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• We have incurred losses since inception, and we may continue to incur substantial losses for the foreseeable future.
+Added: • Market opportunities may not develop as we expect.
• The life science markets are highly competitive and subject to rapid technological change.
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• If our products fail to achieve and sustain sufficient market acceptance, our revenue will be adversely affected.
−Removed: • If we fail to achieve the expected financial and operational benefits of our recently announced restructuring plan and reduction in force, our business and financial results may be harmed.
−Removed: • Implementation of a company-wide enterprise resource planning (ERP) system could adversely affect our business.
+Added: • If we fail to achieve the expected financial and operational benefits of our recently announced restructuring plan and other strategic initiatives, our business and financial results may be harmed.
+Added: • The planned implementation of a company-wide enterprise resource planning (ERP) system could adversely affect our business.
• Our business growth strategy involves the potential for significant acquisitions.
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• We rely on single and sole source suppliers for some of the components and materials used in our products.
+Added: • We may not be able to convert our orders in backlog into revenue.
• Any disruption or delay in the shipping or off-loading of our products may have an adverse effect on our financial condition and results of operations.
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• Our products could have defects or errors.
−Removed: • To the extent we elect to label and promote any of our products as medical devices, we would be required to obtain prior approval or clearance by the FDA or comparable foreign regulatory authority.
+Added: • To the extent we elect to label and promote any of our products as medical devices, we would be required to obtain prior approval or clearance by the U.S.
+Added: Food and Drug Administration (FDA) or comparable foreign regulatory authority.
• Compliance or the failure to comply with current and future regulations affecting our products and business operations worldwide could cause us significant expense and adversely impact our business.
Risks Related to Economic Conditions and Operating a Global Business
−Removed: • We generate a substantial portion of our revenue internationally.
+Added: • We generate a substantial portion of our revenue internationally and our international business exposes us to additional business, regulatory, political, operational, financial, and economic risks.
• Adverse conditions in the global economy may significantly harm our revenue, profitability, and results of operations.
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• We may not realize the value of our goodwill or other intangible assets.
−Removed: • If we fail to comply with the covenants and other obligations under our debt facilities, the lenders may be able to accelerate amounts owed under the facilities and, in the case of our Credit Facility (as defined herein), may foreclose upon the assets securing our obligations.
+Added: • If we fail to comply with the covenants and other obligations under our debt facilities, the lenders may be able to accelerate amounts owed under the facilities and, in the case of our Credit Facility (as defined below), may foreclose upon the assets securing our obligations.
• We are subject to risks related to taxation in multiple jurisdictions.
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• If securities or industry analysts publish unfavorable research about us or cease to cover our business, our stock price and/or trading volume could decline.
−Removed: • Any conversions of our 2014 Notes or 2019 Notes will dilute the ownership interest of our existing stockholders.
+Added: • Any conversions of our 2014 Notes or 2019 Notes (each as defined below) will dilute the ownership interest of our existing stockholders.
Risks Related to our Capital Structure
−Removed: • The holders of our Series B Preferred Stock own a significant portion of our total outstanding voting securities and may prevent other stockholders from influencing material corporate decisions.
−Removed: • The market value of our Common Stock could decline if the holders of our Series B Preferred Stock sell their shares when transfer restrictions expire.
−Removed: • The holders of Series B-1 Preferred Stock and Series B-2 Preferred Stock may exercise influence over us, including through their ability to each designate a member of our board of directors.
+Added: • The holders of our Series B Preferred Stock (as defined below) own a significant portion of our total outstanding voting securities and may prevent other stockholders from influencing material corporate decisions.
+Added: • The market value of our common stock could decline if the holders of our Series B Preferred Stock sell their shares.
+Added: • The holders of our Series B Preferred Stock may exercise influence over us, including through their ability to designate members of our board of directors.
RISKS RELATED TO OUR BUSINESS, INDUSTRY, AND STRATEGY
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and COVID-19 mitigation measures such as travel bans and restrictions, social distancing, quarantines, and business shutdowns and closures.
−Removed: Additionally, in response to a surge in COVID-19 infections in the first half of 2022, the Chinese government imposed lockdowns in certain parts of the country that have negatively impacted and continue to negatively impact manufacturing and/or supply chains, as well as demand for our products.
+Added: Additionally, in response to a surge in COVID-19
+Added: infections in the first half of 2022, the Chinese government imposed lockdowns in certain parts of the country that have negatively impacted and continue to negatively impact manufacturing and/or supply chains, as well as demand for our products.
Because the severity, magnitude, and duration of the COVID-19 pandemic and its economic consequences are uncertain, we are unable to predict the impact of COVID-19 on our operations, our financial performance, and our ability to successfully execute our business strategies and initiatives.
−Removed: The ultimate impact of the COVID-19 pandemic on our operations and financial
−Removed: performance depends on many factors that are not within our control, including, but not limited, to:
−Removed: governmental, business, and individual actions that have been and continue to be taken in response to the pandemic (including restrictions on travel, transport and workforce pressures);
+Added: The ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control, including, but not limited, to:
+Added: governmental, business, and individual actions that have been and continue to be taken in response to the pandemic (including restrictions on travel, and transport and workforce pressures);
the risk of waning immunity among persons already vaccinated and an increase in fatigue or skepticism with respect to initial or booster vaccinations;
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A significant reduction in orders from one or more of these customers could adversely affect our revenue and operating results, and if these customers defer or cancel purchases or otherwise alter their purchasing patterns, our financial results and actual results of operations could be significantly impacted.
+Added: Similarly, the loss of one or more key customers, or the inability of any such customer to pay amounts owing to us, could materially and adversely affect our business, financial performance and results of operations.
Other unknown or unpredictable factors also could harm our results.
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Any failure to adjust spending quickly enough to compensate for a shortfall relative to our anticipated revenue could magnify the adverse impact of such shortfalls on our results of operations.
−Removed: We expect that our sales will continue to fluctuate on an annual and quarterly basis and that our financial results for some periods may be below those projected by securities analysts, which could significantly decrease the price of our common stock.
+Added: We expect that our sales will continue to fluctuate on an annual and quarterly basis and that our financial results for some periods may be below market expectations or projections of securities analysts, which could significantly decrease the price of our common stock.
We have incurred losses since inception, and we may continue to incur substantial losses for the foreseeable future.
We have incurred significant losses in each fiscal year since our inception, including net losses of $59.2 million, $53.0 million , and $64.8 million during the years 2021, 2020, and 2019, respectively.
−Removed: As of June 30, 2022, we had an accumulated deficit of $875.8 million .
+Added: As of September 30, 2022, we had an accumulated deficit of $905.3 million .
These losses have resulted principally from costs incurred in our research and development programs, and from our manufacturing costs and selling, general, and administrative expenses.
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Until we are able to generate additional revenue to support our level of operating expenses, we will continue to incur operating and net losses and negative cash flow from operations.
−Removed: In addition, inflationary pressure, including as a result of supply shortages, could adversely impact our financial results.
+Added: In addition, inflationary pressure, including as a result of supply shortages, has adversely impacted and could continue to adversely impact our financial results.
Our operating costs have increased, and may continue to increase, due to the recent growth in inflation.
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Further, our customers may choose to reduce their business with us if we increase our pricing.
−Removed: We believe that our continued investment in research and development, sales, and marketing is essential to our long-term competitive position and future revenue growth and, as a result, we may incur operating losses for the foreseeable future and may never achieve profitability.
−Removed: Market opportunities may not develop as quickly as we expect, limiting our ability to successfully sell our products, or our product development and strategic plans may change and our entry into certain markets may be delayed, if it occurs at all.
+Added: While we plan to reduce our general and administrative spend and levels of investment in microfluidics research and development and marketing as part of the restructuring plan that we announced in August 2022, our cost restructuring efforts may not result in the anticipated savings or other economic benefits, or could result in total costs and expenses that are greater than expected, and there is no guarantee that our post-restructuring focus will be sufficient for us to achieve success.
+Added: Consequently, we may incur operating losses for the foreseeable future and may never achieve profitability.
+Added: Market opportunities may not develop as we expect, limiting our ability to successfully sell our products, or our product development and strategic plans may change and our entry into certain markets may be delayed, if it occurs at all.
The application of our technologies to high-throughput genomics, single-cell genomics and, particularly, mass cytometry applications are in many cases emerging market opportunities.
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The markets for our products are characterized by rapidly changing technology, evolving industry standards, changes in customer needs, emerging competition, new product introductions, and strong price competition.
−Removed: We compete with both established and development stage life science research companies that design, manufacture, and market instruments and consumables for gene expression analysis, single-cell targeted gene expression and protein expression analysis, SNP genotyping, quantitative polymerase chain reaction (qPCR), digital PCR, flow cytometry, tissue imaging, and additional applications using well established laboratory techniques, as well as newer technologies such as bead encoded arrays, microfluidics, next-generation DNA sequencing (NGS), microdroplets, spatial protein expression, and photolithographic arrays.
−Removed: Most of our current competitors have significantly greater name recognition, greater financial and human resources, broader
−Removed: product lines and product packages, larger sales forces, larger existing installed bases, larger intellectual property portfolios, and greater experience and scale in research and development, manufacturing, and marketing than we do.
+Added: We compete with both established and development stage life science research companies that design, manufacture, and market instruments and consumables for gene expression analysis, single-cell targeted gene expression and protein expression analysis, single nucleotide polymorphism (SNP) genotyping, quantitative polymerase chain reaction (qPCR), digital PCR, flow cytometry, tissue imaging, and additional applications using well established laboratory techniques, as well as newer technologies such as bead encoded arrays, microfluidics, next-generation DNA sequencing (NGS), microdroplets, spatial protein expression, and photolithographic arrays.
+Added: Most of our current competitors have significantly greater name recognition, greater financial and human resources, broader product lines and product packages, larger sales forces, larger existing installed bases, larger intellectual property portfolios, and greater experience and scale in research and development, manufacturing, and marketing than we do.
We consider Agilent Technologies, Inc., Thermo Fisher Scientific Inc.
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Our business is dependent on the improvement of our existing products, our development of new products to serve existing markets, and our development of new products to create new markets and applications that were previously not practical with existing systems.
−Removed: We intend to devote significant personnel and financial resources to research and development activities designed to advance the capabilities of our technology.
We have developed design rules for the implementation of our technology that are frequently revised to reflect new insights we have gained about the technology.
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In addition, it is important that our systems be perceived as accurate and reliable by the scientific and medical research community as a whole.
−Removed: Historically, a significant part of our sales and marketing efforts has been directed at convincing industry leaders of the advantages of our systems and encouraging such leaders to publish or present the results of their evaluation of our system.
+Added: Historically, a significant part of our sales and marketing efforts has been directed at convincing industry leaders of the advantages of our systems and encouraging such leaders to publish or present the results of their evaluation of our systems.
If we are unable to continue to induce leading researchers to use our systems, or if such researchers are unable to achieve and publish or present significant experimental results using our systems, acceptance and adoption of our systems will be slowed and our ability to increase our revenue would be adversely affected.
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It is critical to our success for us to anticipate changes in technology and customer requirements and to successfully introduce new, enhanced, and competitive technology to meet our customers’ and prospective customers’ needs on a timely and cost-effective basis.
−Removed: Developing and implementing new technologies will require us to incur substantial development costs and we may not have adequate resources available to be able to successfully introduce new applications of, or enhancements to, our systems.
+Added: Developing and implementing new technologies typically involve substantial development costs and we may not have adequate resources available to be able to successfully introduce new applications of, or enhancements to, our systems.
We cannot guarantee that we will be able to maintain technological advantages over emerging technologies in the future.
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Even if we successfully implement some or all of these planned improvements, we cannot guarantee that our current and potential customers will find our enhanced systems to be an attractive alternative to existing technologies, including our current products.
−Removed: If we fail to achieve the expected financial and operational benefits of our recently announced restructuring plan and reduction in force, our business and financial results may be harmed.
+Added: If we fail to achieve the expected financial and operational benefits of our recently announced restructuring plan and other strategic initiatives, our business and financial results may be harmed.
From time to time, we have implemented efficiency and cost-savings initiatives intended to stabilize our business operations.
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There is no guarantee that the restructuring plan will achieve its intended benefits and cost savings or that our post-restructuring focus will be sufficient for us to achieve success.
−Removed: For example, our cost restructuring efforts may not result in the anticipated savings or other economic benefits, or could result in total costs and expenses that are greater than expected, which would require us to seek potentially dilutive financing alternatives, disrupt or restrain the scope of our business activities, and would make it more difficult to attract and retain qualified personnel, each of which could have a material adverse effect on our business, financial condition and prospects.
+Added: For example, our cost restructuring efforts may not result in the anticipated savings or other economic benefits, or could result in total costs and expenses that are greater than expected, which would require us to seek potentially dilutive financing alternatives, disrupt or restrain the scope of our business activities, and would make it more difficult to attract and retain qualified personnel, each of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
+Added: Similarly, changes in our commercial and strategic focus and allocation of resources contemplated by the restructuring plan, including reductions in our levels of investment in microfluidics research and development and marketing, as well as implementation of our other strategic initiatives, may be unsuccessful or result in unanticipated risks or other unintended consequences for our business, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Risks associated with implementing a company-wide enterprise resource planning (ERP) system could adversely affect our business and results of operations or the effectiveness of internal control over financial reporting.
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We have in the past experienced variations in yields due to such factors.
−Removed: A drop in yield can increase our cost to manufacture our IFCs or, in more severe cases, require us to halt the manufacture of our IFCs until the problem is resolved.
+Added: A drop in yield can increase our cost to manufacture our IFCs or, in more severe cases,
+Added: require us to halt the manufacture of our IFCs until the problem is resolved.
Identifying and resolving the cause of a drop in yield can require substantial time and resources.
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We rely on a limited number of third-party suppliers for certain components and materials used in our products, including single and sole source suppliers.
−Removed: Additionally, several of our instruments are assembled at the facilities of contract manufacturers in Singapore.
+Added: Additionally, certain of our instruments are assembled at the facilities of contract manufacturers in Singapore.
We do not have long-term contracts with our suppliers of these components and materials or our assembly service providers.
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Our reliance on single and sole source suppliers and assembly service providers also subjects us to other risks that could harm our business, including the following:
−Removed: • we may be subject to increased component or assembly costs and
−Removed: • we may not be able to obtain adequate supply or services in a timely manner or on commercially reasonable terms.
+Added: • we may be subject to increased component or assembly costs;
+Added: • we may not be able to obtain adequate supply or services in a timely manner or on commercially reasonable terms, if at all.
If, as a result of global economic or political instability or health pandemics, such as the ongoing escalation of the situation in Ukraine or the COVID-19 pandemic, our suppliers experience shortages or delays for materials sourced or manufactured in the affected countries, their ability to supply us with instruments or product components may be affected.
If any of these events occur, our business and operating results could be harmed.
−Removed: In connection with the global supply chain disruptions following the onset of the COVID-19 pandemic, we have experienced and are continuing to experience problems with some of our suppliers.
+Added: In connection with the global supply chain disruptions following the
+Added: onset of the COVID-19 pandemic, we have experienced and are continuing to experience problems with some of our suppliers.
In the third quarter of 2021, shortages of certain components caused a backlog and we were unable to fulfill all of the demand for our products during the quarter.
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Any continued or future interruption or delay in the supply of components or materials or assembly of our instruments, or our inability to obtain components, materials, or assembly services from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to cancel orders or switch to competitive products, which would harm our business.
−Removed: In response to surges in COVID-19 infections, the Chinese government imposed lockdowns in certain parts of the country, which may negatively impact manufacturing and/or supply chains.
+Added: Additionally, in response to a surge in COVID-19 infections in the first half of 2022, the Chinese government imposed lockdowns in certain parts of the country that have negatively impacted and continue to negatively impact manufacturing and/or supply chains.
We may not be able to convert our orders in backlog into revenue.
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We may need to increase employee wages and benefits in order to attract and retain the personnel necessary to achieve our goals, and our business, operations, and financial results may suffer if we are unable to do so.
−Removed: Attrition and workforce reductions, such as the August 2022 restructuring plan, including the related reduction in force, could adversely affect our reputation among job seekers, and our existing employees may experience distractions or decreases in employee morale, and result in a loss of institutional know-how, reduced productivity, slower customer service response, reduced effectiveness of internal compliance and risk-mitigation programs, and cancellations of or delays in completing new product developments and other strategic projects.
−Removed: We do not maintain significant key person life insurance with any of our employees and all our employees, including our management team, may terminate employment without notice and without cause or good reason.
−Removed: Additionally, to expand our research and product development efforts, we need to retain and recruit scientists skilled in areas such as molecular and cellular biology, assay development, engineering physics, and manufacturing.
+Added: Attrition and workforce reductions, such as the August 2022 restructuring plan, including the related reduction in force, could adversely affect our reputation among job seekers, cause our existing employees to experience distractions or decreases in employee morale, and result in a loss of institutional know-how, reduced productivity, slower customer service response, reduced effectiveness of internal compliance and risk-mitigation programs, and cancellations of or delays in completing new product developments and other strategic projects.
+Added: We do not currently maintain key person life insurance covering any of our employees and all our employees, including our management team, may terminate employment without notice and without cause or good reason.
+Added: Additionally, in connection with our research and product development efforts, we need to retain and recruit scientists skilled in areas such as molecular and cellular biology, assay development, engineering physics, and manufacturing.
We also need highly trained technical support personnel with the necessary scientific background and ability to understand our systems at a technical level to effectively support potential new customers and the expanding needs of current customers.
−Removed: Competition for these people is intense and we may face challenges in retaining and recruiting such individuals if, for example, our stock price declines, reducing the retention value of equity awards, or our business or technology is no longer perceived as leading in our field.
+Added: Competition for these people is intense and we may face challenges in retaining and recruiting such individuals if, for example, our stock price declines, thereby reducing the retention value of equity awards, or our business or technology is no longer perceived as leading in our field.
Because of the complex and technical nature of our systems and the dynamic market in which we compete, any failure to attract and retain a sufficient number of qualified employees could materially harm our ability to develop and commercialize our technology.
−Removed: If we are unable to expand our direct sales, field support, and marketing forces or distribution capabilities to adequately address our customers’ needs, our business will be adversely affected.
+Added: If our direct sales, field support, and marketing forces and distribution capabilities are not sufficient to adequately address our customers’ needs, our business will be adversely affected.
We may not be able to market, sell, and distribute our products effectively enough to support our planned growth.
We sell our products primarily through our own sales force and through distributors in certain territories.
−Removed: Our future sales will depend in large part on our ability to continue to increase the scope of our marketing efforts and develop and substantially expand our direct sales force and field application specialist and service engineer teams.
+Added: Our future sales will depend on a number of factors including our ability to execute with our existing team, the scope of our marketing efforts and development of our direct sales force, field application specialists and service engineer teams.
Our products are technically complex and used for highly specialized applications.
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Any interruption in the availability of these reagents for use in our products could limit our ability to market our products.
−Removed: Our products, our Biomark, EP1, CyTOF, and Hyperion systems in particular, must be used in conjunction with one or more reagents designed to produce or facilitate the particular biological or chemical reaction desired by the user.
+Added: Our products, and our Biomark, EP1, CyTOF, and Hyperion systems in particular, must be used in conjunction with one or more reagents designed to produce or facilitate the particular biological or chemical reaction desired by the user.
Many of these reagents are highly specialized and available to the user only from a single supplier or a limited number of suppliers.
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Leading suppliers of reagents for real-time qPCR reactions include Life Technologies Corporation (now part of Thermo) and Roche Diagnostics Corporation, who are our direct competitors, and their licensees.
−Removed: These real-time qPCR reagents are typically sold pursuant to limited licenses or covenants not to sue with respect to patents held by these companies.
+Added: These real-time qPCR reagents are typically sold pursuant to limited licenses or covenants not to sue with respect to
+Added: patents held by these companies.
We do not have any contractual supply agreements for these real-time qPCR reagents, and we cannot assure you that these reagents will continue to be available to our customers for use with our systems, or that these patent holders will not seek to enforce their patents against us, our customers, or suppliers.
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We are dependent upon our data and information technology systems for the effective operation of our business and for the secure maintenance and storage of confidential data relating to our business and third-party businesses.
−Removed: Our information technology systems may be damaged, disrupted or shut down due to attacks by experienced programmers or hackers who may be able to penetrate our security controls and deploy computer viruses, cyberattacks, phishing schemes, or other malicious software programs, or due to employee error or malfeasance, power outages, hardware failures, telecommunication or utility
−Removed: failures, catastrophes or other unforeseen events, and our system redundancy and other disaster recovery planning may be ineffective or inadequate in preventing or responding to any of these circumstances.
+Added: Our information technology systems may be damaged, disrupted or shut down due to attacks by experienced programmers or hackers who may be able to penetrate our security controls and deploy computer viruses, cyberattacks, phishing schemes, or other malicious software programs, or due to employee error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events, and our system redundancy and other disaster recovery planning may be ineffective or inadequate in preventing or responding to any of these circumstances.
Furthermore, there may be a heightened risk of potential cyberattacks by state actors or others since the escalation of the war in Ukraine.
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We generally provide warranties that our systems will meet performance expectations and will be free from defects.
−Removed: The costs incurred in correcting any defects or errors may be substantial and could adversely affect our operating margins.
+Added: The costs incurred in correcting any defects or errors may be substantial and could
+Added: adversely affect our operating margins.
For example, we have experienced a performance issue with respect to certain IFCs used in our C1 systems due to the presence of more than one cell in an IFC chamber.
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The occurrence of any one or more of the foregoing could negatively affect our business, financial condition, and results of operations.
−Removed: Although the FDA granted Emergency Use Authorization (EUA) for our Advanta Dx SARS-CoV-2 RT-PCR Assay in August 2020 (which was updated for use with the AZOVA COVID-19 Test Collection Kit in February 2021, among other updates) and our Advanta Dx COVID-19 EASE Assay in February 2022, these authorizations are only valid during the COVID-19 public health emergency, and when the federally declared public health emergency ends, we will be required to stop commercial distribution of our assay and the collection kit immediately in the United States unless we comply with FDA requirements, which may include obtaining FDA clearance or approval for our assay under a traditional regulatory pathway for in vitro diagnostics, which is lengthy and expensive.
+Added: Although the FDA granted Emergency Use Authorization (EUA) for our Advanta Dx SARS-CoV-2 RT-PCR Assay in August 2020 (which was updated for use with the AZOVA COVID-19 Test Collection Kit in February 2021, among other updates) and our Advanta Dx COVID-19 EASE Assay in February 2022, these authorizations are only valid during the COVID-19 public health emergency, and when the federally declared public health emergency ends, we may be required to stop commercial distribution of our assay and the collection kit immediately in the United States unless we comply with FDA requirements, which may include obtaining FDA clearance or approval for our assay under a traditional regulatory pathway for in vitro diagnostics (IVDs), which is lengthy and expensive.
Under section 564 of the Federal Food, Drug, and Cosmetic Act (FD&C Act), the FDA has authority to allow certain unapproved medical products or unapproved uses of approved medical products to be used during a public health emergency under an EUA.
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In August 2020, the FDA granted EUA for our Advanta Dx SARS-CoV-2 RT-PCR Assay for qualitative detection of nucleic acid from SARS-CoV-2 in saliva specimens from individuals suspected by their healthcare providers of having COVID-19, with the use of the assay limited to CLIA high complexity laboratories.
−Removed: Four supplements have been submitted and authorized as follows:
−Removed: S001 for addition of the FDA Reference Panel Results, S002 for software updates and labeling changes, S003 for addition of alternative source of targets and labeling updates, and S004 for addition of AZOVA home collection kit.
+Added: Six supplements have been submitted and authorized by the FDA.
In February 2021, the FDA updated that EUA for our Advanta Dx SARS-CoV-2 RT-PCR Assay for use with the AZOVA COVID-19 Test Collection Kit, which is authorized for self-collection of saliva specimens at home.
−Removed: In February 2022, we were granted EUA for our the Advanta Dx COVID-19 EASE Assay, which is authorized for the qualitative detection of nucleic acid from SARS-CoV-2 in nasopharyngeal swab, oropharyngeal swab, mid-turbinate nasal swab, and anterior nasal swab specimens from individuals suspected of COVID-19 by their healthcare provider.
+Added: In February 2022, we were granted EUA for our the Advanta Dx COVID-19 EASE Assay, which is authorized for the qualitative detection of nucleic acid from SARS-CoV-2 in nasopharyngeal swab, oropharyngeal swab, mid-turbinate nasal swab, and
+Added: anterior nasal swab specimens from individuals suspected of COVID-19 by their healthcare provider.
As set forth in each EUA, we are required to comply with the conditions of authorization, including certain requirements pertaining to FDA notification, distribution, printed materials, advertising and promotion.
1 unchanged sentence
If the FDA’s policies and guidance change unexpectedly and/or materially or if we misinterpret them, potential sales of Advanta Dx SARS-CoV-2 RT-PCR and the AZOVA COVID-19 Test Collection Kit could be adversely impacted.
−Removed: the FDA will revoke an EUA where it is determined that the underlying public health emergency no longer exists or warrants such authorization, or if new evidence becomes available that indicates the test does not meet the conditions of authorization or perform as provided in the EUA application.
+Added: In addition, the FDA may revoke an EUA where it is determined that the underlying public health emergency no longer exists or warrants such authorization, or if new evidence becomes available that indicates the test does not meet the conditions of authorization or perform as provided in the EUA application.
We cannot predict how long this EUA will remain effective.
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While this regulatory classification is generally exempt from certain FDA requirements, such as the need to submit a premarket notification commonly known as a 510(k), and some of the requirements of the FDA’s Quality System Regulations (QSRs), we would be subject to ongoing FDA “general controls,” which include compliance with FDA regulations for labeling, inspections by the FDA, complaint evaluation, corrections and removals reporting, promotional restrictions, reporting adverse events or malfunctions for our products, and general prohibitions against misbranding and adulteration.
−Removed: If we do not comply with all the requirements of the EUA or the normal regulatory requirements for any of our medical device products, including additional regulatory requirements that would apply to the Advanta Dx SARS-CoV-2 RT-PCR Assay and the AZOVA COVID-19 Test Collection Kit after the expiration or termination of the EUA, we may be subject to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, penalties, or fines, among other adverse actions, any of which may adversely impact our business, financial condition and results of operations.
+Added: If we do not comply with all the
+Added: requirements of the EUA or the normal regulatory requirements for any of our medical device products, including additional regulatory requirements that would apply to the Advanta Dx SARS-CoV-2 RT-PCR Assay, the AZOVA COVID-19 Test Collection Kit and the Advanta Dx COVID-19 EASE Assay after the expiration or termination of the EUA, we may be subject to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, penalties, or fines, among other adverse actions, any of which may adversely impact our business, financial condition and results of operations.
Compliance with additional or changing regulatory requirements can be time-consuming and costly.
In addition, we may in the future submit 510(k) premarket notifications to the FDA to obtain FDA clearance of certain of our products on a selected basis.
−Removed: It is possible, in the event we elect to submit 510(k) applications for certain of our products,
−Removed: that the FDA would take the position that a more burdensome premarket application, such as a premarket approval application or a de novo application is required for some of our products.
+Added: It is possible, in the event we elect to submit 510(k) applications for certain of our products, that the FDA would take the position that a more burdensome premarket application, such as a premarket approval application or a de novo application is required for some of our products.
If such applications were required, greater time and investment would be required to obtain FDA approval.
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The draft guidance documents provide the anticipated details through which the FDA would propose to establish an LDT oversight framework, including premarket review for higher-risk LDTs, such as those that have the same intended use as FDA-approved or cleared companion diagnostic tests currently on the market.
−Removed: In January 2017, the FDA announced that it would not issue final guidance on the oversight of LDTs and manufacturers of products used for LDTs, but would seek further public discussion on an appropriate oversight approach, and give Congress an opportunity to develop a legislative solution.
+Added: In January 2017, the FDA announced that it would not issue final guidance on the oversight of LDTs and manufacturers of products used for LDTs, but would seek further
+Added: public discussion on an appropriate oversight approach, and give Congress an opportunity to develop a legislative solution.
More recently, the FDA has issued warning letters to certain genomics labs for illegally marketing genetic tests that claim to predict patients’ responses to specific medications, noting that the FDA has not created a legal “carve-out” for LDTs and retains discretion to take action when appropriate, such as when certain genomic tests raise significant public health concerns.
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government’s efforts to combat COVID-19 and consistent with the direction in Executive Orders 13771 and 13924, the Department of Health and Human Services (HHS) announced rescission of guidances and other informal issuances of the FDA regarding premarket review of LDTs absent notice-and-comment rulemaking, stating that, absent notice-and-comment rulemaking, those seeking approval or clearance of, or an emergency use authorization, for an LDT may nonetheless voluntarily submit a premarket approval application, premarket notification or an EUA request, respectively, but are not required to do so.
−Removed: However, laboratories opting to use LDTs without FDA premarket review or authorization would not be eligible for liability protection under the Public Readiness and Emergency Preparedness Act, or the PREP Act.
+Added: However, laboratories opting to use LDTs without FDA premarket review or authorization would not be eligible for liability protection under the Public Readiness and Emergency Preparedness Act (PREP Act).
In November 2021, HHS under the Biden administration issued a statement that withdrew the August 2020 policy announcement, stating that HHS does not have a policy on LDTs that is separate from FDA’s longstanding approach.
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If the FDA determines our products or related applications should be subject to additional regulation as in vitro diagnostic devices based upon customers’ use of our products for clinical diagnostic or therapeutic decision-making purposes, our ability to market and sell our products could be impeded and our business, prospects, results of operations and financial condition may be adversely affected.
−Removed: In addition, the FDA could consider our products to be misbranded or adulterated under the Federal Food, Drug, and Cosmetic Act and subject to recall and/or other enforcement action.
+Added: In addition, the FDA could consider our products to be misbranded or adulterated under the FD&C Act and subject to recall and/or other enforcement action.
Compliance or the failure to comply with current and future regulations affecting our products and business operations worldwide, such as environmental regulations enacted in the European Union, could cause us significant expense and adversely impact our business.
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Certain of our products sold in these countries are subject to WEEE and RoHS.
−Removed: These and similar regulations that have been or are in the process of being enacted in other countries may require us to redesign our products, use different types of materials in certain components, or source alternative components to ensure compliance with applicable standards, and may reduce the availability of parts and components used in our products by negatively impacting our suppliers’ ability to source parts and components in a timely and cost-effective manner.
+Added: These and similar regulations that have been or are in the process of being enacted in other countries may
+Added: require us to redesign our products, use different types of materials in certain components, or source alternative components to ensure compliance with applicable standards, and may reduce the availability of parts and components used in our products by negatively impacting our suppliers’ ability to source parts and components in a timely and cost-effective manner.
The Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulation (EC) No.
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These slowdowns, in addition to shipment delays in China due to delays in obtaining VAT and import tax exemptions for our products, have caused our financial results to suffer.
−Removed: If these situations continue, or if other risks occur, we could be forced to dedicate significant resources to their resolution, and if we are unsuccessful in finding a solution, our financial condition and results will suffer.
+Added: If these situations continue, or if
+Added: other risks occur, we could be forced to dedicate significant resources to their resolution, and if we are unsuccessful in finding a solution, our financial condition and results will suffer.
In addition, political instability, civil unrest, the deterioration of the political situation in a country in which we have significant sales or operations, or the breakdown of trade relations between the United States and a foreign country in which we have significant operations, could adversely affect our business, financial condition, and results of operations.
−Removed: For example, a change in trade status between the United States and a foreign country could result in a substantial increase in the import duty of products manufactured in that foreign country and imported into the United States.
+Added: For example, a change in trade status between the United States and a foreign country could result in a substantial increase in the import duty applicable to products manufactured in that foreign country and imported into the United States.
The United States has commenced certain trade actions, including imposing increased tariffs on certain goods imported into the United States from China, which has resulted in retaliatory tariffs by China.
−Removed: In addition, the United States has commenced certain trade actions as a result of the
−Removed: Russian invasion of Ukraine, which are widely expected to result in retaliatory measures or actions, including tariffs, by Russia.
+Added: In addition, the United States has commenced certain trade actions as a result of the Russian invasion of Ukraine, which has resulted in retaliatory measures by Russia.
Any increased trade barriers or restrictions on global trade imposed by the United States, or further retaliatory trade measures taken by China, Russia, or other countries in response, could adversely affect our business, financial condition, and results of operations.
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We have implemented new measures to reduce our exposure to this liability.
−Removed: Any additional changes in export control laws, sanctions requirements, or our operations in the affected regions may require us to expend additional resources or to discontinue certain products or services, which would negatively affect our business, financial condition, and operating results.In addition, the increased attention focused upon liability issues as a result of lawsuits, regulatory proceedings, and legislative proposals could damage our brand or otherwise impact the growth of our business.
+Added: Any additional changes in export control laws, sanctions requirements, or our operations in the affected regions may require us to expend additional resources or to discontinue certain products or services, which would negatively affect our business, financial condition, and operating results.
+Added: In addition, the increased attention focused upon liability issues as a result of lawsuits, regulatory proceedings, and legislative proposals could damage our brand or otherwise impact the growth of our business.
Finally, our ability to receive payment from these regions has been significantly impacted.
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dollar and foreign currencies.
−Removed: A majority of our product sales are currently denominated in U.S.
+Added: Our revenue is generally denominated in the local currency of the contracting party.
+Added: Historically, the majority of our revenue has been denominated in U.S.
dollars and fluctuations in the value of the U.S.
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dollars for us to manufacture our products in Singapore and/or in Canada.
−Removed: Additionally, our expenses are generally denominated in the currencies of the countries in which our operations are located, which is primarily in the United States, with a portion of expenses incurred in Singapore and Canada where a significant portion of our manufacturing operations are located.
+Added: Additionally, our expenses are generally denominated in the currencies where our operations are located, which is primarily in the United States, with a portion of expenses incurred in Singapore and Canada where our manufacturing facilities are located.
Our results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates.
−Removed: The volatility of exchange rates
−Removed: depends on many factors that we cannot forecast with reliable accuracy.
+Added: The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy.
We have experienced and will continue to experience fluctuations in our net income or loss as a result of transaction gains or losses related to revaluing certain current asset and current liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded.
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Our future capital needs are uncertain and we may need to raise additional funds in the future, which may cause dilution to stockholders or may be upon terms that are not favorable to us.
−Removed: We believe our existing cash, cash equivalents, and short-term investments, along with funding available under the Revolving Credit Facility, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.
+Added: We believe our existing cash, cash equivalents, and short-term investments, along with funding available under the Revolving Credit Facility (as defined below), will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.
However, we have continued to experience losses and, if that trend continues, we may need to seek additional sources of financing.
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• variability in sales and timing of related cash collections;
−Removed: • the effectiveness of our efficiency and cost-savings initiatives;
+Added: • the effectiveness of our efficiency, cost-savings and other strategic initiatives (including those contemplated by the restructuring plan that we announced in August 2022);
• the impact of any natural disasters or public health crises (including the COVID-19 pandemic);
• the effect of competing technological and market developments;
−Removed: • the extent to which we acquire or invest in businesses, products, and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.
−Removed: To the extent we draw on our Credit Facility or otherwise incur additional indebtedness, the risks described above could increase.
+Added: • the extent to which we acquire, license or otherwise invest in businesses, products, and technologies.
+Added: To the extent we draw on our Revolving Credit Facility or otherwise incur additional indebtedness, the risks described above could increase.
Further, if we increase our indebtedness, our actual cash requirements in the future may be greater than expected.
Our cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and we cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all.
−Removed: The ongoing COVID-19 pandemic has led to significant disruption and volatility in the global capital markets, increasing the cost of—and adversely impacting access to—capital.
+Added: The ongoing COVID-19 pandemic has led to significant disruption and volatility in the global capital markets, increasing the cost of—and adversely
+Added: impacting access to—capital.
If we raise additional funds by issuing equity securities, our stockholders will experience dilution.
−Removed: Debt financing in addition to the Credit Facility, if available, may involve covenants restricting our operations or our ability to incur additional debt.
+Added: Debt financing in addition to the Credit Facility (as defined below), if available, may involve covenants restricting our operations or our ability to incur additional debt.
Any additional debt or equity financing that we raise may contain terms that are not favorable to us or our stockholders, and our ability to raise additional capital may be adversely impacted by the impact of the COVID-19 pandemic on the economy.
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We currently do not have an internal audit group, and we continue to evaluate our need for additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.
−Removed: Moreover, if we do not comply with the requirements of Section 404, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by The Nasdaq Stock Market LLC, the SEC, or other regulatory authorities, which would require additional financial and management resources.
+Added: Moreover, if we do not comply with the requirements of Section 404, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by The Nasdaq Stock Market LLC, the Securities and Exchange Commission (SEC), or other regulatory authorities, which would require additional financial and management resources.
We may not realize the value of our goodwill or other intangible assets, which would be reflected in an impairment charge.
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We make estimates and assumptions in valuing such intangible assets that affect our condensed consolidated financial statements.
−Removed: As of June 30, 2022, we had approximately $125.3 million of goodwill and net intangible assets, including approximately $106.2 million of goodwill and $19.1 million of net intangible assets.
+Added: As of September 30, 2022, we had approximately $122.2 million of goodwill and net intangible assets, including approximately $106.1 million of goodwill and $16.1 million of net intangible assets.
These assets represent a significant portion of the assets recorded on our condensed consolidated balance sheet and relate primarily to our acquisition of DVS Sciences, Inc.
−Removed: (DVS) in February 2014 and InstruNor in 2020.
+Added: in February 2014 and InstruNor AS in 2020.
In addition, if in the future we acquire additional businesses, technologies, or other intangible assets, a substantial portion of the value of such assets may be recorded as goodwill or intangible assets.
We assess the realizability of goodwill and indefinite-lived intangible assets annually as well as whenever events or changes in circumstances indicate that these assets may be impaired.
−Removed: We assess the realizability of definite-lived intangible assets whenever events or changes in circumstances indicate that these assets may be impaired.
−Removed: These events or circumstances would generally include operating losses or a significant decline in earnings associated with the acquired business or asset.
−Removed: Our ability to realize the value of the goodwill and intangible assets will depend on the future cash flows of these businesses.
+Added: We also assess the realizability of definite-lived intangible assets whenever events or changes in circumstances indicate that these assets may be impaired.
+Added: These events or circumstances may include a significant deterioration in overall economic conditions, a decline in our market capitalization, reorganizations of our business, the disposal of all or a portion of a reporting unit, operating losses or a significant decline in earnings associated with the acquired business or asset.
+Added: Our ability to realize the value of the goodwill and intangible assets will depend on the future cash flows of these businesses, including our ability to realize revenue growth, cost savings, and other macro factors which impact the enterprise value.
These cash flows in turn depend in part on how well we have integrated these businesses.
If we are not able to realize the value of the goodwill and intangible assets, we may be required to incur material charges relating to the impairment of those assets.
−Removed: If we fail to comply with the covenants and other obligations under our Credit Facility, the lenders may be able to accelerate amounts owed under the facilities and may foreclose upon the assets securing our obligations.
−Removed: In August 2021, we amended our Revolving Credit Facility, which provides for secured revolving loans in an aggregate amount of up to $15.0 million, to extend the maturity date to August 2, 2023 and to provide for a new $10.0 million term loan facility (the Term Loan Facility and, together with the Revolving Credit Facility, the Credit Facility).
+Added: As a result of our operating and reporting segment change and the significant decline in our share price during the three months ended September 30, 2022, we performed quantitative impairment tests for goodwill and our long-lived intangibles as of August 31, 2022 and as of September 30, 2022 and concluded that no impairment charge was necessary.
+Added: In determining the fair value of our two operating segments, significant assumptions including forecasted cash flows (revenue growth rates), discount rates, earnings multiples and an implied control premium were utilized.
+Added: As these assumptions are inherently judgmental and subject to uncertainty, future impairments that cannot be reasonably estimated, but could be material, may occur.
+Added: If we fail to comply with the covenants and other obligations under our Credit Facility, the lending bank may be able to accelerate amounts owed under the facilities and may foreclose upon the assets securing our obligations.
+Added: In August 2018, we entered into a revolving credit facility with Silicon Valley Bank (as amended, the Revolving Credit Facility) in an aggregate principal amount of up to the lesser of (i) $15.0 million or (ii) the sum of (a) 85% of our eligible receivables and (b) 50% of our eligible inventory, in each case, subject to certain limitations (Borrowing Base), provided that the amount of eligible inventory that may be counted towards the Borrowing Base shall be subject to a cap as set forth in the Revolving Credit Facility.
+Added: In August 2021, we amended our Revolving Credit Facility to extend the maturity date to August 2, 2023 and to provide for a new $10.0 million term loan facility (the Term Loan Facility and, together with the Revolving Credit Facility, the Credit Facility).
+Added: The stated maturity of the Term Loan Facility is July 1, 2025.
+Added: However, if the principal amount of our convertible debt exceeds $0.6 million as of June 1, 2024 or if the maturity of our 2019 Notes has not been extended beyond January 1, 2026 by June 1, 2024, then the maturity date of the Term Loan Facility will be June 1, 2024.
+Added: The interest rate on the Term Loan Facility is the greater of 4.0% or a floating per annum rate equal to three quarters of one percentage point (0.75%) above the prime rate.
+Added: Interest on any outstanding term loan advances is due and payable monthly.
+Added: In addition to the monthly interest payments, a final payment equal to 6.5% of the original principal amount of each advance is due on the earlier of the maturity date or the date the advance is repaid.
+Added: Principal balances are required to be repaid in twenty-four equal installments beginning on August 1, 2023.
The Credit Facility is secured by substantially all of our assets, other than intellectual property.
The Credit Facility contains customary affirmative and negative covenants which, unless waived by the bank, limit our ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets, enter into affiliate transactions, undergo a change of control, or engage in merger and acquisition activity, including merging or consolidating with a third party.
−Removed: Additionally, we are required to maintain a minimum Adjusted Quick Ratio (as defined in the amendment) of at least 1.25 to 1.00.
−Removed: If we fail to comply with the covenants and our other obligations under the Credit Facility, the lenders would be able to accelerate the required repayment of amounts due under the Credit Facility and, if they are not repaid, could foreclose upon the assets securing our obligations under the Credit Facility.
+Added: Additionally, we are required to maintain a minimum Adjusted Quick Ratio (as defined in the Credit Facility) of at least 1.25 to 1.00.
+Added: If we fail to comply with the covenants and our other obligations under the Credit Facility, the lending bank would be able to accelerate the required repayment of amounts due under the Credit Facility and, if they are not repaid, could foreclose upon the assets securing our obligations under the Credit Facility.
Our ability to use net operating loss carryforwards to offset future taxable income for U.S.
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From time to time, we may review our corporate structure and tax positions in the various international jurisdictions in which we operate and such review may result in changes to how we structure our international business operations, which may adversely impact our effective income tax rate.
−Removed: Our effective income tax rate could also be adversely affected by changes in the mix of earnings in tax jurisdictions with different statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in existing tax laws or tax rates, changes in the level of non-deductible expenses (including share-based compensation), changes in our future levels of research and development spending, mergers and acquisitions, or the result of examinations by various tax authorities.
+Added: Our effective income tax rate could also be adversely affected by changes in the mix of earnings in tax jurisdictions with different statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in existing tax laws or tax rates, changes in the level of non-deductible expenses (including share-based compensation), changes in our
+Added: future levels of research and development spending, mergers and acquisitions, or the result of examinations by various tax authorities.
Payment of additional amounts as a result of changes in applicable tax law or upon final adjudication of any disputes could have a material impact on our results of operations and financial position.
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We have significant outstanding convertible debt.
−Removed: As of June 30, 2022, we had outstanding $0.6 million aggregate principal amount of our 2.75% Senior Convertible Notes due 2034 (2014 Notes) and $55.0 million aggregate principal amount of our 5.25% convertible senior notes due 2024 (2019 Notes).
+Added: As of September 30, 2022, we had outstanding $0.6 million aggregate principal amount of our 2.75% Convertible Senior Notes due 2034 that were issued in February 2014 (2014 Notes) and $55.0 million aggregate principal amount of our 5.25% Convertible Senior Notes due 2024 that were issued in November 2019 (2019 Notes and, together with the 2014 Notes, the Convertible Notes).
The 2014 Notes will mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2014 Notes.
−Removed: Pursuant to the terms of the indenture governing the 2014 Notes (2014 Notes Indenture), holders of the 2014 Notes may require us to repurchase all or a portion of the 2014 Notes at a repurchase price in cash equal to 100% of the principal amount of such 2014 Notes plus accrued and unpaid interest thereon, on each of February 6, 2024 and February 6, 2029.
+Added: Pursuant to the terms of the indenture governing the 2014 Notes, holders of the 2014 Notes may require us to repurchase all or a portion of their 2014 Notes at a repurchase price in cash equal to 100% of the principal amount of such 2014 Notes plus accrued and unpaid interest thereon, on each of February 6, 2024 and February 6, 2029.
The 2019 Notes will mature on December 1, 2024, unless earlier converted or repurchased in accordance with the terms of the 2019 Notes.
−Removed: If we undergo a fundamental change (as defined in the 2014 Notes Indenture or the indenture governing the 2019 Notes, as applicable (collectively, the Convertible Notes)), holders of the applicable series of Convertible Notes may require us to repurchase such Convertible Notes in whole or in part for cash at a repurchase price equal to 100% of the principal amount of the applicable series of Convertible Notes plus accrued and unpaid interest.
+Added: If we undergo a fundamental change (as defined in the indenture governing the 2014 Notes or the 2019 Notes, as applicable), holders of the applicable series of Convertible Notes may require us to repurchase such Convertible Notes in whole or in part for cash at a repurchase price equal to 100% of the principal amount of the applicable series of Convertible Notes plus accrued and unpaid interest.
If we refinance all or any portion of the Convertible Notes, we may issue additional convertible notes or other debt, which could include additional company obligations and represent more dilution to existing stockholders and noteholders.
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We rely on patent protection, where appropriate and available, as well as a combination of copyright, trade secret, and trademark laws, and nondisclosure, confidentiality, and other contractual restrictions to protect our proprietary technology.
−Removed: However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage.
+Added: However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any
+Added: competitive advantage.
We apply for patents covering our products and technologies and uses thereof, as we deem appropriate.
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Even if such licenses are obtainable, they may not be available at a reasonable cost.
−Removed: We could therefore incur substantial costs
−Removed: related to royalty payments for licenses obtained from third parties, which could negatively affect our product margins or financial position.
+Added: We could therefore incur substantial costs related to royalty payments for licenses obtained from third parties, which could negatively affect our product margins or financial position.
Further, we could encounter delays in product introductions, or interruptions in product sales, as we develop alternative methods or products.
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We could also voluntarily agree to defend or indemnify third parties in instances where we are not obligated to do so if we determine it would be important to our business relationships.
−Removed: If we are required or agree to defend or indemnify any of these third parties in connection with any infringement claims, we could incur significant costs and expenses that could adversely affect our business, operating results, or financial condition.
+Added: If we are required or agree to defend or indemnify any of these third parties in connection with any
+Added: infringement claims, we could incur significant costs and expenses that could adversely affect our business, operating results, or financial condition.
We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our employees’ former employers or other institutions or third parties with which such employees may have been previously affiliated.
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government grants.
−Removed: In accordance with these regulations, these licenses provide that products embodying the technologies are subject to domestic manufacturing requirements.
+Added: In accordance with these regulations, these licenses provide that products embodying the technologies
+Added: are subject to domestic manufacturing requirements.
If this domestic manufacturing requirement is not met, the government agency that funded the relevant grant is entitled to exercise specified rights, referred to as “march-in rights,” which if exercised would allow the government agency to require the licensors or us to grant a non-exclusive, partially exclusive, or exclusive license in any field of use to a third party designated by such agency.
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Sales of large numbers of shares by any of our large stockholders could adversely affect our trading price, particularly given our relatively small historic trading volumes.
−Removed: If stockholders holding shares of our common stock sell, indicate an intention to sell, or if it is perceived that they will sell, substantial amounts of their common stock in the public market, the trading price of our common stock could decline.
+Added: If stockholders holding shares of our common stock sell,
+Added: indicate an intention to sell, or if it is perceived that they will sell, substantial amounts of their common stock in the public market, the trading price of our common stock could decline.
Moreover, if there is no active trading market or if the volume of trading is limited, holders of our common stock may have difficulty selling their shares.
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• failure to complete significant sales;
−Removed: • manufacturing disruptions that could occur if we are unable to successfully expand our production in our current or an alternative facility;
+Added: • manufacturing disruptions that could occur if we are unable to successfully expand our production in our current or alternative facilities;
• supply chain disruptions;
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These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.
−Removed: In addition, because we are incorporated in Delaware, we are governed by the provisions of
−Removed: Section 203 of the Delaware General Corporation Law (DGCL), which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us.
+Added: In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (DGCL), which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us.
The forum selection provision in our bylaws could limit the ability of our stockholders to bring a claim in a judicial forum viewed by the stockholders as more favorable for disputes with us or our directors, officers or other employees.
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• any action asserting a claim against us that is governed by the internal-affairs doctrine.
−Removed: This provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S.
+Added: This provision does not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended (the Exchange Act), or any other claim for which the U.S.
federal courts have exclusive jurisdiction.
−Removed: Our bylaws further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
+Added: Our bylaws further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended (the Securities Act).
These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees.
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RISKS RELATED TO OUR CAPITAL STRUCTURE
−Removed: As a result of the Private Placement Issuance, the Purchasers own a significant portion of our total outstanding voting securities and may prevent other stockholders from influencing material corporate decisions, and the Purchasers’ interests may conflict with those of our other stockholders.
+Added: As a result of the Private Placement Issuance (as defined below), the Purchasers (as defined below) own a significant portion of our total outstanding voting securities and may prevent other stockholders from influencing material corporate decisions, and the Purchasers’ interests may conflict with those of our other stockholders.
+Added: In April 2022, (i) we issued and sold to (a) Casdin Private Growth Equity Fund II, L.P.
+Added: and Casdin Partners Master Fund, L.P.
+Added: (collectively, Casdin) an aggregate of 112,500 shares of our Series B-1 Convertible Preferred Stock, par value $0.001 per share (Series B-1 Preferred Stock) and (b) Viking Global Opportunities Illiquid Investments Sub-Master LP and Viking Global Opportunities Drawdown (Aggregator) LP (collectively, Viking and, together with Casdin, the Purchasers) an aggregate of 112,500 shares of our Series B-2 Convertible Preferred Stock, par value $0.001 per share (Series B-2 Preferred Stock and, together with the Series B-1 Preferred Stock, the Series B Preferred Stock) and (ii) in connection therewith, bridge loans previously provided to us by the Purchasers were automatically converted into an aggregate of 30,559 shares of Series B Preferred Stock (such transactions, collectively, the Private Placement Issuance).
The Series B Preferred Stock is initially convertible into up to approximately 75,164,397 shares of our common stock (without giving effect to limitations associated with any conversion cap).
−Removed: On an as-converted basis, this collectively represents approximately 48.8% of our issued and outstanding common stock (equating to approximately 24.4% per Purchaser) based on the number of shares of common stock outstanding as of June 30, 2022, but assuming full conversion of all Series B Preferred Stock (without giving effect to limitations associated with any conversion cap).
+Added: On an as-converted basis, this collectively represents approximately 48.7% of our issued and outstanding common stock (equating to approximately 24.3% per Purchaser) based on the number of shares of common stock outstanding as of September 30, 2022, but assuming full conversion of all Series B Preferred Stock (without giving effect to limitations associated with any conversion cap).
As a result, the Purchasers are our largest stockholders.
This concentration of ownership, together with the voting rights, director designation rights and consent rights granted to the Purchasers as part of the Private Placement Issuance, may be perceived negatively by other investors and, as a result, may adversely affect the market price of our common stock.
−Removed: The Purchasers, if they acted together, could significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or
−Removed: other business combination transactions.
+Added: The Purchasers, if they acted together, could significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combination transactions.
The interests of the Purchasers may not always coincide with our interests or the interests of other stockholders.
−Removed: The market value of our common stock could decline if the Purchasers sell their Series B Preferred Stock or common stock after certain transfer restrictions expire.
−Removed: Pursuant to the Registration Rights Agreement that we entered into on January 23, 2022 with the Purchasers, we registered the resale of the shares of common stock issuable upon conversion of the Series B Preferred Stock with the SEC, which means that such shares would become eligible for resale in the public markets following the expiration of any applicable transfer restrictions.
+Added: The market value of our common stock could decline if the Purchasers sell their Series B Preferred Stock or common stock.
+Added: Pursuant to the Registration Rights Agreement that we entered into on January 23, 2022 with the Purchasers, we registered the resale of the shares of common stock issuable upon conversion of the Series B Preferred Stock with the SEC, which means that such shares would become eligible for resale in the public markets, subject to any applicable transfer restrictions.
Any sale of such shares, or the anticipation of the possibility of such sales, could create downward pressure on the market price of our common stock.
Our Series B Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders, which could adversely affect our liquidity and financial condition, result in the interests of holders of our Series B Preferred Stock differing from those of our common stockholders and make an acquisition of us more difficult.
−Removed: Holders of our Series B preferred stock have (i) a liquidation preference (ii) rights to dividends, which are senior to all of our other equity securities, (iii) the right to require us to repurchase any or all of their Series B Preferred Stock in connection with certain change of control events, and (iv) conversion price adjustments upon the occurrence of certain events, each subject to the terms, conditions and exceptions contained in the Certificate of Designations for the Series B-1 and Series B-2 Preferred Stock.
+Added: Holders of our Series B Preferred Stock have (i) a liquidation preference, (ii) rights to dividends, which are senior to all of our other equity securities, (iii) the right to require us to repurchase any or all of their Series B Preferred Stock in connection with certain change of control events, and (iv) conversion price adjustments upon the occurrence of certain events, each subject to the terms, conditions and exceptions contained in the applicable Certificate of Designations.
These dividend and other rights and obligations could impact our liquidity and reduce the amount of cash flows available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.
1 unchanged sentence
The preferential rights could also result in divergent interests between the Purchasers and holders of our common stock.
−Removed: Furthermore, a sale of our Company, as a change of control event, may require us to repurchase Series B Preferred Stock, which could have the effect of making an acquisition of our Company more expensive and potentially deterring proposed transactions that may otherwise be beneficial to our stockholders.
−Removed: The holders of Series B Preferred Stock are entitled to vote with the holders of common stock with voting power measured in a manner related to the conversion ratio of the shares of Series B Preferred Stock and the holders of Series B Preferred Stock have rights to approve certain actions.
−Removed: The holders of Series B Preferred Stock may exercise influence over us, including through the ability of each of the holders of the Series B-1 Preferred Stock and the holders of the Series B-2 Preferred Stock to designate a member of our board of directors.
−Removed: The holders of Series B Preferred Stock are generally entitled to vote with the holders of the shares of common stock on all matters submitted for a vote of holders of shares of common stock (voting together with the holders of shares of common stock as one class) with voting power measured in a manner related to the conversion ratio of the shares of Series B Preferred Stock, subject to certain voting limitations as described in the Series B Certificates of Designations.
+Added: Furthermore, a sale of our Company, as a change of control event, may require us to repurchase the Series B Preferred Stock, which could have the effect of making an acquisition of our Company more expensive and potentially deterring proposed transactions that may otherwise be beneficial to our stockholders.
+Added: The holders of our Series B Preferred Stock are entitled to vote with the holders of our common stock with voting power measured in a manner related to the conversion ratio of the shares of Series B Preferred Stock, and the holders of our Series B Preferred Stock have rights to approve certain actions.
+Added: The holders of our Series B Preferred Stock may exercise influence over us, including through the ability of the holders of the Series B-1 Preferred Stock and the holders of the Series B-2 Preferred Stock to each designate a member of our board of directors.
+Added: The holders of our Series B Preferred Stock are generally entitled to vote with the holders of our common stock on all matters submitted for a vote of holders of our common stock (voting together with the holders of common stock as one class) with voting power measured in a manner related to the conversion ratio of the shares of Series B Preferred Stock, subject to certain voting limitations as described in the applicable Certificate of Designations.
Additionally, the consent of the holders of at least 60% of the shares of Series B Preferred Stock is required for, among other things, (i) amendments to our certificate of incorporation or bylaws that have an adverse effect on the rights, preferences, privileges or voting powers of the Series B Preferred Stock and (ii) issuances by us of securities that are senior to, or equal in priority with, the Series B Preferred Stock.
−Removed: Additionally, pursuant to the Series B Certificates of Designations, the Purchasers each have the right to nominate and elect one member to our board of directors at each annual meeting of the stockholders of the Company or at any special meeting called for the purpose of electing directors, for so long as the Casdin Preferred Percentage or Viking Preferred Percentage, as applicable, is equal to or greater than 7.5%.
−Removed: The director designated by each of the Purchasers is entitled to serve on committees of our board of directors, subject to applicable law and Nasdaq rules.
−Removed: Notwithstanding the fact that all directors will be subject to fiduciary duties to us and to applicable law, the interests of the directors designated by the Purchasers may differ from the interests of our security holders as a whole or of our other directors.
+Added: Additionally, pursuant to the Certificates of Designations for the Series B Preferred Stock, the holders of a majority of the outstanding Series B-1 Preferred Stock and the holders of a majority of the outstanding Series B-2 Preferred Stock each have the right to nominate and elect one member to our board of directors at each annual meeting of the stockholders of the Company or at any special meeting called for the purpose of electing directors, for so long as the Casdin Preferred Percentage or Viking Preferred Percentage (each as defined in the applicable Certificate of Designations), as applicable, is equal to or greater than 7.5%.
+Added: Such directors are not subject to the classified board of directors provisions of our certificate of incorporation, and are entitled to serve on committees of our board of directors, subject to applicable law and Nasdaq rules.
+Added: Notwithstanding the fact that all directors will be subject to fiduciary duties to us and to applicable law, the interests of the directors designated by the holders of Series B Preferred Stock may differ from the interests of our security holders as a whole or of our other directors.
These significant stockholders may be able to determine or significantly influence matters requiring stockholder approval.
The interests of significant stockholders may not always coincide with our interests or the interests of other stockholders.
−Removed: The Series B-1 Director and the Series B-2 Director are not subject to the classified board of directors provisions of our Charter.
−Removed: The director designated by the holders of the Series B -1 Preferred Stock and Series B-2 Preferred Stock will also be entitled to serve on committees of our board of directors, subject to applicable law and stock exchange rules.
−Removed: In addition, the Series B Certificates of Designations also provide that for so long as the Casdin Ownership Percentage and the Viking Ownership
−Removed: Percentage (each as defined in the applicable Certificate of Designations) continue to be met or exceeded for such series of Series B Preferred Stock, the Series B-1 Director and Series B-2 Director will have certain consent rights over, among other things:
−Removed: (i) any increase in the number of directors on the Board beyond seven;
+Added: The Certificates of Designations for the Series B Preferred Stock also provide that for so long as the Casdin Preferred Percentage or Viking Preferred Percentage, as applicable, is equal to or greater than 7.5%, the director designated by the holders of the Series B-1 Preferred Stock or the Series B-2 Preferred Stock, as applicable, will have certain consent rights over, among other things:
+Added: (i) any increase in the number of directors on our board of directors beyond seven;
(ii) the hiring, promotion, demotion, or termination of the Company’s Chief Executive Officer;
−Removed: (iii) entering into or modifying (including by waiver) any transaction, agreement or arrangement with any Related Person (as such term is defined in the Series B Certificates of Designations), subject to certain exceptions;
+Added: (iii) entering into or modifying (including by waiver) any transaction, agreement or arrangement with any Related Person (as defined in the Certificates of Designations for the Series B Preferred Stock), subject to certain exceptions;
(iv) any voluntary petition under any applicable federal or state bankruptcy or insolvency law effected by the Company;
(v) any change in the principal business of the Company or entry by the Company into any material new line of business;
−Removed: and (vi) for a period of three years after the Closing, (A) any acquisition (including by merger, consolidation or acquisition of stock or assets) of any assets, securities or property of any other person or (B) any sale, lease, license, transfer or other disposition of any assets of the Company or any of its subsidiaries, in each case, other than acquisitions or disposition of inventory or equipment in the ordinary course of business consistent with past practice, for consideration in excess of $50,000,000 in the aggregate in any six month period.
−Removed: As a result, the holders of Series B Preferred Stock have the ability to influence the outcome of certain matters affecting our governance and capitalization.
−Removed: Our obligations to the holders of Series B Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.
+Added: and (vi) for a period of three years after the closing date of the Private Placement Issuance, (A) any acquisition (including by merger, consolidation or acquisition of stock or assets) of any assets, securities or property of any other person or (B) any sale, lease, license, transfer or other disposition of any assets of the Company or any of its subsidiaries, in each case, other than acquisitions or dispositions of inventory or equipment in the ordinary course of business consistent with past practice, for consideration in excess of $50,000,000 in the aggregate in any six month period.
+Added: As a result, the holders of our Series B Preferred Stock have the ability to influence the outcome of certain matters affecting our governance and capitalization.
+Added: Our obligations to the holders of our Series B Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.
Unregistered Sales of Equity Securities and Use of Proceeds
−Removed: During the three months ending June 30, 2022, the registrant did not make any sales of unregistered equity securities that were not previously reported in a Current Report on Form 8-K.
Defaults Upon Senior Securities
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