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In this case, the trading price of our Common Stock could decline, and you may lose part or all of your investment.
−Removed: Summary of Risk Factors
Risks Related to Our Business and Industry
If we do not successfully execute our priorities, our business, operating results and financial condition could be adversely affected.
−Removed: • We are in a highly competitive and evolving field and face competition from well-established tissue processors and medical device manufacturers, as well as new market entrants.
−Removed: • Rapid technological change could cause our products to become obsolete.
−Removed: • Our products depend on the availability of tissue from human donors, and any disruption in supply could adversely affect our business.
−Removed: • Public health emergencies, such as the COVID-19 pandemic and the governmental and societal responses thereto have adversely affected our business in the past and future outbreaks could harm our business in the future.
−Removed: • We depend on our senior leadership team and may not be able to retain or replace these employees or recruit additional qualified personnel.
−Removed: • A portion of our revenues and accounts receivable come from government accounts.
−Removed: • Our revenues depend on adequate reimbursement from public and private insurers and health systems and changes to the way in which our products are reimbursed in various sites of service could adversely impact our financial results.
−Removed: • Our revenue, results of operations and cash flows may suffer upon the loss of a Group Purchasing Organization or Integrated Delivery Network.
−Removed: • We contract with independent sales agents and distributors.
−Removed: • Disruption of our processing could adversely affect our business, financial condition and results of operations.
−Removed: • To be commercially successful, we must convince physicians, where appropriate, how and when our products are proper alternatives to existing treatments and that our products should be used in their procedures.
−Removed: • If we cannot successfully address quality issues that may arise with our products, our brand reputation could suffer, and our business, financial condition, and results of operations could be adversely impacted.
−Removed: • The formation of physician-owned distributorships could result in increased pricing pressure on our products or harm our ability to sell our products to physicians who own or are affiliated with those distributorships.
−Removed: • We face the risk of product liability claims and may not be able to obtain or maintain adequate product liability insurance.
−Removed: • The products we manufacture and process are derived from human tissue and therefore have the potential for disease transmission.
−Removed: • We may implement a product recall or voluntary market withdrawal.
−Removed: • A cyberattack or significant disruptions of information technology systems could adversely affect our business.
−Removed: • We may expand or contract our business through acquisitions, divestitures, licenses, investments, and other commercial arrangements.
−Removed: • New lines of business or new products and services may subject us to additional risks.
−Removed: • Our international expansion and operations outside the U.S.
−Removed: expose us to risks.
−Removed: Risks Related to Regulatory Approval of Our Products and Other Government Regulations
−Removed: • Certain of our products no longer qualify for regulation as human cells, tissues and cellular and tissue-based products solely under Section 361 of the Public Health Service Act, which has resulted in removal of the applicable products from the market, made the introduction of some new tissue products more expensive, significantly delayed the expansion of our tissue product offerings and subjected us to additional post-market regulatory requirements.
−Removed: Additional regulatory requirements may be imposed in the future.
−Removed: • If any of the BLAs are approved, the Company would be subject to additional regulation which will increase costs and could result in adverse sanctions for non-compliance.
−Removed: Obtaining and maintaining the necessary regulatory approvals for certain of our products will be expensive and time consuming and may impede our ability to fully exploit our technologies.
−Removed: • If any of the BLAs are approved, we would be subject to additional regulation which will increase costs and could result in adverse sanctions for non-compliance.
−Removed: • Obtaining and maintaining the necessary regulatory approvals for certain of our products will be expensive and time consuming and may impede our ability to fully exploit our technologies.
−Removed: • Our business is subject to extensive regulation by the FDA and other authorities, which is costly.
−Removed: • We may be subject to fines, penalties, injunctions and other sanctions if we are deemed to be promoting the use of our products for unapproved, or off-label, uses.
−Removed: • We and our sales representatives must comply with various federal and state anti-kickback, self-referral, false claims and similar laws.
−Removed: • Our results of operations may be adversely affected by current and potential future healthcare reforms.
−Removed: • We may fail to obtain or maintain foreign regulatory approvals to market our products in other countries.
−Removed: • Federal and state laws that protect the privacy and security of personal information may increase our costs and limit our ability to collect and use that information and subject us to liability if we are unable to fully comply with such laws.
−Removed: Risks Related to Our Intellectual Property
−Removed: • Our ability to protect our intellectual property and proprietary technology through patents and other means is uncertain and may be inadequate.
−Removed: • We may become subject to claims of infringement of the intellectual property rights of others.
−Removed: • We may be subject to damages resulting from claims that we, our employees, or our independent contractors have wrongfully used or disclosed alleged trade secrets, proprietary or confidential information of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors.
−Removed: Risks Related to our Past Audit Committee Investigation, Consolidated Financial Statements, Internal Controls and Related Matters
−Removed: • If we fail to maintain adequate internal control over financial reporting in the future, this could adversely affect our business, financial condition and operating results.
−Removed: • Negative publicity, including publicity relating to or arising from the Restatement, the Audit Committee Investigation, or related matters, has had and could continue to have an adverse effect on our business, results of operations and financial condition.
−Removed: • We are currently, in the past have been, and may in the future be, subject to substantial litigation and ongoing investigations that could cause us to incur significant legal expenses and result in harm to our business.
−Removed: Risks Related to the Securities Markets and Ownership of Our Common Stock
−Removed: • Our substantial indebtedness may adversely affect our financial health.
−Removed: • Our variable rate indebtedness under the Hayfin Loan Agreement subjects us to interest rate risk.
−Removed: • EW Healthcare Partners and its interests may conflict with those of our other shareholders.
−Removed: • Holders of shares of our Series B Preferred Stock have rights, preferences and privileges that are not held by, and are preferential to, the rights of, our common shareholders.
−Removed: • Our Series B Preferred Stock is convertible into shares of our Common Stock, and any such conversion may dilute the value of our Common Stock.
−Removed: • The price of our Common Stock has been, and will likely continue to be, volatile.
−Removed: • Securities analysts may elect not to report on our common stock or may issue negative reports that adversely affect the stock price.
−Removed: • Fluctuations in revenue or results of operations could cause additional volatility in our stock price.
−Removed: • We do not intend to pay cash dividends on our Common Stock.
−Removed: • Certain provisions of Florida law and anti-takeover provisions in our organizational documents may discourage or prevent a change of control.
−Removed: Risks Related to Our Business and Industry
−Removed: If we do not successfully execute our priorities, our business, operating results and financial condition could be adversely affected.
−Removed: Our priorities in our Advanced Wound Care and Surgical Recovery Wound & Surgical business are to address large, underpenetrated market opportunities, domestically and internationally, including by launching new organic or inorganic products.
−Removed: We intend to implement and maintain rigorous CGMP standards throughout our entire supply chain and continue to advance the scientific body of evidence substantiating clinical efficacy, economic viability and the underlying mechanism of action for our PURION processed placental tissue platform through additional peer-reviewed publications, rigorous scientific research and clinical studies.
−Removed: We are also focused on pursuing FDA approval for mDHACM as a platform technology in our Regenerative Medicine segment to treat musculoskeletal degeneration across multiple indications, and initiated a post-Phase 2B registrational KOA program study in February 2023.
+Added: Our priorities in our Wound & Surgical business are to address large, underpenetrated market opportunities, domestically and internationally, including by launching new organic or inorganic products.
+Added: We intend to implement and maintain rigorous quality standards throughout our entire supply chain and continue to advance the scientific body of evidence substantiating clinical efficacy, economic viability and the underlying mechanism of action for our PURION processed placental tissue platform through additional peer-reviewed publications, rigorous scientific research and clinical studies.
We have sought and may continue to seek capital to implement our priorities.
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The presence of this competition may lead to pricing pressure, which could have an adverse effect on our business, results of operations and financial condition.
−Removed: Rapid technological change could cause our products to become obsolete and, if we do not enhance our product offerings through our research and development efforts, we may be unable to compete effectively.
+Added: Rapid technological change could cause our products to become obsolete and, if we do not enhance our product offerings through our research and development efforts or business development and inorganic activities, we may be unable to compete effectively.
The technologies underlying our products are subject to rapid technological change.
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Our research and development efforts may require a substantial investment of time and resources, including additional capital, before we are adequately able to determine the commercial viability of a new product, technology, material or other innovation.
−Removed: In addition, even if we are able to successfully develop enhancements or new generations of our products, these enhancements or new generations of products may not produce sales in excess of the costs
−Removed: of development, or they may never receive required regulatory approval and they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of products embodying new technologies or features.
−Removed: Our products depend on the availability of tissue from human donors, and any disruption in supply could adversely affect our business.
+Added: In addition, even if we are able to successfully develop enhancements or new generations of our products, these enhancements or new generations of products may not produce sales in excess of the costs of development, or they may never receive required regulatory approval and they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of products embodying new technologies or features.
+Added: Many of our products depend on the availability of tissue from human donors, and any disruption in supply could adversely affect our business.
The success of our human tissue products depends upon, among other factors, the availability of tissue from human donors.
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We may be unable to find a sufficient alternative supply channel in a reasonable time period or on commercially reasonable terms, if at all, which would have an adverse effect on our business, results of operations and financial condition.
−Removed: Public health emergencies, such as the COVID-19 pandemic and the governmental and societal responses thereto have adversely affected our business, results of operations and financial condition in the past, and future outbreaks could harm our business, results of operations, and financial condition in the future.
−Removed: The COVID-19 pandemic and governmental and societal responses thereto have adversely affected our business, results of operations and financial condition and future public health emergencies could have similar and wide-ranging impacts to our business.
−Removed: See Item 7, Management’s Discussion and Analysis - Results of Operations.
−Removed: Public health emergencies such as these have the potential to adversely affect our operations and increase our costs and expenses in numerous ways.
−Removed: • We source raw materials for our products from donated placentas from scheduled C-section births via a large, geographically-diverse network of donor hospitals.
−Removed: We may experience shortages of donated placentas if donors or our recovery specialists are excluded from hospitals, or if other disruptions occur.
−Removed: We experienced interruptions from a portion of our hospitals in certain geographic areas in the first half of 2020, in late 2021 and in early 2022.
−Removed: To date, we have been successful in mitigating this disruption to our supply by adding additional donor hospitals, increasing efforts at hospitals that did not impose access limits, and using third-party providers of donated placentas (where necessary and in accordance with MIMEDX quality standards).
−Removed: However, there can be no assurance that our efforts to source raw materials for our products will continue to be successful, and we may experience shortages of raw materials, especially if the current pandemic, including further strains, or responses thereto intensify.
−Removed: Additionally, we may experience shortages of donated placentas if additional testing protocols are implemented for donated tissues based on guidance issued by the AATB, the FDA, or other standards, and are screened as ineligible.
−Removed: • We process donated tissue using aseptic techniques in a controlled environment.
−Removed: However, the manufacturing space is a confined space area in which an infected employee may spread viruses such as the flu and COVID-19 to other employees despite the use of personal protective equipment required for all areas at MIMEDX.
−Removed: To date, we have been successful in mitigating these risks through a variety of measures, however, there can be no assurance that our efforts to prevent wide-scale infections among our processing staff will continue to be successful.
−Removed: If we experience wide-scale infections among our production staff, we may experience a shortage of finished goods.
−Removed: • Our ability to sell our products was previously hampered by the COVID-19 pandemic.
−Removed: In many areas of the country, our sales force was excluded from hospitals and the offices of other health care providers for periods of time.
−Removed: Additionally, many patients stayed away from hospitals and other medical facilities.
−Removed: This had adverse effects on our revenues for periods of time in the past.
−Removed: We are not able to estimate the future effect of COVID-19 or other public health emergencies on patient behavior and, consequently, future demand or the ability of providers to pay for our products.
−Removed: • Similarly, our clinical researchers, clinical study coordinators, and their patients have experienced restrictions in their access to hospitals and ability to access other healthcare providers, which has slowed enrollment in our clinical trials in the past.
−Removed: If such access were to be restricted again, it might again impair or delay the initiation, approval and launch of future products or additional clinical trials.
−Removed: If our leadership, employees, sales agents, suppliers, medical professionals, or users of our products are impacted by an epidemic, by illness, or through social distancing, quarantine or other precautionary measures taken in connection therewith, then our manufacturing operations, sales, demand for our products, and clinical trials may be adversely affected.
−Removed: Disruptions to the health care system generally, such as if patients are unable or unwilling to visit health care providers, or if health care providers prioritize treatment of acute or communicable illnesses over wound care, have affected and may continue to adversely affect our revenues and results of operations.
−Removed: The ultimate impact of the COVID-19 pandemic remains uncertain and subject to change.
−Removed: We do not yet know the full extent of delays or impacts on our business, our clinical trials, healthcare systems or the global economy as a whole, or how long such effects will endure.
−Removed: The effects of the COVID-19 pandemic or other public health emergencies could have an adverse impact on our business, results of operations and financial condition.
We depend on our senior leadership team and may not be able to retain or replace these employees or recruit additional qualified personnel, which would harm our business, results of operations and financial condition.
Our business and success are materially dependent on attracting and retaining members of our senior leadership team to formulate and execute the Company’s business plans.
−Removed: Since June 2018, we have made significant changes to our senior leadership team, and hired several new senior leaders.
+Added: Since June 2018, we have made significant changes to our senior leadership team, and hired several new senior leaders, including our CEO and CFO in 2023.
Leadership changes can be inherently difficult to manage and may cause material disruption to our business or management team.
Changes in senior management could also lead to an environment that presents additional challenges in recruiting and retaining employees, which could have an adverse effect on our business, results of operations and financial condition.
−Removed: We experienced difficulties in recruiting due to legal and business uncertainties resulting from the issues that were the subject of the Audit Committee Investigation.
Our future success will also depend, in part, upon our ability to attract and retain skilled personnel, including sales, managerial and technical personnel.
There can be no assurance that we will be able to continue to find and attract additional qualified employees to support our expected growth or retain any such personnel.
−Removed: A portion of our revenues and accounts receivable come from government accounts.
−Removed: Some of our revenues are derived from sales, both direct and through a distributor, to the government.
−Removed: Any disruption of our products on the FSS or any change in the way the government purchases products like ours or the price it is willing to pay for our products could adversely affect our business, results of operations and financial condition.
Our revenues depend on adequate reimbursement from public and private insurers and health systems and changes to the ways in which our products are reimbursed in various sites of service could adversely impact our financial results.
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Further, we have experienced some reluctance by payers to cover our products under certain circumstances, including for applications other than those for which we have published clinical efficacy data.
−Removed: Recently, several wide-ranging proposals have been published for public comment, including relating to payment methodology within the physician office, and are under consideration by the U.S.
−Removed: Centers for Medicare and Medicaid Services (CMS).
−Removed: In addition, three Medicare Administrative Contractors (MACs) have recently published for public comment changes to their Local Coverage Determinations (LCDs) that they are considering.
−Removed: If adopted, these proposals would significantly change Medicare policies
−Removed: governing the reimbursement of skin substitute products principally when used for wound treatment in the private physician office setting.
−Removed: The LCDs in the proposals could adopt a new standard of clinical evidence required as a prerequisite to coverage.
−Removed: In addition, the proposals all require a confirmation that the products are regulated solely under Section 361 of the Public Health Service Act as a prerequisite to continued coverage.
−Removed: We have the required confirmation for EPIFIX, but not currently for EPICORD.
−Removed: The proposed LCDs also include language that could lower the number of allowed applications of a product below what is commonly used in standard practice by physicians today (supported by clinical evidence) and reflected by LCDs currently in force with the MACs.
−Removed: The Company as well as industry stakeholders across the wound care industry do not support lowering the applications.
+Added: Since 2022, several wide-ranging proposals have been published for public comment, including relating to payment methodology within the physician office, with potential to change how CMS reimburses for skin substitute products at a national level.
+Added: At a regional level, three Medicare
+Added: Administrative Contractors (MACs) signaled their intent to change coverage guidance by moving Local Coverage Determinations (LCDs) through the process.
+Added: While these were ultimately withdrawn, the same MACs signaled their intent to revisit the issue.
+Added: If the national reimbursement proposals were to be adopted, it would significantly change Medicare policies governing the reimbursement of skin substitute products principally when used for wound treatment in the private physician office setting.
+Added: If MACs proceed to change coverage policies, this could significantly change guidance within the affected regions.
Changes in the coverage and reimbursement environment as described above could result in declines in our revenue that would adversely affect our business, financial condition and results of operation.
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As with many manufacturers in the healthcare space, the Company contracts with Group Purchasing Organizations ( “ GPOs ” ) and Integrated Delivery Networks ( “ IDNs ” ) to establish contracted pricing and terms and conditions for the members of GPOs and IDNs.
−Removed: Approximately three-quarters of our sales in the year ended December 31, 2022 came from customers that are members of our primary GPOs or IDNs.
+Added: Approximately 79% of our sales in the year ended December 31, 2023 came from customers that are members of our primary GPOs or IDNs.
Our agreements with GPOs and IDNs allow us to sell our products efficiently to large groups of customers.
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In 2023, approximately 24% of our sales were through our relationships with independent agents, and we also use a small number of distributors, primarily outside the United States, and may use more in the future.
−Removed: (Sales agents act directly on behalf of MIMEDX to arrange sales, while distributors take title to product and may set their own prices.) See Note 12, Revenue to our audited consolidated financial statements included in Item 8, Consolidated Financial Statements and Supplementary Data .
+Added: Sales agents act directly on behalf of MIMEDX to arrange sales, while distributors take title to product and may set their own prices.
If our relationships with our independent sales agents were terminated for any reason, it could materially and adversely affect our revenues and profits.
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Risks that could impact our ability to use these facilities include the occurrence of natural and other disasters, the outbreak of pandemics, and the need to comply with the requirements of directives from government agencies, including the FDA.
−Removed: See above, for example, “ - Public health emergencies, such as the COVID-19 pandemic and governmental and societal responses thereto have adversely affected our business, results of operations and financial condition in the past, and future outbreaks could harm our business, results of operations, and financial condition in the future.”
−Removed: Either of our two processing facilities can serve as a redundant processing facility for most of our Section 361 products in the event the other facility experiences a disaster event.
−Removed: For clinical trial requirements of our Section 351 products, we have transitioned manufacturing to our Kennesaw, Georgia facility to comply with CGMP standards, and implemented these standards for upstream and downstream supply chain activities at our Marietta, Georgia facility.
+Added: Either of our two processing facilities can serve as a redundant processing facility for most of our products in the event the other facility experiences a disaster event.
However, if our processing facilities were to become unavailable, this could have a material adverse effect on our business, financial condition and results of operations during the period of such unavailability.
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We face the risk of product liability claims and may not be able to obtain or maintain adequate product liability insurance.
−Removed: Our business exposes us to the risk of product liability claims that are inherent in the manufacturing, processing and marketing of human tissue products.
+Added: While we have had a low product complaint and adverse event rate historically, our business exposes us to the risk of product liability claims that are inherent in the manufacturing, processing and marketing of human tissue products.
We may be subject to such claims if our products cause, or appear to have caused, an injury.
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Although we have product liability insurance that we believe is adequate, this insurance is subject to deductibles and coverage limitations, and we may not be able to maintain this insurance at an acceptable cost or on acceptable terms or be able to secure increased coverage (if needed), nor can we be sure that existing or future claims against us will be covered by our product liability insurance.
−Removed: Moreover, the existing coverage of our insurance or any rights of indemnification and contribution that we may have may not be sufficient to offset existing or future claims.
+Added: Moreover, the existing coverage of our insurance or any rights of indemnification and contribution that we
+Added: may have may not be sufficient to offset existing or future claims.
If we are unable to maintain product liability insurance at an acceptable cost or on acceptable terms with adequate coverage or otherwise protect ourselves against potential product liability claims or we underestimate the amount of insurance we need, we could be exposed to significant liabilities, which may harm our business.
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However, risks exist with any human tissue implantation.
−Removed: We are also implementing and maintaining CGMP systems to comply with the regulations that will apply to our Section 351 HCT/Ps, and believe this provides an added level of quality throughout our manufacturing process.
−Removed: However, negative publicity concerning disease transmission from other companies’ improperly processed donated tissue could have a negative impact on the demand for our products and adversely affect our business, financial condition and results of operations.
+Added: Also, negative publicity concerning disease transmission from other companies’ improperly processed donated tissue could have a negative impact on the demand for our products and adversely affect our business, financial condition and results of operations.
We may implement a product recall or voluntary market withdrawal, which could significantly increase our costs, damage our reputation, disrupt our business and adversely affect our business, results of operations and financial condition.
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We also have outsourced significant elements of our operations to third parties, including significant elements of our information technology infrastructure, and, as a result, we are managing many independent vendor relationships with third parties who may or could have access to our confidential information.
−Removed: The continually changing threat landscape of cybersecurity today makes our systems potentially vulnerable to service interruptions
−Removed: or to security breaches from inadvertent or intentional actions by our employees, partners, and vendors, and from attacks by malicious third parties, including supply chain attacks originating at our third-party partners.
+Added: The continually changing threat landscape of cybersecurity today makes our systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees, partners, and vendors, and from attacks by malicious third parties, including supply chain attacks originating at our third-party partners.
Such attacks are of ever-increasing levels of sophistication.
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We periodically evaluate opportunities to acquire companies or divest divisions, technologies, products, and rights through licenses, distribution agreements, investments, and outright acquisitions to grow our business.
−Removed: In connection with one or more of those transactions, we may, subject to the requirements and limitations set forth in our secured credit agreement (the “ Hayfin Loan Agreement ”) with Hayfin Services, LLP (“ Hayfin ”) an affiliate of Hayfin Capital Management LLP:
−Removed: • issue additional equity securities that would dilute the value of equity currently held by our shareholders;
+Added: In connection with one or more of those transactions, we may, subject to the requirements and limitations set forth in our Citizens Credit Agreement (as defined below in Management’s Discussion and Analysis of Financial Condition and Results of Operations (“ MD&A ”), Liquidity and Capital Resources):
• divest or license existing products or technology;
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Inability to recover our investment, or any write off of such investment, associated goodwill or assets could have an adverse effect on our business, results of operations and financial condition.
+Added: A portion of our revenues and accounts receivable come from government accounts.
+Added: Some of our revenues are derived from sales, both direct and through a distributor, to the government.
+Added: Any disruption of our products on the FSS or any change in the way the government purchases products like ours or the price it is willing to pay for our products could adversely affect our business, results of operations and financial condition.
New lines of business or new products and services may subject us to additional risks.
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Our ability to conduct international operations is affected by many of the same risks we face in our U.S.
−Removed: operations, as well as unique costs and difficulties of managing international operations, including the relationships and
−Removed: operations of distributors we elect to work with in these markets.
+Added: operations, as well as unique costs and difficulties of managing international operations, including the relationships and operations of distributors we elect to work with in these markets.
Adoption of our products in new geographic regions could take longer and cost more than we anticipate.
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Risks Related to Regulatory Approval of Our Products and Other Government Regulations
−Removed: Certain of our products no longer qualify for regulation as human cells, tissues and cellular and tissue-based products solely under Section 361 of the Public Health Service Act (“Section 361”), which has resulted in removal of the applicable products from the market, made the introduction of some new tissue products more expensive, significantly delayed the expansion of our tissue product offerings and subjected us to additional post-market regulatory requirements.
−Removed: Additional regulatory requirements may be imposed in the future.
+Added: The FDA has in the past determined, and may in the future determine, that certain of our products that are, or are derived from, human cells or tissues, do not qualify for regulation solely under Section 361 of the Public Health Service Act (“Section 361”), and may require that we revise our labeling and marketing claims for these products or that we suspend sales of such products until FDA pre-market clearance or approval is obtained, which could adversely affect our business, results of operations, and financial condition.
The products we manufacture and process are derived from human tissue.
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Prior to May 31, 2021, these sales were primarily in the United States.
−Removed: However, we are pursuing the BLA pre-market approval process for certain use of mDHACM, as more fully discussed above in “ Business - Government Regulation .” The loss of our ability to market and sell our micronized products has had an adverse impact on our revenues, business, financial condition and results of operations.
−Removed: Also, the Company currently markets EPICORD and AMNIOCORD, tissue products derived from the protective covering and extracellular matrix cushioning layers of the human umbilical cord, as providing a protective environment or as a barrier.
−Removed: In warning letters to several companies marketing human umbilical cord derived products for a variety of uses, the FDA has stated that those products fail to meet one or more of the Section 361 criteria, including the minimal manipulation criterion, the dependence on the metabolic activity of living cells for their primary function criterion, and the homologous use criterion, as “the product is not intended to perform the same basic function or functions of umbilical cord in the recipient as in the donor, such as serving as a conduit.” We are engaged with the FDA regarding the classification of our umbilical cord-derived products.
−Removed: If the FDA makes a final determination that our umbilical cord products do not meet the requirements for regulation solely under Section 361, in order to continue to market the products, we would be required to obtain the appropriate FDA approval or clearance.
−Removed: The loss of our ability to market and sell our umbilical cord derived products would have an adverse impact on our revenues, business, financial condition and results of operations.
−Removed: Included in net sales were sales of umbilical cord-derived products totaling $23.2 million, $23.6 million, and $16.1 million, respectively, in 2022, 2021, and 2020, almost entirely in the United States.
+Added: The loss of our ability to market and sell our micronized products previously had an adverse impact on our revenues, business, financial condition and results of operations.
+Added: Also, we are engaged with the FDA regarding the classification of AXIOFILL and certain of our other products.
+Added: If the FDA makes a final determination that any of these products do not meet the requirements for regulation solely under Section 361, in order to continue to market the products, we would be required to obtain the appropriate FDA approval or clearance.
+Added: The loss of our ability to market and sell these products would have an adverse impact on our revenues, business, financial condition and results of operations.
Any future regulatory changes could also have adverse consequences for us and make it more difficult or expensive for us to conduct our business by requiring pre-market clearance or approval and compliance with additional post-market regulatory requirements with respect to those products.
−Removed: For example, the FDA may in the future impose conditions, such as labeling restrictions, and the requirement that a product be manufactured in compliance with CGMP.
−Removed: Although the Company is
−Removed: preparing for these requirements in connection with its pursuit of a BLA for certain of its products, earlier compliance with these conditions would require significant additional time and cost investments by the Company.
+Added: For example, the FDA may in the future impose conditions, such as labeling restrictions, and the requirement that a product be manufactured in compliance with CGMP, which would require significant additional time and cost investments by the Company.
Moreover, increased regulatory scrutiny within the industry in which we operate could lead to increased regulation of HCT/Ps, including Section 361 HCT/Ps, which could ultimately increase our costs and adversely impact our business, results of operations and financial condition.
−Removed: If the FDA approves the BLAs we seek, we will incur increased compliance costs on an ongoing basis.
−Removed: See “ - If any of the BLAs are approved, the Company would be subject to additional regulation which will increase costs and could result in adverse sanctions for non-compliance ” below.
−Removed: If any of the BLAs are approved, the Company would be subject to additional regulation which will increase costs and could result in adverse sanctions for non-compliance.
−Removed: Products subject to the FDA’s BLA requirements must comply with a range of pre- and post-market provisions.
−Removed: Pre-market compliance includes the conduct of clinical trials in support of BLA approval, the development and submission of a BLA, and the production of product for use in the clinical trials that meets FDA’s quality expectations.
−Removed: We have been making enhancements in our fixed plant as well as incurring costs and reduced product yields due to testing against CGMP drug requirements to ensure quality, identity, purity, and potency.
−Removed: Post-approval requirements for BLA products include:
−Removed: compliance with CGMP, which will require us to comply with promotional and labeling requirements, which limit our ability to make claims about regulated products; submission of annual reports in appropriate circumstances; compliance with the FDA’s “Biological Product Deviation Reporting System,” when applicable; submission of adverse events; reporting and correcting product problems within established timeframes; recalling or stopping the manufacture of a product if a significant problem is detected; complying with the appropriate laws and regulations relevant to the biologics licensed and identifying any changes needed to help ensure product quality.
−Removed: In some instances, the FDA can also require that applicants conduct post-market studies or trials of the product.
−Removed: This additional compliance burden may increase costs, and failure to comply with such requirements may subject the Company to sanctions that would have an adverse impact on our business, results of operations and financial condition.
−Removed: Obtaining and maintaining the necessary regulatory approvals for certain of our products will be expensive and time consuming and may impede our ability to fully exploit our technologies .
+Added: Obtaining and maintaining the necessary regulatory approvals, including conducting clinical trials, for certain of our products or potential products could be expensive and time consuming .
The process of obtaining regulatory clearances or approvals to market a biological product or medical device from the FDA or similar regulatory authorities outside of the U.S.
may be costly and time consuming, and such clearances or approvals may not be granted on a timely basis, or at all.
−Removed: We are pursuing approval of BLAs for certain of our micronized products, but have not yet submitted a BLA for review.
−Removed: Additionally, the FDA may take the position that some of the other products that we currently market require a BLA as well.
+Added: The FDA may take the position that some of the products that we currently market require a BLA.
Some of the future products and enhancements to our current products that we expect to develop or may acquire and market may require marketing clearance or approval from the FDA.
2 unchanged sentences
The fee for filing a BLA and program fees payable with respect to any establishment that manufactures biologics are substantial.
−Removed: Additionally, there are significant costs associated with clinical trials that can be difficult to accurately estimate until a BLA is approved.
−Removed: Clinical trials may not be successful or may return results that do not support approval.
−Removed: Moreover, data obtained from clinical trials are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval.
The FDA may not grant approval on a timely basis, or at all, or we may decide not to pursue a BLA for certain products or indications, or need to conduct additional trials for a given indication.
1 unchanged sentence
If we do receive approval, some types of changes to the approved product, such as adding new indications or doses, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.
−Removed: Our revenues will be adversely affected if we fail to obtain BLA approvals on a timely basis or at all, or if the FDA limits the indications for use or requires other conditions that restrict the commercial application of our products.
−Removed: Clinical trials will be necessary to support future BLA submissions and potential product approvals by the FDA.
−Removed: The clinical trial process is lengthy and expensive with uncertain outcomes, and often requires the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit.
−Removed: Delays or failures in our clinical trials could prevent us from commercializing any modified or new products and would adversely affect our business, operating results and prospects.
−Removed: The results of early clinical trials are not necessarily predictive of future results, and any product we advance into clinical trials may not have favorable results in later clinical trials.
+Added: Our revenues could be adversely
+Added: affected if we fail to obtain BLA approvals on a timely basis or at all, or if the FDA limited the indications for use or required other conditions that restrict the commercial application of our products.
+Added: Additionally, there are significant costs associated with clinical trials that can be difficult to accurately estimate until a BLA is approved.
+Added: Clinical trials may not be successful or may return results that do not support approval.
+Added: Moreover, the results of early clinical trials are not necessarily predictive of future results, and any product we advance into clinical trials may not have favorable results in later clinical trials.
Our interpretation of data and results from our clinical trials does not ensure that we will achieve similar results in future clinical trials.
−Removed: In addition, clinical data are often susceptible to various
−Removed: interpretations and analyses, and many companies that have believed their products performed satisfactorily in earlier clinical trials or retrospective studies have nonetheless failed to replicate results in later clinical trials.
−Removed: Products in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through nonclinical studies and earlier clinical trials and retrospective studies, and such failures can occur at any stage of clinical testing.
−Removed: Our clinical studies may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and non-clinical testing in addition to those we have planned.
−Removed: The initiation and completion of a trial may be prevented, delayed, or halted for numerous reasons, including, but not limited to, the following:
−Removed: • regulatory authorities do not approve a clinical study protocol, force us to modify a previously approved protocol, or place a clinical study on hold;
−Removed: • patients do not enroll in, or enroll at a lower rate than we expect or need, or do not complete a clinical study;
−Removed: • patients or investigators do not comply with study protocols;
−Removed: • the FDA may require us to submit data on a greater number of patients than we originally anticipated and/or for a longer follow-up period or change the data collection requirements or data analysis applicable to our clinical trials;
−Removed: • patients do not return for post-treatment follow-up at the expected rate;
−Removed: • patients may experience serious or unexpected adverse side effects for a variety of reasons that may or may not be related to our product causing a clinical trial study to be put on hold;
−Removed: • we may be unable to recruit a sufficient number of clinical trial sites;
−Removed: • sites participating in an ongoing clinical study may withdraw, requiring us to engage new sites;
−Removed: • third-party clinical investigators decline to participate in our clinical studies, do not perform the clinical studies on the anticipated schedule, or act in ways inconsistent with the investigator agreement, clinical study protocol, good clinical practices, or other regulatory requirements;
−Removed: • third-party entities do not perform data collection and analysis in a timely or accurate manner;
−Removed: • we may have to amend clinical trial protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to regulatory authorities for approval;
−Removed: • the cost of clinical trials may be greater than we anticipate;
−Removed: • regulators or other reviewing bodies may fail to approve or subsequently find fault with our manufacturing processes or facilities, the supply of materials necessary to conduct clinical trials may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply.
−Removed: Any of these occurrences may significantly harm our business, financial condition and prospects.
−Removed: In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of certification or regulatory approval of our product candidates.
−Removed: Our ability to consistently and reliably manufacture our biologic products will be key to the marketing of any future Section 351 products.
−Removed: Also, our current manufacturing facilities may be inadequate to produce sufficient quantities if our planned BLA program is approved.
−Removed: The manufacture of biologic products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls, and the approval of BLAs require one to demonstrate the ability to manufacture pursuant to specified chemistry and manufacturing controls.
−Removed: Manufacturers of biologic products often encounter difficulties in production, particularly in scaling up initial production as would be the case at any new facility.
−Removed: These problems can include difficulties with production costs and yields, quality control (including stability of the product candidate and quality assurance testing), shortages of qualified personnel, and compliance with strictly enforced federal, state and foreign regulations.
−Removed: If we were to encounter any of these difficulties, or otherwise fail to comply with our obligations under applicable regulations, then our ability to provide product candidates to patients in our clinical trials or commercially would be jeopardized, and any delay or interruption in the supply of product could delay the commercial launch of the product or impair our ability to meet demand for the product.
−Removed: Our products can be manufactured only in a facility that has undergone a satisfactory inspection by the FDA and other relevant regulatory authorities.
−Removed: We may not be able to replace manufacturing capacity for our products quickly if we were unable to use our manufacturing facilities as a result of a fire, natural disaster (including an earthquake), equipment failure, or other difficulty, or if such facilities were deemed not in compliance with the regulatory requirements and such non-compliance could not be rapidly rectified.
−Removed: An inability or reduced capacity to manufacture our products could have a material adverse effect on our business, financial condition, and results of operations.
−Removed: Our existing manufacturing facilities have been adequate for the products we currently sell, but may become inadequate for future products if our planned BLA for mDHACM is approved or if our sales of current and future Wound & Surgical products ramps at a rate faster than we are able to manufacture.
−Removed: Therefore, we have begun planning changes to our processes to increase manufacturing capacity.
−Removed: Failure to adequately expand capacity could delay commercialization of our current or
−Removed: future product candidates, depriving us of potential product revenue.
−Removed: Any manufacturing problem could be disruptive to our operations and result in lost sales.
+Added: In addition, clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their products performed satisfactorily in earlier clinical trials or retrospective studies have nonetheless failed to replicate results in later clinical trials.
Our business is subject to extensive regulation by the FDA and other authorities, which is costly, and our failure to comply could result in negative effects on our business, results of operations and financial condition.
27 unchanged sentences
As a general rule, FDA regulations require that the marketing of 361 HCT/Ps only be for appropriate homologous uses, and that the promotion of pre-approved biological products or devices only be for FDA-approved indications.
−Removed: Generally, unless the products are approved by the FDA for alternative uses, the FDA contends that we may not make claims about the safety or
−Removed: effectiveness of our products, or promote them as safe or effective for uses other than those specifically approved by the FDA.
+Added: Generally, unless the products are approved by the FDA for alternative uses, the FDA contends that we may not make claims about the safety or effectiveness of our products, or promote them as safe or effective for uses other than those specifically approved by the FDA.
Such limitations present a risk that the FDA or other federal or state law enforcement authorities could determine that the nature and scope of our sales, marketing and support activities, though designed to comply with all FDA requirements, constitute the promotion of our products for an unapproved use in violation of the federal FD&C Act.
23 unchanged sentences
We have entered into consulting agreements, speaker agreements, research agreements and product development agreements with physicians, including some who may order or recommend our products or make decisions to use them.
−Removed: In addition, some of these physicians own our stock, which they purchased in arm’s-length transactions on terms identical to those offered to non-physicians, or received stock awards from us in the past as consideration for services performed by them.
−Removed: While we believe these transactions generally meet the requirements of applicable laws, including the federal AKS and analogous state laws, it is possible that our arrangements with physicians and other providers may be questioned by regulatory or enforcement authorities under such laws, which could lead us to redesign
−Removed: the arrangements and subject us to significant civil or criminal penalties.
+Added: In addition, some of these physicians own our stock, which
+Added: they purchased in arm’s-length transactions on terms identical to those offered to non-physicians, or received stock awards from us in the past as consideration for services performed by them.
+Added: While we believe these transactions generally meet the requirements of applicable laws, including the federal AKS and analogous state laws, it is possible that our arrangements with physicians and other providers may be questioned by regulatory or enforcement authorities under such laws, which could lead us to redesign the arrangements and subject us to significant civil or criminal penalties.
We have designed our policies and procedures to comply with the federal AKS, FCA, and industry best practices.
16 unchanged sentences
The Sunshine Act requires, among others, “applicable manufacturers” of drugs, devices, biological products, and medical supplies reimbursed under Medicare, Medicaid or the Children’s Health Insurance Program to annually report to CMS information related to payments and other transfers of value provided to “covered recipients.” The term covered recipients includes U.S.-licensed physicians and teaching hospitals, and, for reports submitted on or after January 1, 2022, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives.
−Removed: While manufacturers of human cell and tissue products regulated solely under Section 361 are not subject to the Sunshine Act, in the future, if we receive a BLA, we will be subject to this law.
There is the risk that CMS or another government agency may take the position that our products are not human cell and tissue products regulated solely under Section 361, and thereby assert that we are currently subject to the Sunshine Act, which could subject us to civil penalties and the administrative burden of having to comply with the law.
33 unchanged sentences
We may fail to obtain or maintain foreign regulatory approvals to market our products in other countries.
−Removed: We currently market our products in a small number of foreign countries, and are actively pursuing international expansion, including in Japan.
+Added: We currently market our products in a small number of foreign countries, including in Japan.
Foreign jurisdictions require separate regulatory approvals and compliance with numerous and varying regulatory requirements.
6 unchanged sentences
Furthermore, many foreign jurisdictions operate under socialized medical care, and obtaining reimbursement for our products under that construct may also prove difficult.
−Removed: If we fail to receive necessary approvals, certifications, or reimbursements necessary to commercialize our products in foreign jurisdictions such as Japan on a timely basis, or at all, our business, results of operations and financial condition could be adversely affected.
+Added: If we fail to receive necessary approvals, certifications, or reimbursements necessary to commercialize our products in foreign jurisdictions on a timely basis, or at all, our business, results of operations and financial condition could be adversely affected.
Further, governmental authorities outside the U.S.
23 unchanged sentences
These legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage.
−Removed: In addition, our pending patent applications include claims to material aspects of our products and procedures that are not currently protected by issued patents.
+Added: In addition, our pending patent applications include claims to material aspects of our products and procedures that may not be protected by issued patents.
The patent application process can be time consuming and expensive.
−Removed: Our pending patent applications might not result in issued patents.
+Added: Our pending patent applications might not result in issued patents, and issued patents may later be determined to be invalid or unenforceable as a result of district court litigation or related administrative proceedings.
Competitors may be able to design around our patents or develop products that provide outcomes that are comparable or even superior to ours.
1 unchanged sentence
The failure to obtain and maintain patents or protect our intellectual property rights could have an adverse effect on our business, results of operations, and financial condition.
−Removed: Whether a patent claim is valid is a complex matter of science, facts and law, and therefore we cannot be certain that, if challenged, our patent claims would be upheld.
−Removed: If any of those patent claims are invalidated, our competitive advantage may be reduced or eliminated.
+Added: Whether a patent claim is valid is a complex matter of science, facts and law, and therefore we cannot be certain that, if challenged in a court of law, or through an administrative proceeding, our
+Added: patent claims would be upheld.
+Added: If any of those patent claims are invalidated or determined to be unenforceable, our competitive advantage may be reduced or eliminated.
In the event a competitor infringes upon our licensed patents, issued patents, pending patent applications or other intellectual property rights, enforcing those rights may be costly, uncertain, difficult and time consuming.
16 unchanged sentences
We may become subject to claims of infringement of the intellectual property rights of others, which could prohibit us from developing our products, require us to obtain licenses from third parties or to develop non-infringing alternatives, and subject us to substantial monetary damages.
−Removed: Third parties could assert that our products infringe their patents or other intellectual property rights.
+Added: Third parties could assert that our products infringe one or more claims of their issued patents or other intellectual property rights.
Whether a product infringes a patent claim or other intellectual property right involves a complex combination of legal and factual issues, the determination of which is often uncertain.
Therefore, we cannot be certain that we have not infringed the intellectual property rights of others.
−Removed: Because patent applications may take years to issue, there also may be applications now pending of which we are unaware that may later result in issued patent claims that our products or processes infringe.
+Added: Because patent applications are not immediately published, and may take years to issue, there also may be applications now pending of which we are unaware that may later result in issued patent claims that our products or processes may infringe.
There also may be existing patents or pending patent applications of which we are unaware that our products or processes may inadvertently infringe.
Any infringement claim could cause us to incur significant costs, place significant strain on our financial resources, divert management’s attention from our business and harm our reputation.
−Removed: If the relevant patent claims at issue in such a dispute were upheld as valid and enforceable and we were found to infringe, we could be prohibited from selling any product that is found to infringe those claims unless we could obtain licenses to use the technology covered by the asserted patent claims or other intellectual property, or are able to design around the patent claim or claims at issue or other intellectual property.
+Added: If the relevant patent claims at issue in such a dispute were upheld as valid and enforceable and we were found to infringe, we could be prohibited from selling any product that is found to infringe those claims through an injunction unless we could obtain licenses to use the technology covered by the asserted patent claims or other intellectual property, or are able to design around the patent claim or claims at issue or other intellectual property.
We may be unable to obtain such a license on terms acceptable to us, if at all, and we may not be able to redesign our products to avoid infringement.
7 unchanged sentences
We may also hire additional employees who are currently employed at other medical device, pharmaceutical or tissue companies, including our competitors.
−Removed: Additionally, consultants or other independent agents with which we may contract may be or have been in a contractual arrangement with one or more of our competitors.
+Added: Additionally, consultants or other independent agents with which we may contract may be or have been in a
+Added: contractual arrangement with one or more of our competitors.
Although no claims are currently pending, we may be subject to claims that we, our employees, or our independent contractors have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of these former employers or competitors.
5 unchanged sentences
A loss of key personnel or their work product could hamper or prevent our ability to market existing or new products, which could severely harm our business, financial condition and operating results.
−Removed: Risks Related to Our Past Audit Committee Investigation, Consolidated Financial Statements, Internal Controls and Related Matters
+Added: Risks Related to Our Consolidated Financial Statements, Internal Controls and Related Matters
If we fail to maintain adequate internal control over financial reporting in the future, this could adversely affect our business, financial condition and operating results.
−Removed: We have in the past reported material weaknesses in our internal control over financial reporting which we have now remediated.
−Removed: If additional material weaknesses or deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements might contain material misstatements and we could be required to restate our financial results.
+Added: We have in the past reported material weaknesses in our internal control over financial reporting which we have since remediated.
+Added: If material weaknesses or deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements might contain material misstatements and we could be required to restate our financial results.
Moreover, because of the inherent limitations of any control system, material misstatements due to error or fraud may not be prevented or detected on a timely basis, or at all.
1 unchanged sentence
Failures in internal controls may also cause us to fail to meet reporting obligations, negatively affect investor confidence in our management and the accuracy of our financial statements and disclosures, or result in adverse publicity and concerns from investors, any of which could have a negative effect on the price of our Common Stock, subject us to regulatory investigations and penalties or shareholder litigation, and adversely impact our business, results of operations and financial condition.
−Removed: Negative publicity, including publicity relating to or arising from the Restatement, the Audit Committee Investigation, or related matters, has in the past had and could continue to have an adverse effect on our business, results of operations and financial condition.
−Removed: We have been and could continue to be the subject of negative publicity focusing on the Restatement, the results of the Audit Committee Investigation, and related matters.
−Removed: As a result, our customers and others with whom we do business have voiced concerns regarding our accounting and control environment and our ability to be a long-term provider to our customers.
−Removed: Further negative publicity could adversely affect our business, financial condition and results of operations.
−Removed: We have incurred significant legal and accounting expenditures as a result of the Restatement and have become subject to a number of additional risks and uncertainties, including being a party to certain litigation relating to the Restatement.
−Removed: See Item 3, Legal Proceedings and Item 8, Financial Statements and Supplementary Data , Note 16, Commitments and Contingencies for additional information.
−Removed: As a result of the Restatement, we may continue to be at risk for further government investigations, shareholder litigation, and additional accounting and legal fees in connection therewith, as well as loss of investor confidence in us, and a negative impact on our stock price.
−Removed: We are currently, in the past have been, and in the future may be, subject to substantial litigation and ongoing investigations that could cause us to incur significant legal expenses, divert management’s attention, and result in harm to our business.
−Removed: We are exposed to potential liabilities and reputational risk associated with litigation, regulatory proceedings and government enforcement actions.
−Removed: We were party to a securities class action lawsuit subject to appeal alleging, among other things, violations of Section 10(b) of the Securities Exchange Act of 1934.
−Removed: See Item 3, Legal Proceedings and Item 8, Financial Statement and Supplementary Data , Note 16, Commitments and Contingencies for information regarding proceedings that we believe may be significant to the Company as of the date of the filing of this Annual Report.
−Removed: We may be subject to additional lawsuits, including class action or securities derivative lawsuits, and further government investigations as well as incur additional legal fees and may face negative impacts to our stock price and reputation.
−Removed: In addition, we are obligated to indemnify and advance expenses to certain individuals involved in certain of these proceedings.
−Removed: Any adverse judgment in or settlement of any pending or any future litigation could result in significant payments, fines and penalties that could have a material adverse effect on our business, results of operations, financial condition and reputation.
−Removed: Such payments, damages or settlement costs, if any, related to these matters could be in excess of our insurance coverage.
−Removed: The amount of time that is required to resolve these lawsuits is unpredictable and any litigation or claims against us, even those without merit, may cause us to incur substantial costs, divert management’s attention from the day-to-day operation of our business, and materially harm our reputation.
Risks Related to the Securities Markets and Ownership of Our Common Stock
−Removed: Our substantial indebtedness may adversely affect our financial health.
−Removed: As of December 31, 2022, the Company had an aggregate of $50.0 million of borrowings outstanding under the Hayfin Loan Agreement.
−Removed: Our substantial outstanding debt may limit our ability to borrow additional funds or may adversely affect the terms on which such additional funds may be available.
−Removed: Additionally, a default under certain other indebtedness constitutes an event of default under the Hayfin Loan Agreement.
−Removed: Consequently, the effects of a default under other debt may be amplified by the lender exercising the remedies available to it in the Hayfin Loan Agreement for events of default, including foreclosure on the collateral securing our obligations and the declaration that all amounts outstanding under the Hayfin Loan Agreement are immediately due and payable.
−Removed: The limitations on our ability to access additional borrowing and the potential effects of a cross-default under the Hayfin Loan Agreement may limit our liquidity and have an adverse effect on our business, financial condition, and results of operations.
−Removed: The restrictive covenants in the Hayfin Loan Agreement, and the Company’s obligation to make debt payments under the Hayfin Loan Agreement, limit our operating and financial flexibility and may adversely affect our business, results of operations and financial condition.
−Removed: The Hayfin Loan Agreement, as amended, imposes operating and financial restrictions and covenants.
−Removed: For example, the Hayfin Loan Agreement, as amended, contains (a) covenants that impose certain reporting and/or performance obligations on the Company and its subsidiaries, including (i) a Minimum Consolidated Total Net Sales (as defined in the Hayfin Loan Agreement) of varying amounts from now until maturity at June 30, 2025, in each case tested quarterly;
−Removed: and (ii) Minimum Liquidity (as defined in the Hayfin Loan Agreement) of $20 million, an at-all-times covenant tested monthly and (b) certain negative covenants that generally limit, subject to various exceptions, the Company and its subsidiaries from taking certain actions, including, without limitation, incurring indebtedness, making investments, incurring liens, paying dividends and engaging in mergers and consolidations, sale and leaseback transactions and asset dispositions.
−Removed: Our ability to comply with the financial covenants in the Hayfin Loan Agreement is in part dependent on our success in our overall strategies, including pursuing expansion beyond Advanced Wound Care into areas of Surgical Recovery, introducing new products and seeking international growth.
−Removed: A breach of a financial covenant in the Hayfin Loan Agreement could result in an event of default that would trigger the lenders’ remedies, including the right to accelerate the entire principal balance of the loan under the Hayfin Loan Agreement.
−Removed: We currently have sufficient cash on hand to repay all amounts outstanding, however, there can be no assurances that we will be able to find alternative financing in case of such or other event of a default.
−Removed: Even if alternative financing were available, should an event of a default occur under the Hayfin Loan Agreement, it might be on unfavorable terms, and the interest rate charged on any new borrowings could be substantially higher than the interest rate under the Hayfin Loan Agreement, thus adversely affecting our cash flows, liquidity, and results of operations.
−Removed: Acceleration of the repayment of the loan pursuant to the terms of the Hayfin Loan Agreement, in combination with the Company’s current commitments and contingent liabilities, could also cast doubt on the Company’s ability to continue as a going concern.
−Removed: Our variable rate indebtedness under the Hayfin Loan Agreement subjects us to interest rate risk, which could result in higher expense in the event of increases in interest rates and adversely affect our business, financial condition, and results of operations.
−Removed: Borrowings under the Hayfin Loan Agreement, as amended, bear interest at a per annum rate equal to London Interbank Offered Rate (“ LIBOR ”), subject to a “floor” of 1.5%, plus a margin of 6.75%.
−Removed: As a result, we are exposed to interest rate risk, which we do not hedge.
−Removed: If LIBOR rises, the interest rate on outstanding borrowings under the Hayfin Loan Agreement will increase.
−Removed: Therefore, an increase in LIBOR will increase our interest payment obligations under the Hayfin Loan Agreement and have a negative effect on our cash flows and liquidity, and could have a negative effect on our ability to make payments due under the Hayfin Loan Agreement.
+Added: Our indebtedness may adversely affect our financial health.
+Added: As of January 2024, the Company had aggregate borrowings outstanding of $30.0 million under its Revolving Credit Facility and $20.0 million under its Term Loan Facility, all pursuant to its Citizens Credit Agreement (as defined below in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations ).
+Added: Our outstanding debt may limit our ability to borrow additional funds or may adversely affect the terms on which such additional funds may be available.
+Added: Additionally, a default under certain other indebtedness constitutes an event of default under the Citizens Credit Agreement.
+Added: Consequently, the effects of a default under other debt may be amplified by the lenders exercising the remedies available to it in the Citizens Credit Agreement for events of default, including foreclosure on the collateral securing our obligations and the declaration that all amounts outstanding under the Citizens Credit Agreement are immediately due and payable.
+Added: The restrictive covenants in the Citizens Credit Agreement, and the Company’s obligation to make payments under the Citizens Credit Agreement, limit our operating and financial flexibility and may adversely affect our business, results of operations and financial condition.
+Added: The Citizens Credit Agreement imposes operating and financial restrictions and covenants.
+Added: The Company must comply with certain financial covenants, including, a maximum total net leverage ratio and a minimum consolidated fixed charge coverage ratio.
+Added: Additionally, the Citizens Credit Agreement includes certain customary restrictive covenants, including, but not limited to, limitations on indebtedness, liens, fundamental changes, dispositions, investments, loans, advances, guarantees, acquisitions, dividends and other restricted payments, transactions with affiliates, swap transactions, sale and leaseback transactions, prepayments on subordinated debt, and amendments to organizational and other material agreements.
+Added: The Citizens Credit Agreement also contains certain customary events of default, including, without limitation, (i) failure to pay interest or principal when due, (i) failure to provide notice of certain material events and (iii) failure to perform or observe certain covenants under the Citizens Credit Agreement or any related loan documents (subject to a 30-day grace period in certain circumstances).
+Added: If an event of default occurs and is continuing, the agent under the agreement may, and at the direction of the lenders, take one or more of the following actions:
+Added: (i) terminate the commitments, (ii) declare any amounts outstanding immediately due and payable, and (iii) exercise any other right it has under the Citizens Credit Agreement or at law.
+Added: Compliance with such covenants may restrict our operating flexibility, and in the event that we were unable to comply with such covenants, leading to default and acceleration, this could adversely affect our business, results of operations and financial condition.
EW Healthcare Partners and its interests may conflict with those of our other shareholders.
−Removed: As of December 31, 2022, EW Healthcare Partners and their affiliates own 90% of the outstanding shares of our Series B Preferred Stock which, upon conversion into shares of Common Stock, would result in an ownership interest of approximately 18.3% of our Common Stock (calculated on the basis described in Item 12, “ Security Ownership Of Certain Beneficial Owners And Management” below).
−Removed: Also, for as long as EW Healthcare Partners and its affiliates collectively hold at least (i) 10% of the outstanding shares of our Common Stock (calculated on an as converted basis), EW Healthcare Partners has the right to designate two directors to our Board and (ii) 5% (but less than 10%) of the outstanding shares of our outstanding Common Stock (calculated on an as converted basis), EW Healthcare Partners has the right to designate one individual to serve on our Board.
−Removed: Such individuals will initially be preferred directors and therefore not subject to election by the holders of Common Stock.
+Added: As of December 31, 2023, EW Healthcare Partners and their affiliates owned approximately 19.3% of our Common Stock (calculated on the basis described in Item 12, “ Security Ownership Of Certain Beneficial Owners And Management” below).
+Added: Also, for as long as EW Healthcare Partners and its affiliates collectively hold at least (i) 10% of the outstanding shares of our Common Stock, EW Healthcare Partners has the right to select two individuals that the Company must include among its nominees to serve on our Board and (ii) 5% (but less than 10%) of the outstanding shares of our outstanding Common Stock, EW Healthcare Partners has the right to select one individual that the Company must include among its nominees to serve on our Board.
EW Healthcare Partners designated Martin P.
Sutter and William A.
−Removed: Hawkins, III, who continue to serve on our board as preferred directors.
−Removed: The interests of EW Healthcare Partners may conflict with those of our other shareholders, and EW Healthcare Partners may seek to influence, and may be able to influence, us through its director designation rights and its share ownership.
−Removed: Holders of shares of our Series B Preferred Stock have rights, preferences and privileges that are not held by, and are preferential to, the rights of, our common shareholders.
−Removed: Holders of shares of our Series B Preferred Stock are currently entitled to cumulative dividends at a rate of 6.0% per annum , compounding quarterly in arrears.
−Removed: The dividends are payable quarterly in whole or in part, in cash.
−Removed: However, the Company may, at its option, elect not to pay any such dividend in cash and instead to accrue the amount of such dividend.
−Removed: The payment of regular dividends in cash to the holders of Series B Preferred Stock could impact our liquidity and reduce the amount of cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.
−Removed: If we elect to accrue the dividends in lieu of paying them in cash, holders of Common Stock could effectively be diluted because such accrual of dividends will increase the number of shares of Common Stock into which the Series B Preferred Stock would then be convertible.
−Removed: Our obligations to the holders of Series B Preferred Stock could also limit our ability to obtain additional equity or debt financing or increase our borrowing costs, which could have an adverse effect on our financial condition.
−Removed: The Series B Preferred Stock ranks senior to our Common Stock with respect to dividends and distributions on liquidation, winding-up, and dissolution.
−Removed: Upon a liquidation, dissolution, or winding-up of the Company, holders of Series B Preferred Stock will be entitled to receive $1,000 per share of Series B Preferred Stock (subject to adjustment), plus any accrued and unpaid dividends.
−Removed: This amount will be payable prior to any distribution of our available assets to the holders of our Common Stock.
−Removed: Holders of Series B Preferred Stock generally are entitled to vote together as a single class with the holders of the shares of Common Stock, on an as converted basis, on all matters submitted for a vote of holders of our Common Stock subject to certain limitations on their voting rights contained in the related Articles of Amendment to our Restated Articles of Incorporation .
−Removed: Additionally, certain matters will require the approval of the holders of a majority of the outstanding shares of Series B Preferred Stock, voting as a separate class, including the following actions:
−Removed: • any changes to the rights, preferences, or privileges of the Series B Preferred Stock;
−Removed: • amendments or restatements of any organizational document of the Company or its subsidiaries in a manner that materially, adversely, and disproportionately affects the rights, preferences, and privileges of the Series B Preferred Stock as compared to our Common Stock;
−Removed: • the authorization or creation of any class or series of senior or parity equity securities;
−Removed: • the declaration of any dividends or any other distributions, or the repurchase or redemption, of any equity securities of the Company ranking junior to or on parity with the Series B Preferred Stock (subject to certain exceptions).
−Removed: The interests of our holders of Series B Preferred Stock and our Common Stock may conflict in certain circumstances, and these provisions may constrain the Company from taking certain actions that may be in the best interest of the holders of its Common Stock.
−Removed: Additionally, as long as EW Healthcare Partners holds at least 10% of our outstanding Common Stock (calculated on an as converted basis), it has certain preemptive rights to participate in offerings of Common Stock to any person, subject to customary exceptions.
−Removed: Furthermore, in the event that the Company undergoes a change of control (as defined), the holders of Series B Preferred Stock will have certain redemption rights, which, if exercised, could require us to repurchase all of the outstanding shares of Series B Preferred Stock for cash at the original purchase price of Series B Preferred Stock plus all accrued and unpaid dividends thereon.
−Removed: Any required repurchase of the outstanding Series B Preferred Stock could impact our liquidity and reduce
−Removed: the amount of cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.
−Removed: The preferential rights of the Series B Preferred Stock could also result in divergent interests between the holders of Series B Preferred Stock and our common shareholders.
−Removed: Our Series B Preferred Stock is convertible into shares of our Common Stock, and any such conversion may dilute the value of our Common Stock.
−Removed: Holders of shares of Series B Preferred Stock have the right, at their option, to convert each share of Series B Preferred Stock into shares of our Common Stock, except that no holder may convert its shares of Series B Preferred Stock into shares of Common Stock if such conversion would result in such holder and its affiliates holding more than 19.9% of the aggregate voting power of our Common Stock or beneficially owning in excess of 19.9% of our then-outstanding shares of Common Stock.
−Removed: Additionally, each share of Series B Preferred Stock (including any accrued and unpaid dividends) will automatically convert into shares of our Common Stock at any time after July 2, 2023, provided that our Common Stock has traded at 200% or more of the then conversion price (i) for 20 out of 30 consecutive trading days preceding, and (ii) as of the close of trading on the date immediately prior to conversion.
−Removed: The conversion of Series B Preferred Stock may significantly dilute our common shareholders and adversely affect both our net income per share of Common Stock and the market price of our Common Stock.
+Added: Hawkins, III, who continue to serve on our board as directors.
+Added: The interests of EW Healthcare Partners may conflict with those of our other shareholders, and EW Healthcare Partners may seek to influence, and may be able to influence, us through its director nomination rights and its share ownership.
The price of our Common Stock has been, and will likely continue to be, volatile.
26 unchanged sentences
Securities analysts may elect not to report on our common stock or may issue negative reports that adversely affect the stock price.
−Removed: We have conducted extensive investor relations outreach to the investment analysts community with the goal of attracting analyst coverage.
−Removed: However, at this time, only four securities analysts provide coverage on us, and we compensate one of those analyst’s firms.
−Removed: T here can be no assurance that any other analysts will cover our stock or, if they do, that they will continue to report on our common stock or that additional analysts will initiate reporting on our common stock.
−Removed: If we fail to attract the coverage or securities analysts, or if securities analysts discontinue covering our common stock, the lack of research coverage may adversely affect the actual and potential market price of our common stock.
+Added: If we fail to attract the coverage of securities analysts, or if securities analysts discontinue covering our common stock, the lack of research coverage may adversely affect the actual and potential market price of our common stock.
The trading market for our common stock may be affected in part by the research and reports that industry participants, industry analysts or financial analysts publish about our business.
7 unchanged sentences
We do not intend to pay cash dividends on our Common Stock.
−Removed: Holders of our Series B Preferred Stock are entitled to contractually-determined dividends before holders of our Common Stock.
−Removed: See above “- Holders of shares of Series B Preferred Stock have rights, preferences and privileges that are not held by, and are preferential to, the rights of, our common shareholders.”
We have never declared or paid cash dividends on our Common Stock.
−Removed: We currently expect to use available funds and any future earnings to pay dividends on the Series B Preferred Stock;
+Added: We currently expect to use available funds and any future earnings;
in the development, operation and expansion of our business;
15 unchanged sentences
These provisions of Florida law and our articles of incorporation and bylaws could negatively affect our share price, prevent attempts by shareholders to remove current management, prohibit or delay mergers or other takeovers or changes of control of the Company and discourage attempts by other companies to acquire us, even if such a transaction would be beneficial to our shareholders.
−Removed: Unresolved Staff Comments
−Removed: There are no unresolved SEC Staff comments with respect to our SEC filings.
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.