What changed in this filing

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Item 1A. Risk Factors

2020-08-06 compared with 2020-05-08 · 81 added, 53 removed, 681 unchanged (16% of the section changed)

7 unchanged sentences

Our business could be adversely impacted by the effects of COVID-19 or other epidemics.

As a result of COVID-19, our first quarter 2020 financial results were impacted negatively as our customers in multiple regions around the world suspended their normal operations in efforts to curb the spread of the COVID-19 pandemic.

The inability to receive or accept shipment of orders for our products on a timely basis, or at all, and the delay or cancellation of orders for our products, has negatively affected and may negatively affect in the future our operations and revenues.

As a result of COVID-19, our first six months of 2020 financial results were impacted negatively as our customers in multiple regions around the world suspended their normal operations in efforts to curb the spread of the COVID-19 pandemic.

A significant number of our customer sites that had shut down due to COVID-19 have re-opened.

However, those that have re-opened have not necessarily resumed operating at their prior run rates, which has negatively impacted the sale of our consumables.

As of June 30, 2020, approximately 20% of the sites remained inactive.

This dynamic continues to negatively impact the recognition of revenue related to the sale of our Sequel and Sequel II instruments.

The negative impacts of COVID-19 on our customers will likely continue to adversely impact our revenues during the second half of 2020, including the third quarter of 2020.

The inability to receive or accept shipment of orders for our products on a timely basis, or at all, the delay or possible cancellation of orders for our products, and the reduced utilization of our products has negatively affected and may negatively affect in the future our operations and revenues.

In response to local stay-at-home orders and in alignment with CDC recommendations, we have limited our manufacturing and commercial operations based in Menlo Park, California.

We will, however, continue to provide consumables and support to scientists at government, academic, and commercial labs working on COVID-19 and other high-priority research needs.

We will, however, continue to provide consumables and support to scientists at government, academic, and commercial labs that remain open.

To aid in containing the spread of COVID-19, we have implemented remote-work options and are limiting employee travel as much as possible.

3 unchanged sentences

At this point in time, there is significant uncertainty relating to the potential effect of COVID-19 on our business.

Infections may resurge or become more widespread and the limitation on our ability to travel and timely sell and distribute our products, as well as any closures or supply disruptions, may be extended for longer periods of time, all of which would have a negative impact on our business, financial condition and operating results.

Infections may resurge or become more widespread and the limitation on our ability to travel and timely sell and distribute our products, as well as any closures or supply disruptions, may be extended for longer periods of time, which could have a negative impact on our business, financial condition and operating results.

Even after the COVID-19 pandemic has subsided, we may continue to experience an adverse impact to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future.

4 unchanged sentences

As such, we have limited historical financial data upon which to base our projected revenue, planned operating expenses or upon which to evaluate our company and our commercial prospects.

Furthermore, in September 2015, we launched the PacBio Sequel ® System, and concurrently began phasing out production of PacBio RS II instruments, and, in April 2019 we announced the

commercial launch of the Sequel II System .

Furthermore, in September 2015, we launched the PacBio Sequel ® System, and concurrently began phasing out production of PacBio RS II instruments, and, in April 2019 we announced the commercial launch of the Sequel II System .

Based on our limited experience in developing and marketing our existing products and launching new products, we may not be able to effectively:

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 attract, retain and motivate qualified personnel.

The risks noted above, especially with respect to the marketing, sales, and commercialization of our products, may be heightened by the termination of our Merger Agreement with Illumina.

The risks noted above, especially with respect to the marketing, sales, and commercialization of our products, may be heightened by the termination of our Merger Agreement with Illumina and the impact of the COVID-19.

In addition, a high percentage of our expenses is and will continue to be fixed.

2 unchanged sentences

Except for the quarter ended March 31, 2020 and the quarter ended September 30, 2015 (as a result of a one-time gain on lease amendments), we have incurred net losses since inception and we cannot be certain if or when we will produce sufficient revenue from our operations to support our costs.

While we achieved profitability for the quarter ended March 31, 2010, this result was largely due to payment of the Reverse Termination Fee and Continuation Advances.

While we achieved profitability for the quarter ended March 31, 2020, this result was largely due to income recognition of the Continuation Advances.

Even if profitability is achieved in the future, we may not be able to sustain profitability on a consistent basis.

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Our existing resources may not allow us to conduct all of these activities that we believe would be beneficial for our future growth.

As a result, due to our continued losses and operating cash needs as well as significant legal expenses we have incurred in connection with the merger with Illumina, we believe the Continuation Advances and the Reverse Termination Fee, which are both repayable in certain circumstances, are necessary to fund our projected operating requirements for at least twelve months from the date of filing of this Quarterly Report.

As a result, due to our continued losses and operating

cash needs as well as significant legal expenses we have incurred in connection with the merger with Illumina, we believe the Continuation Advances and the Reverse Termination Fee, which are both repayable in certain circumstances, are necessary to fund our projected operating requirements for at least twelve months from the date of filing of this Quarterly Report.

We may need to raise additional funds through public or private debt or equity financing or alternative financing arrangements, which may include collaborations or licensing arrangements.

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Should we face delays in or discover unexpected defects during the further development or manufacturing process of instruments or consumables related to our products, including with respect to the SMRT Cell 8M, reagents and Sequel II System, and including any delays or defects in software development or product functionality, the timing and success of the continued rollout and scaling of our products may be significantly impacted, which may materially and negatively impact our revenue and gross margin.

The ability of our customers to successfully utilize our products will also depend on our ability to deliver high quality SMRT Cells and reagents, including with respect to the SMRT Cell 8M.

ability of our customers to successfully utilize our products will also depend on our ability to deliver high quality SMRT Cells and reagents, including with respect to the SMRT Cell 8M.

We have designed SMRT Cells and other consumables specifically for the Sequel System, and may need to develop in the future, other customized SMRT Cells and consumables for our future products, including the SMRT Cell 8M for the Sequel II System.

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For example, the recent COVID–19 outbreak has impacted and could result in more pronounced impacts to our manufacturing and our ability to supply products.

The performance of our consumables is critical to our customers’ successful utilization of our products,

and any defects or performance issues with our consumables would adversely affect our business.

The performance of our consumables is critical to our customers’ successful utilization of our products, and any defects or performance issues with our consumables would adversely affect our business.

All of the foregoing could negatively impact our ability to sell our products or result in other material adverse effects on our business, financial condition and results of operations.

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Further, we have experienced, and may in the future experience, difficulty in managing or forecasting customer reactions, purchasing decisions or transition requirements with respect to newly launched products.

We have incurred and may continue to incur significant costs in completing the transitions, including costs of write-downs of our products, as current or future customers’ transition to new products.

We have incurred and may continue to incur significant costs in completing the transitions, including costs of write-downs of our products, as current or

future customers’ transition to new products.

If we do not successfully manage these product transitions, including with respect to the SMRT Cell 8M and Sequel II System, our business, reputation and financial condition may be materially and adversely affected.

3 unchanged sentences

 the restrictions in the Merger Agreement that limited our ability to take certain actions while the Merger Agreement was in effect;

 continued liability for certain transaction costs, including legal, accounting, financial advisory and other costs relating to the merger;

 diverted management attention;

3 unchanged sentences

The occurrence, continuation or exacerbation of any of these events individually or in combination could materially and adversely affect our results of operations.

Recent significant changes to our leadership team and the resulting management transitions might harm our future operating results.

We have recently experienced significant changes to our leadership team.

On June 10, 2020, we announced the retirement of Dr.

Michael Hunkapiller as our Chief Executive Officer and President by the end of the year and the retirement of Susan K.

Barnes as our Executive Vice President and Chief Financial Officer, who will retire on August 7, 2020.

On July 31, 2020, our Board of Directors appointed Ben Gong, effective August 8, 2020, to the role of interim Chief Financial Officer and designated as the Company’s principal financial officer.

Our Board of Directors has been conducting searches for the Company’s next Chief Executive Officer and Chief Financial Officer.

Also, on May 26, 2020, we announced that Eric E.

Schaefer was appointed Vice President and Chief Accounting Officer and designated as the Company’s principal accounting officer.

Although we believe these leadership transitions are in the best interest of our stakeholders, these transitions may result in the loss of personnel with deep institutional or technical knowledge.

Further, the transition could potentially disrupt our operations and relationships with employees, suppliers, partners and customers due to added costs, operational inefficiencies, decreased employee morale and productivity and increased turnover.

We must successfully recruit and integrate our new leadership team members within our organization to achieve our operating objectives;

as such, the leadership transition may temporarily affect our business performance and results of operations while the new members of our leadership team become familiar with our business.

In addition, our competitors may seek to use this transition and the related potential disruptions to gain a competitive advantage over us.

Furthermore, these changes increase our dependency on the other members of our leadership team that remain with us, who are not contractually obligated to remain employed with us and may leave at any time.

Any such departure could be particularly disruptive given that we are already experiencing leadership transitions and, to the extent we experience additional management turnover, competition for top management is high such that it may take some time to find a candidate that meets our requirements.

Our future operating results depend substantially upon the continued service of our key personnel and in significant part upon our ability to attract and retain qualified management personnel.

If we are unable to mitigate these or other similar risks, our business, results of operation and financial condition may be adversely affected.

We depend on the continuing efforts of our senior management team and other key personnel.

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Our industry, particularly in the San Francisco Bay Area, is characterized by high demand and intense competition for talent, and the turnover rate can be high.

We compete for qualified management and scientific personnel with other life science companies, academic institutions and research institutions, particularly those focusing on genomics.

We compete for qualified management and scientific personnel with other life science companies, academic institutions and research

institutions, particularly those focusing on genomics.

Our employees could leave our company with little or no prior notice and would be free to work for a competitor.

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We cannot be sure that our current or future products will gain acceptance in the marketplace at levels sufficient to support our costs.

Our success depends, in part, on our ability to expand overall demand for nucleic acid

sequencing to include new applications that are not practicable with other current technologies and to introduce new products that capture a larger share of growing overall demand for sequencing.

Our success depends, in part, on our ability to expand overall demand for nucleic acid sequencing to include new applications that are not practicable with other current technologies and to introduce new products that capture a larger share of growing overall demand for sequencing.

To accomplish this, we must successfully commercialize, and continue development of, our proprietary SMRT Sequencing technology for use in a variety of life science and other applications, including uses by academic, government and clinical laboratories, as well as pharmaceutical, diagnostic, biotechnology and agriculture companies, among others.

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Our industry is characterized by rapid and significant technological changes, frequent new product introductions and enhancements and evolving industry standards.

Our future success depends on our ability to continually improve our products, to develop and introduce new products that address the evolving needs of our customers on a timely and cost-effective basis and to pursue new opportunities.

Our future success depends on our ability to continually improve our products, to develop and introduce new products that address the evolving needs of our customers on a timely and cost-

effective basis and to pursue new opportunities.

These new opportunities may be outside the scope of our proven expertise or in areas where demand is unproven, and new products and services developed by us may not gain market acceptance or may not adequately perform in order to capture market share.

13 unchanged sentences

International Trade Commission, in the High Court of England and Wales and in the District Court of Mannheim, Germany.

previously filed claims against us in the High Court of England and

Wales and the District Court of Mannheim, Germany, also for patent infringement, and its subsidiary, ONT Inc., filed counterclaims against us in the U.S.

previously filed claims against us in the High Court of England and Wales and the District Court of Mannheim, Germany, also for patent infringement, and its subsidiary, ONT Inc., filed counterclaims against us in the U.S.

District Court for the District of Delaware seeking declaratory judgements of non-infringement, invalidity and unenforceability of the asserted patents, as well as antitrust, false advertising and unfair competition counterclaims that were subsequently dismissed by the Court .

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We have enlisted and may continue to enlist third parties to assist with sales, distribution and customer support.

There is no guarantee that we will be successful in attracting desirable sales and distribution partners, that we will be able to enter into arrangements with such partners on terms favorable to us or that we will be able to retain such partners on a going-forward basis.

going-forward basis.

If our sales and marketing efforts, or those of any of our third-party sales and distribution partners, are not successful, or our products do not perform in accordance with customer expectations, our technologies and products may not gain market acceptance, which could materially impact our business operations.

11 unchanged sentences

In addition, we may see consolidation of our customer base.

consolidation, has harmed, and in the future could harm, our business, financial condition, results of operations and prospects.

The loss of one of our larger customers, a significant delay or reduction in its purchases, or any volume-based discount or other more favorable terms that we or our sales and distribution partner(s) may agree to provide in light of the aggregated purchase volume or buying power resulting from such consolidation, has harmed, and in the future could harm, our business, financial condition, results of operations and prospects.

Our net losses since inception and our expectation of incurring substantial losses and negative cash flow for the foreseeable future could adversely affect our operations.

11 unchanged sentences

Despite testing, defects or errors may arise in our products, which could result in a failure to obtain, maintain or increase market acceptance of our products, diversion of development resources, injury to our reputation and increased warranty, service and maintenance costs.

New products, including the SMRT Cell 8M and Sequel II System, or enhancements to our existing products in particular may contain undetected errors or performance problems that are discovered only after delivery to customers.

New products,

including the SMRT Cell 8M and Sequel II System, or enhancements to our existing products in particular may contain undetected errors or performance problems that are discovered only after delivery to customers.

If our products have reliability or other quality issues or require unexpected levels of support in the future, the market acceptance and utilization of our products may not grow to levels sufficient to support our costs and our reputation and business could be harmed.

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Spending budgets are based on a wide variety of factors, including the allocation of available resources to make purchases, funding from government sources which is highly uncertain and subject to change, the spending priorities among various types of research equipment, policies regarding capital expenditures during economically uncertain periods and the impact of COVID-19.

Any decrease in capital spending

or change in spending priorities of our current and potential customers could significantly reduce the demand for our products.

Any decrease in capital spending or change in spending priorities of our current and potential customers could significantly reduce the demand for our products.

Any delay or reduction in purchases by current or potential customers or our inability to forecast fluctuations in demand could harm our future operating results.

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Conducting and launching operations on an international scale requires close coordination of activities across multiple jurisdictions and time zones and consumes significant management resources.

If we fail to coordinate and manage these activities effectively, our business, financial condition or results of operations could be materially and adversely affected and failure to comply with laws and regulations applicable to business operations in foreign jurisdictions may also subject us to significant liabilities and other penalties.

If we fail to

coordinate and manage these activities effectively, our business, financial condition or results of operations could be materially and adversely affected and failure to comply with laws and regulations applicable to business operations in foreign jurisdictions may also subject us to significant liabilities and other penalties.

International operations entail a variety of other risks, including, without limitation:

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The state of the global economy continues to be uncertain.

The current global economic conditions and uncertain credit markets and concerns regarding the availability of credit pose a risk that could impact customer demand for our products, as well as our ability to manage normal commercial relationships with our customers, suppliers and creditors, including financial institutions.

The current global economic conditions and uncertain credit markets and

concerns regarding the availability of credit pose a risk that could impact customer demand for our products, as well as our ability to manage normal commercial relationships with our customers, suppliers and creditors, including financial institutions.

If the current global economic environment deteriorates, our business could be negatively affected.

16 unchanged sentences

foreign trade policy with respect to China and other countries, including the possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the United States.

In September 2018, the U.S.

Trade Representative (the “USTR”) enacted a tariff of 10% on the import of other Chinese products, including non-U.S.

Starting September 2018, the U.S.

Trade Representative (the “USTR”) has enacted various tariffs of 7.5%, 10%, 15% and 25% on the import of Chinese products, including non-U.S.

components and materials that may be used in our products.

Since then, additional tariffs have been imposed by the USTR on imports into the United States from China and China has also imposed tariffs on imports into China from the United States.

Additionally, China has also imposed tariffs on imports into China from the United States.

These tariffs could raise our costs.

Furthermore, tariffs, trade restrictions, or trade barriers that have been, and may in the future be, placed on products such as ours by foreign governments, especially China, have raised, and could further raise, amounts paid for some or all of our products, which may result in the loss of customers and our business, and our financial condition and results of operations may be harmed.

Although the United States and China signed an interim trade agreement in January 2020, the parties are continuing to negotiate a trade agreement.

Therefore, it is possible further tariffs may be imposed that could cover imports of components and materials used in our products, or our business may be adversely impacted by retaliatory trade measures taken by China or other countries, including restricted access to components or materials used in our products or increased amounts that must be paid for our products, which could materially harm our business, financial condition and results of operations.

F urther tariffs may be imposed that could cover imports of components and materials used in our products, or our business may be adversely impacted by retaliatory trade measures taken by China or other countries, including restricted access to components or materials used in our products or increased amounts that must be paid for our products, which could materially harm our business, financial condition and results of operations.

Further, the continued threats of tariffs, trade restrictions and trade barriers could have a generally disruptive impact on the global economy and, therefore, negatively impact our sales.

9 unchanged sentences

Therefore, it is possible that our ability to export our products may be restricted in the future.

Finally, in April 2020, BIS expanded its controls on the export, reexport, and transfer of certain items for military end-use or to military end-users in China, Russia, and Venezuela.

These expanded controls could impact our ability to sell our products to certain end-users in these countries, most notably China.

Our business could be negatively impacted by changes in the United States political environment.

There is significant ongoing uncertainty with respect to potential legislation, regulation and government policy at the federal level, as well as the state and local levels.

Any such changes could significantly impact our business as well as the markets in which we compete.

There is significant ongoing uncertainty with respect to potential legislation, regulation and government policy at the federal level, as well as the state and local levels, such as during this presidential election year.

Any such changes could

significantly impact our business as well as the markets in which we compete.

Specific legislative and regulatory proposals discussed during election campaigns and more recently that might materially impact us include, but are not limited to, changes to spending priorities and potential reductions in research funding.

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Because of these fluctuations, it is likely that in some future quarters our operating results will fall below the expectations of securities analysts or investors.

If that happens, the market price of our

stock would likely decrease.

If that happens, the market price of our stock would likely decrease.

Past fluctuations in our quarterly and annual operating results have resulted in decreases in our stock price.

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Bribery Act of 2010, and other local anti-corruption laws that apply to our international activities;

medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the U.S.

 the federal Physician Payment Sunshine Act, or Open Payments, created under the Affordable Care Act, and its implementing regulations, which requires manufacturers of drugs, medical devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the U.S.

Department of Health and Human Services, or HHS, information related to payments or other transfers of value made to licensed physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

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A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it.

In addition, the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

In addition, the Affordable Care Act provides

that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our activities could be subject to challenge under one or more of such laws.

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We engage third-party vendors and service providers to store and otherwise process some of our data, including sensitive and personal information.

Our vendors and service providers may also be the targets of the

risks described above, including cyberattacks, malicious software, phishing schemes, and fraud.

Our vendors and service providers may also be the targets of the risks described above, including cyberattacks, malicious software, phishing schemes, and fraud.

Our ability to monitor our vendors and service providers’ data security is limited, and, in any event, third parties may be able to circumvent those security measures, resulting in the unauthorized access to, misuse, disclosure, loss or destruction of our data, including sensitive and personal information.

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As a result, we cannot be certain that these patents and applications will be prosecuted and enforced in a manner consistent with the best interests of our business.

Further, because of the rapid pace of technological change in our industry, we may need to rely on key technologies developed or licensed by third parties, and we may not be able to obtain licenses and technologies from these third parties at all or on reasonable terms.

Further, because of the rapid pace of technological change in our industry, we may need to rely on key technologies developed or licensed by third parties, and we may not be able to obtain

licenses and technologies from these third parties at all or on reasonable terms.

The occurrence of these events may have a material adverse effect on our business, financial condition or results of operations.

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Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable.

Additionally, others may independently develop

proprietary information and techniques that are substantially equivalent to ours.

Additionally, others may independently develop proprietary information and techniques that are substantially equivalent to ours.

The occurrence of these events may have a material adverse effect on our business, financial condition or results of operations.

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We may not be aware of issued or previously filed patent applications that belong to third parties that mature into issued patents that cover some aspect of our products or their use.

In addition, because patent litigation is complex and the outcome inherently uncertain, our belief that our products do not infringe third-party patents of which we are aware or that such third-party patents are invalid and unenforceable may

be determined to be incorrect.

As a result, third parties have claimed, and may in the future claim, that we infringe their patent rights and have filed, and may in the future file, lawsuits or engage in other proceedings against us to enforce their patent rights.

1 unchanged sentence

and Harvard University previously filed claims against us in the High Court of England and Wales and the District Court of Mannheim, Germany for patent infringement, and PGI has filed claims against us in the U.S.

District Court for the District of Delaware.

District Court for the District of Delaware and in the Wuhan People’s Court in China.

We are aware of other issued patents and patent applications owned by third parties that could be construed to read on our products and services.

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Open source license terms are often ambiguous and there is little legal precedent governing the interpretation of these licenses.

an open source license, which could substantially help our competitors develop products that are similar to or better than ours or otherwise materially and adversely affect our business.

Successful claims made by the licensors of open source software that we have violated the terms of these licenses could result in unanticipated obligations, including being subject to significant damages, being enjoined from distributing products that incorporate open source software and being required to make available our proprietary source code pursuant to an open source license, which could substantially help our competitors develop products that are similar to or better than ours or otherwise materially and adversely affect our business.

Risks Related to Owning Our Common Stock

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 reports, guidance and ratings issued by securities or industry analysts;

 operating results below the expectations of securities analysts or investors;

 general economic and market conditions, which could be impacted by various events including COVID-19.

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Future sales of our common stock could cause our stock price to fall.

We maintain a shelf registration statement on Form S-3 with the SEC pursuant to which we may, from time to time, sell up to an aggregate of $150.0 million of our common stock, preferred stock, depositary shares, warrants, debt securities or units.

We filed a shelf registration statement on Form S-3 with the SEC that was declared effective on July 14, 2020, pursuant to which we may, from time to time, sell up to an aggregate of $250.0 million of our common stock, preferred stock, debt securities, depositary shares, warrants, subscription rights, purchase contracts or units.

We have sold, and plan in the future to sell, shares of our common stock in underwritten offerings and have established, and may in the future establish, “at-the-market” offering programs pursuant to which we may offer and sell shares of our common stock.

However, up to the $52.0 million of Continuation Advances actually paid to us are repayable

without interest to Illumina if, within two years of March 31, 2020, we raise at least $100 million in equity financing in a single transaction (with the amount repayable dependent on the amount raised by us).

However, up to the $52.0 million of Continuation Advances actually paid to us are repayable without interest to Illumina if, within two years of March 31, 2020, we raise at least $100 million in equity financing in a single transaction (with the amount repayable dependent on the amount raised by us).

Sales of securities have resulted and will continue to result in dilution of our existing stockholders, and such sales could cause our stock price to fall.

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These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.

Furthermore, our amended and restated bylaws provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for:

(i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a breach of fiduciary duty owed by any of our current or former directors, officers or other employees to us or our stockholders; (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law;

(iv) any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws; or (v) any action asserting a claim against us that is governed by the internal affairs doctrine, subject to the court having personal jurisdiction over the indispensable parties named as defendants therein.

This provision is not intended to apply to actions arising under the Securities Act or the Exchange Act, or any claim for which the federal courts have exclusive jurisdiction.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to this provision.

This exclusive-forum provision may discourage lawsuits against us or our directors, officers, and employees.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us.

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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-Q

Item 1A. Risk Factors