What changed in this filing

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Item 1A. Risk Factors

2021-11-12 compared with 2021-08-12 · 24 added, 25 removed, 615 unchanged (7% of the section changed)

109 unchanged sentences

In the past several years, we have experienced supply chain, production and training issues as we have expanded our product lines and sales volumes, and may experience similar issues in the future as we continue to grow our business.

For example, we have contracted with a manufacturing company located in Wuhan, China for certain laser systems scheduled for release in the first half of 2021.

Due to the COVID-19 outbreak, release of our manufacturing process and launch of these new laser systems may be delayed or disrupted, and we may need to incur costs to replace or shift this manufacturing process elsewhere.

24 unchanged sentences

Our ability to sell our products and generate revenues depends upon our direct and independent sales forces within the United States, direct sales force in Germany and relationships with independent international distributors.

Currently our direct and independent sales forces within the United States consist of approximately 23 employees and one independent representative, respectively and our direct sales force in Germany consists of one employee.

Currently our direct and independent sales forces within the United States consist of approximately 20 employees and two independent representative, respectively and our direct sales force in Germany consists of one employee.

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

19 unchanged sentences

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

For the second fiscal quarter of fiscal year 2021, our international sales were $6.9 million, or 51.5% of total revenues.

For the third fiscal quarter of fiscal year 2021, our international sales were $6.4 million, or 48.0% 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 second fiscal quarter of fiscal year 2021 have been denominated in U.S.

All of our international revenues and costs for the third fiscal quarter of fiscal year 2021 have been denominated in U.S.

dollars except for sales transacted through our German subsidiary.

48 unchanged sentences

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.

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.

72 unchanged sentences

Our products are typically purchased by doctors, clinics, hospitals and other users, which bill various third-party payers, such as governmental programs and private insurance plans, for the health care services provided to their patients.

Changes in government legislation or regulation or in private third-party payers’ policies toward reimbursement for procedures employing our products may prohibit adequate reimbursement.

Changes in government legislation or regulation or in private third-party payers’ policies toward reimbursement for procedures employing our products may

prohibit adequate reimbursement.

There have been a number of legislative and regulatory proposals to change the healthcare system, reduce the costs of healthcare and change medical reimbursement policies.

23 unchanged sentences

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.

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.

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.

The risk that we are our being found in violation of these laws may be increased by the fact that we do not have a formal healthcare compliance program in place.

Further, while safe harbors may in some instances be available and utilized by companies to reduce risks associated with the Anti-Kickback Statute and certain other healthcare laws, we have not necessarily utilized such safe harbors nor fully followed all elements required to claim the benefit of such safe harbors in all possible instances.

possible instances.

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.

27 unchanged sentences

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

As of July 3, 2021, our patent portfolio includes 55 active United States patents and 94 active foreign patents on the technologies related to our products and processes.

In addition, as of July 3, 2021, we have 13 patent applications pending in the United States and 22 foreign patent applications pending.

As of October 2, 2021, our patent portfolio includes 59 active United States patents and 93 active foreign patents on the technologies related to our products and processes.

In addition, as of October 2, 2021, we have 13 patent applications pending in the United States and 22 foreign patent applications pending.

Our patent applications may not be approved.

3 unchanged sentences

In addition to patents, we rely on trade secrets and proprietary know-how which we seek to protect, in part, through proprietary information agreements with employees, consultants and other parties.

Our proprietary information agreements with our employees

and consultants contain industry standard provisions requiring such individuals to assign to us, without additional consideration, any inventions conceived or reduced to practice by them while employed or retained by us, subject to customary exceptions.

Our proprietary information agreements with our employees and consultants contain industry standard provisions requiring such individuals to assign to us, without additional consideration, any inventions conceived or reduced to practice by them while employed or retained by us, subject to customary exceptions.

Proprietary information agreements with employees, consultants and others may be breached, and we may not have adequate remedies for any breach.

34 unchanged sentences

We use quarterly and annual forecasts based primarily on our anticipated product orders to plan our manufacturing efforts and determine our requirements for components and materials.

It is very important that we accurately predict both the demand for our product and the lead times required to obtain or manufacture the necessary components, materials, and fully assembled products.

It is very important that we accurately predict both the demand for our

product and the lead times required to obtain or manufacture the necessary components, materials, and fully assembled products.

Lead times for components and fully assembled products vary significantly and depend on numerous factors, including the specific supplier, the size of the order, contract terms and current market demand for such products.

33 unchanged sentences

In addition, our information technology systems are potentially vulnerable to cyber-attacks or other data security breaches-whether by employees or others-which may expose sensitive data to unauthorized persons.

Such data security breaches could lead to the loss of trade secrets or other intellectual property, or could lead to the public exposure of sensitive and confidential information of

our employees, customers, suppliers and others, any of which could have a material adverse effect on our business, financial condition and results of operations.

While we have implemented a number of protective measures, including firewalls, antivirus and malware detection tools, patches, log monitors, routine back-ups, system audits, routine password modifications and disaster recovery procedures, such measures may not be adequate or implemented properly to prevent or fully address the adverse effect of such events, and in some cases we may be unaware of an incident or its magnitude and effects.

Such data security breaches could lead to the loss of trade secrets or other intellectual property, or could lead to the public exposure of sensitive and confidential information of our employees, customers, suppliers and others, any of which could have a material adverse effect on our business, financial condition and results of operations.

cases we may be unaware of an incident or its magnitude and effects.

If we are unable to prevent such security breaches or privacy violations or implement satisfactory remedial measures, our operations could be disrupted, and we may suffer loss of reputation, financial loss and other regulatory penalties because of lost or misappropriated information.

35 unchanged sentences

The Medical Device Regulation (“MDR”) will replace the current medical device directives (93/42/EEC), and it substantially changes the way that medical devices are brought to market in the EU and how they maintain compliance throughout the product’s life cycle.

Due to the UK’s exit from EU (“Brexit”), different rules will apply

in Great Britain (England, Wales and Scotland), Northern Ireland and the EU after the Brexit transition period, which began January 1, 2021.

Due to the UK’s exit from EU (“Brexit”), different rules will apply in Great Britain (England, Wales and Scotland), Northern Ireland and the EU after the Brexit transition period, which began January 1, 2021.

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 most new products.

109 unchanged sentences

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

Our products and operations are subject to various federal, state, local and foreign environmental laws and regulations, including those governing the use, storage, handling, exposure to, and disposal of hazardous materials and a large and growing body of international standards which govern the design, manufacture, materials content and sourcing, testing, certification, packaging,

installation, use and disposal of our products.

We must continually keep abreast of these standards and requirements and integrate compliance to these with the development and regulatory documentation for our products.

Failure to meet these standards could limit the ability to market our products in those regions which require compliance with such standards or subject us to fines and penalties.

Examples of such standards include laws governing the hazardous material content of our devices and products, such as the EU Directive 2015/863 which is known as “RoHS 3” and that relates to Restrictions on the Use of Certain Hazardous Substances and the EU Directive 2012/19/EU on Waste Electrical and Electronic Equipment.

Examples of such standards include laws governing the hazardous material content of our devices and products, such as the EU

Directive 2015/863 which is known as “RoHS 3” and that relates to Restrictions on the Use of Certain Hazardous Substances and the EU Directive 2012/19/EU on Waste Electrical and Electronic Equipment.

Similar laws and regulations have been passed or are pending in several other jurisdictions and may be enacted in other regions, including in the United States, and we are, or may in the future be, subject to these laws and regulations.

5 unchanged sentences

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.

During the second quarter of fiscal year 2021, the trading price of our common stock fluctuated from a low of $6.67 per share to a high of $9.20 per share.

During the third quarter of fiscal year 2021, the trading price of our common stock fluctuated from a low of $6.29 per share to a high of $7.98 per share.

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

19 unchanged sentences

We may experience difficulty in meeting these reporting requirements in a timely manner, particularly if material weaknesses or significant deficiencies were to persist.

Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial

reporting pursuant to Section 404 while we are a “smaller reporting company” as defined in the Exchange Act.

Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 while we are a “smaller reporting company” as defined in the Exchange Act.

If we are unable to comply with the requirements of Section 404 in a timely manner, the market price of our stock could decline and we could be subject to sanctions or investigations by the Nasdaq Stock Market, the SEC or other regulatory authorities, which could require additional financial and management resources.

23 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 1A. Risk Factors