What changed in this filing

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Item 1. Legal Proceedings

2023-11-06 compared with 2023-08-07 · 72 added, 65 removed, 1057 unchanged (11% of the section changed)

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We recognize accruals for any legal action when we conclude that a loss is probable and reasonably estimable.

We did not have any material accruals for any active legal action in our condensed consolidated balance sheet as of June 30, 2023, as we could not predict the ultimate outcome of these matters, or reasonably estimate the potential exposure.

We did not have any material accruals for any active legal action in our condensed consolidated balance sheet as of September 30, 2023, as we could not predict the ultimate outcome of these matters, or reasonably estimate the potential exposure.

See Note 12, Commitments and Contingencies , to the condensed consolidated financial statements for details.

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Drug development and obtaining marketing authorization is a very difficult endeavor and we may ultimately be unable to obtain regulatory approval for our various product candidates in one or more jurisdictions and in one or more indications.

There is a significant risk that our U.S./Rest of World Collaboration Agreement with AstraZeneca will be terminated.

Preclinical, Phase 1 and Phase 2 clinical trial results may not be indicative of the results that may be obtained in larger clinical trials.

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Risks Related to Our Reliance on Third Parties

If our collaborations were terminated or if our partners were unwilling or unable to contribute or participate in these collaborations or if Astellas or AstraZeneca were to prioritize other initiatives over their collaborations with us, our ability to successfully develop and commercialize the relevant product candidate would suffer.

If our collaborations were terminated or if our partners were unwilling or unable to contribute or participate in these collaborations, our ability to successfully develop and commercialize the relevant product candidate would suffer.

If our preclinical and clinical trial contractors do not properly perform their agreed upon obligations, we may not be able to obtain or may be delayed in receiving regulatory approvals for our product candidates.

We currently rely, and expect to continue to rely, on third parties to conduct many aspects of our product manufacturing and distribution, and these third parties may terminate these agreements or not perform satisfactorily.

We may experience delays or technical problems associated with technology transfer, scale-up, or validation of our biologics manufacturing.

We may have shortfalls, delays, or excesses in manufacturing.

Certain components of our products are acquired from single-source suppliers or without long-term supply agreements.

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To date, we have invested substantially in the research and development of pamrevlumab and roxadustat.

The near-term value drivers for the Company depend in large part on pamrevlumab, which is in clinical development for locally advanced unresectable pancreatic cancer, metastatic pancreatic cancer, and Duchenne muscular dystrophy (“DMD”).

The near-term value drivers for the Company depend in large part on pamrevlumab, which is in clinical development for locally advanced unresectable pancreatic cancer and metastatic pancreatic cancer.

If the Phase 3 clinical trials are successful, pamrevlumab will require substantial further investment.

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Our near-term value drivers also include continued development and commercialization of roxadustat in the People’s Republic of China (“China”), Japan, Europe, and elsewhere.

While we continue to co-commercialize roxadustat in China with AstraZeneca AB (“AstraZeneca”) and develop roxadustat in China in chemotherapy-induced anemia (“CIA”), we have no plans to develop roxadustat in the United States (“U.S.”) for anemia associated with chronic kidney disease (“CKD”), myelodysplastic syndromes, or CIA.

With an eye toward our longer-term success, we are investing in new drug programs to expand our early-stage clinical pipeline.

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As a company, we have limited late-stage and commercialization experience, and the time and resources required to develop such experience are significant.

We are running multiple Phase 3 clinical trials simultaneously with multiple readouts in 2023 and 2024, while also commercializing roxadustat with our collaboration partners.

As a company, we have limited resources and limited experience handling such a large number of data readouts and possible regulatory filings.

For pamrevlumab, which we have not partnered, we do not have a sales infrastructure and we have limited experience in the sales, marketing or distribution of pharmaceutical products in any country.

To the extent that we would undertake sales and marketing of any of our products directly, there are risks involved with establishing our own sales, marketing and distribution capabilities.

If any of our late stage programs are successful, and we choose to undertake sales, distribution, and marketing of any of our products directly, there are risks involved with establishing these capabilities.

Factors that may inhibit our efforts to commercialize our products on our own include:

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unforeseen costs and expenses associated with creating an independent commercial organization.

With respect to roxadustat, we are dependent in part on the commercialization capabilities of our collaboration partners, AstraZeneca and Astellas Pharma Inc.

(“Astellas”).

If either such partner were to terminate its agreement with us, we would have to commercialize on our own or with another third party.

We will have limited control over the commercialization efforts of such third parties, and any of them may fail to devote the necessary resources and attention to sell and market roxadustat effectively.

Successful development and commercialization of any of our products requires us to establish and further develop our clinical, regulatory, and commercialization capabilities, including but not limited to, medical affairs, marketing, product reimbursement, sales, price reporting, pharmacovigilance, supply-chain, and distribution.

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Approval by one regulatory authority does not ensure approval by any other regulatory authority.

For example, while we have received approval of our marketing authorization applications for roxadustat in the European Union, Great Britain, China, Japan, and other countries for the treatment of anemia in CKD for patients who are on dialysis and not on dialysis, we received a CRL in CKD anemia in the U.S.

from the FDA regarding roxadustat’s New Drug Application for the treatment of anemia due to CKD, stating that it could not be approved in its present form.

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Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

There is a significant risk that our U.S./Rest of World Collaboration Agreement with AstraZeneca will be terminated.*

While our China Collaboration Agreement with AstraZeneca will continue, it is probable that our U.S./Rest of World Collaboration Agreement with AstraZeneca will be terminated.

Such a termination could have a material impact on our business, operating results, and financial condition, as we would not be eligible for any remaining development cost sharing or development or commercialization milestones outside of China from AstraZeneca.

Preclinical, Phase 1 and Phase 2 clinical trial results may not be indicative of the results that may be obtained in larger clinical trials.*

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Success in preclinical and early clinical trials, which are often highly variable and use small sample sizes, may not be predictive of similar results in humans or in larger, controlled clinical trials, and successful results from clinical trials in one indication may not be replicated in other indications.

For example, ZEPHYRUS-1, our Phase 3 clinical trial of pamrevlumab in 356 patients with idiopathic pulmonary fibrosis, was unable to replicate the efficacy results we saw in PRAISE, a smaller Phase 2 study of pamrevlumab in the same indication.

For example, our Phase 3 clinical trials of pamrevlumab in idiopathic pulmonary fibrosis (“IPF”) and Duchenne muscular dystrophy (“DMD”) were unable to replicate the efficacy results we saw in smaller Phase 2 studies.

Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in early-stage development, and we may face similar setbacks.

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Further, even larger clinical trials may not identify rare serious adverse effects or the duration of such studies may not be sufficient to identify when those events may occur.

There have been other products, including erythropoiesis stimulating agents (“ESAs”), for which safety concerns have been uncovered following approval by regulatory authorities.

Such safety concerns have led to labeling changes or withdrawal of ESAs products from the market.

While roxadustat is chemically unique from ESAs, it or any of our product candidates may be subject to known or unknown risks.

There have been other products, including erythropoiesis stimulating agents, for which safety concerns have been uncovered following approval by regulatory authorities.

Such safety concerns have led to labeling changes or withdrawal of erythropoiesis stimulating agent products from the market.

While roxadustat is chemically unique from erythropoiesis stimulating agents, it or any of our product candidates may be subject to known or unknown risks.

Patients treated with our products, if approved, may experience adverse reactions and it is possible that the FDA or other regulatory authorities may ask for additional safety data as a condition of, or in connection with, our efforts to obtain approval of our product candidates.

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There is a general risk of delayed drug supply due to delays experienced by any third-party provider in the supply chain, including raw material and components suppliers, export and customs locations, and shipping companies.

In addition, if we are not able to obtain regulatory approval of roxadustat in the U.S.

In addition, due to our withdrawal of our New Drug Application in the U.S.

in CKD anemia, we may have excess supply manufactured in anticipation of commercialization.

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We face competition from generics that could enter the market after expiry of our composition of matter patent.

As of the end of the second quarter of 2023, the Chinese health authority has accepted abbreviated new drug applications for eight generic roxadustat applicants.

As of the end of the third quarter of 2023, the Chinese health authority has accepted abbreviated New Drug Applications for 12 generic roxadustat applicants.

In addition, we will likely face competition from other companies developing products in the same diseases or indications in which we are developing or commercializing products.

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any unfavorable publicity relating to the product candidate.

In addition, see the risk factor titled “Our product candidates may cause or have attributed to them undesirable side effects or have other properties that delay or prevent their regulatory approval or limit their commercial potential”

In addition, see the risk factor titled “

Our product candidates may cause or have attributed to them undesirable side effects or have other properties that delay or prevent their regulatory approval or limit their commercial potential ”

If any product candidate is approved but does not achieve an adequate level of acceptance by such parties, we may not generate or derive sufficient revenue from that product candidate and may not become or remain profitable.

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If Fortis was unable or unwilling to continue their development efforts, our ability to develop FG-3246 would be delayed.

We have also entered into collaboration agreements with respect to the development and commercialization of roxadustat with Astellas and AstraZeneca.

We rely on the Pancreatic Cancer Action Network (“PanCAN”) to run its Precision Promise SM Phase 2/3 registration study in metastatic pancreatic cancer.

While this study includes pamrevlumab in combination with standard of care chemotherapy, we do not run this study and have very little control over the way it is conducted.

Therefore pamrevlumab’s success in this indication is highly dependent on PanCAN’s ability and willingness to run the Precision Promise study.

We are also dependent on PanCAN providing sufficient data for us to analyze and, if successful, submit for marketing authorization to the appropriate regulatory authorities.

We have also entered into collaboration agreements with respect to the development and commercialization of roxadustat with Astellas Pharma Inc.

(“Astellas”) and AstraZeneca.

These agreements provide for reimbursement of our development costs by our collaboration partners and also provide for commercialization of roxadustat throughout the major territories of the world.

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Moreover, if Astellas or AstraZeneca, or any successor entity, were to determine that their collaborations with us are no longer a strategic priority, or if either of them or a successor were to reduce their level of commitment to their collaborations with us, our ability to commercialize roxadustat could suffer.

While we continue to co-commercialize roxadustat in China with AstraZeneca and develop roxadustat in China in CIA, it is probable that our U.S./Rest of World Collaboration Agreement with AstraZeneca will be terminated.

for CKD anemia.

In addition, if our collaboration partners are unsuccessful in their commercialization efforts (particularly in Europe and China), our results will be negatively affected.

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If any third-party manufacturers terminate their engagements with us or fail to perform as agreed, we may be required to identify, qualify, and contract with replacement manufacturers (including entering into technical transfer agreements to share know-how), which process may result in significant costs and delays to our development and commercialization programs.

We may experience delays or technical problems associated with technology transfer, scale-up, or validation of our biologics manufacturing.*

We may have shortfalls, delays, or excesses in manufacturing.*

We have entered into an initial commercial supply agreement for the manufacture of pamrevlumab with Samsung Biologics Co., Ltd.

(“Samsung”) and are transitioning our manufacturing of pamrevlumab from Boehringer Ingelheim to Samsung.

However, we may experience delays or technical problems associated with:

technology transfer of the manufacturing process to Samsung;

scale-up and production of cGMP batches;

analytical method validation and transfer to Samsung;

process validation, including process characterization and process performance qualification batches;

set up and execution of appropriate stability studies.

We have made certain manufacturing commitments to Samsung, and there is a contractual risk we will not require the quantities of pamrevlumab we have committed to, particularly if we cease some of our pamrevlumab clinical trials, such as our termination of our ZEPHYRUS-2 study, as well as open label extensions for IPF and DMD indications.

We may also not require quantities of pamrevlumab we have prepared for launch supply (for example for the idiopathic pulmonary fibrosis indication).

(“Samsung”).

We have made certain manufacturing commitments to Samsung, and there is a contractual risk we will not require the quantities of pamrevlumab we have committed to, particularly if we cease our final pamrevlumab clinical trials in pancreatic cancer, such as we did for our ZEPHYRUS-2 study and LELANTOS studies, as well as open label extensions for IPF and DMD indications.

We may also not require quantities of pamrevlumab we have prepared for launch supply (for example for the above studies).

In addition, our product candidates and any products that we may develop may compete with other product candidates and products for access and prioritization to manufacture.

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In addition, third party manufacturers tend to change their upfront fees or postponement/cancelation fees over time or upon initiation of additional contracts, and this may lead to unanticipated financial loss for FibroGen.

If we need to find a supplier in China, there may be additional delays in importing custom raw materials and supplements into China.

There may also be additional delays in importing or exporting products, intermediates, or raw materials between countries.

Certain components of our products are acquired from single-source suppliers or without long-term supply agreements.

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In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions.

from the FDA.

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Our data processing activities may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.

In the U.S., federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), the Health Insurance Portability and Accountability Act, and other similar laws (e.g., wiretapping laws).

In the U.S., there are State data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and the Federal Health Insurance Portability and Accountability Act, and other similar laws (e.g., wiretapping laws).

For example, the California Consumer Privacy Act of 2018 (“CCPA”) applies to personal data of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights.

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In addition, the California Privacy Rights Act of 2020 expands the CCPA’s requirements, including by adding a new right for individuals to correct their personal data and establishing a new regulatory agency to implement and enforce the law.

Outside the U.S., an increasing number of laws, regulations, and industry standards may govern data privacy and security.

For example, the European Union’s General Data Protection Regulation (“GDPR”), the United Kingdom (”UK’s) GDPR, Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais) (Law No.

Outside the U.S., laws, regulations, and industry standards govern data privacy and security.

For example, the European Union’s General Data Protection Regulation (“GDPR”), the United Kingdom (“UK’s) GDPR, Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais) (Law No.

13,709/2018), and China’s Personal Information Protection Law impose strict requirements for processing personal data, including health-related information.

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or private litigation related to processing of personal data.

We also target customers in Asia and have operations in China and may be subject to new and emerging data privacy regimes in Asia, including China’s Personal Information Protection Law, Japan’s Act on the Protection of Personal Information, and Singapore’s Personal Data Protection Act.

In addition, we may be unable to transfer personal data from Europe and other jurisdictions to the U.S.

or other countries due to data localization requirements or limitations on cross-border data flows.

Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries.

In particular, the European Economic Area (“EEA”) and the United Kingdom (“UK”) have restricted the transfer of personal data to the U.S.

and other countries whose data privacy and security laws they believe are inadequate.

We also target customers in Asia and have operations in China and are subject to the data privacy laws in Asia, including China’s Personal Information Protection Law, Japan’s Act on the Protection of Personal Information, and Singapore’s Personal Data Protection Act.

Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the U.S.

in compliance with law, such as the EEA and UK’s standard contractual clauses, these mechanisms are subject to legal challenges.

Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the U.S., are subject to increased scrutiny from regulators, individual litigants, and activities groups.

Preparing for and complying with these obligations requires us to devote significant resources and may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.

Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions are subject to scrutiny from regulators, individual litigants, and activities groups.

Preparing for and complying with these obligations requires us to devote resources and may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.

If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to:

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We expect to depend on these facilities for our product candidates and business operations in China, and we do not yet have a secondary source supplier for either roxadustat API or drug product in China.

Consequently, we also carry single source supplier risk for the Ex-China market.

Consequently, we also carry single source supplier risk for all countries we or our partners are selling in, other than China.

Natural disasters or other unanticipated catastrophic events, including power interruptions, water shortages, storms, fires, pandemics, earthquakes, terrorist attacks, government appropriation of our facilities, and wars, could significantly impair our ability to operate our manufacturing facilities.

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(“Falikang”).

We do not currently rely on revenue from China to fund our operations outside of China.

However, we may in the future rely on dividends and royalties paid by FibroGen Beijing for a portion of our cash needs, including the funds necessary to service any debt we may incur and to pay our operating costs and expenses.

We may in the future rely on dividends and royalties paid by FibroGen Beijing for a portion of our cash needs, including the funds necessary to service any debt we may incur and to pay our operating costs and expenses.

The payment of dividends by FibroGen Beijing is subject to limitations.

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In addition, if FibroGen Beijing incurs debt on its own behalf in the future, the agreements governing such debt may restrict its ability to pay dividends or make other distributions to us.

As of June 30, 2023, approximately $79.7 million of our cash and cash equivalents is held in China.

As of September 30, 2023, approximately $60.1 million of our cash and cash equivalents is held in China.

Any capital contributions from us to FibroGen Beijing must be approved by the Ministry of Commerce in China, and failure to obtain such approval may materially and adversely affect the liquidity position of FibroGen Beijing.

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If we are unable to raise capital when needed or on acceptable terms, we may be forced to delay, reduce or eliminate our research and development programs and/or our commercialization efforts.*

We are a biopharmaceutical company with two lead product candidates in clinical development, roxadustat for CIA in China, and pamrevlumab for pancreatic cancer and DMD.

We are a biopharmaceutical company with two lead product candidates in clinical development, roxadustat for CIA in China, and pamrevlumab for pancreatic cancer.

Most of our revenue generated to date has been based on our collaboration agreements and we have limited commercial drug product sales to date.

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Our net loss for the years ended December 31, 2022, 2021 and 2020 were $293.7 million, $290.0 million and $189.3 million, respectively.

As of June 30, 2023, we had an accumulated deficit of $1.7 billion.

As of June 30, 2023, we had capital resources consisting of cash, cash equivalents and short-term investments of $335.7 million.

In addition, as of June 30, 2023, we had $25.6 million of accounts receivable in our current assets.

As of September 30, 2023, we had an accumulated deficit of $1.8 billion.

As of September 30, 2023, we had capital resources consisting of cash, cash equivalents and short-term investments of $251.3 million.

In addition, as of September 30, 2023, we had $31.7 million of accounts receivable in our current assets.

Despite contractual development and cost coverage commitments from our collaboration partners, AstraZeneca and Astellas, and the potential to receive milestone and other payments from these partners, and despite commercialization efforts for roxadustat for the treatment of anemia caused by CKD, we anticipate we will continue to incur losses on an annual basis for the foreseeable future.

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Most of our recent revenue has been earned from collaboration partners for our product candidates under development.*

If either or both of our Astellas and AstraZeneca collaborations were to be terminated, we could require significant additional capital in order to proceed with development and commercialization of roxadustat or we may require additional partnering in order to help fund our operations.

While we continue to co-commercialize roxadustat in China with AstraZeneca, and develop roxadustat in China for CIA, it is probable that our U.S./Rest of World Collaboration Agreement with AstraZeneca will be terminated, which could decrease expected collaboration revenue as we would not be eligible for any remaining development cost sharing or development or commercialization milestones outside of China from AstraZeneca.

If either our Astellas collaboration or our AstraZeneca China collaboration were to be terminated, we could have a sudden decrease of revenue and require significant additional capital in order to proceed with development and commercialization of roxadustat or we may require additional partnering in order to help fund our operations.

While we continue to co-commercialize roxadustat in China with AstraZeneca, and develop roxadustat in China for CIA, it is probable that our U.S./Rest of World Collaboration Agreement with AstraZeneca will be terminated and we would not be eligible for any remaining development cost sharing or development or commercialization milestones from AstraZeneca (outside of China).

In addition, if our collaboration partners are unsuccessful in their commercialization efforts (particularly in Europe and China), our revenue will be negatively affected.

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We are highly dependent on members of our senior management team.

Effective July 23, 2023, our Board appointed Thane Wettig as Interim Chief Executive Officer to succeed Enrique Conterno, who resigned from his role as Chief Executive Officer and from the Board.

Conterno will remain with the Company as Special Advisor to the Interim CEO through August 8, 2023, and thereafter, for a short time, as a consultant.

Conterno’s resignation was not the result of any disagreement with the Company.

The loss of the services of any of our senior management could significantly impact the development and commercialization of our products and product candidates and our ability to successfully implement our business strategy.

Mark Eisner, our Chief Medical Officer, resigned in September 2023 (not the result of any disagreement with the Company) and we have commenced a search for a new Chief Medical Officer.

Recruiting and retaining qualified commercial, development, scientific, clinical, and manufacturing personnel are and will continue to be critical to our success.

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In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of confidential, proprietary, and sensitive data and income, reputational harm, and diversion of funds.

Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.

Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments.

In addition, our reliance on third-party service providers could introduce new cybersecurity risks and vulnerabilities, including supply-chain attacks, and other threats to our business operations.

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In the third quarter of 2023, we were notified that a service provider of our third-party service provider had a security breach and certain of our pseudo anonymized clinical data was exfiltrated.

Our initial incident response assessment was unable to determine a material impact to our Company (including the fact that we have found no personally identifiable information involved, and there is no business continuity risk).

Our incident response assessment was unable to determine a material impact to our Company (including the fact that we have found no personally identifiable information involved, and there is no business continuity risk).

However, there is a risk that we discover a material impact in the future.

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For a description of our pending litigation and SEC investigation, see Note 12, Commitments and Contingencies , to the condensed consolidated financial statements.

There is a risk that our common stock would be delisted due to not meeting the Nasdaq price requirement.*

On October 24, 2023, FibroGen received a letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market notifying us that for the last 30 consecutive business days the bid price of FibroGen’s common stock had closed below $1.00 per share, the minimum closing bid price required by the continued listing requirements of Nasdaq listing rule 5450(a)(1).

The notification received has no immediate effect on the listing of FibroGen’s common stock on Nasdaq.

In accordance with listing rule 5810(c)(3)(A), we have 180 calendar days, or until April 22, 2024, to regain compliance with the minimum bid price rule.

To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for a minimum of ten consecutive business days (or such longer period of time as the Nasdaq staff may require in some circumstances, but generally not more than 20 consecutive business days) before April 22, 2024.

If our common stock does not achieve compliance by April 22, 2024, we may be eligible for an additional 180-day period to regain compliance if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards, with the exception of the bid price requirement, and provide written notice to Nasdaq of our intention to cure the deficiency during the second compliance period, including by effecting a reverse stock split, if necessary.

However, if it appears to the Nasdaq staff that we will not be able to cure the deficiency, or if we do not meet the other listing standards, Nasdaq could provide notice that our common stock will become subject to delisting.

In the event we receive notice that our common stock is being delisted, Nasdaq rules permit us to appeal any delisting determination by the Nasdaq staff to a Hearings Panel.

We expect that our common stock would remain listed pending the Hearing Panel’s decision.

There can be no assurance that we will regain compliance with the minimum bid price rule or maintain compliance with the other listing requirements within the above timelines, or if it is necessary for us to effect a reverse stock split in order for us to regain compliance with the minimum bid price rule we may fail to do so, in which case our common stock may be delisted.

If we appeal a delisting determination by Nasdaq to the Hearing Panel, there can be no assurance that such appeal would be successful.

Delisting from the Nasdaq Global Select Market or any Nasdaq market could make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity.

In addition, without a Nasdaq market listing, stockholders may have a difficult time getting a quote for the sale or purchase of our common stock, the sale or purchase of our common stock would likely be made more difficult and the trading volume and liquidity of our common stock could decline.

Delisting from Nasdaq could also result in negative publicity and could also make it more difficult for us to raise additional capital.

The absence of such a listing may adversely affect the value accorded by other parties.

Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities.

These requirements could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market.

If our common stock is delisted by Nasdaq, our common stock may be eligible to trade on an over-the-counter quotation system, such as the OTCQB market, where an investor may find it more difficult to sell our common stock or obtain accurate quotations as to the market value of our common stock.

We cannot assure you that our common stock, if delisted from Nasdaq, will be listed on another national securities exchange or quoted on an over-the counter quotation system.

If our common stock is delisted, it may come within the definition of “penny stock”

as defined in the Exchange Act, and would be covered by Rule 15g-9 of the Exchange Act.

That rule imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors.

For transactions covered by Rule 15g-9, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale.

Consequently, Rule 15g-9, if it were to become applicable, would affect the ability or willingness of broker-dealers to sell our securities, and accordingly would affect the ability of stockholders to sell their securities in the public market.

These additional procedures could also limit our ability to raise additional capital in the future.

We may engage in acquisitions that could dilute stockholders and harm 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