Item 1A. Risk Factors
Item
1A. Risk Factors
An
investment in our securities involves a high degree of risk. This prospectus contains a discussion of the risks applicable to an investment
in our securities. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also affect our operations. The occurrence of any of these known or unknown
risks might cause you to lose all or part of your investment in the offered securities. We may not be successful in preventing the material
adverse effects that any of the following risks and uncertainties may cause. You could lose all or a significant portion of your investment
due to any of these risks and uncertainties.
You
should carefully consider the following risks, as well as the other information contained in this prospectus, including our historical
financial statements and related notes included elsewhere in this prospectus before you decide to purchase our securities. Any one of
these risks and uncertainties has the potential to cause material adverse effects on our business, prospects, financial condition and
operating results which could cause actual results to differ materially from any forward-looking statements expressed by us and a significant
decrease in the value of our Common Stock shares and warrants. Refer to “Cautionary Statement Regarding Forward-Looking Statements.”
Risks
Related to this Offering and Our Common Stock
Our
stock price may be volatile, and purchasers of our Common Stock could incur substantial losses.
The
stock market in general has experienced significant price and volume fluctuations that have often been unrelated or disproportionate
to operating performance of individual companies, particularly following a public offering of a company with a small public float. There
is the potential for rapid and substantial price volatility of our Common Stock following this offering. These broad market factors may
seriously harm the market price of our Common Stock, regardless of our actual or expected operating performance and financial condition
or prospects, which may make it difficult for investors to assess the rapidly changing value of our Common Stock.
15
We
are currently listed on The Nasdaq Global Market. If we are unable to maintain listing of our securities on Nasdaq or any stock exchange,
our stock price could be adversely affected and the liquidity of our stock and our ability to obtain financing could be impaired and
it may be more difficult for our stockholders to sell their securities.
Although
our Common Stock is currently listed on The Nasdaq Global Market, we may not be able to continue to meet the exchange’s minimum
listing requirements or those of any other national exchange. If we are unable to maintain listing on Nasdaq or if a liquid market for
our Common Stock does not develop or is sustained, our Common Stock may remain thinly traded.
As
previously reported on Form 8-K on February 9, 2024, the Company received written notice (the “Nasdaq Notice”), dated February
7, 2024, from Nasdaq indicating that for the preceding 30 consecutive business days, the market value of the Company’s listed securities
(“MVLS”) did not maintain a minimum market value of $50,000,000 (the “Minimum MVLS Requirement”) as required
by Nasdaq Listing Rule 5450(b)(2)(A). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company has a compliance period of 180
calendar days, or until August 5, 2024, to regain compliance with the Minimum MVLS Requirement. Compliance may be achieved if the Company’s
MVLS closes at $50,000,000 or more for a minimum of ten consecutive business days at any time during the 180-day compliance period, in
which case Nasdaq will notify the Company of its compliance and the matter will be closed.
If
the Company does not regain compliance with the Minimum MVLS Requirement by August 5, 2024, Nasdaq will provide written notification
to the Company that its common stock is subject to delisting. At that time, the Company may appeal the relevant delisting determination
to a hearings panel pursuant to the procedures set forth in the applicable Nasdaq Listing Rules. However, there can be no assurance,
if the Company does appeal the delisting determination by Nasdaq to the hearings panel, that such appeal would be successful. In such
event, the Company may also seek to apply for a transfer to The Nasdaq Capital Market if it meets the requirements for continued listing
thereon.
The
Nasdaq Notice received have no immediate effect on the Company’s continued listing on the Nasdaq Global Market or the trading of
Company’s common stock, subject to the Company’s compliance with the other continued listing requirements. The Company is
presently evaluating potential actions to regain compliance with all applicable requirements for continued listing on the Nasdaq Global
Market. There can be no assurance that the Company will be successful in maintaining the listing of its common stock on the Nasdaq Global
Market.
The
listing rules of Nasdaq require listing issuers to comply with certain standards in order to remain listed on its exchange. If, for any
reason, we should fail to maintain compliance with these listing standards and Nasdaq should delist our securities from trading on its
exchange and we are unable to obtain listing on another national securities exchange, a reduction in some or all of the following may
occur, each of which could have a material adverse effect on our stockholders:
●
the
liquidity of our Common Stock;
●
the
market price of our Common Stock;
●
our
ability to obtain financing for the continuation of our operations;
●
the
number of institutional and general investors that will consider investing in our Common Stock;
●
the
number of investors in general that will consider investing in our Common Stock;
●
the
number of market makers in our Common Stock;
●
the
availability of information concerning the trading prices and volume of our Common Stock; and
●
the
number of broker-dealers willing to execute trades in shares of our Common Stock.
Our
principal stockholders will continue to have significant influence over the election of our board of directors and approval of any significant
corporate actions, including any sale of the Company.
Our
founders, executive officers, directors, and other principal stockholders, in the aggregate, beneficially own a majority of our outstanding
stock. These stockholders currently have, and likely will continue to have, significant influence with respect to the election of our
board of directors and approval or disapproval of all significant corporate actions. The concentrated voting power of these stockholders
could have the effect of delaying or preventing an acquisition of the Company or another significant corporate transaction.
We
could be subject to securities class action litigation.
In
the past, securities class action litigation has often been brought against companies following a decline in the market price of their
securities. In 2020, 22% of securities class action litigation filings
were against defendants in the health technology and services sector, which accounted for 22% of new filings . If we face such
litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our
business.
16
If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market
price for the shares and trading volume could decline.
The
trading market for our Common Stock will depend in part on the research and reports that securities or industry analysts publish about
us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who
covers us downgrades our Common Stock or publishes inaccurate or unfavorable research about our business, the market price for our Common
Stock would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly,
we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our common stock
to decline.
We
do not expect to pay dividends in the foreseeable future, and you must rely on price appreciation of your shares of Common Stock for
return on your investment.
We
have paid no cash dividends on any class of our stock to date, and we do not anticipate paying cash dividends in the near term. For the
foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate
paying any cash dividends on our stock. Accordingly, investors must be prepared to rely on sales of their shares after price appreciation
to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our shares. Any determination
to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations,
financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.
Future
sales of substantial amounts of our Common Stock or securities convertible into or exchangeable or exercisable for shares of Common Stock,
either by us or by our existing stockholders, or the possibility that such sales could occur, could adversely affect the market price
of our Common Stock.
Future
sales in the public market of shares of our Common Stock or securities convertible into or exchangeable or exercisable for shares of
Common Stock, shares held by our existing stockholders or shares issued upon exercise of our outstanding stock options or warrants, or
the perception by the market that these sales could occur, could lower the market price of our Common Stock or make it difficult for
us to raise additional capital.
We
are an “emerging growth company,” and the reduced reporting requirements applicable to emerging growth companies may make
our common stock less attractive to investors.
We
are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“the JOBS Act”). For
as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that
are applicable to other public companies that are not emerging growth companies, including exemption from compliance with the auditor
attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation 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 will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth
anniversary of the closing of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion
or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock held by non-affiliates
exceeds $700 million as of the end of our prior second fiscal quarter, and (2) the date on which we have issued more than $1 billion
in non-convertible debt during the prior three-year period.
In
addition, under the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until such time as those
standards apply to private companies. We may elect not to avail ourselves of this exemption from new or revised accounting standards
and, therefore, may be subject to the same new or revised accounting standards as other public companies that are not emerging growth
companies. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some
investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our share
price may be more volatile.
Anti-takeover
provisions contained in our certificate of incorporation and bylaws as well as provisions of Delaware law, could impair a takeover attempt.
Our
certificate of incorporation, bylaws and Delaware law contain provisions which could have the effect of rendering more difficult, delaying
or preventing an acquisition deemed undesirable by our board of directors. Our corporate governance documents include provisions:
●
authorizing
“blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may
contain voting, liquidation, dividend, and other rights superior to our common stock;
●
limiting
the liability of, and providing indemnification to, our directors and officers;
●
limiting
the ability of our stockholders to call and bring business before special meetings;
●
requiring
advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of
candidates for election to our board of directors;
●
controlling
the procedures for the conduct and scheduling of board of directors and stockholder meetings; and
●
providing
our board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled
special meetings.
17
These
provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. As a Delaware
corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which
prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without
approval of the holders of substantially all of our outstanding common stock.
Any
provision of our certificate of incorporation, bylaws or Delaware law that has the effect of delaying or deterring a change in control
could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock and could also affect the
price that some investors are willing to pay for our Common Stock.
Our
Business Risks
We
have a history of operating losses and may never achieve profitability in the future .
We
have experienced net losses in each annual period since inception. We generated net losses of $23.2 million and $6.2 million for the
years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had accumulated losses of approximately $55.1 million.
We
expect to continue to incur significant losses in the development, marketing, sale and delivery of our services. If we do not grow our
revenues or if we lose existing customers, we expect to continue to incur losses from operations for the foreseeable future. Because
of the numerous risks and uncertainties associated with the development, marketing, sale and delivery of our imaging real world data
(“iRWD TM ”) services, we may experience larger than expected future losses and may never become profitable. Moreover,
there is a substantial risk that we may not be able to successfully commercialize our iRWD TM services, which would make it
unlikely that we would ever achieving profitability.
OneMedNet
believes it has demonstrated its quality and responsiveness in clinical imaging and curation of Real-World Data based upon success in
compiling one of the largest networks of imaging centers (comprised of hospitals, imaging centers and clinics) throughout the United
States covering more than 15 million patients to date. On the global front, OneMedNet works with hospitals and life science companies
around the world including Ireland, United Kingdom, Ghana, Denmark and South Korea and growing. We base these claims on our understanding
of our competition in the United States and globally. However, if we were to lose these relationships with our network of imaging centers
or lose our customers or our competitors’ technology surpasses ours, our competitors could claim a greater market share domestically
or abroad, which could reduce our growth and our profits, which could harm our business, financial position, results of operations and
prospects.
Two
significant customers represented 53% and 52% of our revenues for 2022 and 2023 respectively, and is expected to continue to represent
a significant portion of our forecasted revenue for 2024.
Change
Healthcare and Siemens Medical Solutions USA, collectively represented 53% and 52% of our revenues in 2023 and 2022, respectively. Change
Healthcare is expected to continue to represent a significant portion of our forecasted revenue for 2024. If we fail to maintain and
grow our relationships with Change Healthcare, we could lose a significant portion of our revenue for 2023, which would materially adversely
affect our results of operations and our business. If OneMedNet were to lose one or more of its significant customers, its revenue may
significantly decline. In addition, revenue from significant customers may vary from period to period depending on the timing of renewing
existing agreements or entering into new agreements for additional OneMedNet products as well as other unforeseen risks and variables
discussed in this proxy statement/prospectus. The loss of one or more of OneMedNet’s significant customers could adversely affect
its business, results of operations and financial condition. You should not rely on our historical relationship with these companies
as an indication of our future performance.
We
may encounter difficulties in managing our attempted growth of our business, which could negatively impact our operations.
As
we expand, market, sell and deliver our service offerings, we anticipate that we will need to increase our service development, sales
and marketing and administrative headcount. Such an evolution may impact our strategic focus and our deployment and allocation of resources.
Our ability to manage our operations and growth effectively depends upon the continual improvement of our procedures, reporting systems
and operational, financial and management controls. We may not be able to implement administrative and operational improvements in an
efficient or timely manner and may discover deficiencies in existing systems and controls. If we do not meet these challenges, we may
be unable to execute our business strategies and may be forced to expend more resources than anticipated addressing these issues.
We
may acquire additional technology and complementary businesses in the future. Acquisitions involve many risks, any of which could materially
harm our business, including the diversion of management’s attention from core business concerns, failure to effectively exploit
acquired technologies, failure to successfully integrate the acquired business or realize expected synergies or the loss of key employees
from either our business or the acquired businesses.
18
We
may be unable to execute our business objectives and growth strategies successfully or sustain our growth and, as a result, this could
have a material adverse effect on our operating results.
The
highly complex nature of our industry requires that we effectively execute and manage our business objectives and growth strategies,
such as expanding our marketing and commercialization of our services in the U.S. and internationally, adding new customers, and increasing
our service delivery capacity. However, we may not be able to execute on these strategies as effectively as anticipated. Our ability
to execute on these strategies depends on a number of factors, including, without limitation:
●
our
ability to obtain adequate capital resources to complete execute our growth plans;
●
our
ability to hire, train and retain skilled managers and personnel, including quality and production personnel, and marketing and commercial
specialists;
●
our
ability to protect our existing and new services by registering and defending our intellectual property rights; and
●
our
ability to successfully add new customers.
To
the extent we are unable to execute on our growth strategies in accordance with our expectations, this could have a material adverse
effect on our business, financial condition, and future results of operations.
The
real-world data and real-world evidence business market continues to evolve, is highly competitive, and we may not be successful in competing
in this industry or establishing and maintaining confidence in our long-term business prospects among current and future partners and
customers.
The
real-world data and real-world evidence business market in which we compete continues to evolve and is highly competitive. To date, we
have focused our efforts on its expertise in clinical imaging innovation solutions that connects healthcare providers and patients and
satisfies a crucial need with the life sciences. We offer direct access to clinical images and associated contextual patient record.
OneMedNet proved the commercial and regulatory viability of imaging Regulatory Grade Real-World Data (“iRWD TM ”),
a promising emerging market, that exactly matches OneMedNet’s life science partners’ case selection protocol. OneMedNet has
the immediate ability to quickly search and extensively curate multi-layer data from a federated group of healthcare facilities and to
provide fast access to curated medical images that has proved the commercial and regulatory viability of imaging RWD and covers the complete
value chain in imaging RWD, validated by an increasing federated network of providers. However, real-world data and real-world evidence
has been increasingly adopted and our current competitors have, and future competitors may have, greater resources than we do and may
also be able to devote greater resources to the development of their current and future technologies. These competitors also may have
greater access to customers and may be able to establish cooperative or strategic relationships amongst themselves or with third parties
that may further enhance their resources and competitive positioning.
Developments
in improvements in real-world data and real-world evidence curation by competitors may materially adversely affect the sales, pricing
and gross margins of our business. If a competing technology or process is developed that has superior operational or price performance,
our business will be harmed. Similarly, if we fail to accurately predict and ensure that our real-world data and real-world evidence
offering can address customers’ changing needs or emerging technological trends, or if our customers fail to achieve the benefits
expected from our real-world data and real-world evidence offering, our business will be harmed.
We
must continue to commit resources to develop our real-world data and real-world evidence technology in order to establish a competitive
position, and these commitments will be made without knowing whether such investments will result in products potential customers will
accept. There is no assurance we will successfully identify new customer requirements, develop and bring our real-world data and real-world
evidence to market on a timely basis, or that products and technologies developed by others will not render our real-world data and real-world
evidence obsolete or noncompetitive, any of which would adversely affect our business and operating results.
If
we are unable to attract and retain key employees and qualified personnel, our ability to compete could be harmed.
We
depend on the talents and continued efforts of our senior management and key employees. The loss of members of our management or key
employees may disrupt our business and harm our results of operations. Further, our ability to manage further expansion will require
us to continue to attract, motivate and retain additional qualified personnel. Competition for this type of personnel is intense, and
we may not be successful in attracting, integrating and retaining the personnel required to grow and operate our business effectively.
There can be no assurance that our current management team or any new members of our management team will be able to successfully execute
our business and operating strategies.
Our
operations could be damaged or adversely affected as a result of natural disasters and other catastrophic events.
Our
operations could be adversely affected by events outside of our control, such as natural disasters, wars, health epidemics such as the
ongoing COVID-19 pandemic, and other calamities . We cannot assure you that any backup systems will be adequate to protect us from
the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks
or similar events. Any of the foregoing events may give rise to interruptions, breakdowns, system failures, technology platform failures
or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect
our ability to provide services.
19
Any
financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially
and adversely affect our business, financial condition, and results of operations.
In
recent years, the United States and global economies suffered dramatic downturns as the result of the COVID-19 pandemic, a deterioration
in the credit markets and related financial crisis as well as a variety of other factors including, among other things, extreme volatility
in security prices, severely diminished liquidity and credit availability, ratings downgrades of certain investments and declining valuations
of others. The United States and certain foreign governments have taken unprecedented actions in an attempt to address and rectify these
extreme market and economic conditions by providing liquidity and stability to the financial markets. If the actions taken by these governments
are not successful, the return of adverse economic conditions may negatively impact the demand for iRWD TM offering and may
negatively impact our ability to raise capital, if needed, on a timely basis and on acceptable terms or at all.
Our
ability to utilize our net operating loss and tax credit carryforwards to offset future taxable income may be subject to certain limitations.
In
general, under Section 382 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its
ability to use its pre-change net operating loss carryforwards (“NOLs”), to offset future taxable income. The limitations
apply if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percentage point
change (by value) in its equity ownership by certain stockholders over a three-year period. If we have experienced an ownership change
at any time since our incorporation, we may already be subject to limitations on our ability to utilize our existing NOLs and other tax
attributes to offset taxable income or tax liability. In addition, the Business Combination and future changes in our stock ownership,
which may be outside of our control, may trigger an ownership change. Similar provisions of state tax law may also apply to limit our
use of accumulated state tax attributes. As a result, even if we earn net taxable income in the future, our ability to use these or our
pre-change NOL carryforwards and other tax attributes to offset such taxable income or tax liability may be subject to limitations, which
could potentially result in increased future income tax liability to us.
There
is also a risk that changes in law or regulatory changes made in response to the need for some jurisdictions to raise additional revenue
to help counter the fiscal impact from unforeseen reasons, including suspensions on the use of net operating losses or tax credits, possibly
with retroactive effect, may result in our existing net operating losses or tax credits expiring or otherwise being unavailable to offset
future income tax liabilities.
We
are subject to many hazards and operational risks that can disrupt our business, some of which may not be insured or fully covered by
insurance.
Our
operations are subject to many hazards and operational risks inherent to our business, including: (a) general business risks; (b) warranty
liability; and (c) damage to third parties (e.g., our vendors), our infrastructure or properties caused by fires, floods and other natural
disasters, power losses, telecommunications failures, terrorist attacks, riots, cyberattacks, public health crises such as the current
COVID-19 pandemic (and other future pandemics or epidemics), human errors and similar events. 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 and the business of our
customers.
Our
insurance coverage may be inadequate to cover our liabilities related to such hazards or operational risks. For example, we do not currently
maintain cybersecurity insurance and our insurance providers may take the position that our coverage, under present circumstances, does
not extend to business interruptions as they relate to the COVID-19 pandemic. In addition, we may not be able to maintain adequate insurance
in the future at rates we consider reasonable and commercially justifiable, and insurance may not continue to be available on terms as
favorable as our current arrangements. The occurrence of a significant uninsured claim or a claim in excess of the insurance coverage
limits maintained by us could have a material adverse effect on our business, financial condition and results of operations.
Risks
Related to Being a Public Company
Our
management has limited experience in operating a public company.
Our
executive officers have limited experience in the management of a publicly traded company. Our management team may not successfully or
effectively manage our transition to a public company that will be subject to significant regulatory oversight and reporting obligations
under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies
could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which
will result in less time being devoted to the management and growth of our Company. We may not have adequate personnel with the appropriate
level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required
of public companies in the United States. The development and implementation of the standards and controls necessary for us to achieve
the level of accounting standards required of a public company in the United States may require costs greater than expected. It is possible
that we will be required to expand our employee base and hire additional employees to support our operations as a public company which
will increase our operating costs in future periods.
We
will incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business,
financial condition and results of operations.
We
will face increased legal, accounting, administrative and other costs and expenses as a public company that legacy OneMedNet Corporation
did not incur as a private company. The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), including the requirements
of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB and the securities exchanges,
impose additional reporting and other obligations on public companies. Compliance with public company requirements will increase costs
and make certain activities more time-consuming. A number of those requirements will require us to carry out activities we have not done
previously. For example, we have created new Board committees and adopted new internal controls and disclosure controls and procedures.
In addition, expenses associated with SEC reporting requirements will be incurred. Furthermore, if any issues in complying with those
requirements are identified (for example, if the auditors identify a material weakness or significant deficiency in the internal control
over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely
affect our reputation or investor perceptions of it. It may also be more expensive to obtain director and officer liability insurance.
Risks associated with our status as a public company may make it more difficult to attract and retain qualified persons to serve on our
Board or as executive officers. The additional reporting and other obligations imposed by these rules and regulations will increase legal
and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require
us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Advocacy
efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further
increase costs.
20
If
securities or industry analysts do not publish or cease publishing research or reports about us, our business, or the market in which
we operate, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities
could decline.
The
trading market for our securities will be influenced by the research and reports that industry or securities analysts may publish about
us, our business, market or competitors. Securities and industry analysts do not currently, and may never, publish research on us. If
no securities or industry analysts commence coverage of us, our share price and trading volume would likely be negatively impacted. If
any of the analysts who may cover us change their recommendation regarding our shares of Common Stock adversely, or provide more favorable
relative recommendations about our competitors, the price of our shares of Common Stock would likely decline. If any analyst who may
cover us were to cease our coverage of us or fail to regularly publish reports on it, we could lose visibility in the financial markets,
which in turn could cause our share price or trading volume to decline.
Our
Common Stock may be subject to extreme volatility.
The
trading price of our Common Stock may be subject to extreme volatility. We cannot predict the magnitude of future fluctuations in the
trading price of our Common Stock. The trading price of our Common Stock may be affected by a number of factors, including events described
in the risk factors set forth in this prospectus and in our periodic reports filed with the SEC from time to time, as well as our operating
results, financial condition and other events or factors. Any of the factors listed below could have a material adverse effect on your
investment in our securities. Factors affecting the trading price of our securities may include:
●
announcements
by us or our competitors regarding technical developments and levels of performance achieved by our or their real-world data and
real-world evidence offering;
●
announcements
by us regarding developments in our relationship with existing and future key customers;
●
our
ability to bring our products and technologies to market on a timely basis, or at all;
●
our
operating results or development efforts failing to meet the expectation of securities analysts or investors in a particular period;
●
Actual
or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be
similar to it;
●
changes
in the market’s expectations about our operating results or the real-world data and real-world evidence industry;
●
success
of competitors actual or perceived development efforts;
●
changes
in financial estimates and recommendations by securities analysts concerning the Company or the real-world data and real-world
evidence industry in general;
●
operating
and share price performance of other companies that investors deem comparable to the Company;
●
disputes
or other developments related to proprietary rights, including patents, litigation matters and our ability to obtain intellectual
property protection for our technologies;
●
changes
in laws and regulations affecting our business;
●
our
ability to meet compliance requirements;
●
commencement
of, or involvement in, litigation involving the Company;
●
changes
in our capital structure, such as future issuances of securities or the incurrence of additional debt;
●
the
volume of shares of Common Stock available for public sale;
●
the
level of demand for our Common Stock, including the amount of short interest in our stock;
●
any
major change in our Board or management;
●
sales
of substantial amounts of the shares of Common Stock by our directors, executive officers or significant stockholders or the
perception that such sales could occur;
●
the
expiration of contractual lock-up agreements with our executive officers, directors and stockholders, which we have entered into and
may enter into in the future from time to time; and
●
general
economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of
war or terrorism.
21
Broad
market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock
market in general, and the Nasdaq in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities,
may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors
perceive to be similar to the Company could depress our share price regardless of our business, prospects, financial conditions or results
of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities
and our ability to obtain additional financing in the future.
Following
certain periods of volatility in the market price of our securities, we may become subject of securities litigation. We have experienced,
and may in the future experience additional litigation following periods of volatility. This type of litigation may result in substantial
costs and a diversion of management’s attention and resources.
Our
business model is capital-intensive, and we may not be able to raise additional capital on attractive terms, if at all, which could be
dilutive to stockholders. If we cannot raise additional capital when needed, our operations and prospects could be materially and adversely
affected.
We
can be expected to continue to sustain substantial operating expenses without generating sufficient revenues to cover expenditures. Over
time, we expect that we will need to raise additional funds, including through the issuance of equity, equity-related or debt securities
or through obtaining credit from financial institutions to fund, together with our principal sources of liquidity, ongoing costs, any
significant unplanned or accelerated expenses, and new strategic investments. We cannot be certain that additional capital will be available
on attractive terms, if at all, when needed, which could be dilutive to stockholders, and our financial condition, results of operations,
business and prospects could be materially and adversely affected.
Risks
Related to Our Warrants
We
may redeem unexpired Warrants prior to their exercise at a time that is disadvantageous to Warrantholders.
Our
public Warrants are currently exercisable for one share of Common Stock at a price of $11.50 per share. We have the ability to redeem
outstanding Warrants at any time prior to their expiration, at a price of $0.01 per Warrant, provided that the last reported sales price
of Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading
day prior to the date we send the notice of redemption to Warrantholders and provided certain other conditions are met. If and when the
Warrants become redeemable by us, we may exercise our redemption rights even if we are unable to register or qualify the underlying securities
for sale under all applicable state securities laws. As a result, we may redeem the Warrants, as set forth above even if the holders
are otherwise unable to exercise the Warrants.
Redemption
of the outstanding Warrants could force Warrantholders (i) to exercise their Warrants and pay the exercise price therefor at a time when
it may be disadvantageous for them to do so, (ii) to sell their Warrants at the then-current market price when they might otherwise wish
to hold their Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption,
we expect would be substantially less than the market value of their Warrants. None of the private placement Warrants will be redeemable
by us so long as they are held by the Sponsor or its permitted transferees.