraine and Israel-Hamas conflicts.

Operational factors

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• our financial condition raises serious doubt as to our ability to continue to operate as a going concern;

• our convertible note agreement contains restrictive and financial covenants that may limit our operating flexibility and the failure to comply with such covenants could cause our outstanding debt to become accelerated;

• the success of our relationship with our strategic partner and main distributor Topcon;

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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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If this were to occur, our ability to grow and support our business and to respond to market challenges could be significantly limited, which could have a material adverse effect on our business, financial condition, and results of operations.

There is substantial doubt regarding our ability to continue as a going concern.

We will need to raise additional funding, which may not be available on acceptable terms, or at all.

Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our commercial programs, product development efforts or other operations.

Developing and commercializing products for the ophthalmology market is expensive, and we have incurred significant operating losses as result.

Based on our current business plan as of the date hereof, there is substantial doubt regarding our ability to continue as a going concern.

Our recurring losses, negative cash flows, ongoing strategic alternatives, and the need for additional financing raise doubt about our ability to continue to execute our business plan as currently intended.

Furthermore, our cash forecasts are based on assumptions that may prove to be wrong, and we could use out available capital resources earlier than we currently expect.

Changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may exhaust our available capital sooner than planned.

See Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources" of this Quarterly Report on Form 10-Q for a discussion of our expected cash runway.

Moreover, as a result of recent volatile market conditions, the cost and availability of capital has been and may continue to be adversely affected.

Continued turbulence in the U.S.

market and economy may adversely affect our liquidity and financial condition, including our ability to access the capital markets to meet liquidity needs.

To fund further operations, the Company will need to raise additional capital.

The Company’s ability to continue as a going concern or meet the minimum liquidity requirements in the future is dependent on its ability to raise additional capital, of which there can be no assurance.

If we are unable to obtain funding on a timely basis, increase sales or reduce expenses, we will be unable to continue to fund our operations, continue to sell our products, realize value from our assets, or discharge our liabilities in the normal course of business.

Although management plans to reduce cash expenditures to alleviate such ongoing concerns, if we become unable to continue as a going concern, we could have to liquidate our assets, and potentially realize significantly less than the values at which they are carried on our financial statements, and stockholders could lose all or part of their investment.

Additionally, our financial statements have been prepared assuming that we will continue to operate as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Thus, our financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

The current macroeconomic conditions 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, all of which have had and may continue to have a material and adverse effect on our business, future revenues and financial condition.

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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 if healthcare customers divert medical resources and priorities towards the treatment of COVID-19 or any future outbreak of disease.

In addition, our customers may delay, cancel or redirect planned capital expenditures in order to focus resources on any future outbreak of disease, global pandemic or in response to macroeconomic disruption related to any future global

In the near term, a future outbreak of disease or global pandemic may negatively impact the use of our products and the number of ophthalmic treatments and procedures performed.

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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.

Servicing our existing and future debt, including the Note, may require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our indebtedness.

On August 7, 2024, we issued the Note to Lind, which has a principal amount of $4,200,000, and we may, in the future, issue the Subsequent Note to Lind which would have a principal amount of up to $1,800,000.

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the Lind Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.

We may not generate cash flow from

operations in the future sufficient to service our debt and make necessary capital expenditures.

If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive.

Our ability to refinance any future indebtedness will depend on the capital markets and our financial condition at such time.

We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

In addition, the Securities Purchase Agreement and the Note contain, and any of our future debt agreements may contain, restrictive covenants that may prohibit us from adopting any of these alternatives.

Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of our debt.

We may not have the ability to raise the funds necessary to settle repayments of the Note in cash, and our future debt may contain limitations on our ability to make cash payments as required by the Note.

Following the occurrence of a Change of Control (as defined in the Securities Purchase Agreement), Lind may require us to prepay, effective immediately prior to the consummation of such Change of Control, the Note in an amount equal to 105% of the outstanding principal amount of the Note as of such date.

In addition, commencing 120 days from the issuance date of the Note, the Company will be required to repay the outstanding principal amount of the Note in twenty consecutive monthly installments of cash, Repayment Shares, or a combination of cash and Repayment Shares, at the Company’s option, provided that no portion of the outstanding principal amount may be paid in Repayment Shares unless such Repayment Shares (A) may be immediately resold pursuant to Rule 144 under the Securities Act of 1933, as amended (the “1933 Act”), by a person that is not an affiliate of the Company, or (B) are registered for resale under the 1933 Act and a registration statement is in effect and lawfully usable to effect immediate sales of such Repayment Shares.

If we do not meet the conditions for repayment in Repayment Shares, we will be required to make such monthly payments in cash.

However, we may not have enough available cash or be able to obtain financing at the time we are required to make such payments on the Note or at its maturity.

In addition, any cash payments would reduce the amount of cash available for our operations, which could have a material and adverse effect on our business.

Our ability to make cash payments in connection with the Note may be limited by law, regulatory authority or agreements governing our future indebtedness.

Our failure to make payments as required by the Note would constitute a default under the Note.

A default under the Note could also lead to a default under agreements governing any of our existing or future indebtedness.

Moreover, the occurrence of a Change of Control under the Note could constitute an event of default under other agreements.

If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness.

Any failure by us to repay indebtedness, in each case, when required to do so pursuant to the terms of the Note, could have a material adverse effect on our business, financial condition, and results of operations.

Lind has conversion rights under the Note, the exercise of which could result in the issuance of a substantial amount of our common stock at a significant discount to the trading price of our common stock.

The Note is convertible at Lind’s option into shares of our common stock at an initial conversion price of $2.44, subject to any adjustments set forth in the Note.

However, upon the occurrence of a Delisting Event or an Event of Default (each as defined in the Note), the Notewill become immediately due and payable, and Lind may declare an amount equal to 120% of the then outstanding principal amount of the Note due and payable, in addition to any other remedies under the Transaction Documents.

Additionally, the occurrence of a Delisting Event, an Event of Default or an event which with the passage of time may result in an Event of Default, Lind may convert all or a portion of the outstanding principal amount of the Note at the lower of (i) the then-current conversion price and (ii) the greater of (a) eighty-percent (80%) of the average of the three (3) lowest daily VWAPs during the twenty (20) trading days prior to the delivery of the notice of conversion and (b) a floor price of $0.39, which would significantly dilute our stockholders.

If we experience a Delisting Event or an Event of Default under the Note, we may experience a material adverse effect on our liquidity, financial condition, and results of operations.

Divestitures of our businesses or product lines may materially and adversely affect our financial condition, results of operations or cash flows and require us to raise additional capital to replace revenue from those business units or product lines.

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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.

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 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.

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

For the first quarter of fiscal year 2024, our international sales were $6.4 million, or 54.8% of total revenues.

For the second quarter of fiscal year 2024, our international sales were $7.0 million, or 55.7% 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 quarter of fiscal year 2024 have been denominated in U.S.

All of our international revenues and costs for the second quarter of fiscal year 2024 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:

• macroeconomic conditions, including the impact of any future global 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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Any one or more of these factors stated above could have a material adverse effect on our business, financial condition or results of operations.

As we expand our existing international operations, we may encounter new risks in addition to the above factors.

For example, as we focus on building our international sales and distribution networks in new geographic regions, we must continue to develop relationships with qualified local distributors and trading companies.

If we are not successful in developing these relationships, we may not be able to grow sales in these geographic regions.

These or other similar risks could adversely affect our revenues, profitability and the price of our common stock.

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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Our research and development process is expensive, prolonged, and entails considerable uncertainty.

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.

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.

Should the current macroeconomic conditions worsen, it could delay and disrupt our research and development processes even further.

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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, the upcoming presidential election in the United States, 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 global 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-Ukraine and Israel-Hamas, and terrorist acts may put further pressure on economic conditions in the United States and abroad.

Concerns about consumer and investor confidence, the upcoming presidential election in the United States, 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, political and social turmoil related to international conflicts, such as that occurring in Russia-Ukraine and Israel-Hamas, and terrorist acts may put further pressure on economic conditions in the United States and abroad.

Weak economic conditions and declines in consumer spending and consumption may harm our operating results.

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Factors contributing to these fluctuations include the following:

• general macroeconomic conditions, including inflationary pressures and heightened interest rates, uncertainty in the global banking and financial services market, upcoming presidential election in the United States, global pandemics and responsive measures and the wars between Russia-Ukraine and Israel-Hamas;

• general macroeconomic conditions, including inflationary pressures and changing interest rates, upcoming presidential election in the United States, global pandemics and responsive measures and the Russia-Ukraine and Israel-Hamas conflicts;

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

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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.

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 $1.26 million per year for violations, depending on the circumstances and adjusted annually for inflation, although enforcement has been negligible to date.

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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 March 30, 2024, our patent portfolio includes 67 active United States patents and 84 active international patents on the technologies related to our products and processes.

In addition, as of March 30, 2024, we have 12 patent applications pending in the United States and 19 international patent applications pending.

As of June 29, 2024, our patent portfolio includes 67 active United States patents and 86 active international patents on the technologies related to our products and processes.

In addition, as of June 29, 2024, we have 12 patent applications pending in the United States and 20international patent applications pending.

Our patent applications may not be approved.

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If we overestimate the demand for our product, we may have excess inventory, which would increase our costs.

If we underestimate demand for our product and consequently, our components, materials and fully assembled product requirements, we may have inadequate inventory, which could interrupt our manufacturing, delay delivery of our product to our customers and result in the loss of customer sales.

If we underestimate demand for our product and consequently, our components, materials and fully assembled product requirements, we may have inadequate inventory, which could interrupt our

manufacturing, delay delivery of our product to our customers and result in the loss of customer sales.

Any of these occurrences would negatively impact our business and operating results.

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Moreover, we cannot assure you that the anticipated benefits of any acquisition or investment would be realized or that we would not be exposed to unknown liabilities.

In connection with these types of transactions, we may issue additional equity securities that would dilute the ownership interest of existing investors or earnings per share, use cash that we may need in the future to operate our business, incur debt on terms unfavorable to us or that we are unable to repay, incur large charges or substantial liabilities, encounter difficulties integrating diverse business cultures and become subject to adverse tax consequences, substantial depreciation

or deferred compensation charges.

These challenges related to acquisitions or investments could adversely affect our business, operating results and financial condition.

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A successful claim brought against us in excess of our insurance coverage could have a material adverse effect on our business, results of operations and financial condition.

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

Any growth in our sales and marketing organization 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 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 operations and our costs, our business may not be able to grow effectively or we may grow at a slower pace.

If we fail to manage growth effectively, our business could be disrupted which could harm our operating results.

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Our stock price has been and may continue to be volatile and an investment in our common stock could suffer a decline in value.

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-Ukraine and Israel-Hamas.

During the first quarter of fiscal year 2024, the trading price of our common stock fluctuated from a low of $2.35 per share to a high of $3.10 per share.

During the second quarter of fiscal year 2024, the trading price of our common stock fluctuated from a low of $1.97 per share to a high of $3.53 per share.

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

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Our certificate of incorporation empowers the board of directors to establish and issue a class of preferred stock, and to determine the rights, preferences and privileges of the preferred stock.

These provisions give the board of directors the ability to deter, discourage or make more difficult a change in control of our company, even if such a change in control could be deemed in the interest of our stockholders or if such a change in control would provide our stockholders with a substantial premium for their shares over the then-prevailing market price for the common stock.

over the then-prevailing market price for the common stock.

Our certificate of incorporation and bylaws contain other provisions that could have an anti-takeover effect, including the following:

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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