What changed in this filing

/stocks — the workspaceLOADING

Item 1. Legal Proceedings

2022-10-26 compared with 2022-07-27 · 106 added, 98 removed, 675 unchanged (23% of the section changed)

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If they fail to compete effectively then the number of stores they maintain, and the scope of their RAIN deployments, may decrease.

Other industries that we currently regard as being key for RAIN adoption include supply chain and logistics, aviation and automotive, many of which face similar stressors as the retail market.

The other industry we currently regard as being key for RAIN adoption is supply chain and logistics ("SC&L"), which faces different but similarly significant stressors as the retail market.

Our market is very competitive.

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We believe our principal current competitors are:

In endpoint ICs, NXP, Alien, EM Microelectronic and Kiloway;

in reader ICs, ST, Phychips, Iotelligent and MagicRF;

In endpoint ICs, NXP, Alien, EM Microelectronic, Kiloway and Fudan Microelectronics Group;

in reader ICs ST, Phychips, Iotelligent, MagicRF and Fudan Microelectronics Group;

and in readers and gateways, Alien and Zebra.

Our channel partners, including our OEMs, ODMs, distributors, SIs, VARs and software solution partners may choose to compete with us rather than purchase our products, which would not only reduce our customer base but also increase competition in the market, adversely affecting our operating results, business and prospects.

Companies in adjacent

markets or newly formed companies may decide to enter our market, particularly as RAIN adoption grows.

affecting our operating results, business and prospects.

Companies in adjacent markets or newly formed companies may decide to enter our market, particularly as RAIN adoption grows.

Further, the Chinese government has made development of the Chinese semiconductor industry a priority, potentially increasing competition for us globally while possibly restricting our ability to participate in the Chinese market .

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We are expected to introduce new products and product enhancements on a regular basis.

We introduce new products and services to keep pace with technology advancements, satisfy increasingly demanding end-user requirements and grow market acceptance.

We commit significant resources to developing these new products and services while improving performance, reliability and reducing costs.

Because our products are often used in, and incorporated into, complex business processes and use cases, new products and services may take time to be successful or may not succeed at all.

In the future, our success in developing the technologies or processes necessary for new or enhanced products and services, or in licensing or otherwise acquiring these technologies from third parties, and our ability to introduce new products and services before our competition, will depend on various factors, including:

We introduce new products and services to advance our business, satisfy increasingly demanding end-user requirements and grow RAIN market acceptance.

We commit significant resources to develop and introduce these new products and services while improving performance, reliability and reducing costs.

New products and services may take time to be successful or may not succeed at all.

They are often used in, and incorporated into, complex business processes and use cases.

In some circumstances, our products and services may offer capabilities that are so novel that the extent and pace of market adoption is uncertain, which may put our investment into developing those capabilities at risk and negatively affect our competitive position.

In the future, our success in developing the technologies, processes or capabilities necessary or desired for new or enhanced products and services, or in licensing or otherwise acquiring them from third parties, and our ability to introduce new products and services before our competition, will depend on various factors, including:

our ability to identify new product capabilities or services that will be widely adopted;

our timely and efficient completion of the design process;

our timely and efficient implementation of manufacturing, assembly and testing procedures;

product or service performance;

our attainment of appropriate product or service performance levels;

product certification;

our ability to attract, retain and manage technical personnel;

the quality, reliability and selling price of the product or service;

effective marketing, sales and service.

partnering successfully with others to deliver complementary products or services;

the quality, reliability and selling price of our product or service;

the effectiveness of our marketing, sales and service.

An inability or limited ability of enterprise systems to exploit RAIN information may adversely affect the market for our products.

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We have also sometimes reduced prices to encourage adoption, address macroeconomic conditions or for other reasons.

Although we expect further price decreases in the long term, we raised prices in 2021 to accommodate higher product costs and we may be required to do so again in the future.

Although we expect further price decreases in the long term, we raised prices in 2021 and 2022 to accommodate higher product costs and we may be required to do so again in the future.

Further, we anticipate that recent macroeconomic conditions, including inflation, may also contribute to upward pressure on our product costs.

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We generate most of our revenue from endpoint IC sales, with lower gross margins than our other products.

In addition, endpoint IC gross margins are affected by product mix, which can fluctuate based on competitive pressures and end-user demand.

A further shift in sales mix away from our higher margin products to lower margin products, especially to our endpoint ICs, will negatively affect our gross margins.

Endpoint IC gross margins are affected by product mix, which can fluctuate based on supply, competitive pressures and end-user demand.

A shift in sales mix away from our higher margin products to lower margin products, either within our endpoint IC product portfolio or from our systems business to our endpoint ICs, could negatively affect our gross margins.

Our products must meet demanding technical and quality specifications.

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When we introduce new products, our success in ramping adoption depends, in part, on us making these products easy to deploy by our partners and their end customers.

For example, for our new M700 endpoint ICs and E710, E510 and E310 reader ICs, we continue supporting our partners to produce high-performing, high-quality products.

For example, for our new M700 endpoint ICs and E-family reader ICs, we continue supporting our partners to produce high-performing, high-quality products.

Until our partners are able to deploy our products widely, adoption and our operating results could suffer.

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If they fail to do so, our operating results and prospects will be adversely affected.

Convincing end users or our direct customers to design RAIN and our products into their products and systems requires educating them about RAIN’s value over other technologies.

They may currently use other technologies or products and may not feel the need to learn about how RAIN or our products can improve their systems.

Even when convinced, they often undertake long pilots or qualification processes prior to placing orders.

We spend significant time and resources to have RAIN and our products selected by a potential end user or customer.

End users or our direct customers adopting RAIN often involves them weighing the benefits of RAIN against the costs of modifying or replacing their existing systems, and if they remain unconvinced, they may not deploy.

If we fail to develop new products that adequately or competitively address the needs of end users or our direct customers, they may not select our products to be designed into their systems, which could adversely affect our business, prospects and operating results .

Convincing end users or our direct customers to design our products into their products and systems requires educating them about RAIN’s value over other technologies.

They may currently use other technologies or products and may not feel the need to learn about how RAIN and our products could improve the efficiency or effectiveness of their systems.

Even when convinced, they often undertake long pilot programs or qualification processes prior to placing orders.

These pilot programs or qualification processes can be time consuming and expensive, and there can be no assurance that these will result in an end user deploying RAIN technologies or placing orders for our products.

If we fail to develop new products that adequately or competitively address end users’

or our direct customers’

needs, they may not design our products into their systems, which could adversely affect our business, prospects and operating results .

Our visibility into the length of the sales and deployment cycles for our products is limited.

We have limited visibility into the length of product sales and deployment cycles, and these cycles are often longer than we anticipate.

Many factors contribute to our uncertainty, including the time channel partners and end users spend evaluating our products, time educating them on RAIN’s benefits, and time integrating our products with their systems.

Many factors contribute to this limited visibility, including the time channel partners and end users spend evaluating our products, the time educating them on RAIN’s benefits, and the time integrating our products with their systems.

The length and uncertain timing of the sales and deployment cycles can lead to delayed product orders.

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Technology developments may affect our business negatively.

Breakthroughs in legacy RFID technologies or markets, including those using low frequency or high frequency RFID technology, could adversely affect RAIN market growth generally and demand for our products in particular.

Likewise, new technologies may allow lower-cost ICs than our current silicon-based technology allows.

If we are unable to innovate using new or enhanced technologies or processes or are slow to react to changes in existing technologies or in the market, or have difficulty competing with advances in new or legacy technologies, then our development of new or enhanced products could be impacted and result in product obsolescence, decreased revenue and reduced market share.

Breakthroughs in legacy RFID technologies or markets, including those using low frequency or high frequency RFID technology, could adversely affect RAIN market growth and demand for our products.

Likewise, new technologies may allow lower-cost ICs than our current silicon-based technology.

If we are unable to innovate using new or enhanced technologies or processes or are slow to react to changes in existing technologies or in the market, or if we have difficulty competing with advances in new or legacy technologies, then our development of new or enhanced products could be impacted and result in product obsolescence, decreased revenue and reduced market share.

Significant changes in RAIN standards bodies, standards or qualification processes could impede our ability to sell our products and services.

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In the future, we could lose that leadership position or our influence in standards development, or we could choose not to participate in certain standards activities.

New industry standards, or changes to existing standards, could render our products obsolete and cause us to incur substantial development costs to adapt to the new or changed standards.

If the industry standards diverge from our or the RAIN market’s needs, then our products may fail to keep pace with the market or cause end users to delay their deployments.

Moreover, the adoption or expected adoption of new or changed standards could slow our sale of existing products before we can introduce new products that meet the new or changed standards.

New standards or changes to existing standards could also limit our ability to implement new features in our products if those features do not meet the new or changed standards.

The lost opportunities as well as time and expense for us to develop new products or change our existing products to comply with new or changed standards could be substantial, and we may not successfully develop products that comply with new or changed standards.

New or changed industry standards could render our products obsolete and cause us to incur substantial development costs to meet the new or changed standards.

If industry standards diverge from our or the RAIN market’s needs, then our products may fail to keep pace with the market or cause end users to delay their deployments.

Moreover, the adoption or expected adoption of new or changed standards could slow sales of our existing products before we can introduce new products that meet the new or changed standards.

New standards or changes to existing standards could also limit our ability to implement new features in our products.

The lost opportunities as well as time and expense to develop new products or change our existing products to comply with new or changed standards could be substantial, and we may not ultimately succeed in developing products that comply with new or changed standards.

Certain organizations develop requirements for RAIN tags and test tags against those requirements.

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Some other organizations perform this function as well.

ARC or a similar organization could develop specifications that few or none of our endpoint ICs meet.

Changes in government spectrum regulations or their enforcement could adversely affect our ability to sell our products.

Government radio regulations require that our readers and gateways be certified for spectral compliance in jurisdictions where they are sold or operated.

ARC or a similar organization could develop specifications that some or all of our endpoint ICs fail to meet.

Changes in government spectrum regulations or in their enforcement could adversely affect our ability to sell our products.

Government radio regulations require that our readers and gateways be certified for spectral compliance where they are sold or operated.

Our readers and gateways are collectively certified for use in more than 40 countries worldwide, including the United States, Canada, Mexico, China, Japan, South Korea and every country in the EU.

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Sales of some of our products could cannibalize revenue from other products.

Our sales of some of our products enable our channel partners to develop their own products that compete with other of our products.

For example, sales of our reader ICs allow our OEM partners to build and sell readers and gateways that may compete with our readers and gateways.

Similarly, sales of our readers allow our channel partners to build and sell gateways that compete with our xArray and xSpan.

In the future, we may see one product line expand at the expense of another, or we may be asked by partners to disadvantage or divest a product line.

We cannot predict whether we can manage such conflicts in the future or retain channel partners despite conflicts.

Some of our channel partners develop products using some our products that compete with other of our products.

For example, some of our OEM partners use our reader ICs to build and sell readers and gateways that compete with our readers and gateways.

Similarly, some of our channel partners use our readers to build and sell gateways that compete with our gateways.

If we fail to manage such conflicts successfully, our business and operating results could be negatively affected.

Pricing commitments and other restrictive provisions in our customer agreements could adversely affect our operating results.

In the ordinary course of business, we enter into agreements containing pricing terms that could, in some instances, adversely affect our operating results and gross margins.

In the ordinary course of our business, we enter into agreements containing pricing terms that could, in some instances, adversely affect our operating results and gross margins.

For example, some contracts specify future IC, reader or gateway pricing or contain most-favored customer pricing for certain products.

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Risks Relating to Our Personnel and Business Operations

We obtain the products we sell through third parties with whom we do not have long-term supply contracts.

If we are unable to effectively manage our relationships with suppliers, our operating results and financial condition will be adversely affected.

We obtain the products we sell through a limited number of third parties with whom we do not have long-term supply contracts.

If we are unable to effectively manage our relationships with key suppliers, our operating results and financial condition will be adversely affected.

Our ability to secure cost-effective, quality products in a timely manner could be adversely affected by many factors, including:

Third-party m anufacturing capacity may not be available when we need it .

Third-party m anufacturing capacity may not be available when we need it, particularly with respect to capacity at our foundry partner from whom we procure the majority of our silicon wafers .

Efforts to diversify our supplier base may be unsuccessful or may not result in us obtaining the anticipated benefits of such diversification.

Some products have long lead times, and we place orders for them five or more months before our anticipated delivery dates to our customers.

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delivery requirements or we may accumulate excess inventory, increasing our costs.

Supply disruptions may affect our ability to meet our customers’

demand, whether in a cost-effective manner or at all, potentially causing customers to cancel orders, qualify alternative suppliers or purchase from our competitors.

Supply disruptions may affect our ability to meet customer demand, whether in a cost-effective manner or at all, potentially causing customers to cancel orders, qualify alternative suppliers or purchase from our competitors.

Supply disruptions can also distort demand, making it even harder to meet true demand with finished products .

If our suppliers fail to manufacture our products at reasonable prices or with satisfactory quality levels, then our ability to bring those products to market and our reputation could both suffer.

If supplier capacity diminishes, whether from closures, bankruptcy, capacity allocation, in response to Covid-19, catastrophic loss of facilities or otherwise, we could have difficulty fulfilling orders, our revenue could decline and our growth prospects could be impaired.

If supplier capacity diminishes, whether from equipment failures, closures, bankruptcy, capacity allocation, in response to Covid-19, catastrophic loss of facilities or otherwise, we could have difficulty fulfilling orders, our revenue could decline and our growth prospects could be impaired.

Transitioning our assembly services or IC foundries to new providers would take many months and, in the case of ICs, could take several years.

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Shortages of silicon wafers and components used in our readers and gateways may adversely affect our ability to meet demand for our products and adversely affect our revenues and/or gross margins.

The semiconductor industry has experienced periods of capacity shortfall.

Many industries, ours included, are experiencing such a shortfall in 2021 and 2022, due to significant worldwide semiconductor demand and limited foundry supply.

We exited fourth-quarter 2021 with limited semiconductor inventory and tight foundry supply for both our 200mm and 300mm products, and our foundry partner has signaled tight wafer availability into 2023.

They have also raised prices.

Absent a significantly higher wafer allocation in 2022 over 2021, and without the benefit of the wafer inventory buffer we had entering 2021, we will be unable to meet 2022 endpoint IC demand, potentially by a significant amount.

Our foundry partner has signaled continued tight availability for endpoint IC wafers in our process nodes into 2023, preventing us from fully capitalizing on our demand.

Although we believe they have prioritized us for upside wafers, and have allocated sufficient second-half 2022 upside wafers for us to deliver second-half 2022 endpoint IC volumes that exceed first half, much of the upside is 200mm rather than 300mm wafers, causing us to transition some customers back from M700 to our older product families.

Wafer shortfalls may decrease sales and cause market-share losses if we are unable to supply enough products and/or our customers purchase competing products or, alternatively, may artificially increase sales as customers overbuy our products, followed by sales declines in future periods as they consume their accumulated inventory.

The semiconductor industry has experienced many times of capacity shortfall and is experiencing such a shortfall again now, due to increased worldwide demand.

We have experienced tight supply for our 200mm and 300mm wafers throughout 2022, and although our foundry partner has signaled improving 200mm wafer availability heading into 2023, our primary market demand and post-processing capacity is focused on 300mm wafers.

Our foundry partner has also raised prices and has signaled they will do so again in 2023.

Although we believe our foundry partner has, and continues to, prioritize us for upside wafers, absent a significantly higher 2023 300mm wafer allocation over 2022, we will be unable to meet our 2023 endpoint IC demand, potentially by a significant amount.

Wafer shortfalls limit sales and may cause market-share losses if we are unable to supply enough products or our customers purchase competing products or, alternatively, may artificially increase bookings as customers over-order our products, followed by sales declines in future periods as they consume their accumulated inventory.

Additionally, if we are unable to raise our prices to cover our higher costs, our gross margins and other financial results could suffer.

We have also experienced, and expect to continue experiencing, shortages and price increases for components we use in readers and gateways, potentially impacting future product availability and/or costs.

If we are unable to increase our prices to cover our increased costs, our gross margins and other financial results could suffer.

To convert the wafers that we receive from our foundry partner into saleable products, we and several third parties perform additional procedures such as testing, dicing, bumping and packaging the ICs.

If we or our partners are unable to efficiently perform these post-processing procedures, or if we experience any capacity constraints with respect to these post-processing procedures, we may be unable to keep up with demand for our products and our financial results will suffer.

We have also experienced shortages and price increases for components we use in our readers and gateways, and packaging and test capacity for our reader ICs, and we may continue to experience such shortages and price increases in the future, particularly for reader and gateway components.

Any such shortages and price increases will negatively impact our product availability and costs.

If we are unable to procure sufficient components and to increase our prices to cover our increased costs, our financial results will suffer.

At times, our suppliers ask us to purchase excess products to ensure we do not face a subsequent shortage.

For example, in certain quarters of 2014, 2015 and 2016, we purchased more endpoint IC wafers than we needed, which reduced our available cash.

In addition, we may invest in inventory to support anticipated business growth, as we did with endpoint IC inventory in 2017 and 2020.

In addition, we may invest in inventory to support anticipated business growth, like we did with endpoint IC inventory in 2017 and 2020.

If we are unable to sell the inventory we purchased, or if we must sell it at lower prices due to excess inventory or obsolescence, then our business will be negatively impacted.

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Our significant Covid-19 risks include:

uncertain product demand in many business activities globally, particularly in the retail industry, as well as overall delays in RAIN market adoption;

product delays or shortages due to restrictions on our ability, or that of our suppliers, to operate at normal capacity due to personnel movement restrictions or other limitations;

uncertain product demand in many business activities globally;

product delays or shortages;

challenges in effectively managing our inventory due to uncertain product demand or supply;

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increased operating and product costs;

delays in customer pilots which can delay project-based deployments;

delays in research and development efforts which can, in turn, delay new product introductions or product enhancements;

inability to engage in in-person sales and market activities, which can reduce our ability to effectively sell our products and drive future demand;

cost-reduction initiatives, such as lay-offs and furloughs;

maintaining employee engagement and productivity in a remote or hybrid work environment.

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laws and regulations relating to foreign trade and investment.

To date, legal, policy or regulatory changes have not had a material adverse effect on our business or financial

condition, but they may in the future.

To date, legal, policy or regulatory changes have not had a material adverse effect on our business or financial condition, but they may in the future.

We may experience increased costs for, or significant impact to, our Chinese operations in the event of changes in Chinese government policies or political unrest or unstable economic conditions in China.

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export controls, including the Commerce Department’s Export Administration Regulations and various economic and trade sanctions established by the Treasury Department’s Office of Foreign Assets Controls.

Such controls are increasingly used to further significant foreign policy goals, and cover both an increasing scope of products, technologies, and software and an increasing range of end uses of such products, technologies, and software.

For example, the U.S.

government recently announced new controls regarding semiconductor- and supercomputer-related products and new restrictions affecting U.S.

persons’

ability to send certain chips and chip-related technology and software to China without an export license.

Because most our products are manufactured and processed in Asia, particularly in China, new controls may impact ability to manufacture and deliver our products.

Additionally, to the extent our products may be used for these semiconductor- and supercomputer-related end-uses or provided to certain specified end-users or facilitates, we must undertake additional diligence efforts to maintain compliance with these laws.

We may not always be successful in obtaining necessary export licenses, and our failure to obtain required import or export approval for our products or limitations on our ability to export or sell our products imposed by these laws may harm our international and domestic sales and adversely affect our revenue.

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Such tariffs could have a material impact on our product costs and decrease our ability to sell our products to existing or potential customers and harm our ability to compete internationally.

Further, it is possible that additional sanctions or restrictions may be imposed by the U.S.

government on items imported into the United States from China and any such measures could further adversely affect our ability to sell our products to existing or potential customers and harm our ability to compete internationally.

Further, it is possible that additional sanctions or restrictions that have been or may be imposed by the U.S.

government on items imported into the United States from China or items exported from the United States to China could further adversely affect our ability to produce our products or sell our products to existing or potential customers and harm our ability to compete internationally.

Any change in export or import regulations or legislation;

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Deterioration in the political, social, business or economic conditions in any jurisdictions in which we have significant suppliers could slow or halt product shipments or disrupt our ability to manufacture, test or post-process products.

In response, we could be

forced to transfer our manufacturing, testing and post-processing activities to more stable, and potentially more costly, regions or find alternative suppliers.

In response, we could be forced to transfer our manufacturing, testing and post-processing activities to more stable, and potentially more costly, regions or find alternative suppliers.

In particular, we source a significant portion of our wafers from suppliers in Taiwan, and our supply of wafers and other critical components may be materially and adversely affected by diplomatic, geopolitical and other developments affecting the relationship between China and Taiwan.

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Our reserve estimates for products stocked by our distributors are based principally on reports provided to us by our distributors, typically on a monthly basis.

If the inventory and resale information our partners and distributors provide is inaccurate, or if we do not receive it in a timely manner, then we may not have a reliable view of products being sold to end users which could impact our operating results.

If the inventory and resale information our partners and distributors provide is inaccurate, or if we do not

receive it in a timely manner, then we may not have a reliable view of products being sold to end users which could impact our operating results.

Our growth strategy depends in part on the success of strategic relationships with third parties and their continued performance and alignment.

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A failure, or perceived failure, of us to respond to any such campaigns could harm our business and reputation and have a negative impact on the market price of our securities.

Moreover, as ESG best practices, reporting standards and disclosure requirements continue developing, we may incur increasing costs related to ESG monitoring and reporting.

Moreover, as ESG best practices, reporting standards and disclosure requirements continue to develop, we may incur increasing costs related to ESG monitoring and reporting.

Risks Relating to Our Intellectual Property

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Regardless of the outcome, our lawsuit against NXP will increase our expenses and distract management and key employees, and could negatively impact our relationships with partners or end users and result in retaliatory claims against us.

Some of our technology is not patented or patentable and constitutes trade secrets.

Some of our technology contains trade secrets that are not patented or patentable.

To protect our trade secrets, we require our employees, consultants, advisors and other collaborators to enter into confidentiality agreements.

We also rely on contractual protections with our channel partners, suppliers and end users, and we implement security measures to protect our trade secrets and other confidential information.

We cannot guarantee we have entered into appropriate agreements with all parties that have access to our trade secrets or confidential information.

Moreover, the agreements we have entered into may not provide sufficient protection for our trade secrets or other confidential information in the event of any unauthorized use or disclosure.

We also rely on contractual protections with our channel partners, suppliers and end users, as well as other security measures, to protect our trade secrets and other confidential information.

We cannot guarantee that we have entered into confidentiality agreements with all parties with access to our trade secrets or confidential information, or that the agreements we have in force will adequately protect our trade secrets or other confidential information.

Our trade secrets and other confidential information could also be obtained by third parties by breaches of our security systems.

Our suppliers, employees or consultants could also assert rights to our trade secrets or other confidential information.

Our use of overseas manufacturers has extra risk.

The intellectual property protection in countries where our third-party contractors operate is weaker than in the United States.

If the steps we have taken and the protection provided by law do not adequately safeguard our intellectual property rights, then we could suffer lost profits due to sales of competing products that exploit our intellectual property rights.

Our use of overseas manufacturers introduces extra risk.

Intellectual property protections in countries where our third-party contractors operate are weaker than in the United States.

If the steps we have taken, and the protection provided by law, do not adequately safeguard our intellectual property rights, then our business could suffer due to sales of competing products that exploit our intellectual property rights.

We may become party to intellectual property disputes which could be time consuming, costly to prosecute, defend or settle, result in the loss of significant rights, and adversely affect RAIN adoption generally.

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We believe those lawsuits adversely affected demand for our products from 2011 to 2014.

In 2013, Round Rock Research entered into licensing agreements with

many RAIN suppliers, including us;

In 2013, Round Rock Research entered into licensing agreements with many RAIN suppliers, including us;

in early 2015 they reached a settlement agreement with the last of the end-user defendants.

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Then, in early 2020, Covid-19 introduced even greater uncertainty in our business, with us choosing to build product inventory during the pandemic-induced downturn.

In 2021 we saw strong demand exceeding our available product supply, and supply-demand imbalance has so far continued into 2022.

Our foundry partner has signaled continued tight availability for endpoint IC wafers in our process nodes into 2023, preventing us from fully capitalizing on our demand.

In 2021 demand exceeded our product supply, and that imbalance has continued throughout 2022.

Our foundry partner has signaled continued tight endpoint IC wafer availability in our process nodes into 2023, preventing us from fully capitalizing on our demand.

Although we believe they are prioritizing us for upside wafers and have provided enough fourth-quarter 2022 wafers for us to increase our shipment volumes relative to third quarter, much of the upside is 200mm rather than 300mm wafers, causing us to transition some customers back from M700 to our older product families.

We expect that for the foreseeable future our visibility to future sales, including volumes and prices, will continue to be limited.

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A substantial portion of our operating expenses are fixed for the short term, and as a result, fluctuations in revenue or unanticipated expenses can have a material and immediate impact on our profitability and negatively affect our operating results, which could cause the price of our common stock to decline.

We may need to raise additional capital which may not be available on favorable terms, if at all, causing dilution to stockholders, restricting our operations or adversely affecting our ability to operate our business.

In the course of running our business we may need to raise capital, potentially diluting our stockholders, including pursuant to a shelf registration statement filed with the SEC.

In December 2019, we issued and sold $86.3 million aggregate principal amount of the 2019 Notes.

In November 2021, we issued and sold $287.5 million aggregate principal amount of the 2021 Notes.

We may in the future engage in additional equity, equity-linked or debt financings to secure additional funds for our business, including for investments in manufacturing capacity and other capital expenditures.

We used approximately $183.6 million of the net proceeds, excluding accrued interest, to repurchase approximately $76.4 million aggregate principal of the 2019 Notes through individual privately negotiated transactions concurrent with such offering.

We used an additional $17.6 million of cash to repurchase the remaining $9.85 million aggregate principal of the 2019 Notes through individual privately negotiated transactions in June 2022.

If unforeseen circumstances drive our financing needs, such as unforeseen expenditures or if our operating results are worse than we expect, then we may not be able to raise capital on favorable terms, if at all.

Debt financing, if available, may include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, expending capital or declaring dividends, or which impose financial covenants that limit our ability to achieve our business objectives.

If we need but cannot raise additional capital on acceptable terms then we may not be able to meet our business objectives, our stock price may fall, and you may lose some or all of your investment.

Our management will have broad discretion as to how to spend and invest our cash and cash equivalents and the proceeds from financings, including on capital expenditures, product development, working capital and other general corporate purposes.

We could spend such resources in ways that our stockholders may not agree with or that do not yield a favorable return.

If we do not use such resources effectively, our business, financial condition, results of operations and prospects could be harmed, and the market price of our common stock could decline.

Risks Relating to U.S.

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on December 31, 2021 and are no longer eligible for reduced disclosure requirements and exemptions applicable to “emerging growth companies.”

As such, we are required to hold a say-on-pay vote and a say-on-frequency vote at our 2022 annual meeting of stockholders.

As such, we were required to hold a say-on-pay vote and a say-on-frequency vote at our 2022 annual meeting of stockholders.

We expect that our loss of “emerging growth company”

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We also expect those requirements to increase the difficulty and expense for us to obtain director and officer liability insurance, and we may need to accept reduced policy limits and coverage or pay substantially higher costs to obtain similar or higher coverage to what we have today.

As a result, we may find it difficult to attract and retain qualified persons to serve on our board of directors or as executive officers or may need to pay higher compensation to attract and retain them.

As a result, we may find it difficult to attract and retain qualified persons to serve on our board of directors or as executive officers or may need to pay higher compensation to attract

and retain them.

Although we monitor developments with respect to those requirements, we cannot predict or estimate the additional costs we may incur or the timing of such costs.

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The market price of our common stock has been and will likely continue to be volatile, and the value of your investment could decline significantly.

Since July 2016, when we sold shares of our common stock in our initial public offering through June 30, 2022, our stock price has ranged from $9.95 to $94.39.

Since July 2016, when we sold shares of our common stock in our initial public offering through September 30, 2022, our stock price has ranged from $9.95 to $99.00.

The following factors, in addition to general risks and other risks described in this report, may have a material effect on the trading price of our common stock:

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For further information regarding this litigation risk, please refer to Note 11 of our condensed consolidated financial statements included elsewhere in this report.

In the course of running our business we may need to raise capital, potentially diluting our stockholders.

In December 2019, we issued and sold $86.3 million aggregate principal amount of the 2019 Notes.

In November 2021, we issued and sold $287.5 million aggregate principal amount of the 2021 Notes.

We may in the future engage in additional equity, equity-linked or debt financings to secure additional funds.

We used an additional $17.6 million of cash to repurchase the remaining $9.85 million aggregate principal of the 2019 Notes through individual privately negotiated transactions in June 2022.

If we need but cannot raise additional capital on acceptable terms then we may not be able to meet our business objectives, our stock price may fall, and you may lose some or all of your investment.

Transactions relating to the 2019 Notes or the 2021 Notes may affect our stock’s value.

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Our principal stockholders and management own a significant percentage of our stock and are able to exercise significant influence over matters subject to stockholder approval.

As of June 30, 2022, our executive officers, directors and principal stockholders, together with their respective affiliates, beneficially owned approximately 25.4% of our stock.

As of September 30, 2022, our executive officers, directors and principal stockholders, together with their respective affiliates, beneficially owned approximately 24.8% of our stock.

As a result, our executive officers, directors and principal stockholders may be able to significantly influence, in their capacity as stockholders, matters requiring approval by our stockholders, including electing directors and approving mergers, acquisitions or other transactions.

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provide that special meetings of our stockholders may be called only by the chair of the board, our chief executive officer or by the board of directors.

provide that stockholders will be permitted to amend our bylaws only upon receiving at least two-thirds of the total votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested”

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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 1. Legal Proceedings