What changed in this filing

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Item 1. Business

2025-08-25 compared with 2024-08-29 · 78 added, 112 removed, 380 unchanged (33% of the section changed)

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and (c) Healthcare, providing patient monitoring, cardiology and remote monitoring, and connected care systems and associated accessories.

Industry Overview

We sell our security and inspection solutions and healthcare products primarily to end‑users, while we design and manufacture our optoelectronic devices and value‑added subsystems and provide electronics manufacturing services primarily for original equipment manufacturer (OEM) customers.

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A variety of technologies are currently used globally in non-intrusive security and inspection systems, including transmission and backscatter X-ray interrogation, 3-D computed tomography, radiation monitoring, metal detection, millimeter wave imaging, chemical trace detection, and optical inspection.

We believe that the market for security and inspection products will continue to be affected by the threat of terrorist incidents, drug and human trafficking, gun violence, and by new government mandates and appropriations for security and inspection products both in the United States and internationally.

Security and inspection products are used at a wide range of facilities in addition to airports, such as border crossings, seaports, freight forwarding operations (to screen cargo before it is loaded onto airplanes and ships), government and military installations, sports and concert venues, correctional facilities, and other locations where the interdiction of criminal activities is paramount.

Department of Homeland Security has undertaken numerous initiatives to prevent terrorists from entering the country, hijacking airplanes, and obtaining and transporting explosives, weapons and their components, and to prevent human trafficking.

Among other serious crimes.

We believe that the market for security and inspection products will continue to be affected by the threat of terrorist incidents, drug and human trafficking, border security, gun violence, and by new government mandates and appropriations for security and inspection products both in the United States and internationally.

Security and inspection products are used at a wide range of facilities such as airports, border crossings, seaports, freight forwarding operations (to screen cargo before it is loaded onto airplanes), government and military installations, sports and concert venues, correctional facilities, and other locations where the interdiction of criminal activities is paramount.

These initiatives, such as the Customs-Trade Partnership Against Terrorism, the U.S.

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Customs and Border Protection Container Security Initiative, have resulted in increased demand for security and inspection products, as have similar programs undertaken by governments across the world.

Government sponsored initiatives in one nation often stimulate corresponding security programs by others in part because such initiatives frequently require that other nations bolster their security strategies, including acquiring or improving their security and inspection equipment and screening operations, in order to participate in international aviation and to facilitate cross-border trade activities.

The international market for non-intrusive inspection equipment and related services also continues to expand as nations choose to procure and operate equipment to meet their own security objectives, including to bolster security operations at their own borders and for their own transportation networks, facilities and at other venues.

The international market for non-intrusive inspection equipment and related services also continues to expand as nations procure and operate equipment to meet their own security objectives and address evolving threats, including bolstering security operations at their own borders, transportation networks, critical infrastructure facilities, and other venues.

Global initiatives like the European Union’s Customs Control Equipment Instrument (CCEI) and mandates for 100% cargo scanning at key international ports are driving increased demand for advanced inspection technologies by setting higher security standards, streamlining customs processes, and promoting greater interoperability among international security frameworks.

Transportation Security Administration and other international air transportation security regulators around the world require the screening of passengers, carry-on bags and air cargo.

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We believe that continued advances in technology have broadened the optoelectronics market by enabling the use of optoelectronic devices in a greater number of applications.

In addition, we see a trend among OEMs to outsource the design and manufacture of optoelectronic devices as well as value-added subsystems to fully-integrated, independent manufacturers, like us, that may have greater specialization, broader expertise and more flexibility to respond to short cycle times and quicker market expectations.

Our optoelectronic devices are used in a wide variety of applications for diversified markets including aerospace and defense, automotive, medical imaging and diagnostics, biochemistry analysis, pharmaceutical, nanotechnology, telecommunications, construction and homeland security.

In addition, we see a trend among OEMs to outsource the design and manufacture of optoelectronic devices as well as value-added subsystems to fully-integrated, independent manufacturers, like us, which may offer greater specialization, broader expertise, and more flexibility to respond to short cycle times and quicker market expectations.

Our optoelectronic devices are utilized in a wide range of applications across various markets, including aerospace and defense, automotive, medical imaging and diagnostics, life sciences and biotechnology, pharmaceuticals, nanotechnology, telecommunications, construction, and homeland security.

Medical applications for our devices include diagnostic and imaging products, patient monitoring equipment, and glucose monitors.

Aerospace and defense applications for our devices include satellite navigation sensors, laser guided munitions systems, range finders, weapons simulation systems, and other applications that require the conversion of optical signals into electrical signals.

Homeland security applications for our devices include X-ray based and other detection systems.

Our optoelectronic devices and value-added subsystems are also used in a wide variety of measurement control, monitoring and industrial applications and are key components in telecommunications technologies.

We also offer electronics manufacturing services to broader markets, as well as to our optoelectronics customers and to our Security and Healthcare divisions.

Aerospace and defense applications for our devices include satellite navigation sensors, laser-guided munitions systems, range finders, and other applications that require the conversion of optical signals into electrical signals.

Homeland security applications for our devices include X-ray imaging, chemical, biological, radiological, nuclear, and explosive-based detection systems.

Our optoelectronic devices and value-added subsystems are also used in a wide range of measurement control, monitoring, and industrial applications, serving as key components in telecommunications technologies.

We also offer electronics manufacturing services to broader markets, as well as to our optoelectronics customers and our Security and Healthcare divisions.

We offer full turnkey solutions as well as printed circuit board assembly, cable and harness assembly, liquid crystal displays, and box-build manufacturing services, in which we provide product design and development, supply chain management, and production manufacturing services.

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Growth Strategy

We believe that one of our primary competitive strengths is our expertise in the cost effective design and manufacture of specialized electronic systems and components for critical applications.

As a result, we will continue to leverage such expertise and capacity to gain price, performance and agility advantages over our competitors in the security, healthcare and optoelectronics fields, and to translate such advantages into profitable growth in those fields.

We believe that one of our primary competitive strengths is our expertise in designing and manufacturing cost-effective specialized electronic systems and components for critical applications.

At the same time, we continually seek to identify new markets in which our core expertise and capacity will provide us with competitive advantages.

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Capitalizing on Vertical Integration.

Our vertical integration provides several advantages in each of our divisions.

These advantages include reduced manufacturing and delivery times, lower costs due to our access to competitive international labor markets and direct sourcing of raw materials and sub components.

Our vertical integration provides several advantages across all our divisions.

These advantages include reduced manufacturing and delivery times, lower costs due to our access to competitive international labor markets and direct sourcing of raw materials and subcomponents.

We also believe that we offer significant added value to our customers by providing a full range of vertically-integrated services, including component design and customization, subsystem concept design and application engineering, product development and prototyping, efficient preproduction and short run manufacturing and competitive mass production capabilities.

We believe that our vertical integration differentiates us from many of our competitors and provides value to our customers who can rely on us to be an integrated supplier.

We believe that our vertical integration differentiates us from many of our competitors and provides value to our customers who can rely on us to be an integrated and comprehensive supplier.

Capitalizing on the Market for Security and Inspection Systems.

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Our software has been used by customs and tax authorities in the United States, Europe and Latin America to screen millions of containers and vehicles.

We believe that government agencies and commercial customers will increasingly rely on such SaaS offerings to review and adjudicate screening decisions remotely, over secure networks, as well as to communicate with and monitor the performance of their employees working on the ground at distant ports, border crossings and other checkpoints.

We believe that government agencies and commercial customers will continue to rely on such SaaS offerings to review and adjudicate screening decisions remotely, over secure networks, as well as to communicate with and monitor the performance of their employees working on the ground at distant ports, border crossings and other checkpoints.

Finally, we also intend to continue to develop new security and inspection products and technologies, including software, and to enhance our current product and service offerings through internal research and development and selective acquisitions.

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We design, manufacture and market security and inspection systems globally to end users primarily under the “Rapiscan” trade name.

Our Security products are used to inspect baggage, parcels, cargo, people, vehicles and other objects for various contraband and prohibited items including weapons, explosives, drugs, and nuclear materials.

These systems are also used for the safe, accurate and efficient verification of cargo manifests for the purpose of assessing duties and monitoring the export and import of controlled materials.

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explosive and narcotics trace detection;

and optical inspection systems.

optical inspection systems;

and radio frequency (RF) equipment.

We also offer turnkey security screening services, as well as related software integration platforms, operator training, and the staffing and operation of security screening checkpoints under the “S2” trade name.

In recent years, security and inspection products have increasingly been used at a wide range of facilities in addition to airports, such as border crossings, railways, seaports, cruise line terminals, sports and entertain venues, freight forwarding operations, government and military installations and nuclear facilities.

In recent years, security and inspection products have increasingly been used at a wide range of facilities in addition to airports, such as border crossings, railways, seaports, cruise line terminals, sports and entertainment venues, freight forwarding operations, government and military installations and nuclear facilities.

As a result of the use of security and inspection products at additional facilities, we have diversified our portfolio of security and inspection products and our sales channels.

Many of our security and inspection systems utilize dual-energy X-ray imaging technology, in combination with software enhanced imaging methods and algorithms to facilitate the detection of contraband materials and items such as explosives, weapons, narcotics, and bulk currency.

Dual energy imaging allows some material properties to be identified.

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This is particularly the case with respect to systems used (or approved for use) to perform screening of airline passenger carry-on items, hold (checked) baggage and air cargo.

Our Security division also offers trace detection systems that are designed to detect trace amounts of explosives or narcotics and people screening products, such as walk-through metal detectors for use at security checkpoints at airports, government buildings, sports arenas and other venues.

Our Security division also offers trace detection systems that are designed to detect trace amounts of explosives and narcotics and people screening products, such as walk-through metal detectors for use at security checkpoints at airports, government buildings, sports arenas and other venues.

We also advance the application of radio frequency (RF) broadcast transmission and scientific and industrial equipment, specializing in the custom design, development, and manufacture of digital and analog high-power RF systems for a global customer base across various sectors, including science, industrial, government, defense, and broadcast objectives.

Optoelectronic Devices and Manufacturing Services .

Optoelectronic devices designed, manufactured, and sold through our Optoelectronics and Manufacturing division generally consist of both active and passive components.

Active components sense light of varying wavelengths and convert the light detected into electrical signals, whereas passive components amplify, separate or reflect light.

A collection of active components detects lights of different wavelengths and converts light into electrical signals.

Meanwhile, another set of devices emits light in the form of lasers, transforming electricity into light.

Passive components are responsible for amplifying, separating, and reflecting light.

These products are manufactured in standard and customized configurations for specific applications and are offered either as components or as subsystems.

Our optoelectronic products and services are provided primarily under the “OSI Optoelectronics,” “OSI LaserDiode,” “OSI Laserscan,” and “Advanced Photonix” trade names.

In addition to the manufacture of standard and OEM products, we also specialize in designing and manufacturing customized value-added subsystems for use in a wide range of products and equipment.

An optoelectronic subsystem typically consists of one or more optoelectronic devices that are combined with other electronic components and packaging for use in an end product.

Our optoelectronic products and services are provided primarily under the “OSI Optoelectronics,” “OSI LaserDiode,” and “Advanced Photonix” trade names.

In addition to manufacturing standard and OEM products, we also specialize in designing and manufacturing customized, value-added subsystems for use in a wide range of products and equipment.

An optoelectronic subsystem typically consists of one or more optoelectronic components that are combined with other electronic components and packaging for use in an end product.

The composition of a subsystem can range from a simple assembly of various optoelectronic devices that are incorporated into other subsystems (for example, a printed circuit board containing our optoelectronic devices) to complete end products (for example, pulse oximetry equipment).

We develop, manufacture and sell laser-based remote sensing devices that are used to detect and classify vehicles in toll and traffic management systems under the “OSI Laserscan” and “Autosense” trade names.

We offer solid-state laser products for aerospace, defense, telecommunication and medical applications under the “OSI LaserDiode” trade name.

We also provide electronics design and manufacturing services in North America, the United Kingdom and in the Asia Pacific region of, printed circuit board and cable and harness assemblies and complete products.

Our factories are equipped with automated surface mount technology lines and other cutting edge automated manufacturing equipment.

We offer these services to OEM customers and end users for medical, automotive, defense, aerospace, industrial and consumer applications that are not primarily integrating optoelectronic devices.

We also manufacture and design custom LCD displays for medical, industrial and consumer electronics applications, and also design and fabricate flex circuits for OEM customers from the prototype stage to mass production.

Our electronics manufacturing services are provided primarily under the “OSI Electronics,” “APlus Products,” “Altaflex,” and “PFC Flexible Circuits” trade names.

We provide electronics design and manufacturing services in North America, the United Kingdom, and the Asia Pacific region.

Our offerings include printed circuit boards, cable and harness assemblies, and complete systems.

Our factories are equipped with automated surface mount technology (SMT) lines and other advanced automated manufacturing equipment.

We offer these services to OEM customers and end users in various sectors, including medical, automotive, defense, aerospace, industrial, and consumer electronics applications that are not primarily focused on integrating optoelectronic devices.

Additionally, we design and manufacture custom LCD displays for medical, industrial, and consumer electronics applications, as well as design and fabricate flex circuits for OEM customers ranging from the prototype stage to mass production.

Our electronics manufacturing services are provided primarily under the trade names “OSI Electronics,” “APlus Products,” “Altaflex,” and “PFC Flexible Circuits.”

Patient Monitoring and Cardiology and Remote Monitoring.

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These tools help to drive care improvement initiatives hospitals are funding today.

For remote clinical monitoring, through an subsidiary, we provide monitoring technicians who remotely monitor telemetry patients at customer hospitals to provide secondary and supplemental monitoring.

Our PathfinderSL ® and Lifescreen™ Pro analysis tools provide clinicians the ability to save Holter analysis time and to do detailed analysis when needed inside or outside the hospital.

Our Pathfinder SL ® and Lifescreen™ Pro analysis tools provide clinicians the ability to save Holter analysis time and to do detailed analysis when needed inside or outside the hospital.

Our Eclipse Pro Holter recorders provide up to 14 days of 3-channel recording or up to 72 hours of 12 lead with pacing.

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Security and Inspection Products .

Many security and inspection products were developed originally in response to civilian airline hijackings.

Some security and inspection products were developed originally in response to civilian airline hijackings.

Consequently, certain of our security and inspection products have been and continue to be sold for use at airports.

Our security and inspection products are also used for security and customs purposes at locations in addition to airports, such as border crossings, shipping ports, sports and entertainment venues, military and other government installations, freight forwarding facilities, high-profile locations such as U.K.

Our security and inspection products are also used for security and customs purposes at locations in addition to airports, such as border crossings, shipping ports, critical infrastructure facilities, international mail facilities, sports and entertainment venues, military and other government installations, freight forwarding facilities, high-profile locations such as U.K.

House of Parliament, Buckingham Palace, and the Vatican and for high-profile events such as the Olympic Games, FIFA World Cup, and other sporting events.

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Optoelectronic Devices and Electronics Manufacturing Services.

Our optoelectronic devices and the electronics we manufacture are used in a broad range of products by a variety of customers in the following market segments:

Our optoelectronic devices and electronics are used in a broad range of products for various customers across the following market segments:

defense, aerospace, and avionics;

analytical and medical imaging;

medical and life sciences;

telecommunications;

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toll and traffic management;

and automotive.

automotive and industrial.

Patient Monitoring, Cardiology and Remote Monitoring, and Connected Care Solutions.

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Our solutions are also utilized in physicians’ offices, medical clinics and ambulatory surgery centers.

We also provide clinical monitoring solutions in select geographies for telemetry units.

We sell products directly to end customers, as well as through integrated delivery networks and group purchasing organizations in the U.S., the NHS Supplies Organization in the United Kingdom, UGAP in France, and to various government funded hospitals in the Middle East and several parts of Asia.

We sell products directly to end customers, as well as through integrated delivery networks and group purchasing organizations in the U.S., the NHS Supplies Organization in the United Kingdom, UGAP in France, NUPCO in Saudi Arabia and to various government funded hospitals in the Middle East and several parts of Asia.

Marketing, Sales and Service

We market and sell our security and inspection products and turnkey security screening solutions globally through a direct sales and marketing staff located in North America, South America, Europe, Middle East, Australia, and Asia, in addition to an expansive global network of independent distributors.

This sales organization is supported by a service organization located in the same regions, as well as a global network of independent, authorized service providers.

This sales organization is supported by a service organization located in the same region, as well as a global network of independent, authorized service providers.

We market and sell our healthcare solutions globally through a direct sales and marketing staff located in North America, South America, Europe and Asia, in addition to a global network of independent distributors.

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We provide this support via our international team of technical and clinical specialists.

We market and sell our optoelectronic devices and manufacturing services, through both our direct sales and marketing staff located in North America, Europe and Asia, and indirectly through a global network of independent sales representatives and distributors.

Our sales staff is supported by an applications engineering group whose members are available to provide technical support, which includes designing applications, providing custom tooling and process integration and developing products that meet customer defined specifications.

We market and sell our optoelectronic devices and manufacturing services through both our direct sales and marketing teams located in North America, Europe, and Asia, as well as indirectly through a global network of independent sales representatives and distributors.

Our sales staff is supported by a team of application engineers who provide technical assistance, including application design, custom tooling, process integration, and development of products that meet customer-defined specifications.

We consider our maintenance service operations to be an important element of our business.

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Research and Development

Our security and inspection systems and software are primarily designed at our facilities in the United States and in the United Kingdom, Australia, Germany, Singapore, India, and Malaysia.

Our security and inspection systems and software are primarily designed at our facilities in the United States and in the United Kingdom, Australia, Germany, Singapore, and India.

These products include mechanical, electrical, analog and digital electronics, software, as well as other components and subsystems.

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We engineer and manufacture subsystems to solve the specific application needs of our OEM customers.

In addition, we offer entire subsystem design and manufacturing solutions.

Additionally, we provide comprehensive subsystem design and manufacturing solutions.

We consider our engineering personnel to be an important extension of our core sales and marketing efforts.

Our engineering teams also design and develop processes for fabricating our custom products from wafer level to complete products with the goal of having our technology and products meet the latest market trends.

Our engineering teams also design and develop processes for fabricating our custom products, from semiconductor wafer-level to complete products, to ensure that our technology and products meet the latest market trends.

Our healthcare products are primarily designed at our facilities in the United States, the United Kingdom and India.

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Manufacturing and Materials

We currently manufacture our security and inspection systems domestically in California, Kentucky, Massachusetts, and Tennessee, and internationally in Germany, Malaysia and the United Kingdom.

We currently manufacture our security and inspection systems domestically in California, Massachusetts, and Tennessee, and internationally in Germany, Malaysia and the United Kingdom.

We currently manufacture our patient monitoring and cardiology and remote monitoring systems in Washington state.

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Most of our high-volume, labor-intensive manufacturing activities are performed at our facilities in Mexico, India, Indonesia and Malaysia.

Our ability to manufacture products and provide follow-on service from offices located in these regions allows us to remain in close proximity to our customers, which is an important component of our global strategy.

Our global manufacturing organization has expertise in optoelectronic, microelectronic and integrated electronics for industrial and automation, medical, aerospace and defense industry applications.

Our manufacturing includes silicon wafer processing and fabrication, optoelectronic device assembly and screening, thin and thick film microelectronic hybrid assemblies, surface mounted and thru-hole printed circuit board electronic assemblies, cable and harness assemblies, LCD and TFT displays, box-build manufacturing, and flex and rigid - flex circuitry on a complete turnkey basis.

To support our manufacturing operations, we outsource certain requirements, including sheet metal fabrication and molding of plastic components.

Our ability to manufacture products and provide follow-on services from offices located in these regions enables us to remain in close proximity to our customers, which is a key component of our global strategy.

Our global manufacturing organization has expertise in optoelectronics, microelectronics, and integrated electronics for industrial and automation, medical, aerospace and defense industry applications.

Our manufacturing includes semiconductor silicon and laser wafer processing and fabrication, optoelectronic device assembly and screening, thin and thick film microelectronic hybrid assemblies, surface mount and thru-hole printed circuit board electronic assemblies, cable and harness assemblies, LCD and TFT displays, box-build manufacturing, and flex and rigid - flex circuitry on a complete turnkey basis.

To support our manufacturing operations, we outsource specific requirements, including sheet metal fabrication and molding of plastic components.

The principal raw materials and subcomponents used in producing our security and inspection systems consist of X-ray generators, linear accelerators, detectors, data acquisition and computer systems, conveyance systems, vehicles, and miscellaneous mechanical and electrical components.

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We purchase finished medical devices, computers, peripheral accessories, and remote displays from unaffiliated third-party providers.

The principal raw materials and subcomponents used in producing our optoelectronic devices and electronic subsystems consist of silicon wafers, electronic components, light emitting diodes, scintillation crystals, passive optical components, printed circuit boards and packaging materials.

The principal raw materials and subcomponents used in producing our optoelectronic devices and electronic subsystems consist of semiconductor wafers, electronic components, light-emitting diodes, scintillation crystals, passive optical components, printed circuit boards, and packaging materials.

The silicon-based optoelectronic devices we manufacture are critical components in most of our products and subsystems.

We purchase silicon wafers and other electronic components from unaffiliated third-party providers.

For cost, quality control, technological, and efficiency reasons, we purchase certain materials, parts, and components only from single vendors with whom we have ongoing relationships.

For cost, quality control, technological, and efficiency reasons, we purchase specific materials, parts, and components only from single vendors with whom we have ongoing relationships.

We do, however, qualify alternative sources for many of our materials, parts, and components.

We purchase most materials, parts, and components pursuant to purchase orders placed from time to time in the ordinary course of business.

In connection with the COVID-19 pandemic, our divisions experienced supply chain and labor availability challenges that impacted the price and availability of parts, components, consumables, freight, shipping, and third-party services, adversely impacting our gross margin as well as delayed product deliveries, installations, maintenance and repair work, and technical support, among other work and services.

Pricing for many of these items has remained elevated.

Information Technology and Cybersecurity Risk Management

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To counter these threats, we have implemented an information security management system (ISMS) focused on data confidentiality, integrity, and availability.

Our ISMS has been certified as ISO/IEC 27001 compliant and is re-evaluated annually by our external auditors.

Our ISMS has been certified as ISO/IEC 27001 compliant, and we engage independent third parties (auditors and security firms) to test and assess our cybersecurity controls annually.

Similarly, we conduct external cyber-penetration testing annually to assess and improve our security posture and reduce cybersecurity risk.

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Our ISMS and GRC processes are designed to prioritize IT and cybersecurity risk areas, identify solutions that minimize such risks, pursue optimal outcomes, and maintain compliance with contractual obligations.

We also maintain a global security operations center with real-time capability to investigate and trigger impact mitigation protocols.

We maintain a global security operations center with the capability to investigate and trigger impact mitigation protocols in real-time.

These capabilities allow us to reduce exposure should a security incident arise.

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The loss of some of our trademarks or patents might have a negative impact on our financial results and operations.

Nevertheless, with the exception of the loss of the Rapiscan ® , AS&E ® or Spacelabs ® trademarks, the impact of the loss of any single trademark or patent would not likely have a material adverse effect on our business.

Nevertheless, with the exception of the loss of the Rapiscan ® or Spacelabs ® trademarks, the impact of the loss of any single trademark or patent would not likely have a material adverse effect on our business.

Government Regulation of Medical Devices

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In the United States, the FDA has broad regulatory powers with respect to preclinical and clinical testing of new medical devices and the designing, manufacturing, labeling, storage, record keeping, marketing, advertising, promotion, distribution, post market monitoring and reporting and import and export of medical devices.

Unless an exemption applies, federal law and FDA regulations require that all new or significantly modified medical devices introduced into the market be preceded either by a premarket notification clearance under section 510(k) of the Federal Food, Drug and Cosmetic Act (FDCA), or an approved premarket approval (PMA) application.

Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with respect to safety and effectiveness.

Unless an exemption applies, federal law and FDA regulations require that all new or significantly modified medical devices introduced into the market be preceded either by a premarket notification clearance under section 510(k) of the Federal Food, Drug and Cosmetic Act (FFDCA), or an approved premarket approval (PMA) application.

Under the FFDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with respect to safety and effectiveness.

Class I devices are those for which safety and effectiveness can be reasonably assured by adherence to a set of regulations, referred to as General Controls, which require compliance with the applicable portions of the FDA’s Quality System Regulation (QSR) facility registration and product listing, reporting of adverse events and malfunctions and truthful and non-misleading promotional materials.

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Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k) premarket notification process.

Under the 510(k) process, the manufacturer must submit to the FDA a premarket notification, demonstrating that the product for which clearance has been sought is substantially equivalent to a previously cleared 510(k) device or a device that was in commercial distribution before May 28, 1976 for which the FDA had not yet called for the submission of pre-market approval applications.

After a 510(k) notice is submitted, the FDA determines whether to accept it for substantive review.

If it lacks necessary information for substantive review, the FDA will refuse to accept the 510(k) notification.

In that case, the applicant must correct the submission errors before resubmitting.

If it is accepted for filing, the FDA begins a substantive review.

By statute, the FDA is required to complete its review of, and clear or deny, a 510(k) notification within 90 days of receiving the 510(k) notification.

The FDA may formally request additional information, which may toll or restart the 90 day deadline.

As a practical matter, clearance often takes longer than 90 days and sometimes is not granted at all.

Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process.

If the FDA agrees that the device is substantially equivalent, it will grant clearance to commercially market the device.

To be substantially equivalent, the proposed device must have a substantially equivalent intended use and indications for use as the predicate device, and either have substantially equivalent technological characteristics to the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device.

Clinical data is sometimes required to support the demonstration of substantial equivalence.

Multiple interactions and/or the submission of additional information or documentation may be required to secure regulatory clearance.

After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a new or major change in its intended use, will require a new 510(k) clearance or, depending on the modification, could require a PMA application.

The FDA requires each manufacturer to make this determination initially, but the FDA can review any such decision and can disagree with a manufacturer’s determination.

If the FDA disagrees with a manufacturer’s determination that a new submission is not required, the FDA may require the manufacturer to cease marketing and/or recall the modified device until 510(k) clearance or approval of a PMA application is obtained.

In addition, in these circumstances, we may be subject to significant regulatory fines or penalties for failure to submit the requisite premarket notification or PMA submissions.

Class III devices include devices deemed by the FDA to pose the greatest risk such as life-supporting or life-sustaining devices, or implantable devices, in addition to those deemed not substantially equivalent following the 510(k) process.

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To date, all of the patient monitoring and cardiology and remote monitoring systems we manufacture and sell in the United States have required only 510(k) pre-market notification clearance.

FDA clearance or approval, when granted, may entail limitations on the indicated uses for which a product may be marketed, and such product approvals, once granted, may be withdrawn if problems occur after initial marketing.

Manufacturers of FDA-regulated products are subject to pervasive and continuing post-approval governmental regulation, including, but not limited to, the registration and listing regulation, which requires manufacturers to register all manufacturing facilities and list all medical devices placed into commercial distribution;

Quality System (also known as Good Manufacturing Practices) Regulations, which requires manufacturers, including third-party manufacturers, to follow stringent design, risk management, validation, testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during the manufacturing process;

We are subject to pervasive and continuing post-approval governmental regulation, including, but not limited to, the registration and listing regulation, which requires manufacturers to register all manufacturing facilities and list all medical devices placed into commercial distribution;

Quality System (also known as Good Manufacturing Practices) Regulations, which requires manufacturers, including third-party manufacturers, to follow stringent design, risk management, validation, testing, production, control, supplier and contractor selection, complaint handling, documentation and other quality assurance procedures during the manufacturing process;

product and promotional labeling regulations;

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restrictions on sale, distribution or use of a device;

PMA annual reporting requirements;

the FDA’s general prohibition against promoting products for unapproved or “off-label” uses;

the Medical Device Reporting (MDR) regulation, which requires that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to reoccur;

medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and removals (“recalls”) if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death;

an order of repair, replacement or refund;

device tracking requirements;

and post-approval study and post-market surveillance requirements.

The FDA has also established a Unique Device Identification (“UDI”) system that requires manufacturers to mark certain medical devices distributed in the United States with unique device identifiers.

Also, we must comply with cybersecurity requirements to assess cybersecurity and safety risks and design and develop our devices to ensure safe and effective performance in the face of cyber threats.

It is also incumbent on us to monitor third-party software for new vulnerabilities and verify and validate any software updates or patches meant to address vulnerabilities.

Our facilities, records and manufacturing processes are subject to periodic scheduled and unscheduled inspections by the FDA.

and the Medical Device Reporting (MDR) regulation, which requires that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to reoccur.

Noncompliance with these standards can result in, among other things, fines, injunctions, civil penalties, recalls or seizures of products, total or partial suspension of production, refusal of the government to grant clearance or approval of devices, withdrawal of marketing approvals and criminal prosecutions.

We believe that our design, manufacturing and quality control procedures comply with the FDA’s regulatory requirements.

Our facilities, records and manufacturing processes are also subject to periodic scheduled and unscheduled inspections by the FDA.

Failure to comply with the applicable United States medical device regulatory requirements could result in, among other things, warning letters, untitled letters, fines, injunctions, consent decrees, civil penalties, unanticipated expenditures, repairs, replacements, refunds, recalls or seizures of products, operating restrictions, total or partial suspension of production, the FDA’s refusal to issue certificates to foreign governments needed to export products for sale in other countries, the FDA’s refusal to grant future premarket clearances or approvals, withdrawals or suspensions of current product clearances or approvals and criminal prosecution.

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These larger customers, due to their enhanced purchasing power, may attempt to increase the pressure on product pricing.

Significant healthcare reforms have had an impact on medical device manufacturer and hospital revenues.

The Patient Protection and Affordable Care Act as amended by the Health Care and Education and Reconciliation Act of 2010, collectively referred to as the Affordable Care Act, is a sweeping measure designed to expand access to affordable health insurance, control healthcare spending and improve healthcare quality.

Many states have also adopted or are considering changes in healthcare policies, in part due to state budgetary pressures.

Ongoing uncertainty regarding implementation of certain aspects of the Affordable Care Act makes it difficult to predict the impact the Affordable Care Act or state law proposals may have on our business.

This has created uncertainty in the market, which could result in reduced demand for our products, additional pricing pressure, and increased demand for new and more flexible payment structures.

Other Healthcare Laws.

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We and other medical device manufacturers are confronted with major changes in the EU’s decades-old regulatory framework governing market access to the EU.

The EU’s Medical Devices Regulation (“EU MDR”) has replaced, effective as of May 26, 2021, the EU’s Medical Device Directive (93/42/EEC) and the EU’s Directive on active implantable medical devices (90/385/EEC).

The EU’s Medical Devices Regulation (“EU MDR”) has replaced the EU’s Medical Device Directive (93/42/EEC) and the EU’s Directive on active implantable medical devices (90/385/EEC).

The EU MDR imposes stricter requirements for the marketing and sale of medical devices, including in the areas of clinical evaluation, quality systems and post-market surveillance, than the medical device directives replaced by the EU MDR.

Manufacturers of currently approved medical devices have a transition time to meet the requirements of the EU MDR with expiration of such transition time depending on the class of medical device.

Manufacturers of currently approved medical devices have a transition time to meet the requirements of the EU MDR with expiration of such transition time depending on the class of medical device being manufactured.

The EU MDR differs in several important ways from the EU’s directives for medical devices and active implantable medical devices replaced thereby.

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Although our competitors offer products in competition with one or more of our products, we can supply a variety of system types and we offer among the widest array of security inspection solutions available from a single supplier.

This variety of technologies also permits us to offer unique hybrid systems to our customers that utilize two or more of these technologies, thereby optimizing flexibility, performance and cost to meet each customer’s unique application requirements.

This variety of technologies also permits us to offer unique combinations and hybrid systems to our customers that utilize two or more of these technologies, thereby optimizing flexibility, performance and cost to meet each customer’s unique application requirements.

In the patient monitoring, cardiology and remote monitoring, clinical monitoring and connected care markets, competition is also based on a variety of factors including product performance, functionality, value and breadth of sales and service organization.

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In the patient monitoring and connected care markets we face many large international players.

Our competitive advantage in this market is via our solution delivery and workflow and communications software (SafeNSound) as well as our FDA cleared clinical decision support (Rothman Index).

Our competitive advantage in this market is via our solution delivery and workflow and communications software (SafeNSound) as well as our FDA cleared clinical decision support (Rothman Index) software.

Our offering in this market in the USA uniquely addresses the needs of our customers.

In cardiology and remote monitoring our competitors are more regionally based.

Our differentiators in these markets are our best-in-class analyzer software solutions as well as our industry renowned ambulatory blood pressure monitors.

In the markets in which we compete to provide optoelectronic devices and electronics manufacturing services, our customers evaluate us and our competitors based primarily on factors such as expertise in the design and development of optoelectronic devices, product quality, timeliness of delivery, price, technical support and the ability to provide fully integrated services from application development and design through production.

Because our custom optoelectronic components and subsystems require a high degree of engineering expertise, there are very few competitors of any significant scale in United States, Europe or Asia.

Competition in the extensive electronic manufacturing services market ranges from multinational corporations with sales in excess of several billion dollars, to large regional competitors and to small local assembly companies.

In our experience, the OEM customers to whom we provide such services often prefer to engage companies that offer both local and lower-cost off-shore facilities.

Our differentiators in these markets are our analyzer software solutions as well as our ambulatory blood pressure monitors.

In the markets where we operate, providing optoelectronic devices and electronics manufacturing services, our customers evaluate us and our competitors based on several key factors.

These include expertise in the design and development of optoelectronic devices, product quality, timely delivery, pricing, technical support, and the ability to offer fully integrated services that span application development and design through to production.

Because our custom optoelectronic components and subsystems require a high degree of engineering expertise, there are very few significant competitors in the United States, Europe, or Asia.

The competition in the broader electronic manufacturing services market ranges from multinational corporations with sales exceeding several billion dollars to large regional competitors and small local assembly companies.

In our experience, the OEM customers to whom we provide such services often prefer to engage companies that offer both local and lower-cost offshore facilities.

Along with a number of domestic competitors for these services, our high-volume, low-cost contract manufacturing locations in Southeast Asia compete with other manufacturers in the same region.

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In addition, large orders of security and inspection products and orders for our most complex systems typically require greater lead-times.

Fulfillment of orders of our Rapiscan RTT hold (checked) baggage screening equipment generally requires longer lead times.

Further, we provide turnkey screening services to certain customers for which we may recognize revenue over multi-year periods.

Certain of our cargo and vehicle inspection systems may require more than a year of lead-time.

Certain of our cargo and vehicle inspection systems and our radio frequency transmission products may require more than a year of lead-time.

We have experienced some significant delays associated with shipments of our cargo and vehicle inspection systems to certain customers.

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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 1. Business