What changed in this filing

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Item 1A. Risk Factors

2023-03-16 compared with 2022-03-30 · 64 added, 85 removed, 506 unchanged (23% of the section changed)

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We have only generated limited revenues to date and have a history of losses from operations.

As of December 31, 2021, we had an accumulated deficit of $68,690,810.

As of December 31, 2022, we had an accumulated deficit of $81.9 million.

Our independent registered public accounting firm, in its report on our financial statements for the year ended December 31, 2022, has raised substantial doubt about our ability to continue as a going concern.

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We will need to raise additional capital in order to finance the full commercialization of our NAFLD TAEUS application and to complete the development of any other TAEUS application through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives.

To date, we have financed our operations primarily through the net proceeds from offerings of common stock and convertible notes, as well as sales of our discontinued Nexus 128 system.

To date, we have financed our operations primarily through the net proceeds from offerings of common and preferred stock and convertible notes.

We do not know when or if our operations will generate sufficient cash to fund our ongoing operations.

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the costs, timing and outcomes of regulatory reviews associated with our future products, including TAEUS applications;

the progress, timing, costs and outcomes of our clinical trials, including the ability to timely enroll patients in our planned and potential future clinical trials;

the progress, timing, costs and outcomes of our clinical trials, including the ability to timely enroll patients in such clinical trials;

the costs and expenses of expanding our sales and marketing infrastructure;

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Our revenues will be adversely affected if, due to these or other factors, the products we are able to commercialize do not gain significant market acceptance.

Public health crises, such as the outbreak of the novel strain of coronavirus which causes COVID-19, and variants of the virus, can adversely impact our business, including our pre-sales activities, clinical trials and ability to obtain regulatory approvals.

Public health crises, such as COVID-19 , can adversely impact our business, including our pre-sales activities, clinical trials and ability to obtain regulatory approvals.

Public health crises such as pandemics or similar outbreaks could adversely impact our business.

In December 2019, a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019 (“COVID-19”), surfaced in Wuhan, China.

Since then, COVID-19 has been declared a pandemic by the World Health Organization and variants of the virus continue to spread to countries around the world .

The level and nature of the disruption caused by COVID-19 is unpredictable, may be cyclical and long-lasting and varies from location to location.

Beginning in March 2020, we undertook temporary precautionary measures to help minimize the risk of the virus to our employees, including by requiring most employees to work remotely, pausing all non-essential travel worldwide for our employees, and limiting employee attendance at industry events and in-person work-related meetings, to the extent those events and meetings are continuing.

As a cash-conserving measure taken in light of the adverse economic conditions caused by the COVID-19 pandemic, in April 2020 we reduced the cash salaries of members of management by 33% for the remainder of 2020, including the salaries of our executive officers.

In lieu of cash, the Company paid this portion of management salaries in the form of restricted stock units that vested over the remainder of the year.

Additionally, we amended our Non-Employee Director Compensation Policy to provide that our non-employee directors’ annual retainers for the second, third and fourth fiscal quarters of 2020 were paid in in the form of restricted stock units rather than cash.

We may take additional measures to mitigate the effects to our business caused by COVID-19, any of which could negatively affect our business.

The COVID-19 pandemic has impacted our clinical trial activities.

Patient visits in ongoing clinical trials have been delayed, for example, due to prioritization of hospital resources toward the COVID-19 outbreak, travel restrictions imposed by governments, and the inability to access sites for initiation and monitoring.

The continued spread of COVID-19 could further adversely affect our clinical trial operations in the United States and elsewhere, including our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 if an outbreak occurs in their geography.

Further, some patients may be unable to comply with clinical trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services, or if the patients become infected with COVID-19 themselves, which would delay our ability to conduct clinical trials or release clinical trial results.

COVID-19 may also affect employees of third-party contract research organizations located in affected geographies that we rely upon to carry out our clinical trials, which could result in inefficiencies due to reductions in staff and disruptions to work environments.

In addition, COVID-19 has had an effect on the business at FDA and other health authorities by causing them to reallocate resources to addressing the pandemic, which has resulted in delays of reviews and approvals, including with respect to our NAFLD TAEUS application.

The spread of COVID-19, or another infectious disease, could also negatively affect the operations at our third-party manufacturers, which could result in delays or disruptions in the commercialization of our products.

In addition, we have taken, and may continue to take, precautionary measures intended to help minimize the risk of the virus to our employees, including temporarily requiring all employees to work remotely, suspending all non-essential travel worldwide for our employees, and discouraging employee attendance at industry events and in-person work-related meetings, which affects our business, including by attending industry events and conducting marketing activities virtually rather than in-person.

In addition to the foregoing effects, as a result of the COVID-19 outbreak or similar pandemics we have and may in the future experience disruptions that could severely impact our business, preclinical studies and clinical trials, including:

For instance, the COVID-19 pandemic impacted our clinical trial activities by delaying patient enrollment and visits due to the prioritization of hospital resources toward the COVID-19 outbreak, travel restrictions, and the inability to access sites for initiation and monitoring.

In addition, the COVID-19 pandemic had an effect on the business at the FDA and other health authorities by causing them to reallocate resources to addressing the pandemic, which resulted in delays of reviews and approvals of submissions such as that for our NAFLD TAEUS application.

The level and nature of the disruption caused by COVID-19 and any other pandemic is unpredictable, may be cyclical and long-lasting and vary from location to location.

In addition to the foregoing effects, as a result of future COVID-19 outbreaks or other pandemics we have and may in the future experience disruptions that could severely impact our business, preclinical studies and clinical trials, including:

interruption of key clinical trial activities and attendance at industry events due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures;

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effects of a local or global recession or depression that could depress economic conditions for a prolonged period and limit access to capital by the Company.

These and other factors arising from the COVID-19 pandemic could worsen in the United States or locally at the location of our offices or clinical trials, each of which could further adversely impact our business generally, and could have a material adverse impact on our operations and financial condition and results.

Even if not rising to the level of a global pandemic, the outbreak of illness locally at the location of our offices or clinical trials could have a material adverse impact on our operations and financial condition and results.

We may not remain commercially viable if there is an inadequate level of reimbursement by governmental programs and other third-party payors for our planned products or associated procedures.

Medical imaging products are purchased principally by hospitals, physicians and other healthcare providers around the world that typically bill various third-party payors, including governmental programs (e.g., Medicare and Medicaid in the United States), private insurance plans and managed care programs, for the services provided to their patients.

, Medicare and Medicaid in the United States), private insurance plans and managed care programs, for the services provided to their patients.

Third-party payors and governments may approve or deny coverage for certain technologies and associated procedures based on independently determined assessment criteria.

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If any of our applications that receive regulatory approval do not perform in accordance with our expectations, we are unlikely to successfully commercialize our applications.

Since our success depends in large part on the medical and third-party payors community’s acceptance of our TAEUS applications, even if we receive regulatory approval for our applications, we believe that we will need to obtain additional clinical data from users of our applications to persuade medical professions to use our applications.

Since our success depends in large part on the medical and third-party payor community’s acceptance of our TAEUS applications, even if we receive regulatory approval for our applications, we believe that we will need to obtain additional clinical data from users of our applications to persuade medical professions to use our applications.

We may also be required to conduct post-approval clinical testing to obtain such additional data.

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To successfully commercialize any application based on our TAEUS platform technology, we expect it will be necessary to conduct various pre-clinical and human studies to demonstrate that the product is safe and effective for human use.

In October 2018 we initiated certain human studies of our TAEUS device targeting NAFLD.

In September 2019, we reported top-level findings from a clinical study conducted by CIMTEC relating to the feasibility of our TAEUS application for NAFLD.

This data enabled us to obtain CE mark approval for our NAFLD TAEUS application.

However, there can be no assurance that results from these studies are indicative of results that would be achieved in future animal studies or human clinical studies of this or any future TAEUS applications, which may be required in order for our applications incorporating our technology to obtain or maintain regulatory approval, including as required to support our submission for classification of our NAFLD TAEUS device as a Class II device under the FDA’s de novo review process..

Even if clinical trials or other studies demonstrate safety and effectiveness of any applications of our technology and the necessary regulatory approvals are obtained, the commercial success of any of such application will depend upon their acceptance by patients, the medical community, and third-party payers and on our partners’ ability to successfully manufacture and commercialize a device for such application.

Even if clinical trials or other studies demonstrate the safety and effectiveness of any applications of our technology and the necessary regulatory approvals are obtained, the commercial success of any of such application will depend upon their acceptance by patients, the medical community, and third-party payers and on our partners’ ability to successfully manufacture and commercialize a device for such application.

Our limited commercial experience makes it difficult to evaluate our business, predict our future results or forecast our financial performance and growth.

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This agreement has a term lasting until December 16, 2024 and is subject to termination by either party upon not less than 60 days’ notice.

See the section of this Annual Report titled “Collaboration with GE Healthcare” under “Item 1.

See the section of this Annual Report titled “TAEUS System for Early Assessment and Monitoring of Nonalcoholic Fatty Liver Disease, or NAFLD” under “Item 1.

Business” for further description of this agreement.

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We have limited control over the efforts and resources that these and any other third-party OEMs will devote to developing and manufacturing our TAEUS applications and their capabilities to serve our needs, including quality control, quality assurance and qualified personnel.

In addition, we currently expect to depend on OEMs to acquire CE marks for the device or devices that they develop and manufacture which are necessary to permit marketing of those devices in the European Union followed by corresponding FDA approval.

In addition, for any future applications of our TAEUS technology we currently expect to depend on OEMs to acquire CE marks for the device or devices that they develop and manufacture which are necessary to permit marketing of those devices in the European Union followed by corresponding FDA approval.

An OEM may not be able to successfully design and manufacture the products it develops based on our TAEUS technology, may not devote sufficient time and resources to support these efforts or may fail in gaining the required regulatory approvals of our TAEUS applications.

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To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our products could be delayed.

The United Kingdom's withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business and operations.

The United Kingdom exited from the European Union on January 31, 2020 (often referred to as “Brexit”).

On December 24, 2020, the U.K.

and the European Union entered into a trade and cooperation agreement (the “Trade and Cooperation Agreement”), which was applied on a provisional basis from January 1, 2021.

While the economic integration does not reach the level that existed during the time the U.K.

was a member state of the European Union, the Trade and Cooperation Agreement sets out preferential arrangements in areas such as trade in goods and in services, digital trade and intellectual property.

Negotiations between the U.K.

and the European Union are expected to continue in relation to the relationship between the U.K.

and the European Union in certain other areas which are not covered by the Trade and Cooperation Agreement.

The long term effects of Brexit will depend on the effects of the implementation and application of the Trade and Cooperation Agreement and any other relevant agreements between the U.K.

and the European Union.

It is still unclear what terms, if any, may be agreed within the U.K.

and between the U.K.

and other countries on many aspects of fiscal policy, cross-border trade and international relations, both in the final outcome and for any transitional period.

The withdrawal of the U.K.

from the European Union could potentially disrupt the free movement of goods, services and people between the U.K.

and the European Union, including in Ireland where we have significant manufacturing operations, undermine bilateral cooperation in key geographic areas and significantly disrupt trade between the U.K.

and the European Union or other nations as the U.K.

pursues independent trade relations.

In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K.

determines which European Union laws to replace or replicate.

Because this is an unprecedented event, it is unclear what long-term economic, financial, trade and legal implications Brexit would have and how it would affect the regulation applicable to our business globally and in the region.

Any of these developments, along with any political, economic and regulatory changes that may occur, could cause political and economic uncertainty in Europe and internationally and harm our business and financial results.

Although we have not observed a material financial impact or identified any trends or potential changes to critical accounting estimates as a result of Brexit at this time, we will continue to assess the impact of Brexit on our business and operations.

The effects of Brexit and the application of the Trade and Cooperation Agreement could adversely affect our business, financial condition or future results.

Risks Related to Intellectual Property and Other Legal Matters

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Third parties may infringe or misappropriate our intellectual property, which could harm our business.

As of the date of this Annual Report, we maintain a patent portfolio consisting of twenty-three (23) patents issued in the United States and sixteen (16) issued patents in foreign jurisdictions, fourteen (14) patent applications pending in the United States and thirty-four (34) patent applications pending in foreign jurisdictions relating to our technology.

As of December 31, 2022, we maintained a patent portfolio consisting of thirty-three (33) patents issued in the United States and twenty-three (23) issued patents in foreign jurisdictions, five (5) patent applications pending in the United States and thirty-one (31) patent applications pending in foreign jurisdictions relating to our technology.

These patents and patent applications mostly cover certain innovations relating to fat imaging, fat quantitation, and temperature monitoring in the liver and other tissues.

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Design patents have a term of 14 years from a respective filing date.

Among our issued utility patents in the U.S., the first patent is set to expire in 2033 and the last patent is set to expire in 2041.

Among our issued utility patents in the United States, the first patent is set to expire in 2033 and the last patent is set to expire in 2041.

Expenses related to a patent portfolio include periodic maintenance fees, renewal fees, annuity fees, various other governmental fees on patents and/or applications due in several stages over the lifetime of patents and/or applications, as well as the cost associated with complying with numerous procedural provisions during the patent application process.

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The European Union has revised its regulatory system for medical devices by implementing regulation (EU) 2017/745 on medical devices (“Medical Device Regulation” or “MDR”) and regulation (EU) 2017/746 on in vitro diagnostic medical devices.

The MDR was originally meant to apply as from May 26, 2020 (the “Date of Application” or “DoA”) but, in light of the COVID-19 pandemic, the Date of Application was postponed to May 26, 2021.

The MDR became effective on May 26, 2021 (the “Date of Application” or “DoA”).

The changes to the regulatory system implemented by the MDR include stricter requirements for clinical evidence and pre-market assessment of safety and performance, refined classifications to indicate risk levels, requirements for third party testing by Notified Bodies, tightened and streamlined quality management system assessment procedures and additional requirements for the quality management system, additional requirements for traceability of products and transparency as well a refined responsibility of economic operators.

We are currently in a transitional period, where our products will be required to comply with applicable medical device directives (including the Medical Devices Directive and the Active Implantable Medical Devices Directive) and with the Medical Device Regulation and to obtain CE mark certification in order to market medical devices.

The CE mark is applied following approval from an independent notified body or declaration of conformity.

We are currently in a transitional period, where our existing certified products will be required to continue to comply with applicable medical device directives (including the Medical Devices Directive and the Active Implantable Medical Devices Directive) and with the Medical Device Regulation and to obtain CE mark certification in order to market medical devices.

The CE mark is applied following approval from a Notified Body or declaration of conformity.

It is an international symbol of adherence to quality assurance standards and compliance with applicable European Medical Devices Directives or the MDR, as the case may be.

CE mark approvals issued prior to the DoA will remain in place for the duration of such approvals or conformity assessments and such products may be made available for this transitional period, but no later than June 2024.

CE mark approvals issued prior to May 26, 2021 will, subject to certain conditions (including, among others, continued compliance with the MDR, no significant changes to design or intended purpose, a quality management system, and engagement with a notified body to obtain conformity assessment), remain valid until December 31, 2028.

In March 2020, we received CE mark approval for our TAEUS FLIP (Fatty Liver Imaging Probe) System.

The CE marking indicates that TAEUS FLIP System complies with all applicable European Directives and Regulations in the European Union, including the MDR, and other CE mark geographies, including the 27 EU member states.

The CE marking indicates that TAEUS complies with all applicable regulations in the EU, and other CE mark geographies, including the 27 EU member states.

We believe that future TAEUS applications will qualify for sale in the European Union as Class IIa medical devices.

Although existing regulations do not require clinical trials to obtain CE marks for Class IIa medical devices, the MDR requires a clinical evaluation for all medical devices and clinical trials for selected medical devices.

The MDR requires a clinical evaluation for all medical devices and clinical trials for selected medical devices to be (re-)certified under the rules of the MDR.

Depending on the classification of our applications, future CE mark certifications or recertification of our applications may require additional clinical evaluations or trials, as the case may be.

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Our NAFLD TAEUS device will be reviewed under a “de novo” process for a risk-based classification determination whether the device is of low to moderate risk and that it can be appropriately regulated as a Class II device and thereby eligible for 510(k) clearance.

While the 510(k) pathway for product marketing requires only non-clinical testing proof of substantial equivalence to a lawfully marketed predicate device for a given indication, a de novo review may require clinical studies to support a reclassification to a lower risk class.

While the 510(k) pathway for product marketing typically requires only non-clinical testing proof of substantial equivalence to a lawfully marketed predicate device for a given indication, a de novo review is more likely to require clinical studies to support a reclassification to a lower risk class.

Even with the clinical data we expect to provide with the de novo submission for our NAFLD TAEUS device, the FDA may decide to reject the request to classify the device into Class II.

If that happens, the device will be regulated as a Class III device and the device sponsor must fulfill more rigorous PMA requirements.

If that happens, the device will be regulated as a Class III device and we will be required to fulfill more rigorous PMA requirements.

Thus, although at this time we do not anticipate that we will be required to do so, it is possible that our NAFLD TAEUS device may require approval by means of a PMA.

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The Affordable Care Act contains a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, all of which will impact existing government healthcare programs and will result in the development of new programs.

The Affordable Care Act, among other things, imposes an excise tax of 2.3% on the sale of most medical devices, including ours, and any failure to pay this amount could result in the imposition of an injunction on the sale of our products, fines and penalties.

It remains unclear whether changes will be made to the Affordable Care Act, or whether it will be repealed or materially modified.

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Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future.

From January 1, 2021 through December 31, 2021, intra-day trading prices on the Nasdaq Capital Market fluctuated from a low of $0.72 to a high of $3.10 with respect to shares of our common stock, and from a low of $0.06 to a high of $0.97 with respect to our warrants, and may continue to fluctuate significantly in the future.

We may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance or prospects.

In addition, the COVID-19 pandemic has caused broad stock market and industry fluctuations.

From January 1, 2022 through December 31, 2022, intra-day trading prices of shares of our common stock, on a Reverse Stock Split-adjusted basis (as discussed below in Item 7 under “Nasdaq Capital Market Listing and Reverse Stock Split”), on the Nasdaq Capital Market fluctuated from a low of $3.16 to a high of $15.80, and may continue to fluctuate significantly in the future.

The stock market in general and the market for healthcare companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

As a result of this volatility, investors may experience losses on their investment in our common stock.

These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.

In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies.

Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.

There can be no guarantee that our stock price will remain at current prices or that future sales of our common stock will not be at prices lower than those sold to investors.

Additionally, recently, securities of certain companies have experienced significant and extreme volatility in stock price due to a sudden increase in demand for stock resulting in aggregate short positions in the stock exceeding the number of shares available for purchase, forcing investors with short exposure to pay a premium to repurchase shares for delivery to share lenders.

Additionally securities of certain companies have experienced significant and extreme volatility in stock price due to a sudden increase in demand for stock resulting in aggregate short positions in the stock exceeding the number of shares available for purchase, forcing investors with short exposure to pay a premium to repurchase shares for delivery to share lenders.

This is known as a “short squeeze.” These short squeezes have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.

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If one or more of these analysts ceases research coverage of us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the price of our securities or trading volume to decline.

If we are unable to implement and maintain effective internal control over financial reporting, including by remediating current material weaknesses in our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our securities may decrease.

If we are unable to implement and maintain effective internal control over financial reporting, including by remediating current material weaknesses in our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our securities may decrease and we may become subject to litigation or enforcement actions.

As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls.

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Specifically, we have insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting.

We are in the process of improving our internal control over financial reporting, which process is time-consuming, costly and complicated and could limit our ability to maintain effective internal controls over financial reporting.

Until such time as we are no longer an “emerging growth company” or a smaller reporting company, our auditors will not be required to attest as to our internal control over financial reporting.

We intend to improve our internal control over financial reporting;

however, the process is time-consuming, costly and complicated.

We are constrained in the improvements we are able to make due to our limited resources.

Until our internal controls are improved our ability to maintain effective internal controls over financial reporting will be limited.

Until such time as we are no longer a smaller reporting company, our auditors will not be required to attest as to our internal control over financial reporting.

If we continue to identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective or, if required, if our independent registered public accounting firm is unable to attest that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decrease.

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Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

We are an “emerging growth company” under the JOBS Act and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We cannot predict if investors will find our securities less attractive because we may rely on these exemptions.

If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the price of our securities may be more volatile.

We will remain an “emerging growth company” until December 31, 2022, the end of the fiscal year following the fifth anniversary of the date of our May 2017 initial public offering, although we will lose that status sooner if our annual revenues exceed $1.07 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30.

We have not paid dividends in the past and have no immediate plans to pay dividends.

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As a result, it may be more difficult for us to attract and retain qualified people to serve on our board of directors, our board committees or as executive officers.

Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plan, could result in dilution of the percentage ownership of our stockholders and could cause the price of our securities to fall.

Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plan and our at-the-market equity offering program, could result in dilution of the percentage ownership of our stockholders and could cause the price of our securities to fall.

We expect that significant capital will be needed in the future to continue our planned operations.

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Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable.

Certain provisions of our Fourth Amended and Restated Certificate of Incorporation (our “Certificate of Incorporation”) and Amended and Restated Bylaws (our “Bylaws”) and applicable provisions of Delaware law may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests.

Certain provisions of our Fourth Amended and Restated Certificate of Incorporation, as amended (our “Certificate of Incorporation”) and Amended and Restated Bylaws (our “Bylaws”) and applicable provisions of Delaware law may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests.

The provisions in our Certificate of Incorporation and Bylaws:

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This potential inability to obtain a control premium could reduce the price of our common stock.

General Risk Factors

Our business is affected by macroeconomic conditions.

Various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, interest rates and foreign currency exchange rates and overall economic conditions and uncertainties, including those resulting from the current and future conditions in the global financial markets.

For instance, we experienced inflationary pressures in 2022 and expect such pressures to continue in 2023.

Cost inflation, including increases in raw material prices, labor rates, and transportation costs may impact our profitability.

Our ability to recover these cost increases through price increases is significantly limited by the process by which we are reimbursed for our products and services by government and private payers.

The volatility of the capital markets could also affect the value of our investments and our ability to liquidate our investments in order to fund our operations.

Increasing interest rates and reduced access to capital markets could also adversely affect the ability of our suppliers, distributors, licensors, collaborators, contract manufacturers and other commercial partners to remain effective business partners or to remain in business.

The loss of a critical business partner, or a failure to perform by a critical business partner, could have a disruptive effect on our business and could adversely affect our results of operations.

Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.

We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit.

Any failure of a depository institution to return these deposits on demand, or if a depository institution is subject to other adverse conditions in the financial or credit markets, could impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance.

The ongoing military action by Russia in Ukraine could have negative impact on the global economy, which could materially adversely affect our business, operations, operating results and financial condition.

In February 2022, Russian forces launched significant military action against Ukraine, and sustained conflict and disruption in the region is possible.

The impact to Ukraine as well as actions taken by other countries, including new and stricter sanctions imposed by Canada, the United Kingdom, the European Union, the United States and other countries and companies and organizations against officials, individuals, regions, and industries in Russia and Ukraine, and actions taken by Russia in response to such sanctions, and each country’s potential response to such sanctions, tensions, and military actions could adversely affect the global economy and financial markets and thus could affect our business, operations, operating results and financial condition as well as the price of our common stock and our ability to raise additional capital when needed on acceptable terms.

The extent and duration of the military action, sanctions and resulting market disruptions, including supply chain disruptions, are impossible to predict, but could be substantial.

Any such disruptions caused by Russian military action or resulting sanctions may magnify the impact of other risks described in this Annual Report on Form 10-K.

Our business and operations are subject to risks related to climate change.

The effects of global climate change present risks to our business.

Natural disasters, extreme weather and other conditions caused by or related to climate change could adversely impact our supply chain, the courier delivery services we use, the availability and cost of raw materials and components, energy supply, transportation, or other inputs necessary for the operation of our business.

Climate change and natural disasters could also result in physical damage to our facilities as well as those of our suppliers, health care providers and other business partners, which could cause disruption in our business and operations.

Our facilities and our laboratory equipment would be costly to replace and could require substantial lead time to repair or replace.

Although we believe we possess adequate insurance for the disruption of our business from causalities, such insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all.

Our business could be negatively impacted by corporate social responsibility and sustainability matters.

There has been an increased focus from investors, customers, employees and other stakeholders concerning corporate social responsibility and sustainability matters, including addressing climate change and diversity in company management, which may result in increases in our costs to operate our business or restrict certain aspects of our activities.

The standards by which corporate social responsibility and sustainability efforts and related matters are measured are developing and evolving, and certain areas are subject to assumptions that could change over time and the extent and severity of climate change impacts are unknown.

In addition, we could be criticized for the scope of such initiatives or goals or a lack of diversity on our board of directors or among our executive officers, or perceived as not acting responsibly in connection with these matters.

Any such matters could have a material adverse impact on our future results of operations, financial position and cash flows.

Unresolved Staff Comments

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors