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Item 1A. Risk Factors

2023-03-06 compared with 2022-03-01 · 239 added, 236 removed, 478 unchanged (50% of the section changed)

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Our business is subject to numerous risks and uncertainties.

The following summary highlights some of the risks you should consider with respect to our business and prospects.

The following summary highlights some of the risks to be considered with respect to our business and prospects.

This summary is not complete and the risks summarized below are not the only risks we face.

You should review and carefully consider the risks and uncertainties described in more detail below, which includes a more complete discussion of these risks.

Readers should review and carefully consider the risks and uncertainties described in more detail below, which includes a more complete discussion of these risks.

● We have incurred annual losses since we were formed and expect to incur losses in the future.

We cannot be certain that we will achieve or sustain profitability.

● Our quarterly and annual operating results and cash flows have fluctuated in the past and might continue to fluctuate, causing the value of our common stock to decline substantially.

● Our quarterly and annual operating results and cash flows have fluctuated in the past and might continue to fluctuate, which could cause the value of our common stock to fluctuate or decline significantly.

● If our products fail to achieve and sustain sufficient market acceptance, our revenue will be adversely affected.

● Sales of our assay for the neurological biomarker Nf-L and other neurological assays have become increasingly important to our business, and any significant decrease in sales of such assays could have a material adverse effect on our business.

● Epidemic diseases, such as COVID-19 and its variants, could negatively affect various aspects of our business, make it more difficult to meet our obligations to our customers, and result in reduced demand from our customers, which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

● Our long-term results depend upon our ability to improve existing products and introduce and market new products successfully.

● Undetected errors or defects in our products could harm our reputation, decrease market acceptance of our products or expose us to product liability claims.

● Sales of our assays for neurological indications have become increasingly important to our business, and any significant decrease in sales of such assays could have a material adverse effect on our business.

● We may fail to achieve the intended cost savings, revenue improvement, and related benefits from our Restructuring Plan.

● We may not be able to obtain the anticipated product and quality-related benefits from our assay improvement program .

● Failure to remediate a material weakness in, or inherent limitations associated with, our internal accounting controls could result in material misstatements in our financial statements.

● Because a significant portion of our revenue comes from a few large customers, any significant decrease in sales to these customers, due to industry consolidation or otherwise, could harm our operating results.

● Our long-term results depend upon our ability to improve existing products, develop or acquire new technology, and develop, introduce and market new products successfully.

● If defects are discovered in our products, we may incur additional unforeseen costs, our products may be subject to recalls, customers may not purchase our products, our reputation may suffer, and ultimately our sales and operating earnings could be negatively affected.

● We may seek to enter into strategic collaborations and licensing arrangements with third parties, but we may not be successful in establishing or maintaining such arrangements.

● We expect to generate a substantial portion of our revenue internationally in the future and can become further subject to various risks relating to our international activities, which could adversely affect our business, operating results and financial condition.

● We rely on a single contract manufacturer to manufacture and supply our Simoa HD instruments and rely on a different single contract manufacturer to manufacture and supply our Simoa SR-X.

● We generate a substantial portion of our revenue internationally and we expect this will continue in the future;

as a result, our business is subject to various risks relating to our international activities, which could adversely affect our business, operating results and financial condition.

● We rely on a single contract manufacturer to manufacture and supply our Simoa HD-X instrument and rely on a different single contract manufacturer to manufacture and supply our Simoa SR-X.

If either of these manufacturers should fail to perform, or not perform satisfactorily, our ability to supply these instruments would be negatively and adversely affected.

● We rely on a limited number of suppliers or, in some cases, one supplier, for some of our materials and components used in our consumable products and our SP-X instrument, and may not be able to find replacements or immediately transition to alternative suppliers, which could have a material adverse effect on our business, financial condition, results of operations and reputation.

● If the FDA determines that our products are medical devices or if we seek to market our products for clinical diagnostic or health screening use, we will be required to obtain regulatory clearance(s) or approval(s) and may be required to cease or limit sales of our then marketed products, which could materially and adversely affect our business, financial condition and results of operations.

● We rely on a limited number of suppliers or, in some cases, one supplier, for some of our materials and components used in our consumable products and our SP-X instrument, and we may not be able to find replacements or immediately transition to alternative suppliers if any of these suppliers fail to perform, which could have a material adverse effect on our business, financial condition, results of operations and reputation.

● Epidemic diseases, such as COVID-19 and its variants, and other events could negatively affect various aspects of our business, make it more difficult to meet our obligations to our customers and/or result in reduced demand from our customers, each of which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

● If the FDA determines that our products are subject to regulation as medical devices or if we seek to market our products for clinical diagnostic or health screening use, we will be required to obtain regulatory clearance(s) or approval(s) and may be required to cease or limit sales of our then-marketed products, which could materially and adversely affect our business, financial condition and results of operations.

Any such regulatory process would be expensive, time-consuming and uncertain both in timing and in outcome.

● We are subject to extensive regulatory requirements in connection with the EUAs that we have received from the FDA for our COVID-19 antibody and antigen tests.

If we fail to comply with these requirements, or if the FDA otherwise determines that the conditions no longer warrant such authorization, we will be unable to market these products pursuant to this authorization and our business may be harmed.

● If we do not comply with governmental regulations applicable to our CLIA-certified laboratory, we may not be able to continue our operations.

● If we are unable to protect our intellectual property, it may reduce our ability to maintain any technological or competitive advantage over our competitors and potential competitors, and our business may be harmed.

● If we or any of our partners are sued for infringing intellectual property rights of third parties, it would be costly and time-consuming, and an unfavorable outcome in that litigation could have a material adverse effect on our business.

● We may not be able to protect our intellectual property rights throughout the world, which could materially, negatively affect our business .

● Cybersecurity breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.

● If we do not comply with governmental regulations applicable to our CLIA-certified laboratory, we may not be able to continue our operations or continue offering our LDTs.

● If we are unable to protect our intellectual property, our ability to maintain any technological or competitive advantage over our competitors and potential competitors may be reduced and our business may be harmed.

● If we or any of our partners are sued for infringing intellectual property rights of third parties, the resulting litigation would be costly and time-consuming, and an unfavorable outcome in that litigation could have a material adverse effect on our business.

● We may not be able to protect our intellectual property rights throughout the world, which could have a materially adverse effect on our business .

● Our stock price may fluctuate significantly.

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As of December 31, 2022, we had an accumulated deficit of $402.2 million.

cannot predict if we will achieve sustained profitability in the near future or at all.

We expect that our losses will continue at least through the next 24 months as we plan to continue to invest significant funds toward expansion of our commercial organization and the development of our technology.

In addition, as a public company, we incur significant legal, accounting, and other expenses that we would not incur as a private company.

These expenses make it harder for us to achieve and sustain future profitability.

We cannot predict if or when we will achieve profitability or if or when we will be able to sustain such profitability once achieved.

We expect that our losses will continue at least through the next 24 months as we continue to invest funds for technology development, including our assay redevelopment program designed to improve our ability to manufacture and deliver high-quality assays at scale and execute our strategy for our entry into translational pharma and clinical markets.

We may incur significant losses in the future for a number of reasons, many of which are beyond our control, including the other risks described in this Annual Report on Form 10-K, the market acceptance of our products, competitive products, future product development and our market penetration and margins.

Our quarterly and annual operating results and cash flows have fluctuated in the past and might continue to fluctuate, causing the value of our common stock to decline substantially.

Our quarterly and annual operating results and cash flows have fluctuated in the past and might continue to fluctuate, which could cause the value of our common stock to fluctuate or decline significantly.

Numerous factors, many of which are outside of our control, may cause or contribute to significant fluctuations in our quarterly and annual operating results.

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As a result, comparing our operating results on a period-to-period basis might not be meaningful.

You should not rely on our past results as indicative of our future performance.

Moreover, our stock price might be based on expectations of future performance that are unrealistic or that we might not meet and, if our revenue or operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially.

If we are unable to maintain adequate revenue growth or do not successfully manage such growth, our business and growth prospects will be harmed.

We have experienced significant revenue growth in a short period of time.

We may not achieve similar growth rates in future periods.

Investors should not rely on our operating results for any prior periods as an indication of our future operating performance.

To effectively manage our anticipated future growth, we must continue to maintain and enhance our financial, accounting, manufacturing, customer support and sales administration systems, processes and controls.

Failure to effectively manage our anticipated growth could lead us to over-invest or under-invest in development, operational, and administrative infrastructure;

result in weaknesses in our infrastructure, systems, or controls;

give rise to operational mistakes, losses, loss of customers, productivity or business opportunities;

and result in loss of employees and reduced productivity of remaining employees.

Our continued growth could require significant capital expenditures and might divert financial resources from other projects such as the development of new products and services.

As we commercialize additional products , we may need to incorporate new equipment, implement new technology systems, or hire new personnel with different qualifications.

Failure to manage this growth or transition could result in turnaround time delays, higher product costs, declining product quality, deteriorating customer service, and slower responses to competitive challenges.

A failure in any one of these areas could make it difficult for us to meet market expectations for our products, and could damage our reputation and the prospects for our business.

If our management is unable to effectively manage our anticipated growth, our expenses may increase more than expected, our revenue could decline or grow more slowly than expected and we may be unable to implement our business strategy.

In addition, the quality of our products and services may suffer, which could negatively affect our reputation and harm our ability to retain and attract customers.

Investors should not rely on our past results as indicative of our future performance.

Our future capital needs are uncertain and we may need to raise additional funds in the future.

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● continued market acceptance of our products and the ability of our products to meet our customers’ expectations;

● potential opportunities to strategically acquire companies or technologies that may be complementary to our business;

● the cost and timing of establishing additional sales, marketing and distribution capabilities;

● the extent to which we achieve intended cost savings, revenue improvement and related benefits from our Restructuring Plan;

● the extent to which we are able to successfully complete our assay improvement program to enhance product quality;

● the cost of our research and development activities;

● our ability to enter into collaborations in the future, and the success of any such collaborations;

● potential opportunities to strategically acquire and integrate companies or technologies that may be complementary to our business;

● the cost and timing of potential regulatory clearances or approvals that may be required in the future for our products;

● the effect of competing technological and market developments.

We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all.

If we need additional capital in the future, we may not be able to obtain additional funds on acceptable terms, or at all.

If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution.

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Any of these factors could have a material adverse effect on our financial condition, operating results and business.

Failure to remediate a material weakness in, or inherent limitations associated with, internal accounting controls could result in material misstatements in our financial statements.

Our management has identified material weaknesses in our internal control over financial reporting related to the operating effectiveness of our internal controls associated with (i) the accounting for inventory, including excess and obsolescence reserves, (ii) the accounting for salary and commissions expense, (iii) the financial statement close process, including financial reporting, share-based compensation and non-recurring transactions such as impairment of assets and accounting for leases, and (iv) the accounting for property and equipment, net.

See “Item 9A.

Controls and Procedures”.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

As a result, management has concluded that, due to such material weaknesses, our disclosure controls and procedures were not effective as of December 31, 2022.

Our efforts to improve our internal controls are ongoing;

however, there are inherent limitations in all control systems and no evaluation of controls can provide absolute assurance that all deficiencies have been detected.

If we are unable to maintain effective internal control over financial reporting, or after having remediated such material weaknesses, fail to maintain the effectiveness of our internal control over financial reporting or our disclosure controls and procedures, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline and we could be subject to regulatory scrutiny, civil or criminal penalties or litigation.

Continued or future failure to maintain effective internal control over financial reporting could also result in financial statements that do not accurately reflect our financial condition or results of operations, may result in material misstatements in our financial statements and may also restrict our future access to the capital markets.

We are currently implementing a plan intended to remediate the material weaknesses described above.

The implementation of this plan could be costly and distract management from other activities.

There can be no assurance that we will not conclude in the future that we have not effectively remediated these material weaknesses and they continue to exist or that we will not identify any significant deficiencies or other material weaknesses that will impair our ability to report our financial condition and results of operations accurately or on a timely basis.

Our ability to use net operating losses to offset future income may be subject to certain limitations.

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We have already experienced ownership changes as defined under Section 382 of the Code.

Depending on the timing of any future utilization of our NOLs, we may be limited as to the amount that can be utilized each year as a result of such previous ownership changes.

Depending on the timing of any future utilization of our NOLs, the amount that can be utilized each year may be limited as a result of such previous ownership changes.

In addition, future changes in our stock ownership, including changes that may be outside of our control, could result in additional ownership changes under Section 382 of the Code.

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We have recorded a full valuation allowance related to our NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.

taxation of international business activities or the adoption of tax reform policies could materially impact our future financial position and results of operations.

Limitations on the ability of taxpayers to claim and utilize foreign tax credits and the deferral of certain tax deductions until earnings outside of the United States are repatriated to the United States, as well as changes to U.S.

tax laws that may be enacted in the future, could impact the tax treatment of future foreign earnings.

Should the scale of our international business activities expand, any changes in the U.S.

taxation of such activities could increase our worldwide effective tax rate and harm our future financial position and results of operations.

Risks Related to Our Business

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Our success depends on our ability to develop and market products that are recognized and accepted by our customers and potential customers as reliable, enabling and cost-effective.

Continued market acceptance of our Simoa

technology platform and products will depend on many factors, including our ability to convince potential customers that our technology is an attractive alternative to other available technologies.

Historically, a significant part of our sales and marketing efforts has been directed at demonstrating the advantages of our technology to industry leaders and encouraging such leaders to publish or present the results of their evaluation of our system.

Continued market acceptance of our Simoa technology platform and products and other platforms and products we may develop in the future will depend on many factors, including our ability to convince potential customers that our technology is an attractive alternative to other available technologies.

We also need to demonstrate to current and prospective customers that our products can help them accomplish their objectives in a cost-effective and efficient manner.

If we are unable to continue to motivate leading researchers to use Simoa technology, or if such researchers are unable to achieve or unwilling to publish or present significant experimental results using our systems, acceptance and adoption of our systems may be slowed and our ability to increase our revenue would be adversely affected.

Our future success is dependent upon our ability to further penetrate our existing customer base and attract new customers.

Our success will depend upon our ability to respond to the evolving needs of, and increase our market share among, existing customers and adding new customers.

Identifying, engaging and marketing to customers requires substantial time, expertise and expense and involves a number of risks, including:

● our ability to attract, retain and manage the sales, marketing and service personnel necessary to expand market acceptance for our Simoa technology platforms;

● the time and cost of maintaining and growing a specialized sales, marketing and service force;

If we are unable to continue to motivate leading researchers to use Simoa technology or other technologies we may develop, or if such researchers are unable to achieve or unwilling to publish or present significant experimental results using our systems, acceptance and adoption of our systems may be slowed and our ability to retain and grow our customer base and increase our revenue would be adversely affected.

Our future success is dependent upon our ability to retain and further penetrate our existing customer base and attract new customers.

Our success will depend upon our ability to successfully retain, respond to the evolving needs of, and increase our market share among, existing customers and add new customers.

Identifying, cultivating, engaging and marketing to customers requires substantial time, expertise and expense and involves a number of risks, including that:

● we may not have the ability to attract, retain and manage the sales, marketing and service personnel necessary to expand market acceptance for our Simoa technology or other platforms we may develop in the future;

● the time and cost of maintaining and growing a specialized sales, marketing and service force may be better spent elsewhere;

● our sales, marketing and service force may be unable to accomplish their goals.

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Any failure of our sales and marketing efforts, or those of any third-party sales and distribution partners, would adversely affect our business.

Sales of our assay for the neurological biomarker Nf-L and other neurological assays have become increasingly important to our business, and any significant decrease in sales of such assays could have a material adverse effect on our business.

Sales of our assays for neurological indications have become increasingly important to our business, and any significant decrease in sales of such assays could have a material adverse effect on our business.

Neurology has been one of our primary focus areas for commercialization of our Simoa technology and the services that we provide to our customers.

Sales from neurological-related biomarkers, Nf-L in particular, have become an increasingly important part of our business.

Sales from neurological-related biomarkers have become an increasingly important part of our business.

There can be no assurance that we will continue to derive meaningful revenues from the sale of our neurological products, from services related to neurodegenerative conditions or from sales of instruments driven by customers desiring access to our technology for work relating to neurological conditions.

The adoption by our customers of competitive technologies for detecting biomarkers of neurodegenerative conditions could negatively impact our revenues and have a material adverse effect on our business.

Epidemic diseases, such as COVID-19 and its variants, could negatively affect various aspects of our business, make it more difficult to meet our obligations to our customers, and result in reduced demand from our customers, which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, such as COVID-19 and its variants .

Potential impacts to our business include disruptions to or restrictions on our employees’ and customers’ ability to travel, temporary closures of the facilities of our suppliers or customers, delays in installation of instruments, and delays in shipments to and from affected countries.

Any such travel restrictions and business closures could adversely impact our operations locally and worldwide, including our ability to manufacture, sell or distribute our products, as well as cause temporary closures of our foreign distributors, or the facilities of suppliers or customers.

Any material disruption of our employees, distributors, suppliers or customers in impacted countries could impact our global

sales and operating results.

In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products and likely impact our operating results.

We may fail to achieve the intended cost savings, revenue improvement, and related benefits from our Restructuring Plan .

In August 2022, we announced a plan of restructuring and strategic re-alignment, which included the elimination of 119 positions, or 25% of our workforce at the time, and other cost-savings measures (the Restructuring Plan).

We incurred expenses of approximately $3.8 million related to the Restructuring Plan in the third and fourth quarter of 2022, substantially all of which were cash expenditures for severance and other costs relating to the Restructuring Plan.

Overall, as a result of the Restructuring Plan we expect to realize estimated annualized operating expense savings of approximately $25 million.

However, these estimates are subject to a number of assumptions, and actual results may differ.

There is no guarantee that the Restructuring Plan will achieve its intended benefits.

For example, our cost restructuring and business re-alignment efforts may not result in the anticipated savings or other economic benefits and could result in total costs and expenses that are greater than expected, each of which could have an adverse effect on our business.

As part of the Restructuring Plan, we do not currently, nor do we intend to in the future, occupy the additional space acquired under the Bedford facilities lease agreement.

We are reviewing our alternatives with respect to this space.

These alternatives may include sub-leasing all, or a portion, of the Bedford facilities.

We believe that the Billerica office, laboratory and manufacturing space will be sufficient to meet our needs for the foreseeable future.

Refer to Note 12 to the consolidated financial statements for further details related to the Bedford lease.

The Restructuring Plan may cause disruption to our business operations, and we may fail to effectively execute on the Restructuring.

We may not be able to obtain the anticipated product and quality-related benefits from our assay improvement program .

In connection with the Restructuring Plan, we have implemented an assay improvement program designed to improve our ability to manufacture and deliver high-quality assays at scale.

We made initial progress toward this initiative in 2022, and we expect that the program will be completed in 2023.

We may not be able to obtain the anticipated product and quality-related benefits from these efforts.

Further, we may be delayed in completing this program.

Delays in completing the assay improvement program or our inability to fully realize the anticipated product and quality-related benefits could materially and adversely affect our revenue and cash flows and could undermine customer confidence in our products and adversely affect our business .

The sales cycle for our Simoa instruments can be lengthy and variable, which makes it difficult for us to forecast revenue and other operating results.

The sales process for our Simoa instruments generally involves numerous interactions with multiple individuals within an organization, and often includes in-depth analysis by potential customers of our technology and products and a lengthy review process.

Our customers’ evaluation processes often involve a number of factors, many of which are beyond our control.

Our customers’ evaluation processes often involve a number of factors, many of which are

beyond our control.

As a result of these factors, the capital investment required to purchase our systems, and the budget cycles of our customers, the time from initial contact with a customer to our receipt of a purchase order can vary significantly.

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In addition, any failure to meet customer expectations could result in customers choosing to retain their existing systems, using existing assays not requiring capital equipment, or purchasing systems other than ours.

Because a significant portion of our revenue comes from a few large customers, any significant decrease in sales to these customers, due to industry consolidation or otherwise, could harm our operating results.

One customer accounted for 13% of our total revenue for the year ended December 31, 2022, and several other customers accounted for a significant portion of our total revenue.

The loss of a significant amount of business from one or more of our major customers would have a material adverse effect on our business.

There can be no assurance that there will not be a loss or reduction in business from one or more of our major customers.

In addition, we cannot assure that net sales from customers that have accounted for significant net sales in the past, either individually or as a group, will reach or exceed historical levels in any future period.

Our long-term results depend upon our ability to improve existing products and introduce and market new products successfully.

We generally sell our products in industries that are characterized by rapid technological changes, frequent new product introductions and changing industry standards.

Accordingly, our business is dependent on the continued improvement of our existing Simoa products and our development of new products utilizing Simoa or other potential future technology.

Accordingly, our business is dependent on the continued improvement of our existing Simoa products and our development of new products utilizing Simoa or other technology we develop or acquire.

As we introduce new products or refine, improve or upgrade versions of existing products, we cannot predict the level of market acceptance or the amount of market share these products will achieve, if any.

We cannot assure you that we will not experience material delays in the introduction of new products in the future.

We cannot guarantee that we will not experience material delays in the introduction of new products in the future.

In addition, introducing new products could result in a decrease in revenues from our existing products.

Consistent with our strategy of offering new products and product refinements, we expect to continue to use a substantial amount of capital for product research and development.

Consistent with our strategy of offering new products and product refinements, we have invested substantial capital on research and development, and we expect to continue to use a substantial amount of capital for product research and development.

Our research and development initiatives can be costly and time-consuming, and they may fail to achieve the intended benefits.

We may need more capital for product research and development than is available on terms favorable to us, if at all.

If we do not develop new products and product enhancements based on technological innovation on a timely basis, our products may become obsolete over time and our revenues, cash flow, profitability and competitive position will suffer.

Undetected errors or defects in our products could harm our reputation, decrease market acceptance of our products or expose us to product liability claims.

Our Simoa products may contain undetected errors or defects when first introduced or as new versions or new products are released.

If defects are discovered in our products, we may incur additional unforeseen costs, our products may be subject to recalls, customers may not purchase our products, our reputation may suffer, and ultimately our sales and operating earnings could be negatively affected.

Our Simoa products are complex and may contain undetected errors or defects, especially when first introduced or as new versions or new products are released.

New products or enhancements may contain undetected errors or performance problems that, despite testing, are discovered only after commercial shipment.

We continue to invest funds for technology development and quality assurance, including our assay redevelopment program, which is designed to improve our ability to manufacture and deliver high-quality assays at scale.

However, there can be no assurance that we will be successful in our efforts to avoid our products containing undiscovered defects.

Defects or errors in our products may discourage customers from purchasing our products.

Disruptions affecting the introduction or release of, or other performance problems with, our products may damage our customers’ businesses and could harm their and our reputation.

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A material liability claim, recall or other occurrence that harms our reputation or decreases market acceptance of our products could harm our business and operating results.

Although we do not, and cannot currently, promote the use of our products, or services based on our products, for diagnostic purposes, if our customers develop or use them for diagnostic purposes, someone could file a product liability claim alleging that one of our products contained a design or manufacturing defect that resulted in the failure to adequately perform, leading to death or injury.

Use of our products or services by us or a customer for diagnostic purposes could result in a product liability claim alleging that one of our products contained a design or manufacturing defect that resulted in the failure to adequately perform, leading to death or injury.

A product liability claim could result in substantial damages and be costly and time-consuming to defend, either of which could materially harm our business or financial condition.

We cannot assure you that our product liability insurance would adequately protect our assets from the financial impact of defending a product liability claim.

We cannot guarantee that our product liability insurance would adequately protect our assets from the financial impact of defending a product liability claim.

Any product liability claim brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing insurance coverage in the future.

We may seek to enter into additional strategic collaborations and licensing arrangements with third parties, but we may not be successful in establishing or maintaining such arrangements.

We may seek to enter into additional strategic collaborations and licensing agreements with third parties to develop products based on our Simoa technology, such as for certain in vitro diagnostics, or IVD, purposes.

We may seek to enter into additional strategic collaborations and licensing agreements with third parties to develop products based on our Simoa technology, such as for certain IVD purposes.

However, we may not be successful in doing so.

Establishing collaborations and licensing arrangements is difficult and time-consuming, and discussions may not lead to collaborations or licenses on favorable terms, if at all.

Even if we establish such relationships, such as our license agreement with Abbott, if our partners do not prioritize and commit sufficient resources to develop and sell products based on our Simoa technology, they may never result in the successful development or commercialization of products based on our Simoa technology.

Even if we establish such relationships, if our partners do not prioritize and commit sufficient resources to develop and sell products based on our Simoa technology, such relationships may never result in the successful development or commercialization of products based on our Simoa technology.

Our reliance on distributors for sales of our products outside of the United States could limit or prevent us from selling our products and could impact our revenue.

We have established exclusive distribution agreements for our Simoa instruments and related consumable products within certain foreign countries, including Australia, Brazil, China, Czech Republic, India, Hong Kong, Israel, Japan, New Zealand, Qatar, Saudi Arabia, Singapore, South Africa, South Korea, Taiwan, and UAE.

We have established exclusive distribution agreements for our Simoa instruments and related consumable products within certain foreign countries, including Australia, Brazil, China, the Czech Republic, India, Hong Kong, Israel, Japan, New Zealand, Qatar, Saudi Arabia, Singapore, South Africa, South Korea, Taiwan and the UAE.

We intend to continue to grow our business internationally, and to do so we must attract additional distributors and retain existing distributors to maximize the commercial opportunity for our products.

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Distributors may not commit the necessary resources to market and sell our products to the level of our expectations or may choose to favor marketing the products of our competitors.

If current or future distributors do not perform adequately, or we are unable to enter into effective arrangements with distributors in particular geographic areas, we may not realize long-term international revenue growth.

If current or future distributors do not perform adequately, or if we are unable to enter into effective arrangements with distributors in particular geographic areas, we may not realize long-term international revenue growth.

In addition, if our distributors fail to comply with applicable laws and ethical standards, including anti-bribery laws, this could damage our reputation and could have a significant adverse effect on our business and our revenues.

We expect to generate a substantial portion of our revenue internationally in the future and can become further subject to various risks relating to our international activities, which could adversely affect our business, operating results and financial condition.

We generate a substantial portion of our revenue internationally and we expect this will continue in the future;

as a result, our business is subject to various risks relating to our international activities, which could adversely affect our business, operating results and financial condition.

For the years ended December 31, 2022, 2021, and 2020, approximately 38%, 36% and 31%, respectively, of our total revenue was generated from customers located outside of North America.

We believe that a substantial percentage of our future revenue will continue to come from international sources as we expand our overseas operations and develop opportunities in additional areas.

We have limited experience operating internationally and engaging in international business involves a number of difficulties and risks, including:

Engaging in international business involves a number of difficulties and risks, including:

● required compliance with existing and changing U.S.

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or international sanctions against a country, company, person or entity with whom we do business that would restrict or prohibit continued business with the sanctioned country, company, person or entity;

● the impact of political and economic instability and conflict, such as the tension in Russia and Ukraine, which could lead to uncertainty and instability in global financial markets;

● the impact of political and economic instability and conflict, which could lead to uncertainty and instability in global financial markets;

● scrutiny of foreign tax authorities which could result in significant fines, penalties and additional taxes being imposed on us;

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We are subject to the U.S.

Foreign Corrupt Practices Act (the FCPA), which prohibits companies and their intermediaries from making payments in violation of law to non-U.S.

Foreign Corrupt Practices Act (the FCPA), which prohibits companies and individuals from corruptly making payments, directly or indirectly through third parties, to non-U.S.

government officials for the purpose of obtaining or retaining business or securing any other improper advantage.

Our reliance on independent distributors to sell our products internationally demands a high degree of vigilance in maintaining our policy against participation in corrupt activity, because these distributors could be deemed to be our agents, and we could be held responsible for their actions.

companies in the medical device and pharmaceutical fields have faced criminal penalties under the FCPA for allowing their agents to deviate from appropriate practices in doing business with these individuals.

We are also subject to similar antibribery laws in the jurisdictions in which we operate, including the United Kingdom’s Bribery Act of 2010, which also prohibits commercial bribery and makes it a crime for companies to fail to prevent bribery.

We have limited experience in complying with these laws and in developing procedures to monitor compliance with these laws by our agents.

These laws are complex and far-reaching in nature, and, as a result, we cannot assure you that we would not be required in the future to alter one or more of our practices to be in compliance with these laws or any changes in these

laws or the interpretation thereof.

We are also subject to the FCPA’s accounting provisions, which require us to keep accurate books and records and to maintain a system of internal accounting controls sufficient to assure management’s control, authority and responsibility over our assets.

reliance on independent distributors to sell our products internationally demands a high degree of vigilance in maintaining our policy against participation in corrupt activity, because there are circumstances under which we could be held responsible for their actions.

companies in the medical device and pharmaceutical fields have faced criminal penalties under the FCPA for allowing their distributors and other third parties to deviate from appropriate practices in doing business with these individuals.

We are also subject to similar anti-bribery laws in the jurisdictions in which we operate, including the United Kingdom’s Bribery Act of 2010, which also prohibits commercial bribery and makes it a crime for companies to fail to prevent bribery.

These laws are complex and far-reaching in nature, and, as a result, we cannot guarantee that we would not be required in the future to alter one or more of our practices to be in compliance with these laws or any changes in these laws or the interpretation thereof.

Any violations of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction, involve significant costs and expenses, including legal fees, and could result in a material adverse effect on our business, prospects, financial condition, or results of operations.

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We rely on a single contract manufacturer to manufacture and supply our Simoa HD-X instrument and rely on a different single contract manufacturer to manufacture and supply our Simoa SR-X instrument.

If either of these manufacturers should fail or not perform satisfactorily, our ability to supply these instruments would be negatively and adversely affected.

If either of these manufacturers should fail to perform, or not perform satisfactorily, our ability to supply these instruments would be negatively and adversely affected.

We currently rely on a single contract manufacturer, STRATEC, an analytical and diagnostic systems manufacturer located in Germany, to manufacture and supply all of our Simoa HD-X instruments.

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If either of these manufacturers were not able to supply instruments, our business would be harmed.

In the event it becomes necessary to utilize a different contract manufacturer for the HD-X instrument or the SR-X, we would experience additional costs, delays and difficulties in doing so as a result of identifying and entering into an agreement with a new supplier as well as preparing such new supplier to meet the logistical requirements associated with manufacturing our units, and our business would suffer.

In the event it becomes necessary to utilize a different contract manufacturer for the HD-X instrument or the SR-X instrument, we would experience additional costs, delays and difficulties in doing so as a result of needing to identify and enter into an agreement with a new supplier as well as needing to prepare such new supplier to meet the logistical requirements associated with manufacturing our instruments, and our business would suffer.

We may also experience additional costs and delays in the event we need access to or rights under any intellectual property of STRATEC.

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If any of these events occur, our business and operating results could be harmed.

We rely on a limited number of suppliers or, in some cases, one supplier, for some of our materials and components used in our consumable products and our SP-X instrument, and may not be able to find replacements or immediately transition to alternative suppliers, which could have a material adverse effect on our business, financial condition, results of operations and reputation.

We rely on limited or sole suppliers for certain reagents and other materials and components that are used in our consumable products and in our SP-X instrument.

While we have long-term contracts with some critical suppliers, we do not have contracts with all suppliers and instead rely on periodically forecasting our needs for such materials and entering into standard purchase orders with them.

We rely on a limited number of suppliers or, in some cases, one supplier, for some of our materials and components used in our consumable products and services and our SP-X instrument, and we may not be able to find replacements or immediately transition to alternative suppliers if any of these suppliers fail to perform, which could have a material adverse effect on our business, financial condition, results of operations and reputation.

We rely on limited or sole suppliers for certain reagents and other materials and components that are used in our consumable products and services and in our SP-X instrument.

In addition, our use of many of the materials used in our consumable products is limited to research use only.

As we expand into diagnostic applications for our products, we will need to secure diagnostic rights to such materials.

If we were to lose suppliers or were unable to secure required rights for materials from suppliers, there can be no assurance that we will be able to identify or enter into agreements with alternative suppliers on a timely basis and on acceptable terms, if at all.

If we were to lose suppliers or were unable to secure required rights for materials from suppliers, there can be no assurance that we will be able to identify or enter into

agreements with alternative suppliers on a timely basis and on acceptable terms, if at all.

An interruption in our operations could occur if we encounter delays or difficulties in securing these materials or any required rights to these materials, if the quality of the materials supplied do not meet our requirements, or if we cannot then obtain an acceptable substitute.

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● larger sales forces and more established distributor networks;

● substantial intellectual property portfolios;

● more substantial intellectual property portfolios;

● larger and more established customer bases and relationships;

● better established, larger scale and lower cost manufacturing capabilities.

We cannot assure you that our products will compete favorably or that we will be successful in the face of increasing competition from new products and technologies introduced by our existing competitors or new companies entering our markets.

In addition, we cannot assure you that our competitors do not have or will not develop products or technologies that currently or in the future will enable them to produce competitive products with greater capabilities or at lower costs than ours.

We cannot guarantee that our products will compete favorably or that we will be successful in the face of increasing competition from new products and technologies introduced by our existing competitors or new companies entering our markets.

In addition, we cannot guarantee that our competitors do not have or will not develop products or technologies that currently or in the future will enable them to produce competitive products with greater capabilities or at lower costs than ours.

Any failure to compete effectively could materially and adversely affect our business, financial condition and operating results.

Integrating any business, product or technology we acquire can be expensive and time-consuming and can disrupt and adversely affect our ongoing business, including product sales, and distract our management.

We may acquire other businesses, products or technologies as well as pursue strategic alliances, joint ventures, technology licenses or investments in complementary businesses, such as our 2018 acquisition of Aushon and our 2019 acquisition of Uman.

acquisition of Uman.

Our ability to successfully integrate any business, product or technology we acquire depends on a number of factors, including, but not limited to, our ability to:

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We cannot predict the number, timing or size of future joint ventures or acquisitions, or the effect that any such transactions might have on our operating results.

Epidemic diseases, such as COVID-19 and its variants, and other events could negatively affect various aspects of our business, make it more difficult to meet our obligations to our customers and/or result in reduced demand from our customers, each of which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, such as COVID-19 and its variants, or as a result of natural disasters or other catastrophic events .

Potential impacts to our business include disruptions to or restrictions on our employees’ and customers’ ability to travel, temporary closures of the facilities of our suppliers or customers, delays in installation of instruments and delays in shipments to and from affected countries.

Any material disruption of our employees, distributors, suppliers or customers in impacted countries could impact our global sales and operating results.

In addition, if any of these events adversely

affect the economies and financial markets of countries in which we sell our products and services, resulting in an economic downturn, demand for our products could be affected and could adversely impact our operating results.

Risks Related to Government Regulation and Diagnostic Product Reimbursement

If the FDA determines that our products are medical devices or if we seek to market our products for clinical diagnostic or health screening use, we will be required to obtain regulatory clearance(s) or approval(s) and may be required to cease or limit sales of our then marketed products, which could materially and adversely affect our business, financial condition and results of operations.

If the FDA determines that our products are subject to regulation as medical devices or if we seek to market our products for clinical diagnostic or health screening use, we will be required to obtain regulatory clearance(s) or approval(s) and may be required to cease or limit sales of our then marketed products, which could materially and adversely affect our business, financial condition and results of operations.

Any such regulatory process would be expensive, time-consuming and uncertain both in timing and in outcome.

We have focused initially on the life sciences research market.

We focused initially on the life sciences research market.

This includes offering products for use by laboratories associated with academic and governmental research institutions, as well as pharmaceutical, biotechnology and contract research companies.

Accordingly, other than our COVID assays for which we have received EUAs, our products are labeled as “Research Use Only” and are not intended for diagnostic uses.

While we have focused initially on the life sciences research market and RUO products only, our future strategy includes expanding our product line to encompass products that are intended to be used for the diagnosis of disease, either alone or in collaboration with third parties.

Such IVD products, once developed and offered, will be subject to regulation by the FDA, or comparable international agencies, as medical devices including requirements for regulatory clearance or approval of such products before they can be marketed.

Accordingly, the majority of our products are labeled as “Research Use Only”.

While we focused initially on the life sciences research market and RUO products only, our strategy includes expanding our product line to encompass products that are intended to be used for the diagnosis of disease, including LDTs and IVD devices, either alone or in collaboration with third parties.

Other than our LDTs, such IVD products, once developed and offered, will be subject to regulation by the FDA, or comparable international agencies, as medical devices including requirements for regulatory clearance or approval of such products before they can be marketed.

The process of obtaining regulatory clearances to market a medical device can be costly and time consuming, and we or our collaborators may not be able to obtain these clearances or approvals on a timely basis, if at all.

In general, the FDA permits commercial distribution of a new medical device only after the device has received clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act, or is the subject of an approved PMA, unless the device is specifically exempt from those requirements.

The FDA will clear marketing of a lower risk medical device through the 510(k) process if the manufacturer demonstrates that the new product is substantially equivalent to other

pre-amendment, 510(k)-exempt, 510(k) cleared products, or PMA-approved products that have subsequently been down-classified.

If the FDA determines that the device is not “substantially equivalent” to a predicate device, or if the device is automatically classified into Class III, the device sponsor must then fulfill the much more rigorous premarketing requirements of the PMA approval process, or seek reclassification of the device through the de novo process.

The FDA will clear marketing of a lower risk medical device through the 510(k) process if the manufacturer demonstrates that the new product is substantially equivalent to other pre-amendment, 510(k)-exempt, 510(k) cleared products, or PMA-approved products that have subsequently been down-classified.

If the FDA determines that the device is not “substantially equivalent” to a predicate device, or if the device is novel, it is automatically classified into Class III, and the device sponsor must then fulfill the much more rigorous premarketing requirements of the PMA approval process, or seek reclassification of the device through the de novo classification process.

Pursuant to amendments to the statute in 2012, a manufacturer can also submit a petition for a direct de novo review if the manufacturer is unable to identify an appropriate predicate device and the new device or new use of the device presents a moderate or low risk.

High risk devices deemed to pose the greatest risk, such as life-sustaining, life-supporting, or implantable devices, or devices not deemed substantially equivalent to a previously cleared device, require the approval of a PMA.

Class III devices, which are high risk devices deemed to pose the greatest risk, such as life-sustaining, life-supporting, or implantable devices, require the approval of a PMA.

The PMA process is more costly, lengthy and uncertain than the 510(k) clearance process.

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In these circumstances, we may rely significantly on our foreign independent distributors or collaborators to comply with the varying regulations, and any failures on their part could result in restrictions on the sale of our products in foreign countries.

If we or our collaborators are required to obtain a PMA or 510(k) clearance for products based on our technology, we or they would be subject to a substantial number of additional requirements for medical devices, including establishment registration, device listing, Quality Systems Regulations (QSRs), which cover the design, testing, production, control, quality assurance, labeling, packaging, servicing, sterilization (if required), and storage and shipping of medical devices (among other activities), product labeling, advertising, recordkeeping, post-market surveillance, post-approval studies, adverse event reporting, and correction and removal (recall) regulations.

One or more of the products we or a collaborator may develop using our technology may also require clinical trials in order to generate the data required for a PMA.

Complying with these requirements may be time-consuming and expensive.

If we or our collaborators are required to obtain a PMA or 510(k) clearance for products based on our technology, we or they would be subject to a substantial number of additional requirements for medical devices, including establishment registration, device listing, QSRs —which cover the design, testing, production, control, quality assurance, labeling, packaging, servicing, sterilization (if required), and storage and shipping of medical devices (among other activities) —product labeling, advertising, recordkeeping, post-market surveillance, post-approval studies, adverse event reporting, and correction and removal (recall) regulations.

One or more of the products we or a collaborator may develop using our technology may also require clinical trials in order to generate the data required for a PMA, de novo classification request or 510(k) premarket notification.

Complying with these requirements may be time-consuming and

We or our collaborators may be required to expend significant resources to ensure ongoing compliance with the FDA regulations and/or take satisfactory corrective action in response to enforcement action, which may have a material adverse effect on the ability to design, develop, and commercialize products using our technology as planned.

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If we or our collaborators fail to obtain, or experience significant delays in obtaining, regulatory approvals for IVD products, such products may not be able to be launched or successfully commercialized in a timely manner, or at all.

LDTs are a subset of IVD tests that are designed, manufactured and offered as services by high complexity clinical laboratories and used within a single laboratory.

The FDA maintains that LDTs are medical devices and has for the most part exercised enforcement discretion for most LDTs.

LDTs are a subset of IVD tests that are offered as services by high complexity clinical laboratories and designed, manufactured and used within a single laboratory.

In July 2022, we launched an LDT to quantitatively measure pTau-181 in plasma as an aid in diagnostic evaluation of Alzheimer’s disease, and in January 2023, we launched an LDT to quantitatively measure NfL in serum as an aid in the evaluation of individuals for possible neurodegenerative conditions or other causes of neuronal or central nervous system damage.

The FDA maintains that LDTs are medical devices and has for the most part exercised enforcement discretion for most LDTs, meaning that the FDA has not required LDTs to obtain premarket approval or clearance or comply with post-market medical device requirements.

A significant change in the way that the FDA regulates any LDTs that we, our collaborators or our customers develop using our technology could affect our business.

The FDA has considered the appropriate way to regulate such tests, but after publishing several draft guidances and holding a number of public hearings and workshops, no final guidance has been issued.

However, if the FDA requires laboratories to undergo premarket review and comply with other applicable FDA requirements in the future, the cost and time required to commercialize an LDT will increase substantially, and may reduce the financial incentive for laboratories to develop LDTs, which could reduce demand for our instruments and our other products.

The FDA has considered the appropriate way to regulate such tests, but after publishing several draft guidances in 2014 and holding a number of public hearings and workshops, no final guidance has been issued, as the FDA indicated the agency would defer to a legislative approach.

Congress has considered several bills that would have imposed a new FDA regulatory framework (with many similarities to the current device framework) for LDTs and IVD devices, but to date, has not passed such legislation.

However, if Congress or the FDA requires laboratories to undergo premarket review and comply with other applicable FDA requirements in the future, the cost and time required to commercialize an LDT will increase substantially, and may reduce the financial incentive for laboratories to develop LDTs, which could reduce demand for our instruments and our other products.

The FDA could also take enforcement action against us if it determines the tests we have currently launched as LDTs do not fall within the agency’s definition of an LDT and therefore do not fall within the scope of the agency’s enforcement discretion for LDTs.

Foreign jurisdictions have laws and regulations similar to those described above, which may adversely affect our ability to market our products as planned in such countries.

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As in the United States, the cost and time required to comply with regulatory requirements may be substantial, and there is no guarantee that we will obtain the necessary authorization(s) required to make our products commercially viable.

As a result, the imposition of foreign requirements may also have a material adverse effect on the commercial viability of our operations.

We are subject to extensive regulatory requirements in connection with the EUAs that we have received from the FDA for our COVID-19 antibody and antigen tests.

We have received EUAs from the FDA authorizing us to market our Simoa Semi-Quantitative SARS-CoV-2 IgG Antibody Test and our Simoa SARS-CoV-2 N Protein Antigen Test, each of which is run on our HD-X instrument.

These EUAs allow us to market and sell these products without the need to obtain premarket clearance or approval under the FDA’s standard review pathways for the duration of the COVID-19 public health emergency.

The FDA has also established certain conditions which must be met in order to maintain authorization under these EUAs.

The requirements can be unclear and are subject to change.

The FDA has the authority to issue an EUA during a public health emergency if it determines, based on the totality of the scientific evidence, that it is reasonable to believe that the product may be effective, that the known and potential benefits of a product outweigh the known and potential risks, that there is no adequate, approved and available alternative, and if certain other regulatory criteria are met.

These standards for marketing authorization are lower than if the FDA had reviewed these tests under its traditional marketing authorization pathways, and we cannot assure you that our tests would be cleared or approved under those more extensive clearance and approval standards.

Moreover, the FDA’s policies regarding EUAs can change unexpectedly, and the FDA may revoke an EUA when it determines that the underlying health emergency no longer exists or warrants such authorization or if problems are identified with the authorized product.

We cannot predict how long our authorizations will remain in place.

FDA policies regarding diagnostic tests, therapies and other products used to diagnose, treat or mitigate COVID-19 remain in flux as the FDA responds to new and evolving public health information and clinical evidence.

Changes to FDA regulations or requirements could require changes to our authorized tests, necessitate additional measures or make it impractical or impossible for us to market our tests at all.

In addition, even though we have received these EUAs, these tests may not gain broad market acceptance among customers, including physicians, healthcare payors, users and others in the medical community.

The commercial success of our COVID-19 tests will initially be dependent upon physicians and healthcare providers adopting our test kits, which will be informed, in part, by the convenience and accuracy of our tests.

Furthermore, the COVID-19 diagnostic testing market is susceptible to rapid technological developments and we may not be able to match new technological advances, which might render our COVID-19 test kits uncompetitive or obsolete.

If we are unable to match technological improvements in competitive products or effectively respond to the needs of our customers and users, the demand for our COVID-19 test kits could be reduced.

The termination of the emergency conditions under which EUAs are permitted, the rescission of an EUA, the failure of our tests to gain market acceptance or our inability to match advances in competing products could adversely impact our business.

In addition, the imposition of foreign requirements may also have a material adverse effect on the commercial viability of our operations.

Our products may in the future be subject to product recalls that could harm our reputation, business and financial results.

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Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our financial condition and results of operations.

The FDA requires that certain classifications of recalls be reported to FDA within 10 working days after the recall is initiated.

The FDA requires that certain recalls (including field corrections and removals) be reported to the FDA within 10 working days after the recall is initiated.

Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA.

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If the FDA disagrees with our determinations, they could require us to report those actions as recalls.

A future recall announcement could harm our

reputation with customers and negatively affect our sales.

A future recall announcement could harm our reputation with customers and negatively affect our sales.

In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.

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From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory approval, manufacture and marketing of regulated products or the reimbursement thereof.

For example, in December 2022, Congress enacted the Food and Drug Omnibus Reform Act of 2022 (FDORA).

FDORA reauthorized the FDA to collect device user fees and contained substantive amendments to the device provisions of the FDCA, including imposing new cybersecurity and clinical trial requirements for devices.

Congress has also considered, but not yet passed, legislation to impose a new FDA regulatory framework for IVD devices and LDTs.

Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of future products.

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Significant delays in receiving clearance or approval, or the failure to receive clearance or approval for our new products would have an adverse effect on our ability to expand our business.

In addition, the EU recently published new regulations that will result in greater regulation of medical devices and IVDs.

The new IVD regulation (new IVD Regulation) is significantly different from the European directive for In vitro diagnostic products (IVD Directive) that it replaces in that it will ensure that the new requirements apply uniformly and on the same schedule across the member states, include a risk-based classification system and increase the requirements for conformity assessment.

The CE registration for Uman’s Nf-L ELISA assay kit for CSF was approved in March 2014 under the IVD Directive .

In addition, in the E.U.

new regulations recently entered into force that result in greater regulation of medical devices and IVDs.

The IVD Regulation is significantly different from the IVD Directive that it replaces in that it ensures that the new requirements apply uniformly and on the same schedule across the member states, includes a risk-based classification system and increases the requirements for conformity assessment.

The CE registration for Uman’s Nf-L ELISA assay kit for cerebral spinal fluid was approved in March 2014 under the IVD Directive .

Under the IVD Directive the assay is classified as a general IVD product, class I and required self-certification with no involvement of a notified body/authority.

Under the new IVD Regulation, the requirements increase and involve assessment by a notified body for class B, C and D products.

Uman’s Nf-L ELISA assay kit for CSF is classified as class B product and must fully implement the new IVD Regulation by May 2027.

The IVD Regulation introduces a new classification system for IVDs and assessment by a notified body is required for class B, C and D products.

Uman’s Nf-L ELISA assay kit for CSF is classified as a class B product and must fully comply with (and have a CE mark issued under) the IVD Regulation by May 2027.

The new requirements include an ISO 13485 certification of the quality system (which Uman received July 2018) and increased technical evidence and follow-up of performance of the specific product (e.g.

clinical evidence and post-market activities).

The work to meet the new technical requirements is on-going.

An internal GAP-analysis is to be performed and work to eliminate the GAPs performed.

In order to continue to sell our products in Europe, we must maintain our CE marks and continue to comply with certain EU directives and, in the future with the new IVD Regulation.

Our failure to continue to comply with applicable foreign regulatory requirements, including those administered by authorities of the EEA countries, could result in enforcement actions against us, including refusal, suspension or withdrawal of our CE Certificates of Conformity by our notified body, which could impair our ability to market products in the EEA in the future.

Any changes to the membership of the European Union, such as the departure of the United Kingdom (Brexit), may impact the regulatory requirements for the impacted countries and impair our business operations and our ability to market products in such countries.

If we do not comply with governmental regulations applicable to our CLIA-certified laboratory, we may not be able to continue our operations.

The operation of our Clinical Laboratory Improvement Amendments (CLIA) certified laboratory is subject to regulation by numerous federal, state and local governmental authorities in the United States.

The work to evaluate and to meet the new technical requirements is on-going.

In order to continue to sell our products in the E.U., we must maintain our CE marks and comply with the IVD Regulation.

Our failure to continue to comply with applicable foreign regulatory requirements, including those administered by authorities of the European Economic Area (EEA) countries, could result in enforcement actions against us, including refusal, suspension or withdrawal of our CE Certificates of Conformity by our notified body, which could impair our ability to market products in the EEA in the future.

Any changes to the membership of the E.U., such as the departure of the United Kingdom, may impact the regulatory requirements for the impacted countries and impair our business operations and our ability to market products in such countries.

If we do not comply with governmental regulations applicable to our CLIA-certified laboratory, we may not be able to continue our Accelerator laboratory operations or continue offering our LDTs.

The operation of our CLIA-certified laboratory is subject to regulation by numerous federal, state and local governmental authorities in the United States.

This laboratory holds a CLIA certificate of compliance and is licensed by the Commonwealth of Massachusetts and the State of Maryland, and we may obtain other state licenses if required in the future.

Failure to comply with federal or state regulations or changes in those regulatory requirements could result in a substantial curtailment or even prohibition of the operations of our laboratory and could have an adverse effect on our business.

CLIA is a federal law that regulates clinical laboratories

that perform testing on human specimens for the purpose of providing information for the diagnosis, prevention or treatment of disease.

CLIA is a federal law that regulates clinical laboratories that perform testing on human specimens for the purpose of providing information for the diagnosis, prevention or treatment of any disease or impairment of, or the

assessment of health of, human beings.

To maintain CLIA certification, laboratories are subject to survey and inspection every two years.

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We do not have the ability to independently conduct clinical trials or other studies that may be required to obtain FDA and other regulatory clearance or approval for future diagnostic products.

Accordingly, we expect that we would rely on third parties, such as clinical investigators, consultants, and collaborators to conduct such studies if needed.

Accordingly, we expect that we would rely on third parties, such as clinical investigators, contract research organizations, consultants, and collaborators to conduct such studies if needed.

For example, we are currently working with the Alzheimer’s Drug Discovery Foundation and the Global Alzheimer’s Platform Foundation on prospective clinical trials for our assays.

Our reliance on these third parties for clinical and other development activities would reduce our control over these activities.

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If diagnostic procedures that are enabled by our technology are subject to unfavorable pricing regulations or third-party coverage and reimbursement policies, our business could be harmed.

The ability of us, our customers or our collaborators to commercialize diagnostic tests based on our technology will depend in part on the extent to which coverage and reimbursement for these tests will be available from government health programs, private health insurers and other third-party payors.

In the United States, the principal decisions about reimbursement for new technologies are often made by the Centers for Medicare and Medicaid Services (CMS).

Private payors often follow CMS to a substantial degree.

The ability of us, our customers or our collaborators to commercialize diagnostic tests based on our technology, including our recently launched LDTs, will depend in part on the extent to which coverage and reimbursement for these tests will be available from government health programs, private health insurers and other third-party payors.

In the United States, the principal decisions about reimbursement for new technologies are often made by CMS.

Private payors often follow CMS’s reimbursement policies to a substantial degree.

It is difficult to predict what CMS will decide with respect to reimbursement.

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Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of payments for particular products and procedures.

We cannot be sure that coverage will be available for any diagnostic tests based on our technology, and, if coverage is available, the level of payments.

Reimbursement may impact the demand for those tests.

If reimbursement is not available or is available only to limited levels, any tests for which marketing authorization is received may not be able to be successfully commercialized.

Current and future legislation may increase the difficulty and cost to obtain marketing approval of and commercialize any products based on our technology and affect the prices that may be obtained.

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, collectively, the ACA, became law.

The ACA is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.

We cannot be sure that coverage will be available for any diagnostic tests based on our technology, and, if coverage is available, the level of reimbursement.

Payor coverage and reimbursement decisions may impact the demand for those tests.

If coverage is not available or the reimbursement amount is inadequate, any tests for which marketing authorization is received may not be able to be successfully commercialized.

Current and future legislation may increase the difficulty and cost to obtain marketing approval of and to commercialize any products based on our technology and affect the prices that may be obtained.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the ACA), is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the ACA.

Both Congress and former President Trump expressed their intention to repeal or repeal and replace the ACA, and as a result certain sections of the ACA have not been fully implemented or were effectively repealed.

The uncertainty around the future of the ACA, and in particular the impact to reimbursement levels and the number of insured individuals, may lead to uncertainty or delay in the purchasing decisions of our customers, which may in turn negatively impact our product sales.

As a result, certain sections of the ACA have not been fully implemented or were effectively repealed.

If there are not adequate reimbursement levels, our business and results of operations could be adversely affected.

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Any reduction in payments from Medicare or other government programs may result in a similar reduction in payments from private payors.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize any of our products for which we receive marketing approval.

The implementation of cost containment measures or other healthcare

reforms may prevent us from being able to generate revenue, attain profitability, or commercialize any of our products for which we receive marketing approval.

In addition, sales of our tests outside of the United States will subject us to foreign regulatory requirements, which may also change over time.

We cannot predict whether future healthcare initiatives will be implemented at the federal or state level or in countries outside of the United States in which we may do business, or the effect any future legislation or regulation will have on us.

The expansion in government’s effect on the United States healthcare industry may result in decreased profits to us, lower reimbursements by payors for our products or reduced medical procedure volumes, all of which may adversely affect our business, financial condition and results of operations.

Any such initiatives may result in decreased profits to us, lower reimbursements by payors for our products or reduced medical procedure volumes, all of which may adversely affect our business, financial condition and results of operations.

Risks Related to Our Operations

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We depend on information technology and telecommunications systems to operate our business.

We have installed, and expect to expand, a number of enterprise software systems that affect a broad range of business processes and functional areas, including, for example, systems handling human resources, accounting, manufacturing, inventory control, financial controls and reporting, sales administration, and other infrastructure operations.

In addition to the aforementioned business systems, we intend to extend the capabilities of both our preventative and detective security controls by augmenting the monitoring and alerting functions, network design, and automatic countermeasure operations of our technical systems.

These information technology and telecommunications systems support a variety of functions, including manufacturing operations, quality control, customer service support, and general administrative activities.

Information technology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters.

Our enterprise software systems affect a broad range of business processes and functional areas, including, for example, systems handling human resources, accounting, manufacturing, inventory control, financial controls and reporting, sales administration, and other infrastructure operations.

We maintain preventative and detective security controls and seek to enhance such controls by, for example, augmenting the monitoring and alerting functions, network design, and automatic countermeasure operations of our technical systems.

We also periodically assess the adequacy of our hardware and systems and are planning to upgrade hardware and systems where appropriate.

Information technology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications, systems or network failures, malicious human acts and natural disasters.

Moreover, despite network security and back-up measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses, and similar disruptive problems.

Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our information technology and telecommunications systems, failures or significant downtime of our information technology or telecommunications systems or those used by our third-party suppliers could prevent us from operating our business and managing the administrative aspects of our business.

Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our information technology and telecommunications systems, those measures may be inadequate and failures or significant downtime of our information technology or telecommunications systems or those used by our third-party suppliers could prevent us from operating our business and managing the administrative aspects of our business.

Loss of data or a material delay in our access to our data due to a security breach or other interruption could also prevent us from operating our business.

Any disruption or loss of information technology or telecommunications systems on which critical aspects of our operations depend could have an adverse effect on our business.

Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.

Cybersecurity breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.

In the ordinary course of our business, we collect and store sensitive data, and intellectual property and proprietary business information owned or controlled by ourselves or our customers.

This data encompasses a wide variety of business-critical information including research and development information, commercial information, and business and financial information.

This data encompasses a wide variety of business-critical information including research and development information, operational information, commercial information, and business and financial information.

We face four primary risks relative to protecting this critical information:

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The secure processing, storage, maintenance, and transmission of this critical information is vital to our operations and business strategy, and we devote significant resources to protecting such information.

Although we take measures to protect sensitive information from unauthorized access or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses, breaches, interruptions due to employee error, malfeasance, faulty password management, lapses in compliance with privacy and security mandates, or other disruptions.

The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.

Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations.

Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.

Our information technology systems may have vulnerabilities, and we may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyberattacks, such as ransomware attacks.

A significant cyber incident, including system failure, security breach, disruption by malware or other damage, could interrupt or delay our operations, result in a violation of applicable cybersecurity and privacy and other laws, damage our reputation, cause a loss of customers or expose sensitive customer data, or give rise to monetary fines and other penalties, which could be significant.

Any such breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, publicly disclosed, lost, or stolen.

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Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen.

We engage third-party vendors and service providers to store and otherwise process some of our data,

including sensitive and personal information.

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.

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The successful assertion of one or more large claims against us that exceed available insurance coverage, the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, or denials of coverage, could have a material adverse effect on our business, including our financial condition, results of operations and reputation.

The failure to maintain our current enterprise resource planning system (ERP) could adversely impact our business and results of operations.

If our ERP system does not continue to operate as intended, the effectiveness of our internal controls over financial reporting could be adversely affected or our ability to assess those controls adequately could be delayed.

Significant delays in documenting, reviewing, and testing our internal control could cause us to fail to comply with our SEC reporting obligations related to our management's assessment of our internal control over financial reporting.

We are currently subject to, and may in the future become subject to additional, U.S.

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We are, and may increasingly become, subject to various laws and regulations, as well as contractual obligations, relating to data privacy and security in the jurisdictions in which we operate.

The regulatory environment related to data privacy and security is increasingly rigorous, with new and constantly changing requirements applicable to our business, and enforcement

practices are likely to remain uncertain for the foreseeable future.

The regulatory environment related to data privacy and security is increasingly rigorous, with new and constantly changing requirements applicable to our business, and enforcement practices are likely to remain uncertain for the foreseeable future.

These laws and regulations may be interpreted and applied differently over time and from jurisdiction to jurisdiction, and it is possible that they will be interpreted and applied in ways that may have a material adverse effect on our business, financial condition, results of operations and prospects.

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Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, all of which may complicate compliance efforts.

For example, the California Consumer Privacy Act (CCPA), which increases privacy rights for California residents and imposes obligations on companies that process their personal information, came into effect on January 1, 2020.

For example, the California Consumer Privacy Act (the CCPA), which increases privacy rights for California residents and imposes obligations on companies that process their personal information, came into effect on January 1, 2020.

Among other things, the CCPA requires covered companies to provide new disclosures to California consumers and provide such consumers new data protection and privacy rights, including the ability to opt-out of certain sales of personal information.

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This private right of action may increase the likelihood of, and risks associated with, data breach litigation.

In November 2020, California also passed the California Privacy Rights Act, or CPRA, which significantly expands the CCPA, including by introducing additional obligations such as data minimization and storage limitations and granting additional rights to consumers.

In November 2020, California also passed the California Privacy Rights Act (the CPRA), which significantly expands the CCPA, including by introducing additional obligations such as data minimization and storage limitations and granting additional rights to consumers.

In 2021, Virginia and Colorado both passed comprehensive state data privacy laws.

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These and future laws and regulations may increase our compliance costs and potential liability.

Furthermore, regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 (HIPAA), establish privacy and security standards that limit the use and disclosure of individually identifiable health information (known as “protected health information”) and require the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity and availability of electronic protected health information.

Furthermore, regulations promulgated pursuant to HIPAA establish privacy and security standards that limit the use and disclosure of individually identifiable health information (known as “protected health information”) and require the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity and availability of electronic protected health information.

Determining whether protected health information has been handled in compliance with applicable privacy standards and our contractual obligations can require complex factual and statistical analyses and may be subject to changing interpretation.

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Any such breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, manipulated, publicly disclosed, lost or stolen.

Any such access, breach or other loss of information could result in legal claims or proceedings, and liability under federal or state laws that protect the privacy of personal information, such as the HIPAA, the Health Information Technology for Economic and Clinical Health Act (HITECH), and regulatory penalties.

Notice of breaches must be made to affected individuals, the Secretary of the Department of Health and Human Services, and for extensive breaches, notice may need to be made to the media or State Attorneys General.

Notice of breaches must be made to affected individuals, the Secretary of the Department of Health and Human Services, and for extensive breaches, notice may need to be made to the media.

Such a notice could harm our reputation and our ability to compete.

In addition, the European Parliament and the Council of the European Union adopted the GDPR in 2016 to replace the current European Union Data Protection Directive and related country-specific legislation.

The GDPR took effect in May 2018 and governs the collection and use of personal data in the European Union.

In addition, the European Parliament and the Council of the E.U.

adopted the GDPR in 2016 to replace the European Union Data Protection Directive and related country-specific legislation.

The GDPR took effect in May 2018

and governs the collection and use of personal data in the E.U.

The GDPR, which is wide-ranging in scope, imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third-party processors in connection with the processing of the personal data.

The GDPR also imposes strict rules on the transfer of personal data out of the European Union to the United States, enhances enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenues of the infringer, whichever is greater.

While we have taken steps to comply with the GDPR, including such as reviewing our security procedures and entering into data processing agreements with relevant contractors, we cannot assure you that our efforts to remain in compliance will be fully successful.

Further, unauthorized access, loss or dissemination of sensitive information could also disrupt our operations, including our ability to conduct research and development activities, process and prepare company financial information, manage various general and administrative aspects of our business and damage our reputation, any of which could adversely affect our reputation and our business.

The GDPR also imposes strict rules on the transfer of personal data out of the E.U.

to the United States, enhances enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenues of the infringer, whichever is greater.

While we have taken steps to comply with the GDPR, including reviewing our security procedures and entering into data processing agreements with relevant contractors, we cannot guarantee that our compliance efforts will be fully successful.

Further, unauthorized access, loss or dissemination of sensitive information could also disrupt our operations, including our ability to conduct research and development activities, process and prepare company financial information, manage various general and administrative aspects of our business, any of which could adversely affect our reputation and our business.

In addition, there can be no assurance that we will promptly detect any such disruption or security breach, if at all.

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

We face risks related to handling of hazardous materials and other regulations governing environmental safety.

Our operations are subject to complex and stringent environmental, health, safety and other governmental laws and regulations that both public officials and private individuals may seek to enforce.

Our activities that are subject to these regulations include, among other things, our use of hazardous materials and the generation, transportation and storage of waste.

We face risks related to handling of hazardous materials and other regulations governing environmental, health and safety.

Our operations are subject to complex and stringent federal, state and local environmental, health, safety and other laws and regulations that both public officials and in some circumstances private individuals may seek to enforce.

Our activities that are subject to these laws and regulations include, among other things, our use of hazardous materials and the generation, transportation, disposal and storage of waste.

Although we have secured clearance from the EPA historically, and currently are operating in compliance with applicable EPA rules and regulations, our business could be adversely affected if we discover that we or an acquired business is not in material compliance with these rules and regulations.

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Risks Related to Intellectual Property

If we are unable to protect our intellectual property, it may reduce our ability to maintain any technological or competitive advantage over our competitors and potential competitors, and our business may be harmed.

If we are unable to protect our intellectual property, our ability to maintain any technological or competitive advantage over our competitors and potential competitors may be reduced, and our business may be harmed.

We rely on patent protection as well as trademark, copyright, trade secret and other intellectual property rights protection and contractual restrictions to protect our proprietary technologies, all of which provide limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage.

If we fail to protect our intellectual property, third parties may be able to compete more effectively against us, we may lose our technological or competitive advantage, or we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property.

We cannot assure investors that any of our currently pending or future patent applications will result in granted patents, and we cannot predict how long it will take for such patents to be granted.

Our currently pending or future patent applications may not result in granted patents, and we cannot predict how long it will take for such patents to be granted.

It is possible that, for any of our patents that have granted or that may grant in the future, others will design around our patented technologies.

Further, we cannot assure investors that other parties will not challenge any patents granted to us or that courts or regulatory agencies will hold our patents to be valid or enforceable.

We cannot guarantee investors that we will be successful in defending challenges made against our patents and patent applications.

Further, other parties may challenge any patents granted to us and courts or regulatory agencies could hold our patents to be invalid or unenforceable.

We may not be successful in defending challenges made against our patents and patent applications.

Any successful third-party challenge to our patents could result in the unenforceability or invalidity of such patents, or to such patents being interpreted narrowly or otherwise in a manner adverse to our interests.

Our ability to establish or maintain a technological or competitive advantage over our competitors may be diminished because of these uncertainties.

For these and other reasons, our intellectual property may not provide us with any competitive advantage.

these and other reasons, our intellectual property may not provide us with any competitive advantage.

To the extent our intellectual property offers inadequate protection, or is found to be invalid or unenforceable, we would be exposed to a greater risk of direct competition.

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In addition, we take steps to protect our intellectual property and proprietary technology by entering into confidentiality agreements and intellectual property assignment agreements with our employees, consultants, corporate partners and, when needed, our advisors.

Such agreements may not be enforceable

or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements, and we may not be able to prevent such unauthorized disclosure.

Such agreements may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements, and we may not be able to prevent such unauthorized disclosure.

Moreover, if a party having an agreement with us has an overlapping or conflicting obligation to a third party, our rights in and to certain intellectual property could be undermined.

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Any loss of our rights to this technology could prevent us from selling our products.

Our Simoa bead-based technology is licensed exclusively to us from Tufts University.

Our Simoa bead-based technology is licensed exclusively to us from Tufts University (Tufts).

We do not own the patents that underlie this license.

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Our principal obligations under our license agreement with Tufts are as follows:

● royalty payments;

● milestone payments;

● annual maintenance fees;

● making royalty payments;

● making milestone payments;

● paying annual maintenance fees for the underlying patents;

● using commercially reasonable efforts to develop and sell a product using the licensed technology and developing a market for such product;

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● providing certain reports.

If we breach any of these obligations, Tufts may have the right to terminate the license, which could result in our being unable to develop, manufacture and sell products using our Simoa bead-based technology or a competitor’s gaining access to the Simoa technology.

Termination of our license agreement with Tufts would have a material adverse effect on our business.

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We expect that we may need to enter into additional license agreements in the future.

Our business could suffer, for example, if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms.

Our business could suffer materially and adversely, for example, if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms.

We may need or may choose to obtain licenses from third parties to advance our research or allow commercialization of our current or future products, and we cannot provide any assurances that we would be able to do so.

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Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement.

If disputes over intellectual property that we have licensed prevent or impair our ability to maintain the licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product, or the dispute may have an adverse effect on our results of operation.

In addition to agreements pursuant to which we in-license intellectual property, we have in the past and expect to in the future to grant licenses under our intellectual property.

If disputes over intellectual property that we have licensed prevent or impair our ability to maintain the licensing arrangements on acceptable terms,

we may be unable to successfully develop and commercialize the affected product, or the dispute may have an adverse effect on our results of operation.

In addition to agreements pursuant to which we in-license intellectual property, we have in the past and expect in the future to grant licenses under our intellectual property.

Like in-licenses, out-licenses are complex, and disputes may arise between us and our licensees.

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Any such occurrence could have an adverse effect on our business.

If we or any of our partners are sued for infringing intellectual property rights of third parties, it would be costly and time-consuming, and an unfavorable outcome in that litigation could have a material adverse effect on our business.

If we or any of our partners are sued for infringing intellectual property rights of third parties, the resulting litigation would be costly and time-consuming, and an unfavorable outcome in that litigation could have a material adverse effect on our business.

Our success also depends on our ability to develop, manufacture, market and sell our products and perform our services without infringing upon the proprietary rights of third parties.

Numerous U.S.

and foreign-issued patents and

pending patent applications owned by third parties exist in the fields in which we are developing products and services.

Numerous U.S.- and foreign-issued patents and pending patent applications owned by third parties exist in the fields in which we are developing products and services.

As part of a business strategy to impede our successful commercialization and entry into new markets, competitors have claimed, and may claim in the future, that our products and/or services infringe their intellectual property rights and have suggested, and may suggest in the future, that we enter into license agreements.

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Such a loss of patent protection would have a material adverse impact on our business.

We may not be able to protect our intellectual property rights throughout the world, which could materially, negatively affect our business.

We may not be able to protect our intellectual property rights throughout the world, which could have a material adverse effect on our business.

Filing, prosecuting and defending patents on current and future products in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside of the United States can be less extensive than those in the United States.

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Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.

The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally.

The legal systems of certain countries, such as China and certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally.

Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and provoke third parties to assert claims against us.

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Changes in patent laws or patent jurisprudence could diminish the value of patents in general, thereby impairing our ability to protect our products.

The America Invents Act (the AIA) was signed into law on September 16, 2011, and many of the substantive changes became effective on March 16, 2013.

An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention.

A third party that files a patent application in the USPTO after that date but before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by the third party.

This will require us to be cognizant of the time from invention to the filing of a patent application, but circumstances could prevent us from promptly filing patent applications on our inventions.

Under the America Invents Act (the AIA), as of March 16, 2013, the United States transitioned to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention.

A third party that files a patent application in the USPTO before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by the third party.

This requires us to be cognizant of the time from invention to the filing of a patent application, but circumstances could prevent us from promptly filing patent applications on our inventions.

Among some of the other changes introduced by the AIA are changes that limit where a patent holder may file a patent infringement suit and provide additional opportunities for third parties to challenge any issued patent in the USPTO.

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Risks Related to Our Common Stock and Being a Public Company

We expect that our stock price may fluctuate significantly.

Our stock price has fluctuated significantly and may continue to fluctuate significantly.

The market price of shares of our common stock has been and could continue to be subject to wide fluctuations in response to many factors listed in this section, and others beyond our control, including:

● actual or anticipated fluctuations in our financial condition and operating results;

● announcements by us, our partners or our competitors of new products, significant contracts, strategic partnerships, joint ventures, collaborations, acquisitions, commercial relationships or capital commitments;

● announcements by us, our partners or our competitors of new products, significant contracts, restructuring plans, strategic partnerships, joint ventures, collaborations, acquisitions, commercial relationships or capital commitments;

● competition from existing products or new products that may emerge;

● failure to meet or exceed financial estimates and projections of the investment community or that we may provide to the public;

● issuance of new or updated research or reports by securities analysts or recommendations for our stock;

● issuance of new or updated research or reports by securities analysts or recommendations with respect to our stock;

● positive or adverse regulatory announcements;

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We have not paid dividends on any of our classes of capital stock to date and we currently intend to retain our future earnings, if any, to fund the development and growth of our business.

As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

Consequently, in the foreseeable future, you will likely only experience a gain from an investment in our common stock if the price of our common stock increases.

As a result, capital appreciation, if any, of our common stock will be the sole source of gain for the shareholders in the foreseeable future.

Consequently, in the foreseeable future, shareholders will likely only experience a gain from an investment in our common stock if the price of our common stock increases.

Anti-takeover provisions contained in our restated certificate of incorporation and restated by-laws, as well as provisions of Delaware law, could impair a takeover attempt.

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● providing that our board of directors may create new directorships and that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;

● establishing that our board of directors is divided into three classes—Class I, Class II, and Class III—with each class serving staggered three-year terms;

● establishing that our board of directors is divided into three classes with each class serving staggered three-year terms;

● providing that our board of directors may amend our restated by-laws without stockholder approval;

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Any provision of our restated certificate of incorporation, restated by-laws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

We incur increased costs and devote substantial management time as a result of operating as a public company.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company.

We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Protection Act, as well as rules adopted, and to be adopted, by the SEC and The Nasdaq Global Market.

Our management and other personnel devote a substantial amount of time to these compliance initiatives.

Moreover, these rules and regulations substantially increase our legal and financial compliance costs and make some activities more time-consuming and costly.

These costs increase our net loss.

For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the sufficient coverage.

We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.

The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

In addition, as a public company we incur additional costs and obligations in order to comply with SEC rules that implement Section 404 of the Sarbanes-Oxley Act.

Under these rules, we are required to make a formal assessment of the effectiveness of our internal control over financial reporting and to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.

To achieve timely compliance with Section 404, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging.

The process of obtaining the attestation report from our independent registered public accounting firm is costly and requires the devotion of significant management attention and resources.

We have been required to dedicate internal resources, engage outside consultants and adopt a detailed work plan to assess and document the adequacy of our internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are designed and operating effectively, and implement a continuous reporting and improvement process for internal control over financial reporting.

If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

UNRESOLVED STAFF COMMENTS

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

What changed 10-K

Item 1A. Risk Factors