What changed in this filing

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Item 1A. Risk Factors

2024-03-08 compared with 2023-03-15 · 144 added, 156 removed, 793 unchanged (27% of the section changed)

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Uncertainties in global economic conditions that are beyond our control have in the past impacted our business and may in the future materially adversely affect our business, results of operations, financial condition and stock price.

These adverse economic conditions include inflation, slower growth or recession, new or increased tariffs and other changes to fiscal and monetary policy, higher interest rates, high unemployment, decreased consumer confidence in the economy, armed hostilities, such as the ongoing military conflict between Russia and Ukraine, foreign currency exchange rate fluctuations, and other matters that influence consumer spending and preferences.

These adverse economic conditions include inflation, slower growth or recession, new or increased tariffs and other changes to fiscal and monetary policy, higher interest rates, high unemployment, decreased consumer confidence in the economy, armed hostilities, such as the ongoing military conflict between Russia and Ukraine, the ongoing hostilities in Israel and the Gaza Strip, foreign currency exchange rate fluctuations, and other matters that influence consumer spending and preferences.

As a result of these economic conditions, our customers may face their own financial difficulties and the demand and sale of our products to end users and the quantity of products our customers decide to purchase from us (or the mix of products demanded) could be adversely affected, and it may become more challenging to forecast our operating results and make business decisions.

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As a result, our operations and performance depend significantly on global and regional economic conditions.

In addition to an adverse impact on demand for our products, uncertainty about, or a decline in, global or regional economic conditions can have a significant impact on our suppliers, manufacturers, logistics providers, distributors, and other partners.

Potential effects include financial instability; inability to obtain credit to finance operations; and insolvency.

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These and other economic factors can materially adversely affect our business, results of operations, financial condition and stock price.

The COVID-19 global pandemic, and any future outbreaks or other public health emergencies, could materially affect our business, liquidity, financial condition and operating results.

The COVID-19 pandemic, including resurgences and the emergence of new variants, and efforts to control its spread have significantly curtailed the movement of people, goods and services worldwide.

In light of the uncertain and continually evolving situation relating to the spread of COVID-19, both we and authorities across the U.S.

and globe have implemented precautionary measures that include varying degrees of restriction on social and commercial activity intended to minimize the risk of the virus.

While certain of these restrictions were lifted and phased re-openings occurred in some regions, some restrictions continued through fiscal 2022 in certain regions or to certain extents, and other regions have seen a resurgence of COVID-19 cases resulting in reinstitution or expansion of such measures.

These measures have impacted and may continue to impact all or portions of our workforce, operations, suppliers and customers and demand for our products and services.

There can be no certainty that such policies will continue, or that new or similar restrictions will not be imposed to address the continued spread of COVID-19 or any of its variants, or to address other outbreaks, epidemics, pandemics or public health crises, and the extent of the impact on our business and financial condition from measures to counteract the effects of a public health crisis, such as the COVID-19 pandemic, will depend on numerous evolving factors that we may not be able to accurately predict.

In particular, the COVID-19 pandemic, including resurgences and the emergence of new variants, and efforts to control its spread, has generally disrupted the operations of our customers and prospective customers, and may continue to disrupt their operations, including as a result of travel restrictions and/or business shutdowns, uncertainty in the financial markets or other harm to their business and financial results.

These disruptions have caused reduced capital spend by our existing customers and potential new customers, and could result in further reductions to capital expenditure budgets, delayed purchasing decisions, longer sales cycles, extended payment terms or missed payments, and postponed or canceled projects, any of which would negatively impact our business and operating results, including sales and cash flows.

For example, Federal customers may divert funds to address their own supply chain or other challenges, which could delay the progression of customer trials and pilots of our products into larger enterprise-wide justification, purchase and deployment of both of our devices and consumables .

The long-term effects to the global economy and to us are difficult to assess or predict and may lead to a decline in the market prices of our products, risks to employee health and safety, risks to our ability to manufacture and distribute our products and services and reduced sales in geographic locations impacted.

In addition, the strain on certain domestic and international supply chains from the COVID-19 pandemic has resulted in production slowdowns, longer lead times and negative impacts on pricing for certain of our critical components, including, among other things, electronic and plastic components necessary to manufacture our products.

A pandemic, epidemic or outbreak of an infectious disease such as the COVID-19 pandemic may adversely affect our business.

Our global operations expose us to risks associated with public health crises and epidemics or pandemics, such as COVID-19.

Such risks include significant volatility, uncertainty and worldwide economic disruption which may result in an economic slowdown of potentially extended duration that could impact our operations and supply chain.

Future outbreaks of infectious disease, such as COVID 19, and any future variants or subvariants that may emerge, may disrupt operations of our customers and prospective customers including as a result of travel restrictions and/or business shutdowns, uncertainty in the financial markets or other harm to their business and financial results.

These disruptions could reduce capital spend by our existing customers and potential new customers, and could result in further reductions to capital expenditure budgets, delayed purchasing decisions, longer sales cycles, extended payment terms or missed payments, and postponed or canceled projects, any of which would negatively impact our business and operating results, including sales and cash flows.

Federal customers may divert funds to address their own supply chain or other challenges, which could delay the progression of customer trials and pilots of our products into larger enterprise-wide adoption, and could delay the purchase and deployment of both of our devices and consumables.

In addition, the strain on certain domestic and international supply chains from public health crises and epidemics or pandemics, such as COVID-19, could result in production slowdowns, longer lead times and negative impacts on pricing for certain of our critical components, including, among other things, electronic and plastic components necessary to manufacture our products.

Our suppliers may have to temporarily close a facility, face staffing shortages, production slowdowns and stoppages, be overwhelmed by unexpected demand or face disruptions in delivery systems which may require suppliers to locate shipping routes that avoid delivery bottlenecks, all of which could cause delays in delivery.

If our suppliers are unable to deliver the components and subassemblies we require on a timely basis, we cannot guarantee that we will be able to locate alternative sources of supply for our products on acceptable terms, or at all.

A significant portion of our field sales, customer training events and other application services have historically been conducted in person, and the rollout of our new products has historically been supported by our participation at industry conferences.

We have experienced, and may experience in the future, prolonged restrictive measures put in place in order to control the spread of COVID-19 or another pandemic, epidemic or outbreak of an infectious disease that prevented us from meeting customers in person and attending conferences, which has, and may in the future, negatively impact our ability to attract new customers or retain and expand our relationships with existing customers.

Although we continue to monitor the situation and may adjust our current policies as more information and public health guidance become available, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and/or the precautionary measures that we have adopted may create operational and other challenges, any of which could harm our business and results of operations.

To the extent a pandemic, epidemic or outbreak of an infectious disease in the United States such as the COVID-19 pandemic adversely affects our business, financial condition and results of operations, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, including but not limited to, those related to our ability to increase sales to existing and new customers, continue to perform on existing contracts, develop and deploy new technologies, expand our marketing capabilities and sales organization, generate sufficient cash flow to service our indebtedness, and comply with the covenants in the agreements that govern our indebtedness.

Risks related to our business and industry

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Additionally, we may encounter unforeseen issues that require us to incur additional costs.

We will have to generate and sustain increased revenue to

achieve profitability and positive cash flow as a result of these increased expenditures.

We will have to generate and sustain increased revenue to achieve profitability and positive cash flow as a result of these increased expenditures.

Accordingly, if we are not able to achieve or maintain profitability and we incur significant losses in the future, the market price of our common stock may decline, and you could lose part or all of your investment.

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• our dependence on a limited number of large orders from U.S.

government agencies for a substantial portion of our revenue in any quarterly period, whereby the loss of or delay in a customer order, or any delay in our fulfillment of deliverables under a customer order, could significantly reduce our revenue for that quarter;

government agencies for a substantial portion of our revenue in any quarterly period, whereby the loss of or delay in a customer order, including as a result of delays in Federal budget approval, or any delay in our fulfillment of deliverables under a customer order, could significantly reduce our revenue for that quarter;

• market volatility or downturns caused by outbreaks, epidemics, pandemics, geopolitical tensions or conflicts, or other macroeconomic dynamics;

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• the productivity and growth of our sales force and customer service team;

• the effectiveness of our distributors in securing new orders and fulfilling existing orders;

• the effectiveness of our channel partners in securing new orders and fulfilling existing orders;

• service interruptions with any of our single source suppliers or subassembly manufacturers;

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Our operating expenses are heavily based on our anticipated product revenue growth, especially as we continue to invest significant resources in building out our sales and marketing channels and the development of future products.

As a result, any shortfall in product revenue in relation to our expectations could cause significant changes in our operating results from period-to-period and could result in negative cash flow from operations and a decrease in the price of our common stock.

We have experienced a period of significant growth in recent years, and our inability to manage this growth could have a material adverse effect on our business, the quality of our products and services and our ability to retain key personnel.

We have experienced a period of significant growth in recent years.

As a result, any shortfall in product revenue in relation to our expectations could cause significant changes in our operating

results from period-to-period and could result in negative cash flow from operations and a decrease in the price of our common stock.

We have experienced growth of our business in recent years, and our inability to manage this growth could have a material adverse effect on our business, the quality of our products and services and our ability to retain key personnel.

We have experienced growth of our business in recent years.

Our growth has placed increased demands on our management and other resources and will continue to do so in the future.

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• maintaining the quality of product and services offerings while controlling our expenses;

• meeting end-user requirements for functional performance and product robustness;

• growing our direct sales force and channel partners;

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Customers may require product features and capabilities that our current products do not have.

Any of the current plans we have for future developments or enhancements are strategic in nature and not commitments to develop such capabilities for our customers.

Any of the current plans we have for future developments or enhancements are strategic in nature and not commitments to

develop such capabilities for our customers.

If we fail to develop products that satisfy customer requirements, our ability to create or increase demand for our products will be harmed.

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As a result, to the extent we fail to accurately forecast the needs of our customers and timely introduce new and innovative products or services, or fail to obtain desired levels of market acceptance, our business may suffer and our operating results could be adversely affected.

The challenge of identifying market trends and customer needs is even more demanding for markets that we have recently entered, such as the bioprocessing market, or that we intend to

enter in the future, such as the GxP quality assurance market.

The challenge of identifying market trends and customer needs is even more demanding for markets that we have recently entered, such as the bioprocessing market, or that we intend to enter in the future, such as the GxP quality assurance market.

There is no certainty that we will effectively identify these trends and needs or introduce products that are successful.

We have limited experience in marketing and sales and are in the early stages of building our sales channels in the life science market and internationally.

We need to continue to build and develop our sales, marketing and customer service organization, and to engage with domestic and international channel partners to support our planned growth.

We may not be able to market, sell or distribute our current and future products effectively enough to support our planned growth.

Currently, we sell our products through a combination of direct sales efforts and partnerships with distributors across all of our key markets.

During 2022, our distributors accounted for a significant portion of our total revenue.

Currently, we sell our products through a combination of direct sales efforts and partnerships with channel partners across all of our key markets.

During 2023, our channel partners accounted for a significant portion of our total revenue.

We are in the process of broadening and diversifying our sales channels across all markets.

In the future, if we fail to maintain good relationships with, or fail to successfully motivate any of our large distributors, our revenue may decline.

If we do not diversify our sales channels and effectively utilize our direct sales force, we will continue to be susceptible to risks associated with having a large percentage of revenue concentrated with a limited number of distributors.

In the future, if we fail to maintain good relationships with, or fail to successfully motivate any of our large channel partners, our revenue may decline.

Competition for employees capable of selling expensive instruments within the pharmaceutical and biotechnology industries is intense.

We may not be able to attract and retain personnel or be able to build an efficient and effective sales organization, which could negatively impact sales and market acceptance of our products and limit our revenue growth and potential profitability.

In addition, the time and cost of establishing a specialized sales, marketing and customer service force for a particular product or service may be difficult to justify in light of the revenue projected to be generated by such additional personnel and resources.

We also intend to add additional distribution partners in the life science market, and if we are unable to do so successfully, it will adversely impact our ability to increase the revenue from our Rebel and ZipChip Interface.

We rely on distributors for the sale of our products in certain countries outside of the United States.

We intend to continue to grow our business internationally and to do so we must attract additional distributors and retain existing distributors to maximize the commercial opportunity for our products.

We exert limited control over existing distributors under our agreements with them, and if their sales and marketing efforts for our products in their particular region are not successful, our business would be materially and adversely affected.

Locating, qualifying and engaging additional distribution partners with local industry experience and knowledge will be necessary in at least the short to mid-term to effectively market and sell our platform in certain countries outside the United States.

We may not be successful in finding, attracting and retaining distribution partners, or we may not be able to enter into such arrangements on favorable terms.

Most of our distribution relationships are non-exclusive and permit such distributors to distribute competing products.

As such, our distributors may not commit the necessary resources to market our products to the level of our expectations or may choose to favor marketing the products of our competitors.

If current or future distributors do not perform adequately or we are unable to enter into effective arrangements with distributors in particular geographic areas, we may not realize long-term international revenue growth.

In addition, the time and cost of maintaining a specialized sales, marketing and customer service force for a particular product or service may be difficult to justify in light of the revenue projected to be generated by such additional personnel and resources.

We also intend to add additional channel partners in the life science market, and if we are unable to do so successfully, it will adversely impact our ability to increase the revenue from our Maverick, Rebel, ZipChip Interface and Maven and related sampling products.

We rely on channel partners for the sale of our products in certain countries outside of the United States, and to access certain end customers in the United States.

We intend to continue to grow our business internationally and to do so we must attract additional channel partners and retain existing channel partners to maximize the commercial opportunity for our products.

We exert limited control over existing channel partners under our agreements with them, and if their sales and marketing efforts for our products in their particular region are not successful, our business would be materially and adversely affected.

Locating, qualifying and engaging additional channel partners with local industry experience and knowledge will be necessary in at least the short to mid-term to effectively market and sell our platform in certain countries outside the United States.

We may not be successful in finding, attracting and retaining channel partners, or we may not be able to enter into such arrangements on favorable terms.

Most of our channel partner relationships are non-exclusive and permit such channel partners to distribute competing products.

As such, our channel partners may not commit the necessary resources to market our products to

the level of our expectations or may choose to favor marketing the products of our competitors.

If current or future channel partners do not perform adequately or we are unable to enter into effective arrangements with channel partners in particular geographic areas, we may not realize long-term international revenue growth.

We face intense and growing competition from leading technology companies as well as from emerging companies.

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This competition may make it more difficult for us to sell our products, and may result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses and failure to increase, or the loss of, market share, any of which would likely seriously harm our business, operating results and financial condition.

We face substantial competition from very large and experienced enterprises, both public and privately held, including Agilent Technologies, Bruker Corporation, Danaher Corporation, Inficon, Flir Systems, PerkinElmer, Shimadzu Corporation, Thermo Fisher Scientific, and Waters Corp.

We face substantial competition from very large and experienced enterprises, both public and privately held, including Agilent Technologies, Bruker Corporation, Danaher Corporation, Inficon, Teledyne, Endress & Hauser, PerkinElmer, Shimadzu Corporation, Thermo Fisher Scientific, and Waters Corp.

Our competitors also include many smaller companies, including companies established to pursue new and emerging technologies.

We also expect additional

competition in the future from new and existing companies with whom we do not currently compete directly.

We also expect additional competition in the future from new and existing companies with whom we do not currently compete directly.

As our industry evolves, our current and potential competitors may establish cooperative relationships among themselves or with third parties, including companies with whom we have partnerships and whose products interoperate with our own, that could acquire significant market share, which could adversely affect our business.

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Accordingly, our business may not grow as expected and our business may suffer.

Currently, we derive the majority of our revenue from our handheld products and are actively growing the revenue we derive from our desktop products, focused today in the life science market.

Currently, we derive the majority of our revenue from our handheld products in the field forensics market, and are seeking to grow the revenue we derive from our desktop products in the life science market.

If we fail to maintain significant market acceptance in existing markets or fail to successfully increase our penetration in new and expanding markets, we will not generate expected revenue and our prospects may be harmed.

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If market demand for our MX908 product declines, if our products fail to maintain or achieve greater market acceptance, or if we fail to execute on our sales and customer service efforts in the field forensics market, we will not be able to grow our revenue sufficiently to achieve or maintain profitability.

We also derive a significant and growing portion of our revenue from our desktop devices, primarily in the life science market, specifically the antibody therapeutics, cell and gene therapy and synthetic biology markets, including sales to biopharmaceutical companies and research institutions.

We recently introduced our Rebel product line and our future success will partially depend on our ability to successfully commercialize this product line.

We also are seeking to grow and derive a significant portion of our revenue from our desktop devices in the life science market, specifically the antibody therapeutics, cell and gene therapy and synthetic biology markets, including sales to biopharmaceutical companies and research institutions.

We recently introduced our Maverick and Maven

product lines and our future success will partially depend on our ability to successfully commercialize these product lines.

The life sciences scientific community is comprised of a small number of early adopters and key opinion leaders who significantly influence the rest of the community.

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The sizes of the markets for our solutions may be smaller than estimated and new market opportunities may not develop as quickly as we expect, or at all, limiting our ability to successfully sell our products.

The markets for our products are rapidly evolving, making it difficult to predict with any accuracy the sizes of the markets for our current and future solutions.

The markets for our innovative new class of products are rapidly evolving, making it difficult to predict with any accuracy the sizes of the markets for our current and future solutions.

Our estimates of the annual total addressable market for our current and future solutions are based on a number of internal and third party estimates and assumptions.

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For example, new life sciences technology is often not adopted by the relevant market until a sufficient amount of research conducted using such technology has been published in peer-reviewed publications.

While we believe our assumptions and the data underlying our estimates of the total annual addressable market for our solutions are reasonable, these assumptions and

estimates may not be correct and the conditions supporting our assumptions or estimates, or those underlying the third party data we have used, may change at any time, thereby reducing the accuracy of our estimates.

While we believe our assumptions and the data underlying our estimates of the total annual addressable market for our solutions are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates, or those underlying the third party data we have used, may change at any time, thereby reducing the accuracy of our estimates.

As a result, our estimates of the annual total addressable market for our solutions may be incorrect.

We rely on assumptions and estimates and data to calculate certain of our key metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.

In addition to our financial results, our management regularly reviews a number of operating and financial metrics, including a breakdown of product and service revenue into device sales and consumables and service revenue (recurring revenue), product placements, cumulative product placements, revenue by customer market (government, pharmaceutical/biotechnology and academia), and status of pipeline opportunities that represent customers in test, trials, pilots and full deployments, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

As both the industry in which we operate and our businesses continue to evolve, so too might the metrics by which we evaluate our businesses and the company.

In addition, while the calculation of the metrics we use is based on what we believe to be reasonable estimates, our internal tools are not independently verified by a third party and have a number of limitations and, furthermore, our methodologies for tracking these metrics may change over time, for example, the industry breakdown of our customer revenue by government, pharma/bio and academia sales.

Accordingly, investors should not place undue reliance on these metrics.

Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense, which contribute to the unpredictability and variability of our financial performance and may adversely affect our profitability.

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We believe our platform has potential applications across a wide range of markets and we have targeted certain markets in which we believe we have a higher probability of success or revenue opportunity or for which the path to commercialize products and realizing or achieving revenue is shorter.

For example, we have entered into agreements regarding a specific government program opportunity to develop an aerosol vapor detector, and more recently we entered into several engagements related to the evaluation of our products within the cell therapy and gene therapy markets.

We seek to continue to prioritize opportunities and allocate our resources among our programs to maintain a

balance between advancing near-term opportunities and exploring additional markets for our technology.

For example, we have entered into agreements regarding a specific government program opportunity to develop an aerosol vapor detector, and several engagements

related to the evaluation of our products within the cell therapy and gene therapy markets.

We seek to continue to prioritize opportunities and allocate our resources among our programs to maintain a balance between advancing near-term opportunities and exploring additional markets for our technology.

However, due to the significant resources required for the development of workflows for new markets, we must make decisions regarding which markets to pursue and the amount of resources to allocate to each.

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Food and Drug Administration, or FDA, or other regulatory agencies in the future, which could increase our costs and delay or prevent commercialization of our products, thereby materially and adversely affecting our business, financial condition, results of operations, and prospects.

We make our platform and devices, including our MX908, Rebel, and ZipChip Interface, available to customers as research-use-only, or RUO, products.

We make our platform and devices, including our Maven, Maverick, MX908, Rebel and ZipChip Interface, available to customers as research-use-only, or RUO, products.

Products that are labeled as RUO are exempt from compliance with most FDA requirements, including premarket clearance or approval, manufacturing requirements, and others.

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Knopp, our Chief Executive Officer and one of our co-founders, and Dr.

Brown, our Chief Technology Officer and one of our co-founders, are critical to our vision, strategic direction, culture and products.

Brown, our Chief Product Officer and one of our co-founders, are critical to our vision, strategic direction, culture and products.

Each of our employees may terminate his or her relationship with us at any time and the loss of the services of such persons could have an adverse effect on our business.

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As we continue to scale our business, we may find that certain of our products, certain customers or certain markets, including the biopharmaceutical market, may require a dedicated sales force or sales personnel with different experience than those whom we currently employ.

Our continued growth will depend, in part, on attracting, retaining and motivating highly-trained sales personnel with the necessary scientific background and technical ability to understand our systems and effectively identify and sell to potential new customers.

Our continued growth will depend, in part, on attracting, retaining and motivating highly-trained sales personnel with the necessary scientific background and technical ability to understand

our systems and effectively identify and sell to potential new customers.

Identifying, recruiting and training additional qualified personnel will require significant time, expense and attention.

In addition, the continued development of

complementary software tools, such as our analysis tools and visualization software, requires us to compete for highly trained software engineers in the Boston area and for highly trained customer service personnel globally.

In addition, the continued development of complementary software tools, such as our analysis tools and visualization software, requires us to compete for highly trained software engineers in the Boston area and for highly trained customer service personnel globally.

We do not have fixed term employment contracts with any of our employees.

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Although in many cases we use standard components for our products, in some cases, components may only be purchased from a limited number of suppliers.

In particular, we are dependent on single suppliers for our Rebel autosampler subassemblies and our MX908 consumables.

If, for any reason, our access to these swab samplers is limited or delayed, we would need to quickly identify and qualify an alternate source of swab samplers.

Identifying and qualifying an alternate source may take time and involve additional expense, and there is no guarantee that the alternate source will perform as expected.

If our customers experienced a shortage or delay in consumables, such as swab samplers, microfluidic chips, or assay kits, or if these

consumables do not perform at the levels our customers expect, our business could be materially and adversely impacted.

In particular, we are dependent on single suppliers for our Rebel and ZipChip autosampler subassemblies, our MX908 consumables, the Raman spectrometer and optical probe and fiber assemblies for Maverick, and our device subassembly for Maven.

If, for any reason, our access to these products is limited or delayed, we would need to quickly identify and qualify an alternate source of products.

Identifying and qualifying an alternate source may take time and involve

additional expense, and there is no guarantee that the alternate source will perform as expected.

If our customers experienced a shortage or delay in consumables, such as swab samplers, microfluidic chips, or assay kits, or if these consumables do not perform at the levels our customers expect, our business could be materially and adversely impacted.

In addition, we maintain relatively low inventory and acquire components based upon anticipated annual demand.

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Additionally, damage to a manufacturing facility or other property of any of our suppliers, due to fire, flood or other natural disaster or casualty event may have a material adverse effect on our business, financial condition and results of operations.

For additional risks related to the supply of necessary components, refer to the risk factor entitled “ The COVID-19 global pandemic, and any future outbreaks or other public health emergencies, could materially affect our business, liquidity, financial condition and operating results ” above.

Our current research and development efforts may not produce significant revenue for several years, if at all.

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Further, defending a suit, regardless of its merit, could be costly, divert management attention and harm our reputation.

We are subject to various and evolving laws and regulations governing the privacy and security of personal data, and our failure to comply could result in fines or criminal penalties and damage our reputation and result in the loss of business.

Privacy and data security are significant issues in the United States, Europe and many other jurisdictions where we operate or collect personal information.

We are subject to data privacy and security laws and regulations in various jurisdictions that apply to the collection, storage, use, sharing and security of personal data, including health information, and impose significant compliance obligations.

In addition, numerous other federal and state laws, including state security breach notification laws, state health information privacy laws and federal and state consumer protection and privacy laws, govern the collection, use, disclosure and security of personal information.

For example, in California, the California Consumer Protection Act, or CCPA, which went into effect on January 1, 2020, established a comprehensive privacy framework for covered businesses by creating an expanded definition of personal information, establishing new data privacy rights for consumers in the State of California, imposing special rules on the collection of consumer data from minors, and creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.

In addition, a ballot initiative, the California Privacy Rights Act, or CPRA, has been in effect since January 1, 2023 and has imposed additional obligations on companies covered by the legislation.

The CPRA significantly modified the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information.

Similar laws have been passed in numerous other states and other states have proposed similar new privacy laws.

Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.

The existence of comprehensive privacy laws in different states in the country would make our compliance obligations more complex and costly and may increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance.

In addition, other states have proposed and/or passed legislation that regulates the privacy and/or security of certain specific types of information.

For example, a small number of states have passed laws that regulate biometric data specifically.

These various privacy and security laws may impact our business activities, including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our products.

State laws are changing rapidly and there is discussion in the U.S.

Congress of a new comprehensive federal data privacy law to which we may likely become subject, if enacted.

For Europe, we are subject to the EU General Data Protection Regulation, or EU GDPR, and the UK equivalent of the same, the UK GDPR (collectively referred to as the GDPR), as well as other national data protection legislation in force in relevant European Economic Area, or EEA, Member States and the UK (including the UK Data Protection Act 2018) with respect to any collecting or processing of personal data (i) regarding individuals in the EEA and UK , and/or (ii) carried out in the context of the activities of an establishment in the EEA and UK.

The GDPR places strict obligations on companies relating to their processing of personal data (for example, informing individuals of how their personal data is handled and how they can exercise their rights, ensuring a valid lawful basis for processing, mandatory data breach notification requirements, maintaining internal records, entering into data processing agreements with third parties, implementing appropriate security and data retention requirements).

The GDPR also imposes strict rules on the transfer of personal data outside of the EEA and UK to countries that do not ensure an adequate level of protection, like the United States in certain circumstances unless valid GDPR transfer mechanisms and transfer impact assessments are put in place.

Any inability to transfer personal data from the EEA and UK to the United States in compliance with data protection laws may impede our business operations and adversely affect our business and financial position.

Failure to comply with the GDPR, and any supplemental EEA Member State or UK national data protection laws may result in substantial penalties for us, including potential fines of up to the greater of €20 million (£17.5 million under the UK GDPR) or 4% of our total worldwide annual turnover.

The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.

The UK’s data protection regime is independent from but aligned to the EU’s data protection regime.

However, following the UK’s exit from the EU, or Brexit, there will be increasing scope for divergence in application, interpretation and enforcement of the data protection laws between these territories.

For example, the UK Government has introduced a Data Protection and Digital Information Bill, or Data Reform Bill into the UK legislative process to reform the UK’s data protection regime following Brexit, which may have the effect of further altering the similarities between the UK and EEA data protection regimes.

The respective provisions and enforcement of the EU GDPR and UK GDPR may further diverge in the future and create additional regulatory challenges and uncertainties.

This lack of clarity on future UK laws and regulations and their interaction with EU laws and regulations could add legal risk, complexity and cost to our handling of European personal data and our privacy and data security compliance programs, and could require us to implement different compliance measures for the UK and the EEA.

All of these evolving compliance and operational requirements impose significant costs, such as costs related to organizational changes, implementing additional protection technologies, training employees and engaging consultants and legal advisors, which are likely to increase over time.

In addition, such requirements may require us to modify our data processing practices and policies, utilize management’s time and/or divert resources from other initiatives and projects.

Any failure or perceived failure by us to comply with any applicable federal, state or foreign laws and regulations relating to data privacy and security could result in damage to our reputation, as well as proceedings or litigation by governmental agencies or other third parties, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, sanctions, awards, injunctions, penalties or judgments.

Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.

Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information, and personal data.

Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations.

As with many technological innovations, artificial intelligence presents risks and challenges that could impact our business.

We may adopt and integrate generative artificial intelligence tools into our systems for specific use cases reviewed by legal and information security.

Our vendors may incorporate generative artificial intelligence tools into their offerings without disclosing this use to us, and the providers of these generative artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection and may inhibit our or our vendors’ ability to maintain an adequate level of service and experience.

If we, our vendors, or our third-party partners experience an actual or perceived breach or privacy or security incident because of the use of generative artificial intelligence, we may lose valuable intellectual property and confidential information and our reputation and the public perception of the effectiveness of our security measures could be harmed.

Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information, and intellectual property.

Any of these outcomes could damage our reputation, result in the loss of valuable property and information, and adversely impact our business.

Our international operations may raise additional risks, which could have an adverse effect on our operating results.

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• the rising cost of labor in the foreign countries in which we and our suppliers operate, resulting in increases in our costs of doing business internationally;

• geopolitical conditions, including changes in a specific country's or region's political or economic conditions, including the ongoing military conflict between Russia and Ukraine and the threat that such conflict could spread to other parts of Europe;

• geopolitical conditions, including changes in a specific country's or region's political or economic conditions, including the ongoing military conflict between Russia and Ukraine, and the ongoing hostilities in Israel and the Gaza Strip, and the threat that such conflicts could spread to other parts of Europe and the Middle East;

• the difficulty of increased travel, infrastructure and legal compliance costs associated with developing international revenue;

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• reduced protection for intellectual property rights in some countries;

• political unrest, war, incidents of terrorism , natural disasters, and public health concerns or epidemics, such as the COVID-19 pandemic , or responses to such events.

• political unrest, war, incidents of terrorism , natural disasters, and public health concerns or epidemics, or responses to such events.

As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations.

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Our failure to manage these risks successfully could harm our international operations, reduce our international sales and increase our costs, thus adversely affecting our business, operating results and financial condition.

Compliance with global data protection, privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and the failure to comply with such requirements could subject us to significant fines and penalties, which may have a material adverse effect on our business, financial condition or results of operations.

The legislative and regulatory framework for the collection, use, safeguarding, sharing, transfer and other processing of personal information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future.

Internationally, laws, regulations and standards in many jurisdictions apply broadly to the collection, use, retention, security, disclosure, transfer and other processing of personal information.

For example, the collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European Union (“EU”) is subject to the EU General Data Protection Regulation(“EU GDPR”), which took effect across all member states of the European Economic Area, or the EEA, in May 2018.

Following the United Kingdom’s (“UK”) withdrawal from the EU (“Brexit”), the EU GDPR has been incorporated into UK laws (“UK GDPR”) (together with the EU GDPR, “GDPR”).

The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including granting individuals certain rights with respect to their personal data, including rights of access and deletion in certain circumstances, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors.

The GDPR also imposes strict rules on the transfer of personal data to countries outside the European Economic Area and the UK, including the United States, and permits data protection

authorities to impose large penalties for violations of the GDPR, including potential fines of up to 4% of global annual revenue or €20 million (£17.5 million), whichever is greater.

All of these evolving compliance and operational requirements may require us to modify our data processing practices and policies, put in place additional compliance mechanisms, and review our technologies, systems and practices, as well as those of any third-party collaborators, service providers, contractors or consultants that store, process or transfer personal data on our behalf, which in turn could distract management or divert resources from other initiatives and projects.

Any failure or perceived failure by us to comply with any applicable laws and regulations relating to data protection, privacy and security could result in damage to our reputation, as well as proceedings or litigation by governmental agencies or other third parties, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, sanctions, awards, penalties or judgments, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

Our loan and security agreement contains covenants, which restrict our operating activities, and we may be required to repay the outstanding indebtedness in an event of default, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

On November 2, 2022, we entered into a Loan and Security Agreement, or the 2022 Revolver, with Silicon Valley Bank, or the Lender .

This agreement created a revolving line of credit totaling $35.0 million and replaced the prior $25.0 million revolving line of credit.

The 2022 Revolver subjects us to various customary covenants, including requirements as to financial reporting and financial covenants (including a requirement that the amount of unrestricted and unencumbered cash minus advances under the 2022 Revolver, is not less than the amount equal to the greater of (i) $10.0 million or (ii) nine (9) months of cash burn), and restrictions on our ability to change the principal nature of our business, dispose of our business or property, engage in any change of control transaction, merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, incur additional indebtedness or liens, pay dividends or make other distributions on capital stock, redeem our capital stock, engage in transactions with affiliates or otherwise encumber our intellectual property, in each case, subject to customary exceptions.

On August 4, 2023, we entered into a Default Waiver and First Amendment to Loan and Security Agreement, or the Amended 2022 Revolver, with Silicon Valley Bank, or the Lender, pursuant to which the Lender waived certain of its rights and remedies against us in connection with covenants requiring us to maintain all of our operating accounts, depository accounts and excess cash with the Lender, and pursuant to which the our Loan and Security Agreement with the Lender dated November 2, 2022 was amended.

The Amended 2022 Revolver subjects us to various customary covenants, including requirements as to financial reporting and financial covenants (including a requirement that the amount of unrestricted and unencumbered cash minus advances under the Amended 2022 Revolver, is not less than the amount equal to the greater of (i) $10.0 million or (ii) nine (9) months of cash burn), and restrictions on our ability to change the principal nature of our business, dispose of our business or property, engage in any change of control transaction, merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, incur additional indebtedness or liens, pay dividends or make other distributions on capital stock, redeem our capital stock, engage in transactions with affiliates or otherwise encumber our intellectual property, in each case, subject to customary exceptions.

We are permitted to make interest-only payments on the revolving line of credit through November 3, 2025, at which time all outstanding indebtedness shall be immediately due and payable.

However, we may be required to repay the outstanding indebtedness under the revolving line of credit if an event of default occurs under the 2022 Revolver.

An event of default will occur if, among other things, we fail to make required payments under the 2022 Revolver;

we breach any of our covenants under the 2022 Revolver, subject to specified cure periods with respect to certain breaches;

the Lender determines that a material adverse change (as defined in the 2022 Revolver) has occurred;

However, we may be required to repay the outstanding indebtedness under the revolving line of credit if an event of default occurs under the Amended 2022 Revolver.

An event of default will occur if, among other things, we fail to make required payments under the Amended 2022 Revolver;

we breach any of our covenants under the Amended 2022 Revolver, subject to specified cure periods with respect to certain breaches;

the Lender determines that a material adverse change (as defined in the Amended 2022 Revolver) has occurred;

we or our assets become subject to certain legal proceedings, such as bankruptcy proceedings;

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The majority of our operations are currently conducted at a single location and any disruption at our facility could negatively impact our operations and increase our expenses.

Our headquarters in Boston, Massachusetts contains nearly all of our corporate and administrative functions, the majority of our research, and all of our in-house manufacturing.

Our headquarters in Boston, Massachusetts contains nearly all of our corporate and administrative functions, the majority of our research, and substantially all of our in-house manufacturing.

A natural or other disaster, such as a fire or flood, could cause substantial delays in our operations, damage or destroy our manufacturing equipment or inventory, and cause us to incur additional expenses.

The insurance we maintain against fires, floods and other natural disasters may not be

adequate to cover our losses in any particular case.

The insurance we maintain against fires, floods and other natural disasters may not be adequate to cover our losses in any particular case.

With or without insurance, damage to our manufacturing facility or our other property, or to any of our suppliers, due to fire, flood or other natural disaster or casualty event may have a material adverse effect on our business, financial condition and results of operations.

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A significant portion of our business depends on sales to the public sector, and our failure to receive and maintain government contracts or changes in the contracting or fiscal policies of the public sector could have a material adverse effect on our business.

We derive a significant portion of our revenue from contracts that we have, either directly or through distribution partners, with federal, state, local and foreign governments and government agencies, and we believe that the success and growth of our business will continue to depend on our successful procurement of government contracts.

We derive a significant portion of our revenue from contracts that we have, either directly or through channel partners, with federal, state, local and foreign governments and government agencies, and we believe that the success and growth of our business will continue to depend on our successful procurement of government contracts.

For example, we have historically derived, and expect to continue to derive, a significant portion of our revenue from sales to agencies of the U.S.

federal government, either directly by us or through other distribution partners.

federal government, either directly by us or through other channel partners.

Sales to such government agencies are subject to a number of challenges and risks.

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• influence by, or competition from, third parties with respect to pending, new or existing contracts with government customers;

• potential delays or changes in the government appropriations or procurement processes, including as a result of events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics, such as the COVID-19 pandemic;

• increased or unexpected costs or unanticipated delays caused by other factors outside of our control, such as performance failures of our partners and subcontractors.

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government has the right to audit our costs even after job completion and after we have billed and recognized the corresponding revenue.

government also may review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property,

estimating, compensation and management information systems.

government also may review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems.

Any costs found to be improperly allowed or improperly allocated to a specific contract will not be reimbursed, and any such costs that have already been reimbursed must be refunded, which would affect associated revenue that had already been recognized.

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Our current license agreements impose, and we expect that any future exclusive in-bound license agreements will impose, various development, diligence, commercialization and other obligations on us.

We have also entered into engagements in the past, and may enter into engagements in the future, with other partners and customers under which we obtain certain intellectual property rights

relating to our platform and technology.

We have also entered into engagements in the past, and may enter into engagements in the future, with other partners and customers under which we obtain certain intellectual property rights relating to our platform and technology.

These engagements take the form of exclusive licenses, non-exclusive licenses, or assignment of actual ownership of intellectual property rights or technology from third parties.

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These include allowing third party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review and derivation proceedings.

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid, even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to

invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid, even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.

Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action.

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In addition, the patent position of companies in the biotechnology field is particularly uncertain.

Various courts, including the United States Supreme Court have rendered decisions that affect the scope of patentability of certain

inventions or discoveries relating to biotechnology.

Various courts, including the United States Supreme Court have rendered decisions that affect the scope of patentability of certain inventions or discoveries relating to biotechnology.

These decisions state, among other things, that a patent claim that recites an abstract idea, natural phenomenon or law of nature are not themselves patentable.

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Additionally, the determination that a patent application or patent claim meets all of the requirements for patentability is a subjective determination based on the application of law and jurisprudence.

The ultimate determination by the USPTO or by a court or other trier of fact in the U.S., or corresponding foreign national patent offices or courts, on whether a claim meets all requirements of patentability cannot be assured.

The ultimate determination

by the USPTO or by a court or other trier of fact in the U.S., or corresponding foreign national patent offices or courts, on whether a claim meets all requirements of patentability cannot be assured.

Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or patent applications, in our licensed patents or patent applications or in third party patents.

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Certain customer agreements contain provisions permitting the customer to become a party to, or a beneficiary of, a technology escrow agreement under which we place proprietary know-how and source code for our products in escrow with a third party.

Under these escrow agreements, the know-how and source code to the applicable product may be released to the customer, typically for its use to further develop, maintain, modify and enhance the product, upon the occurrence of specified events, such as our filing for bankruptcy and breaching our representations, warranties or covenants of our agreements with our customers.

covenants of our agreements with our customers.

Disclosing this know-how and source code may limit the intellectual property protection we can obtain or maintain for that know-how or source code or the products embodying or containing that know-how or source code, and may facilitate intellectual property infringement claims against us.

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Some of our patents or patent applications (including in-bound licensed patents) have been or may be challenged at a future point in time in opposition, derivation, reexamination, inter partes review, post-grant review or interference.

Any successful third party challenge to our patents in this or any other proceeding could result in the unenforceability or invalidity of such

patents, which may lead to increased competition to our business, which could harm our business.

Any successful third party challenge to our patents in this or any other proceeding could result in the unenforceability or invalidity of such patents, which may lead to increased competition to our business, which could harm our business.

In addition, in patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace.

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• subject us to significant liability for damages or result in significant settlement payments;

• require us to indemnify our customers, distribution partners or suppliers;

• require us to indemnify our customers, channel partners or suppliers;

• refund deposits and other amounts received for allegedly infringing technology or products.

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Some of our competitors may be able to sustain the costs of complex intellectual property litigation more effectively than we can because they have substantially greater resources.

In addition, any uncertainties resulting from

the initiation and continuation of any litigation could significantly limit our ability to continue our operations.

In addition, any uncertainties resulting from the initiation and continuation of any litigation could significantly limit our ability to continue our operations.

Any of the foregoing could disrupt our business and have a material adverse effect on our operating results and financial condition.

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There can be no assurance that we will prevail in any suit initiated against us by third parties, successfully settle or otherwise resolve patent infringement claims.

Third parties making claims against us may be able to obtain injunctive or other relief, which could block our ability to develop, commercialize and sell products or services, and could result in the award of substantial damages against us, including treble damages, attorneys’ fees, costs and expenses if we are found to have willfully infringed.

Third parties making claims against us may be able to obtain injunctive or other relief, which could block our ability to develop, commercialize and sell products or services, and could result in the

award of substantial damages against us, including treble damages, attorneys’ fees, costs and expenses if we are found to have willfully infringed.

In the event of a successful claim of infringement against us, we may be required to pay damages and ongoing royalties, and obtain one or more licenses from third parties, or be prohibited from selling certain products or services.

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Any failure to successfully implement our operating strategy or the occurrence of any of the events or circumstances set forth in this “Risk Factors” section could result in actual operating results being different from our guidance, and the differences may be adverse and material.

Insiders own a significant portion of our outstanding common stock and therefore have substantial control over us and are able to influence corporate matters.

Our executive officers, directors and their affiliates beneficially own, in the aggregate, a significant portion of our outstanding common stock.

As a result, these stockholders, if they act together and/or in coordination with other affiliates, are able to influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or its assets.

This concentration of ownership could limit your ability to influence corporate matters and may have the effect of delaying or preventing a change in control of our company and might affect the market price of our common stock.

Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur, could depress the market price of our common stock.

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Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses.

Our compliance with Section 404 requires that we incur substantial accounting expense and expend significant management efforts, including hiring additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.

Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies 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 Nasdaq, the SEC or other regulatory authorities, which would require additional financial and management resources.

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We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

We may be an “emerging growth company” until December 31, 2025, though we may cease to be an “emerging growth company” earlier under certain circumstances, including if (i) we have more than $1.07 billion in annual revenue in any fiscal year, (ii) the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30, or (iii) we issue more than $1.0 billion of non-convertible debt over a three-year period.

We may be an “emerging growth company” until December 31, 2025, though we may cease to be an “emerging growth company” earlier under certain circumstances, including if (i) we have more than $1.235 billion in annual revenue in any fiscal year, (ii) we become a “large accelerated filer” as a result of the market value of our common stock that is held by non-affiliates being greater than or equal to $700 million as of any June 30, or (iii) we issue more than $1.0 billion of non-convertible debt over a three-year period.

The exact implications of the JOBS Act are subject to interpretation and guidance by the SEC and other regulatory agencies, and we cannot assure you that we will be able to take advantage of all of the benefits of the JOBS Act.

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While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will be enforced by a court in those other jurisdictions.

If a court were to find these types of provisions to be inapplicable or unenforceable, and if a court were to find the exclusive forum provision in our amended

and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could materially adversely affect our business.

If a court were to find these types of provisions to be inapplicable or unenforceable, and if a court were to find the exclusive forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could materially adversely affect our business.

Our fourth amended and restated bylaws designate specific courts in Delaware as the exclusive forum for certain litigation that may be initiated by the Company’s stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

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(2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders;

(3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or our sixth amended and restated certificate of incorporation or fourth amended and restated bylaws;

(3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or our sixth amended and restated certificate

of incorporation or fourth amended and restated bylaws;

(4) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws;

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Therefore, failure to scale our customer service organization adequately may adversely impact our business results and financial condition.

Customers utilize our service teams and online content for help with a variety of topics, including how to use our products efficiently, how to integrate our products into existing workflows, and how to resolve technical, analysis, and

operational issues if and when they arise.

While we have developed significant resources for remote training, including an extensive library of online videos, we may need to rely more on these resources for future customer training, or we may experience increased expenses to enhance our online and remote solutions.

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In addition, as we continue to grow our operations and reach a global customer base, we need to be able to provide efficient customer service that meets our customers’ needs globally at scale.

In geographies where we sell through distributors, we rely on those distributors to provide customer service.

If these third party distributors do not provide a high quality customer experience, our business operations and reputation may suffer.

In geographies where we sell through channel partners, we rely on those channel partners to provide customer service.

If these third party channel partners do not provide a high quality customer experience, our business operations and reputation may suffer.

If we were to be sued for product liability, we could face substantial liabilities that exceed our resources.

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Our products are or may be subject to U.S.

export controls, including the International Traffic in Arms Regulations, or ITAR, the Export Administration Regulations, or EAR, the Office of Foreign Assets Control, or OFAC, and other

similar laws and regulations of our products and associated technology.

export controls, including the International Traffic in Arms Regulations, or ITAR, the Export Administration Regulations, or EAR, the Office of Foreign Assets Control, or OFAC, and other similar laws and regulations of our products and associated technology.

Obtaining export licenses can be a costly and time-consuming process, often three to six months in duration.

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Changes in our products or changes in export regulations may require reclassification and create delays in the introduction and sale of our products in international markets, prevent our customers with international operations from deploying our products throughout their global systems or, in some cases, constrain in some way the export of our products to additional countries.

Any change in export regulations or related legislation, shift in approach to the enforcement or scope of existing regulations or change in the countries, persons or technologies targeted by these regulations could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations.

decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations.

We may also be required to obtain licenses from the U.S.

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Export control laws may also inhibit the free interchange of technical discussions among our employees.

Absent license authorization from the appropriate agency, some technical information related to our products and technologies cannot be discussed with or otherwise disclosed to our foreign national employees, or with our foreign distributors.

Export licensing requirements may delay product development and other engineering activities.

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government officials for the purpose of obtaining or retaining business or securing any other improper advantage.

We have engaged independent distributors in the past and currently use independent distributors to sell our products outside of the United States.

Our reliance on independent distributors to sell our products internationally demands a high degree of vigilance in maintaining our policy against participation in corrupt activity, because these distributors could be deemed to be our agents and we could be held responsible for their actions.

We have engaged independent channel partners in the past and currently use independent channel partners to sell our products outside of the United States.

Our reliance on independent channel partners to sell our products internationally demands a high degree of vigilance in maintaining our policy against participation in corrupt activity, because these channel partners could be deemed to be our agents and we could be held responsible for their actions.

companies in our markets have faced criminal penalties under the FCPA for allowing their agents to deviate from appropriate practices in doing business with these individuals.

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We could also suffer severe penalties, including criminal and civil penalties, disgorgement, and other remedial measures.

Our employees, consultants, distributors and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, and insider trading.

We are exposed to the risk of fraud or other misconduct by our employees, consultants, distributors, and commercial partners.

Our employees, consultants, channel partners and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, and insider trading.

We are exposed to the risk of fraud or other misconduct by our employees, consultants, channel partners, and commercial partners.

Misconduct by these parties could include intentional failures to comply with the applicable laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us.

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As an emerging growth company, our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an emerging growth company.

At such time, our independent registered public

accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

To comply with the requirements of being a public company, we may need to undertake actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff.

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If we raise additional funds by issuing equity securities, you may experience significant dilution of your ownership interest, and the newly-issued securities may have rights senior to those of the holders of our common stock.

If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility and would also

require us to fund additional interest expense, which could harm our profitability.

Holders of debt would also have rights, preferences or privileges senior to those of holders of our common stock.

Adverse developments affecting financial institutions, companies in the financial services industry or the financial services industry generally, such as actual events or concerns involving liquidity, defaults or non-performance, could adversely affect our operations and liquidity.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems.

For example, on March 10, 2023, Silicon Valley Bank, or SVB, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, or the FDIC, as receiver.

As of March 10, 2023, we had substantially all of our cash and cash equivalents on deposit with SVB.

Although a statement by the U.S.

Department of the Treasury, the Federal Reserve and the FDIC stated that all depositors of SVB would have access to all of their money after only one business day following the date of closure and we and other depositors with SVB received such access on March 13, 2023, uncertainty and liquidity concerns in the broader financial services industry remain.

Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates.

Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments.

However, widespread demands for customer withdrawals or other needs of financial institutions for immediate liquidity may exceed the capacity of such program.

There is no guarantee that the U.S.

Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions in a timely fashion or at all.

Our access to our cash and cash equivalents in amounts adequate to finance our operations could be significantly impaired by the financial institutions with which we have arrangements directly facing liquidity constraints or failures.

In addition, investor concerns regarding the U.S.

or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.

Any material decline in available funding or our ability to access our cash and cash equivalents could adversely impact our ability to meet our operating expenses, result in breaches of our contractual obligations or result in violations of federal or state wage and hour laws, any of which could have material adverse impacts on our operations and liquidity.

In addition, if any parties with whom we conduct business are unable to access funds held in uninsured deposit accounts or pursuant to lending arrangements with a financial institution that is placed in receivership by the FDIC, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.

We may engage in future acquisitions that could disrupt our business, cause dilution to our stockholders and harm our financial condition and operating results.

On August 3, 2022, we entered into a share purchase and transfer agreement and completed our acquisition of 100% of the registered share capital of TRACE Analytics GmbH, a German limited liability company located in Braunschweig, Germany (Trace), for total potential purchase price consideration of $17.3 million, comprised of (i) a $14.4 million initial cash payment plus (ii) up to $2.0 million contingent cash consideration upon achievement of certain milestones over a twenty four month period and (iii) $0.9 million contingent pension liability holdback to be released upon discharging or transferring of such liability from Trace.

On August 3, 2022, we entered into a share purchase and transfer agreement and completed our acquisition of 100% of the registered share capital of Trace Analytics GmbH, a German limited liability company located in Braunschweig, Germany, for total potential purchase price consideration of $17.3 million, comprised of (i) a $14.4 million initial cash payment plus (ii) up to $2.0 million contingent cash consideration upon achievement of certain milestones over a twenty four month period and (iii) $0.9 million contingent pension liability holdback to be released upon discharging or transferring of such liability from Trace Analytics GmbH.

In the future, we may acquire additional companies, assets or technologies in an effort to complement our existing offerings or enhance our market position.

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additional acquisitions on favorable terms, if at all.

The Trace acquisition, and any future acquisitions we make could subject us to a number of risks, including:

Any prior acquisitions we have made or future acquisitions we make could subject us to a number of risks, including:

• the purchase price we pay could significantly deplete our cash reserves, impair our future operating flexibility or result in dilution to our existing stockholders;

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Future interpretations of existing accounting standards could adversely affect our operating results.

Generally accepted accounting principles in the United States, or GAAP, are subject to interpretation by the Financial Accounting Standards Board, or FASB, the American Institute of Certified Public Accountants, or AICPA, the SEC and various other bodies formed to promulgate and interpret appropriate accounting principles.

Generally accepted accounting principles in the United States of America (“GAAP”), are subject to interpretation by the Financial Accounting Standards Board, or FASB, the American Institute of Certified Public Accountants, or AICPA, the SEC and various other bodies formed to promulgate and interpret appropriate accounting principles.

A change in these principles or interpretations could have a significant effect on our reported financial results, and they could affect the reporting of transactions completed before the announcement of a change.

Unresolved Staff Comments.

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-K

Item 1A. Risk Factors