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This summary is not complete, and the risks summarized below are not the only risks we face.
−Removed: You should review and consider carefully the risks and uncertainties described in the “Risk Factors” section of this Annual Report on Form 10-K, which includes a more complete discussion of the risks summarized below as well as a discussion of other risks related to our business and an investment in our common stock, as well as our other public filings with the Securities and Exchange Commission, or SEC.
+Added: You should review and consider carefully the risks and uncertainties described in the “Risk Factors” section of this Annual Report on Form 10-K, which includes a more complete discussion of the risks
+Added: summarized below as well as a discussion of other risks related to our business and an investment in our common stock, as well as our other public filings with the Securities and Exchange Commission, or SEC.
Any of the following risks could have a material adverse effect on our business, financial condition, results of operations and prospects and cause the trading price of our common stock to decline:
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If Ascensia fails to perform satisfactorily under this agreement, including among other things if they are delayed or unsuccessful in growing the adoption of our product, our commercialization efforts and financial results would be directly and adversely affected.
−Removed: ● The markets in which we participate are highly competitive, and our primary competitors, as well as a number of other companies, medical researcher and existing medical device companies, are pursuing new delivery devices, delivery technologies, sensing technologies, procedures, drugs and other therapies for the monitoring, treatment and prevention of diabetes.
+Added: ● The markets in which we participate are highly competitive, and our primary competitors, as well as a number of other companies, medical researchers and existing medical device companies, are pursuing new delivery devices, delivery technologies, sensing technologies, procedures, drugs and other therapies for the monitoring, treatment and prevention of diabetes.
Any technological breakthroughs in diabetes monitoring, treatment or prevention could reduce the potential market for Eversense or render Eversense less competitive or obsolete, which would significantly reduce our potential sales.
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In particular, the FDA and other foreign regulatory clearance, certification, or approval processes are expensive, time-consuming and uncertain, and the failure to maintain required regulatory clearances, certifications and approvals could prevent us from commercializing Eversense and future versions of Eversense.
−Removed: ● The ongoing military action by Russia in Ukraine and Israel in Gaza could have negative impact on the global economy which could materially adversely affect our business, operations, operating results and financial condition.
−Removed: There is uncertainty regarding the ultimate impact the conflict, including any escalation or further expansion of the conflict’s current scope, will have on our customers, the global economy, supply chains, logistics, fuel prices, raw material pricing and our business.
−Removed: ● Surging natural gas and electricity costs in Europe poses a threat to our contract manufacturers ability to maintain operations in Europe which can adversely affect or business supply chain.
−Removed: If the energy crisis or other supply chain challenges impact our ability to obtain raw materials on a timely basis or without significant increases in costs, our financial results and business operations may be adversely affected.
● Failure to secure or retain coverage or adequate reimbursement for Eversense or future versions of Eversense systems, including the related insertion and removal procedures, by third-party payors could adversely affect our business, financial condition and operating results.
−Removed: ● We have partnerships with companies such as NPG to establish broad inserter networks and as the number of insertions increase so does our reliance on these companies.
+Added: ● We have partnerships with companies such as NPG and directly contract with healthcare professionals to establish broad inserter networks and as the number of insertions increase so does our reliance on these partners.
If NPG or other partners fail to perform satisfactorily under these agreements our commercialization efforts and financial results would be directly and adversely affected.
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● Our operating results are subject to significant fluctuations.
+Added: ● Due to our recurring losses and uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, there is substantial doubt about our ability to continue as a going concern.
● We contract with third parties for the manufacture of Eversense.
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federal, state and local laws and regulations, including those promulgated by the FDA and equivalent foreign regulatory authorities, among others.
−Removed: Failure to comply with applicable laws and regulations should harm our business and we may incur significant expenditures related to compliance efforts.
+Added: Failure to comply
+Added: with applicable laws and regulations should harm our business and we may incur significant expenditures related to compliance efforts.
● Failure or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, standards, and other obligations related to data privacy and security (including security incidents) could harm our business.
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Since our inception, we have incurred significant net losses and expect to incur additional losses in the near future.
−Removed: We incurred total net (loss) income of ($60.4) million and $142.1 million for the years ended December 31, 2023, and 2022, respectively.
−Removed: Positive net income during 2022 was substantially the result of fair value gains due to embedded derivatives in our convertible notes.
+Added: We incurred total net loss of $(78.6) million and $(60.4) million for the years ended December 31, 2024, and 2023, respectively.
As of December 31, 2024, we had an accumulated deficit of $947.9 million.
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We have never been profitable from operations and do not expect to be profitable for at least the next several years.
−Removed: We expect our expenses to increase significantly as we pursue these objectives.
+Added: We expect to make significant investments in product development as we pursue these objectives.
The extent of our future operating losses and the timing of profitability are highly uncertain, and we expect to continue incurring expenses and operating losses over the next several years.
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Our Commercialization Agreement with Ascensia to market Eversense may not be successful.
−Removed: We have entered into a Commercialization Agreement with Ascensia, pursuant to which we have granted Ascensia the exclusive right to distribute Eversense worldwide, subject to initial exceptions based on our other current exclusive distribution agreements.
+Added: We have a Commercialization Agreement with Ascensia, pursuant to which we have granted Ascensia the exclusive right to distribute Eversense worldwide, subject to certain exceptions.
Pursuant to this agreement, our future success will be dependent on Ascensia effectively marketing and selling Eversense.
−Removed: We expect that the substantial majority of our future revenue will come
−Removed: pursuant to this agreement in future years.
+Added: We expect that the substantial majority of our future revenue will come pursuant to this agreement.
Prior to our Commercialization Agreement with Ascensia, Ascensia had limited experience with marketing durable medical equipment and no experience marketing CGM systems.
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The agreement is terminable by either party if the other party materially breaches its obligations under the agreement;
−Removed: provided, however, that if Ascensia is unable to achieve the specified minimum spending or revenue targets described above, then we will only have the right to covert Ascensia’s exclusive rights to nonexclusive rights, which may make it difficult for us to successfully engage with another commercial partner.
+Added: provided, however, that if Ascensia is unable to achieve the specified minimum spending or revenue targets described above, then we will only have the right to convert Ascensia’s exclusive rights to
+Added: nonexclusive rights, which may make it difficult for us to successfully engage with another commercial partner.
The agreement is also terminable by either party if the other party undergoes bankruptcy, dissolution or winding up.
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We have invested substantially all of our efforts and financial resources to the development and commercialization of Eversense.
−Removed: Our ability to generate revenue from our products will depend heavily on successful commercialization of products in the United States and Europe, which is entirely dependent on our collaboration with Ascensia, and on continuing development of future generations of our Eversense system.
+Added: Our ability to generate revenue from our products will depend heavily on successful commercialization of products in the
+Added: United States and Europe, which is entirely dependent on our collaboration with Ascensia, and on continuing development of future generations of our Eversense system.
The success of any products that we develop will depend on several factors, including:
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If the FDA, or any comparable foreign regulatory authority concludes that we are not in compliance with applicable laws or regulations, or that any of our products are ineffective or pose an unreasonable health risk, such authority could ban these products, suspend, vary or cancel our marketing authorizations or CE Certificates of Conformity, impose "stop-sale" and "stop-import" orders, refuse to issue export certificates, detain or seize adulterated or misbranded products, order a recall, repair, replacement, correction or refund of such products, or require us to notify health providers and others that the products present unreasonable risks of substantial harm to the public health.
−Removed: Discovery of previously unknown problems with our product's design or manufacture may result in restrictions on the use of Eversense, restrictions placed on us or our suppliers, or withdrawal or variation of an existing regulatory clearance or CE Certificate of Conformity for Eversense.
+Added: Discovery of previously unknown problems with our product's design or manufacture may result in restrictions on the use of Eversense, restrictions placed on us or our suppliers, or withdrawal or variation of an existing regulatory clearance
+Added: or CE Certificate of Conformity for Eversense.
The FDA, competent authorities of EEA countries and comparable foreign regulatory authorities may also impose operating restrictions, enjoin and restrain certain violations of applicable law pertaining to medical devices, assess civil or criminal penalties against our officers, employees or us, or recommend criminal prosecution of our company.
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Penalties for a company's noncompliance with foreign governmental regulation could be severe, including revocation or suspension of a company's business license and civil or criminal sanctions.
−Removed: In some jurisdictions, such as Germany, any violation of a law related to medical devices is also considered to be a violation of unfair competition law.
+Added: In some jurisdictions, such as Germany, any violation of a law related to medical devices is also considered to be a violation of the unfair competition law.
In such cases, governmental authorities, our competitors and business or consumer associations may then file lawsuits to prohibit us from commercializing Eversense in such jurisdictions.
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● any limitations in the ability of Ascensia to effectively communicate and promote product benefits.
−Removed: In addition, Eversense may be perceived by people with diabetes, their caregivers or healthcare providers to be more complicated or less effective than traditional monitoring methodologies, including SMBG or CGM systems which require less calibration, and people may be unwilling to change their current regimens.
+Added: In addition, Eversense may be perceived by people with diabetes, their caregivers or healthcare providers to be more complicated or less effective than traditional monitoring methodologies, including SMBG or CGM systems which may require less calibration, and people may be unwilling to change their current regimens.
Moreover, healthcare providers tend to be slow to change their medical treatment practices because of perceived liability risks arising from the use of new products and the uncertainty of third-party payor reimbursement.
Accordingly, healthcare providers may not recommend Eversense unless and until there is sufficient evidence to convince them to alter the treatment methods they typically recommend, such as receiving recommendations from prominent healthcare providers or other key opinion leaders in the diabetes treatment community.
−Removed: If we are not successful in educating people with diabetes of the benefits of Eversense, or if we are unable to achieve the support of caregivers and healthcare providers or widespread market acceptance for Eversense, then our sales potential, strategic objectives and profitability could be negatively impacted, which would adversely affect our business, financial condition and operating results.
+Added: If we are not successful in educating people with diabetes of the benefits of Eversense, or if we are unable to achieve the support of caregivers and healthcare providers or widespread market acceptance for Eversense, then our sales
+Added: potential, strategic objectives and profitability could be negatively impacted, which would adversely affect our business, financial condition and operating results.
We contract with third parties for the manufacture of Eversense.
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● inability to establish agreements with current or future third-party manufacturers or to do so on acceptable terms;
−Removed: ● potential damage to or destruction of our manufacturers' equipment or facilities.
+Added: ● potential damage to, disruption of or destruction of our manufacturers' equipment or facilities, including their information technology systems.
These risks are likely to be exacerbated by our limited experience with Eversense and its manufacturing process.
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Further, we may be required to fund capital investments at our third-party suppliers to support increased production capacity.
−Removed: In addition, although we expect some of our future versions of Eversense to share product features and components with our current Eversense E3 product, manufacturing future versions of Eversense may require the modification of production lines, the identification of new manufacturers for specific components, or the development of new manufacturing technologies.
+Added: In addition, although we expect some of our future versions of Eversense to share product features and components with our current Eversense versions, manufacturing future versions of Eversense may require the modification of production lines, the identification of new manufacturers for specific components, or the development of new manufacturing technologies.
It may not be possible for us to manufacture these products at a cost or in quantities sufficient to make these future versions of Eversense commercially viable.
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For our business strategy to be successful, our suppliers must be able to provide us with components and Eversense systems in sufficient quantities, in compliance with regulatory requirements and quality control standards, in accordance with agreed upon specifications, at acceptable costs and on a timely basis.
−Removed: Future increases in sales of Eversense, whether
−Removed: expected or unanticipated, could strain the ability of our suppliers to deliver an increasingly large supply of components and Eversense systems in a manner that meets these various requirements.
+Added: Future increases in sales of Eversense, whether expected or unanticipated, could strain the ability of our suppliers to deliver an increasingly large supply of components and Eversense systems in a manner that meets these various requirements.
We generally use a small number of suppliers of components for our products.
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As a result, our ability to purchase adequate quantities of components or our products may be limited, and we may not be able to convince suppliers to make components and products available to us.
−Removed: Additionally, our suppliers may encounter problems that limit their ability to supply components or manufacture products for us, including financial difficulties, damage to their manufacturing equipment or facilities, or product discontinuations.
+Added: Additionally, our suppliers may encounter problems that limit their ability to supply components or manufacture products for us,
+Added: including financial difficulties, damage to their manufacturing equipment or facilities, or product discontinuations.
As a result, there is a risk that certain components could be discontinued and no longer available to us.
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For example, payment rates may vary according to the use of the product and the clinical setting in which it is used, may be based on payments allowed for lower cost products that are already reimbursed, and may be incorporated into existing payments for other services.
−Removed: Net prices for products may be
−Removed: reduced by mandatory discounts or rebates required by government healthcare programs or third-party payors and by any future relaxation of laws that presently restrict imports of products from countries where they may be sold at lower prices.
+Added: Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or third-party payors and by any future relaxation of laws that presently restrict imports of products from countries where they may be sold at lower prices.
Private insurance companies and other private third-party payors set payor-specific reimbursement policies.
−Removed: The extent of coverage and the rate of reimbursement varies on a payor-by-payor basis.
+Added: The extent of coverage and the rate of reimbursement vary on a payor-by-payor basis.
Most of the largest private third-party payors, in terms of the number of covered lives, have issued coverage policies for the category of CGM devices.
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Many of these coverage policies reimburse for CGM systems under durable medical equipment benefits, which are restrictive in nature and require the healthcare provider or supplier to comply with extensive documentation and other requirements.
−Removed: In addition, those third-party payors that cover CGM products may and have included limitations as to the patient conditions and characteristics eligible for coverage and may adopt different coverage and reimbursement policies for our products, which could also diminish payments for Eversense.
+Added: those third-party payors that cover CGM products may and have included limitations as to the patient conditions and characteristics eligible for coverage and may adopt different coverage and reimbursement policies for our products, which could also diminish payments for Eversense.
It is possible that some third-party payors will not offer any coverage for our products.
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In December 2021 the HTA Regulation was adopted and entered into force on January 11, 2022.
−Removed: It will apply from 2025.
+Added: It is now in effect as of January 12, 2025, although its implementation is phased.
In April 2022, as a part of commercialization efforts, our partner Ascensia implemented the PASS program designed to enhance affordability and access to Eversense for patients who do not have insurance coverage for Eversense, or whose insurance is denied or is insufficient.
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In addition, we may not be able to recognize a substantial portion of the revenue related to Eversense insertions for the patients participating in these access programs.
−Removed: The amount of time required to obtain favorable coverage and reimbursement
−Removed: decisions, including navigating the appeals process with third-party payors, is uncertain, and we may see increased product utilization without corresponding recognized revenue.
+Added: The amount of time required to obtain favorable coverage and reimbursement decisions, including navigating the appeals process with third-party payors, is uncertain, and we may see increased product utilization without corresponding recognized revenue.
Our operating results may be adversely impacted if we are unable to obtain successful appeals or favorable coverage decisions by insurance providers, or if there are not effective patient access programs in place.
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If our estimates and projections overestimate the size of this market, our sales growth may be adversely affected.
−Removed: Our estimates of the size and future growth in the market for CGM systems and CGM-related products, including the number of people currently managing their diabetes with insulin who may benefit from and be amenable to using Eversense, is based on a number of internal and third-party studies, reports and estimates.
+Added: Our estimates of the size and future growth in the market for CGM systems and CGM-related products, including the number of people currently managing their diabetes with insulin who may benefit from and be amenable to using Eversense, are based on a number of internal and third-party studies, reports and estimates.
In addition, our internal estimates are based in large part on current treatment patterns by healthcare providers using CGM systems and our belief that the incidence of diabetes in the United States and worldwide is increasing.
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As a result, our estimates of the size and future growth in the market for our CGM systems may prove to be incorrect.
−Removed: If the actual number of people with diabetes who would benefit from Eversense
−Removed: and the size and future growth in the market for Eversense is smaller than we have estimated, it may impair our projected sales growth and have an adverse impact on our business.
+Added: If the actual number of people with diabetes who would benefit from Eversense and the size and future growth in the market for Eversense is smaller than we have estimated, it may impair our projected sales growth and have an adverse impact on our business.
Our ability to maintain and grow our revenue will depend on establishing a customer base and retaining a high percentage of our customer base.
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Potential complications from Eversense or future versions of Eversense may not be revealed by our clinical experience.
−Removed: Based on our experience, complications from use of Eversense may include sensor errors, sensor failures or skin irritation under the adhesive dressing of the transmitter.
+Added: Based on our experience, complications from the use of Eversense may include sensor errors, sensor failures or skin irritation under the adhesive dressing of the transmitter.
Inflammation or redness, swelling, minor infection, and minor bleeding at the sensor insertion site are also possible risks with an individual's use of the device.
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If that occurs, we may incur significant costs, the attention of our key personnel could be diverted, or other significant customer relations problems may arise.
−Removed: We may also be subject to increased warranty and liability claims for damages related to errors or defects in Eversense or future versions of Eversense.
+Added: also be subject to increased warranty and liability claims for damages related to errors or defects in Eversense or future versions of Eversense.
A material liability claim or other occurrence that harms our reputation or decreases market acceptance of Eversense could harm our business and operating results.
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It is possible that conflicts may arise with our collaborators, such as conflicts concerning the achievement of performance milestones, or the interpretation of significant terms under any agreement, such as those related to financial obligations or the ownership or control of intellectual property developed during the collaboration.
−Removed: If any conflicts arise with any future collaborators, they may act in their self-interest, which may be adverse to our best interest, and they may breach their obligations to us.
+Added: If any conflicts arise with any future collaborators, they may act in their self-interest, which may be adverse to our best interest, and they may
+Added: breach their obligations to us.
For example, one of our vendors who provides a component to the Eversense sensor has communicated to us its belief that one of its employees should be named as a co-inventor on a related patent application.
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Our potential inability to integrate any acquired products or technologies effectively may adversely affect our business, operating results and financial condition.
−Removed: The ongoing military action by Russia in Ukraine and by Hamas in Gaza could have negative impact on the global economy which could materially adversely affect our business, operations, operating results and financial condition.
−Removed: On February 24, 2022, Russian forces launched significant military action against Ukraine, and sustained conflict and disruption in the region is possible.
−Removed: The impact to Ukraine as well as actions taken by other countries,
−Removed: including new and stricter sanctions imposed by Canada, the United Kingdom, the European Union, the U.S.
−Removed: and other countries and companies and organizations against officials, individuals, regions, and industries in Russia and Ukraine, and actions taken by Russia in response to such sanctions, and each country’s potential response to such sanctions, tensions, and military actions could adversely affect the global economy and financial markets and thus could affect our business, operations, operating results and financial condition as well as the price of our common stock and our ability to raise additional capital when needed on acceptable terms.
−Removed: Separately, in early October 2023, Hamas, a militant group in control of Gaza, and Israel began an armed conflict in Israel, the Gaza Strip, and surrounding areas, which threatens to spread to other Middle Eastern countries including Lebanon, Syria, and Iran.
−Removed: The Hamas-Israel military conflict is ongoing, and its length and outcome are highly unpredictable.
−Removed: The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial.
−Removed: While our suppliers may source certain raw materials from areas with ongoing military conflict, to date we have not been notified that the supply of these materials has been significantly impacted by these conflicts.
−Removed: We continue to monitor potential disruptions closely and are proactively assessing and evaluating alternative sources to bolster supply of these materials moving forward, in addition to working closely with our suppliers in any product re-qualification that may be required.
−Removed: Revenue relating to products manufactured from raw materials sourced from regions with current ongoing international conflict does not constitute a material portion of our business.
−Removed: Further, there is uncertainty regarding the ultimate impact these conflicts, including any escalation or further expansion of the conflict’s current scope, will have on our customers, the global economy, supply chains, logistics, fuel prices, raw material pricing and our business.
−Removed: Surging natural gas and electricity costs in Europe poses a threat to our contract manufacturers ability to maintain operations in Europe which can adversely affect or business supply chain
−Removed: Europe’s energy crisis driven by the impacts of Russia’s military action in Ukraine is quickly soaring and causing extreme disruption to the manufacturing industry across the continent.
−Removed: The reduced natural gas supply to Europe has resulted in higher gas costs which have been unsustainable for energy intensive companies that operate across Europe.
−Removed: Several manufacturers have shut down, suspended or reduced operations amidst the skyrocketing prices.
−Removed: Several of our suppliers operate in Europe and may be impacted by the energy crisis as the result of increased production costs.
−Removed: Across Europe, these energy constraints could result in nations or regions enacting emergency energy related policies, limiting energy availability for manufacturers.
−Removed: The impact of these developments cannot be predicted with certainty, however, any such production constraints could further exacerbate an already ailing supply chain and could have a material, adverse effect on our operations and our ability to source materials that are required to manufacture our products.
−Removed: We continue to monitor the situation closely and continue to have discussions with our suppliers to determine whether there may be any uncertainty with regards to our ability to source materials that are required to manufacture our products.
−Removed: If the energy crisis or other supply chain challenges impact our ability to obtain raw materials on a timely basis or without significant increases in costs, our financial results and business operations may be adversely affected.
−Removed: Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises such as pandemics, political crises, geopolitical events, such as the crisis in Ukraine, or other macroeconomic conditions, which have in the past and may in the future negatively impact our business and financial performance.
+Added: Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises such as pandemics, political crises, geopolitical events, or other macroeconomic conditions, which have in the past and may in the future negatively impact our business and financial performance.
The global economy, including credit and financial markets, has experienced extreme volatility and disruptions,
−Removed: including, among other things, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates and uncertainty about economic stability.
+Added: including, among other things, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates and uncertainty about economic stability, due to reasons including, among other things, political changes and trends such as protectionism, economic nationalism resulting in government actions impacting international trade agreements or imposing trade restrictions such as tariffs and retaliatory counter measures.
A widespread public health crisis such as a pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity.
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(c) manufacturing supply disruption due to travel restrictions or other government actions;
−Removed: (d) disruptions in raw material
−Removed: supply, our manufacturing operations, or in our distribution and supply chain;
+Added: (d) disruptions in raw material supply, our manufacturing operations, or in our distribution and supply chain;
and (e) our ability to conduct planned clinical trials and commercialization activities.
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As a result of our lack of operating history as a commercial-stage company and Ascensia’s lack of experience selling CGM systems, and Eversense in particular, and due to the complexities of the industry and regulatory framework in which we operate, it will be difficult for us to forecast demand for our future products and to forecast our sales with any degree of certainty.
−Removed: For example, many of the products we will seek to develop and introduce in the future will require regulatory approval, certification or clearance and import licenses before we can sell such products and given that
−Removed: the timing of such approvals, certification, clearances or licenses may be uncertain, it will be difficult for us to predict sales projections for these products with any degree of certainty before such approvals, certifications, clearances or licenses are obtained.
+Added: For example, many of the products we will seek to develop and introduce in the future will require regulatory approval, certification or clearance and import licenses before we can sell such products and given that the timing of such approvals, certification, clearances or licenses may be uncertain, it will be difficult for us to predict sales projections for these products with any degree of certainty before such approvals, certifications, clearances or licenses are obtained.
In addition, we will be increasing our operating expenses as we expand our business.
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We believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance.
−Removed: Covenants under the Loan and Security Agreement and the 2025 Notes may result in the acceleration of outstanding indebtedness and limit the manner in which we operate.
+Added: Our product revenue is subject to seasonal variation
+Added: Our product revenues have historically been lower in the first quarter of the year as compared to the fourth quarter of the preceding year.
+Added: We believe this arises primarily due to the annual reset of health insurance plan deductibles that occur at the beginning of the insurance plan year and the utilization of patient assistance programs to offset those costs and our distributors reductions of inventory of our products in the first quarter.
+Added: The seasonal variance is has also been impacted by the timing of Ascensia’s purchases in accordance with minimum purchase requirements under our distribution agreement.
+Added: As a result, our distributors typically end the calendar year with higher levels of inventory than at the end of the first quarter of the following year.
+Added: As a result, our net sales are typically lower in the first quarter of the year than would otherwise have been the case as a result of the reduction of product inventory at our distributors.
+Added: Many health insurance plans and government insurance programs reset annual limits on deductibles and out-of-pocket costs at the beginning of each calendar year and require participants to pay for a large portion of medical products and services until such deductibles and annual out-of-pocket cost limits are met.
+Added: As a result of these factors, patients may delay medical expenses or find cheaper alternatives until such deductibles and annual out-of-pocket cost limits are met.
+Added: Any reduction in the demand for Eversense as a result of the foregoing factors or otherwise, can adversely affect our business, operating results and financial condition.
+Added: Covenants under the Loan and Security Agreement may result in the acceleration of outstanding indebtedness and limit the manner in which we operate.
In September 2023, we entered into a loan agreement (the “Loan and Security Agreement”) with several institutions (collectively, the “Lenders") and Hercules Capital, Inc.
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The Loan and Security Agreement also contains customary events of default, after which borrowings under the Loan and Security Agreement will be due and payable immediately, including defaults related to payment compliance, material inaccuracy of representations and warranties, covenant compliance, material adverse changes, bankruptcy and insolvency proceedings, cross defaults to certain other agreements, judgments against the Company, change of control or delisting events, termination of any guaranty, governmental approvals, and lien priority.
−Removed: In addition, the indentures related to the 2025 Notes contain, and any future indebtedness we incur may contain, various negative covenants that restrict, among other things, our ability to:
−Removed: ● incur additional indebtedness, guarantee indebtedness or issue disqualified stock or, in the case of such subsidiaries, preferred stock;
−Removed: ● declare or pay dividends on, repurchase or make distributions in respect of, their capital stock or make other restricted payments;
−Removed: ● make investments or acquisitions;
−Removed: ● create liens;
−Removed: ● enter into agreements restricting certain subsidiaries' ability to pay dividends or make other intercompany transfers;
−Removed: ● consolidate, merge, sell or otherwise dispose of all or substantially all of our assets and the assets of our restricted subsidiaries;
−Removed: ● enter into transactions with affiliates;
−Removed: ● sell, transfer or otherwise convey certain assets;
−Removed: ● prepay certain types of indebtedness.
As a result, we are limited in the manner in which we conduct our business and we may be unable to engage in favorable business activities, repurchase shares of our common stock or finance future operations or capital needs.
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If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive.
−Removed: Our ability to refinance our indebtedness will depend on the capital markets and our financial
−Removed: condition at such time.
+Added: Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
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If new debt is added to our current debt levels, the related risks that we and they now face could intensify.
−Removed: Prolonged negative economic conditions could adversely affect us, our customers and third-party suppliers, which could harm our financial condition.
−Removed: We are subject to the risks arising from adverse changes in general economic and market conditions.
−Removed: Uncertainty about future economic conditions could negatively impact our existing and potential customers, adversely affect the financial ability of health insurers to pay claims, adversely impact our expenses and ability to obtain financing of our operations, and cause delays or other problems with key suppliers.
−Removed: Healthcare spending in the United States and Europe has been, and is expected to continue to be, under significant pressure and there are many initiatives to reduce healthcare costs.
−Removed: As a result, we believe that some insurers are scrutinizing insurance claims more rigorously and delaying or denying coverage and reimbursement more often.
−Removed: Because the sale of Eversense will generally depend on the availability of third-party coverage and reimbursement, any delay or decline in coverage and reimbursement will adversely affect our sales.
Our business may be exposed to foreign exchange risks.
−Removed: We incur some of our expenses and derive revenues from the Eversense system in currencies other than the U.S dollar.
+Added: We incur some of our expenses and derive revenues from the Eversense system in currencies other than the U.S.
As a result, we are exposed to foreign currency exchange risk as our results of operations and cash flows are subject to fluctuations in foreign currency exchange rates.
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We cannot predict the impact of foreign currency fluctuations, and foreign currency fluctuations in the future may adversely affect our financial condition, results of operations and cash flows.
+Added: There is uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt about our ability to continue as a going concern.
+Added: The accompanying financial statements have been prepared assuming the Company will continue as a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
+Added: Our management concluded that our recurring losses from operations, existing unrestricted cash, cash equivalents and marketable securities, anticipated debt repayments, and minimum cash and satisfaction of performance milestones to comply with debt covenants under its Loan and Security Agreement raise substantial doubt about our ability to continue as a going concern for the next twelve months after issuance of our financial statements.
+Added: As of December 31, 2024, the Company had unrestricted cash, cash equivalents and marketable securities of $74.6 million consisting of cash and investments in highly liquid U.S.
+Added: money market funds.
+Added: On October 28, 2024, we raised additional proceeds of approximately $14.8 million before expenses incurred by the Company in a registered direct offering of the Company’s common stock and concurrent private placement of warrants to purchase shares of the Company’s common stock.
+Added: We do not expect our existing cash and cash equivalents will be sufficient to fund our operations through the next twelve months and we will need to seek additional capital to fund our operations, working capital needs, capital expenditures and other strategic initiatives beyond that time.
+Added: There can be no assurance that we will be successful in raising additional capital or that any needed financing will be available in the future at terms acceptable to us.
+Added: As such, we cannot conclude that such plans will be effectively implemented within one year after the date that the financial statements are issued and there is uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, and substantial doubt exists about our ability to continue as a going concern.
+Added: If we are unable to generate to secure additional capital on acceptable terms or at all, we may be required to significantly reduce or cease our operations, which could result in the loss to investors of their investment in our securities.
Risks Related to Development of our Products
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Any modifications to the Eversense that could significantly affect its safety or effectiveness, including significant design and manufacturing changes, or that would constitute a major change in its intended use, manufacture, design, components, or technology requires approval of a new PMA, or PMA supplement or similar modifications in other jurisdictions.
−Removed: However, certain changes to a PMA-approved device do not require submission and approval of a
−Removed: new PMA or PMA supplement, or appropriate modifications in other jurisdictions, and may only require notice to FDA in a PMA Annual Report, or similar notifications in other jurisdictions.
+Added: However, certain changes to a PMA-approved device do not require submission and approval of a new PMA or PMA supplement, or appropriate modifications in other jurisdictions, and may only require notice to FDA in a PMA Annual Report, or similar notifications in other jurisdictions.
In the U.S., the FDA requires every manufacturer to make this determination in the first instance, but the FDA may review any such decision.
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Recruiting and retaining qualified scientific and clinical personnel and, as we progress the development of our product pipeline toward scaling up for commercialization, manufacturing and sales and marketing personnel, will also be critical to our success.
−Removed: The loss of the services of our executive officers or other key employees could impede the
−Removed: achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy.
+Added: The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy.
Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize our products.
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This liquidity may represent material wealth to such individuals and impact retention and focus of existing key members of management.
−Removed: We expect to expand our development and regulatory capabilities and our marketing and distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
+Added: We may need to expand our development and regulatory capabilities and our marketing and distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
As of December 31, 2024, we had 117 full-time employees.
−Removed: As our commercialization progresses, we expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of research, product development, clinical sciences, regulatory affairs, supply chain, and marketing.
−Removed: To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel.
+Added: As our commercialization progresses, we may experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of research, product development, clinical sciences, regulatory affairs, supply chain, and marketing.
+Added: To manage our future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel.
Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel.
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We have adopted a code of business conduct and ethics, but it is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.
−Removed: If any such actions are instituted against us, and we are
−Removed: not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, including, without limitation, damages, fines, disgorgement of profits, individual imprisonment, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, and the curtailment or restructuring of our operations.
+Added: If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, including, without limitation, damages, fines, disgorgement of profits, individual imprisonment, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, and the curtailment or restructuring of our operations.
We may incur product liability losses, and insurance coverage may be inadequate or unavailable to cover these losses.
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Our patents expire between 2025 and 2043, subject to any patent extensions that may be available for such patents.
−Removed: If patents are issued on our pending patent applications, the resulting patents are projected to expire on dates ranging from 2032 to 2043, subject to any patent term extensions or adjustments that may be available for such patents.
+Added: If patents are issued on our pending patent applications, the resulting patents are projected to
+Added: expire on dates ranging from 2033 to 2044, subject to any patent term extensions or adjustments that may be available for such patents.
We are also seeking patent protection for our proprietary technology in Europe, Japan, China, Canada, India, Australia and other countries and regions throughout the world.
−Removed: We have two pending U.S.
−Removed: trademark application and 5 pending foreign trademark applications, as well as 12 U.S.
−Removed: trademark registrations and 129 foreign trademark registrations.
+Added: We have 14 U.S.
+Added: trademark registrations and 133 foreign trademark registrations, as well as one pending foreign trademark application.
We have applied for patent protection relating to certain existing and proposed products and processes.
Currently, several of our issued U.S.
−Removed: patents as well as various pending U.S.
+Added: and foreign patents as well as various pending U.S.
and foreign patent applications relate to the structure and operation of our CGM sensor and CGM systems, which are important to the functionality of our products.
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Even if we are successful in receiving patent protection for certain products and processes, our competitors may be able to design around our patents or develop products that provide outcomes which are comparable to ours without infringing on our intellectual property rights.
−Removed: Due to differences between foreign and
+Added: Due to differences between foreign and U.S.
patent laws, our patented intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States.
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We rely on our trademarks and trade names to distinguish our products from the products of our competitors and have registered or applied to register many of these trademarks.
−Removed: For example, we have two pending applications in the United States for the "Eversense" trademark.
+Added: For example, we have one pending foreign application for the "Eversense Now" trademark relating to our mobile application.
We cannot assure you that our trademark applications will be approved in a timely manner or at all.
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The owners of these patents may assert that the manufacture, use, sale or offer for sale of our CGM sensors or CGM systems infringes one or more claims of their patents.
+Added: For example, as noted in Item 3:
+Added: Legal Proceedings, in May 2024, we were served with a complaint by Cellspin Soft, Inc., a non-practicing entity, filed against us in the United States District Court for the Eastern District of Texas, alleging that we infringe on certain patents owned by it and seeking unspecified damages.
+Added: We note that the validity of all three patents-in-suit is currently being challenged in Inter Partes Review proceedings at the U.S.
+Added: Patent and Trademark Office, where the Patent Trial and Appeal Board instituted a review which the Company has joined.
+Added: On February 5, 2025, the court issued an order staying the complaint pending resolution of the Inter Partes Review.
+Added: We are further reviewing the allegations, and intend to vigorously defend this matter, however, the outcome of any litigation, such as this, is inherently unpredictable.
Furthermore, there may be additional patents issued to third parties of which we are presently unaware that may relate to aspects of our technology that such third parties could assert against us and materially and adversely affect our business.
In addition, because patent applications can take many years to issue, there may be patent applications that are currently pending and unknown to us, which may later result in issued patents that third parties could assert against us and harm our business.
−Removed: In preparation for commercializing our Eversense products, we are performing an analysis, the purpose of which is to review and assess publicly available information to determine whether third parties hold any valid patent rights that a well-informed court would more likely than not find that we would infringe by commercializing our products, understanding that there are risks and uncertainties associated with any litigation and no predictions or assurances can be made regarding the outcome of any such litigation.
+Added: In preparation for commercializing our Eversense products, we are performing an analysis, the purpose of which is to review and assess publicly available information to determine whether third parties hold any valid patent rights that a well-informed court would more likely than not find that we would infringe by commercializing our products, understanding that there are risks and uncertainties associated with any litigation and no predictions or
+Added: assurances can be made regarding the outcome of any such litigation.
Although our review and analysis are not complete and subject to the express limitations in the preceding sentence, we are not aware of any such valid patent rights.
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Failure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement actions such as fines, civil penalties, injunctions, warning letters, recalls of products, delays in the introduction of products into the market, refusal of the regulatory agency or other regulators or Notified Bodies to grant future clearances, CE Certificates of Conformity or approvals, and the suspension, variation or withdrawal of existing approvals or CE Certificates of Conformity by such regulatory bodies.
−Removed: in September 2019 we voluntarily initiated a recall of Eversense sensors that had not yet been implanted, due to premature loss of function due to inadequate hydration of the sensor’s glucose-sensing surface.
+Added: For example, in September 2019 we voluntarily initiated a recall of Eversense sensors that had not yet been implanted, due to premature loss of function due to inadequate hydration of the sensor’s glucose-sensing surface.
This recall, as well as any of the above sanctions, could result in higher than anticipated costs or lower than anticipated sales and harm our reputation, business, financial condition and operating results.
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A government-mandated or voluntary recall by us or one of our third-party distributors could occur as a result of an unacceptable risk to health, component failures, manufacturing errors, design or labeling defects or other deficiencies and issues.
−Removed: example, in September 2019 we voluntarily initiated a recall of Eversense sensors that had not yet been implanted, due to premature loss of function due to inadequate hydration of the sensor’s glucose-sensing surface.
+Added: For example, in September 2019 we voluntarily initiated a recall of Eversense sensors that had not yet been implanted, due to premature loss of function due to inadequate hydration of the sensor’s glucose-sensing surface.
Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our reputation, financial condition and operating results, which could impair our ability to produce our products in a cost-effective and timely manner.
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Our current and future global operations will expose us to trade and economic sanctions and other restrictions imposed by the United States, the European Union and other governments and organizations.
−Removed: Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the Foreign Corrupt Practices Act (“FCPA”) and other federal statutes and regulations, including those established by the Office of Foreign Assets Control (“OFAC”).
+Added: Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and
+Added: criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the Foreign Corrupt Practices Act (“FCPA”) and other federal statutes and regulations, including those established by the Office of Foreign Assets Control (“OFAC”).
In addition, the U.K.
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We will implement and maintain policies and procedures designed to ensure compliance by us, and our directors, officers, employees, representatives, third-party distributors, consultants and agents with the FCPA, OFAC restrictions, the Bribery Act and other export control, anticorruption, anti-money-laundering and anti-terrorism laws and regulations, including in foreign jurisdictions.
−Removed: We cannot assure you, however, that our policies and procedures will be
−Removed: sufficient or that directors, officers, employees, representatives, third-party distributors, consultants and agents have not engaged and will not engage in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us or even result in our being held liable for such conduct.
+Added: We cannot assure you, however, that our policies and procedures will be sufficient or that directors, officers, employees, representatives, third-party distributors, consultants and agents have not engaged and will not engage in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us or even result in our being held liable for such conduct.
Violations of the FCPA, OFAC restrictions, the Bribery Act or other export control, anti-corruption, anti-money-laundering and anti-terrorism laws or regulations, including in foreign jurisdictions, may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could have a material adverse effect on our business, financial condition, cash flows and results of operations.
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our failure to comply with those laws could have an adverse impact on our business .
−Removed: Although we will not provide healthcare services, submit claims for third-party payor reimbursement, or receive payments directly from government health insurance programs or other third-party payors for Eversense, we are subject to broadly applicable federal, state, and foreign healthcare laws, including health care fraud and abuse and health information privacy and security laws, which could adversely impact our business.
−Removed: Such healthcare laws potentially applicable to our operations include:
+Added: We are subject to broadly applicable federal, state, and foreign healthcare laws, including health care fraud and abuse and health information privacy and security laws, which could adversely impact our business.
+Added: Such healthcare laws applicable to our operations include:
● the federal Anti-Kickback Statute, which will apply to our marketing practices, educational programs, pricing policies and relationships with healthcare providers, by prohibiting, among other things, soliciting, receiving, offering or providing remuneration intended to induce the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare or Medicaid programs.
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● HIPAA, and its implementing regulations, which created federal criminal and civil statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
−Removed: ● HIPAA, as amended by HITECH, and their implementing regulations, which also imposes obligations on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity and their subcontractors, regarding the privacy, security and transmission of such individually identifiable health information;
+Added: ● HIPAA, as amended by HITECH, and their implementing regulations, which also imposes obligations on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” that create, receive, maintain or transmit individually identifiable health
+Added: information for or on behalf of a covered entity and their subcontractors, regarding the privacy, security and transmission of such individually identifiable health information;
● federal "sunshine" requirements imposed by the PPACA, on device manufacturers regarding the annual reporting to CMS, of any "transfer of value" made or distributed to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners, and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members.
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state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;
−Removed: laws governing the privacy and security of certain health information, many of which differ from each other in significant ways and often are not preempted by HIPAA;
+Added: state fee-splitting laws, and state laws governing the privacy and security of certain health information, many of which differ from each other in significant ways and often are not preempted by HIPAA;
+Added: ● state corporate practice of medicine laws, which prohibit business entities from practicing medicine, employing physicians to practice medicine, or exercising control over medical decisions of physicians.
+Added: In addition, any physician who participates in an arrangement that violates a state’s corporate practice of medicine prohibition may be punished for aiding and abetting a lay entity in the unlawful practice of medicine;
● equivalent foreign legislation and requirements including in relation to interactions between medical devices companies and healthcare professionals, such as national anti-bribery laws of European countries, national sunshine rules, regulations, industry self-regulation codes of conduct and physicians’ codes of professional conduct.
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Any of these challenges could impact our reputation, business, financial condition and operating results.
−Removed: Our activities, including our research, sales and marketing, and patient reimbursement support activities, may be subject to scrutiny under these laws.
+Added: Our activities, including our research, sales and marketing, and patient reimbursement support activities, and relationships with Eon Care PCs, may be subject to scrutiny under these laws.
If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us now or in the future, we may be subject to penalties, including significant civil, criminal, and administrative penalties, damages, fines, disgorgement of profits, imprisonment, exclusion from governmental health care programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results.
Any federal, state or foreign regulatory review to which we may become subject, regardless of the outcome, would be costly and time-consuming.
+Added: In addition, if our affiliated physicians are found to have violated these laws, they could also be subject to significant fines and other sanctions through professional licensure proceedings.
For example, to enforce compliance with the federal laws, the U.S.
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Dealing with investigations can be time and resource consuming and can divert management's attention from our core business.
−Removed: Additionally, if we settle an investigation with law enforcement or other regulatory agencies, we may be forced to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement.
+Added: Additionally, if we settle an investigation with law enforcement or other regulatory agencies, we may be forced to agree to additional onerous
+Added: compliance and reporting requirements as part of a consent decree or corporate integrity agreement.
Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.
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In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).
−Removed: In the past few years, numerous U.S.
−Removed: states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents
−Removed: with certain rights concerning their personal data.
+Added: Numerous U.S.
+Added: states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.
As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making.
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These state laws allow for statutory fines for noncompliance.
−Removed: The collection and use of personal health data in the EEA and UK is governed by the EU and UK GDPR (collectively, GDPR).
+Added: The collection and use of personal health data in the EEA and the UK is governed by the EU and UK GDPR (collectively, GDPR).
The GDPR applies to the processing of personal data by any company established in the EEA or UK and to companies established outside the EEA to the extent they process personal data in connection with the offering of goods or services to data subjects in the EEA or the monitoring of the behavior of data subjects in the EEA or UK.
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The GDPR also imposes strict rules on the transfer of personal data outside of the EEA and UK to countries that do not ensure an adequate level of protection, like the United States.
−Removed: In the ordinary course of business, we may transfer personal data from the EEA and UK or other jurisdictions to the United States or other countries.
+Added: In the ordinary course of business, we transfer personal data from the EEA and UK or other jurisdictions to the United States or other countries.
+Added: Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries.
+Added: In particular, the EEA and the UK have significantly restricted the transfer of personal data to the United States and other countries whose privacy laws it generally believes are inadequate.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK or other jurisdictions to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
−Removed: Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
+Added: Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer
+Added: personal data to the United States.
If there is no lawful manner for us to transfer personal data from the EEA or UK or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
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Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations.
−Removed: In addition to data privacy and security laws, we are contractually subject to industry standards adopted by industry groups and, we are, or may become subject to such obligations in the future.
+Added: Other jurisdictions have adopted and may adopt stringent data localization and cross-border data transfer laws.
+Added: In addition to data privacy and security laws, we are contractually subject to certain industry standards adopted by industry groups and, we are, and may become subject in the future, to additional such obligations.
We are also bound by contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful.
Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.
−Removed: We publish privacy policies and other statements regarding data privacy and security.
−Removed: If these policies or statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences.
+Added: We publish privacy policies, whitepapers and other statements concerning data privacy and security.
+Added: Regulations in the United States are increasingly scrutinizing these statements, and if these policies or statements are found to be deficient, lacking in transparency, deceptive, unfair, misleading, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences.
Our employees and personnel use generative artificial intelligence (“AI”) technologies to perform their work, and the disclosure and use of personal data in generative AI technologies is subject to various privacy laws and other privacy obligations.
Governments have passed and are likely to pass additional laws regulating generative AI.
−Removed: this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits.
+Added: Our use of this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits.
If we are unable to use generative AI, it could make our business less efficient and result in competitive disadvantages.
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For example, some of our data processing practices may be challenged under wiretapping laws, if we obtain consumer information from third parties through various methods, including chatbot providers.
−Removed: These practices may be subject to increased challenges by class action plaintiffs.
+Added: These practices are subject to increased challenges by class action plaintiffs.
Our inability or failure to obtain consent for these practices could result in adverse consequences, including class action litigation and mass arbitration demands.
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Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions.
−Removed: Preparing for and complying with these obligations requires us to devote significant resources, which may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.
+Added: Preparing for and complying with these obligations requires us to devote significant resources, which has in the past and may in the future necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.
If we or our parties on which we rely fail to comply or are alleged to have failed to comply with applicable data privacy obligations, we could face significant consequences, including but not limited to:
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Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations.
−Removed: Any associated claims, inquiries, or investigations or other government actions could lead to unfavorable outcomes that have a material impact on our business including through significant penalties or fines, monetary judgments or settlements including criminal and civil liability for us and our officers and directors, increased compliance costs, delays or impediments in the development of new products, inability to process personal data or to operate in certain jurisdictions;
+Added: Any associated claims, inquiries, or investigations or other government actions could lead to unfavorable outcomes that have a material impact on our business including through significant penalties or fines, monetary judgments or settlements including criminal and civil liability for us and our officers and directors, increased compliance
+Added: costs, delays or impediments in the development of new products, inability to process personal data or to operate in certain jurisdictions;
negative publicity, increased operating costs, diversion of management time and attention, or other remedies that harm our business, including orders that we modify or cease existing business practices.
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This means that, if and to the extent such regulations are relevant to our operations or those of our customers, certain of the above risks and considerations may apply equally to our processing of both personal and non-personal information.
−Removed: If our information technology systems or those third parties upon which we rely or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions;
+Added: If our information technology systems or those third parties with whom we work, or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions;
fines and penalties;
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and other adverse consequences .
−Removed: In the ordinary course of our business, we and the third parties upon which we rely, process proprietary, confidential, and sensitive data, including personal data (such as health-related data), intellectual property and trade secrets (collectively, sensitive information).
+Added: In the ordinary course of our business, we and the third parties with whom we work, process proprietary, confidential, and sensitive data, including personal data (such as health-related data), intellectual property and trade secrets (collectively, sensitive information).
Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology systems, and those of the third parties upon which we rely.
Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.
−Removed: We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential
−Removed: stuffing attacks, credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, attacks enhanced or facilitated by AI, and other similar threats.
+Added: We and the third parties with whom we work are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing attacks, credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, attacks enhanced or facilitated by AI, and other similar threats.
In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of sensitive data and income, reputational harm, and diversion of funds.
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Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.
−Removed: If the third-parties upon whom we rely on experience a security incident or other interruption, we could experience adverse consequences.
+Added: If the third-parties upon whom we rely on experience a security incident or other interruption, as they have in the past, we could experience adverse consequences.
While we may be entitled to damages if our third-party service providers fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.
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Vulnerabilities could be exploited and result in a security incident.
−Removed: Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information or our information technology systems, or those of the third parties upon whom we rely.
−Removed: A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our products and services.
−Removed: We may expend significant resources or modify our business activities to try to protect against security incidents.
−Removed: Certain data privacy and security obligations may require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive information.
+Added: Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information or our information technology systems, or those of the third parties with whom we work.
+Added: For example, we have been the target of phishing attempts in the past, and expect such attempts will continue in the future.
+Added: A security incident or other interruption could disrupt our ability (and that of third parties with whom we work) to provide our products and services.
+Added: We may expend significant resources or modify our business activities to try to protect against security incidents, and have in the past.
+Added: Certain data privacy and security obligations have required us to implement and maintain specific security measures to protect our information technology systems and sensitive information.
Applicable data privacy and security obligations may require us to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security incidents.
Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences.
−Removed: If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections);
+Added: If we (or a third party with whom we work) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections);
additional reporting requirements and/or oversight;
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and other similar harms.
−Removed: Security incidents and attendant consequences
−Removed: may prevent or cause customers to stop using our products, deter new customers from using our prodcuts, and negatively impact our ability to grow and operate our business.
+Added: Security incidents and attendant consequences may prevent or cause customers to stop using our products, deter new customers from using our products, and negatively impact our ability to grow and operate our business.
Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.
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It is also possible that other federal, state or competent authorities of the EEA countries, or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an unapproved use, which could result in significant fines or penalties.
−Removed: Although we intend to train our marketing and direct sales force to not promote our products for uses outside of their cleared uses and our policy will be to refrain from statements that could be considered off-label promotion of our products, the FDA competent authorities of the EEA countries, or another regulatory agency could disagree and conclude that we have engaged in off-label promotion.
+Added: Although we intend to train our marketing and direct sales force to not promote our
+Added: products for uses outside of their cleared uses and our policy will be to refrain from statements that could be considered off-label promotion of our products, the FDA competent authorities of the EEA countries, or another regulatory agency could disagree and conclude that we have engaged in off-label promotion.
In addition, the off-label use of our products may increase the risk of product liability claims.
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Eversense is currently labeled as non-adjunctive;
−Removed: however once a day fingerstick calibrations are still required.
+Added: however, once weekly fingerstick calibrations are still required.
We have no control over whether patients adhere to labeling instructions and confirm blood glucose levels to ensure calibration with Eversense.
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While we do not believe that, as a general matter, such a claim would have merit, the possibility of an adverse result to the manufacturer cannot be dismissed, and in any event, we could incur significant defense costs.
−Removed: Also, if there should be widespread off-label use of our system by patients, and resulting adverse medical events, the
−Removed: FDA, competent authorities of the EEA countries or other foreign regulatory bodies might require us, to implement additional measures to reduce off-label use, which could be costly or reduce adoption of Eversense.
+Added: Also, if there should be widespread off-label use of our system by patients, and resulting adverse medical events, the FDA, competent authorities of the EEA countries or other foreign regulatory bodies might require us to implement additional measures to reduce off-label use, which could be costly or reduce adoption of Eversense.
Legislative or regulatory healthcare reforms may make it more difficult and costly for us to obtain regulatory clearance, certification or approval of our products.
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Subsequently, we affixed the CE mark to the extended life Eversense XL CGM system in September 2017 which was sold in select markets in Europe and the Middle East.
−Removed: The changes to the regulatory system implemented in the EU by the Medical Device Regulation include stricter requirements for clinical evidence and pre-market assessment of safety and performance, new classifications to indicate risk levels, requirements for third party testing by Notified Bodies, tightened and streamlined quality management system assessment procedures and additional requirements for the quality management system, additional requirements for traceability of products and transparency as well a refined responsibility of economic operators.
+Added: The changes to the regulatory system implemented in the EU by the Medical Device Regulation include stricter requirements for clinical evidence and pre-market assessment of safety and performance, new classifications to
+Added: indicate risk levels, requirements for third party testing by Notified Bodies, tightened and streamlined quality management system assessment procedures and additional requirements for the quality management system, additional requirements for traceability of products and transparency as well as a refined responsibility of economic operators.
We are also required to provide clinical data in the form of a clinical evaluation report.
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On May 26, 2021, the MDR entered into application in the EU.
−Removed: However, the MDR is not applicable in the UK.
−Removed: In the UK, medical devices are governed by the Medical Devices Regulations 2002 (SI 2002 No 618, as amended) (UK MDR 2002) which, for the time being, retains a regulatory framework similar to the framework set out by the MDD.
−Removed: The UK Medicines and Healthcare products Regulatory Agency plans on introducing new legislation governing medical devices with an aim to bring the new regulations into force by July 2024.
+Added: However, the MDR is not applicable in Great Britain (i.e.
+Added: England, Wales and Scotland) but does apply in Northern Ireland.
+Added: In Great Britain, medical devices are governed by the Medical Devices Regulations 2002 (SI 2002 No 618, as amended) (UK MDR 2002) which, for the time being, retains a regulatory framework similar to the framework set out by the MDD.
+Added: The UK’s regulator, the Medicines & Healthcare products Regulatory Agency plans on introducing new legislation governing medical devices with an aim to bring the new regulations into force during 2025 (“MHRA”) has published a road-map to new regulations for medical devices.
+Added: The first of the regulations, which strengthen post-market surveillance requirements, is scheduled to come into force on June 17, 2025.
+Added: Further updated regulations are scheduled to follow in 2025 and 2026.
Should the UK or Great Britain further diverge from the EU from a regulatory perspective, tariffs could be put into place in the future.
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These inspections may include our suppliers’ facilities.
−Removed: In addition, the competent
−Removed: authorities of individual EEA countries have powers to suspend the marketing and use, or demand the recall, of unsafe or non-compliant devices.
+Added: In addition, the competent authorities of individual EEA countries have powers to suspend the marketing and use, or demand the recall, of unsafe or non-compliant devices.
They also have the power to bring enforcement action against companies or individuals for breaches of the device rules.
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The PPACA substantially changes the way healthcare is financed by both governmental and private insurers, encourages improvements in the quality of healthcare items and services and significantly impacts the medical device industries.
−Removed: Among other things, the PPACA:
−Removed: ● establishes a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research;
−Removed: ● implements payment system reforms including value-based payment programs, increased funding for comparative effectiveness research, reduced hospital payments for avoidable readmissions and hospital acquired conditions, and pilot programs to evaluate alternative payment methodologies that promote care coordination (such as bundled physician and hospital payments).
−Removed: There have been executive, judicial and Congressional challenges to certain aspects of the PPACA.
−Removed: While Congress has not passed comprehensive repeal legislation, it has enacted laws that modify certain provisions of the PPACA such as removing penalties, starting January 1, 2019, for not complying with the PPACA’s individual mandate to carry health insurance and delaying the implementation of certain PPACA-mandated fees.
−Removed: Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the PPACA-mandated medical device tax and “Cadillac” tax on high-cost employer-sponsored health coverage and, effective January 1, 2021, also eliminated the health insurer tax.
−Removed: On June 17, 2021, the U.S.
−Removed: Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.
−Removed: Further, on August 16, 2022, President Biden signed the IRA into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in PPACA marketplaces through plan year 2025.
+Added: There have been executive, judicial and Congressional challenges and amendments to certain aspects of the PPACA.
+Added: For example, on August 16, 2022, President Biden signed the IRA into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in PPACA marketplaces through plan year 2025.
The IRA also eliminates the "donut hole" under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program.
−Removed: It is possible that the PPACA will be subject to judicial or Congressional challenges in the future.
−Removed: It is unclear how such challenges and the healthcare reform measures of the Biden administration will impact the PPACA and our business.
+Added: It is possible that the
+Added: PPACA will be subject to judicial or Congressional challenges in the future.
+Added: It is unclear how such challenges and the healthcare reform measures of the second Trump administration will impact the PPACA and our business.
In addition, other legislative changes have been proposed and adopted since the PPACA was enacted.
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Our stock price has been highly volatile.
−Removed: The stock market in general and the market for innovative, emerging medtech and biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
+Added: The stock market in general and the market for innovative, emerging medtech and biotechnology companies in particular have experienced volatility that has often been unrelated to the operating performance of particular companies.
From January 1, 2023 through February 14, 2025, the trading price of our common stock has been as low as $0.25 per share and as high as $1.31 per share.
−Removed: This extreme stock price volatility has been accompanied by extremely high trading volume in our common stock in comparison to historical experience.
−Removed: During this period, the average daily trading volume of our common stock has been approximately 5.2 million shares and on February 11, 2022, our trading volume exceeded 106.3 million shares, whereas the average daily trading volume from January 1, 2023 to December 31, 2023 was 4.3 million shares.
−Removed: The extreme increase in trading volume and volatility has not necessarily correlated to the company’s announcement of material developments and often appears unrelated to changes in actual or expected operating performance.
+Added: This stock price volatility has been accompanied by significant variability in trading volume of our common stock in comparison to historical experience.
+Added: The volatility in our trading volumes has not necessarily correlated to the company’s announcement of material developments and often appears unrelated to changes in actual or expected operating performance.
Purchases or sales of large quantities of our stock, including the establishment and/or closing of significant short positions in our stock could have an unusual or adverse effect on our market price.
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Any such issuance could result in substantial dilution to our existing stockholders and cause the trading price of our common stock to decline.
−Removed: Holders of our Series B convertible preferred stock and our 2025 notes may convert their securities into common stock and, upon conversion, will dilute your percentage of ownership.
−Removed: The Series B convertible preferred stock and 2025 Notes are convertible into our common stock at the option of the holders thereof.
−Removed: Accordingly, any conversion of convertible preferred stock or 2025 Notes would dilute the ownership of our holders of common stock.
−Removed: The potential dilutive effect of the conversion of shares of convertible preferred stock or convertible notes may also adversely affect our ability to obtain additional financing on favorable terms or at all.
−Removed: Certain shareholders may have the ability exert substantial influence over us in a manner adverse to your interests.
+Added: PHC may have the ability exert substantial influence over us in a manner adverse to your interests.
Subject to maintaining specified ownership thresholds, PHC continues to hold the right to designate up to two individuals to serve on our board of directors as outlined in their Investor Rights Agreement.
As a result, PHC may be able to significantly influence our decisions, including the election and removal of directors, any merger, consolidation, sale of all or substantially all of our assets, or other significant corporate transactions.
−Removed: PHC may have interests different the interests of the other holders of our common stock.
−Removed: Our GAAP operating results could fluctuate substantially due to changes in fair value of the derivatives related to the embedded conversion option, interest make-whole provision and make-whole fundamental change provision features of the notes.
−Removed: Our 2025 Notes contain certain embedded features that require bifurcation of the embedded conversion option along with the fundamental change make-whole provision and the cash settled fundamental make-whole shares provision, and recorded the fair value of these embedded features as a derivative liability in the Company’s consolidated balance sheets in accordance with Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging.
−Removed: ASC 815 requires companies to bifurcate certain embedded derivatives from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria.
−Removed: The fair value of the derivative is remeasured to fair value at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value of the derivative being charged to earnings (loss).
−Removed: We utilize a third-party valuation expert and the binomial option pricing method to determine the fair value of the derivative instruments at each reporting date using inputs based on recent trading prices (Level 2) and other observable inputs, including our common stock price, implied volatility, and interest rates, or unobservable inputs (Level 3) where there is an absence of recent trading prices.
−Removed: We cannot predict the effect that the accounting for the options and notes and the associated fluctuations in the fair value of the liability options and embedded features of the 2025 Notes will have on our future GAAP financial results, the trading of our common stock and the trading price of the 2025 Notes, which could be material.
−Removed: Continued extreme volatility in our stock price, as we have experienced recently, could exacerbate such effects.
+Added: PHC may have interests different from the interests of the other holders of our common stock.
If our estimates relating to our critical accounting policies are based on assumptions or judgments that change or prove to be incorrect, our operating results could fall below expectations of financial analysts and investors, resulting in a decline in our stock price.
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GAAP requires our management to make estimates, assumptions and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes.
−Removed: We base our estimates on historical experience and on various other assumptions that we believe to
−Removed: be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources.
+Added: We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources.
Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of financial analysts and investors, resulting in a decline in our stock price.
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Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions.
−Removed: There is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings.
+Added: There is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other
+Added: companies’ charter documents has been challenged in legal proceedings.
While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will be enforced by a court in those other jurisdictions.
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Any failure to maintain effective internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.
−Removed: If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could
−Removed: decline, and we could be subject to sanctions or investigations by the NYSE American, the SEC or other regulatory authorities.
+Added: If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, 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 sanctions or investigations by the NYSE American, the SEC or other regulatory authorities.
Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
−Removed: If securities or industry analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, our stock price and trading volume could decline.
−Removed: The trading market for our common stock is influenced by the research and reports that securities or industry analysts publish about us or our business, our market and our competitors.
−Removed: Securities or industry analysts may elect not to initiate or continue to provide coverage of our common stock, and such lack of coverage may adversely affect the market price of our common stock.
−Removed: Even if we have securities or industry analyst coverage, we will not have any control over the analysts, or the content and opinions included in their reports.
−Removed: The price of our stock could decline if one or more securities or industry analysts downgrade our stock or issue other unfavorable commentary or research.
−Removed: If one or more securities or industry analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.
Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of accrued amounts.
−Removed: We are subject to taxation for US Federal and numerous U.S.
+Added: We are subject to taxation for U.S.
+Added: Federal and numerous U.S.
As a result, our effective tax rate is derived from a combination of applicable tax rates in the various places that we operate.
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We may be unable to utilize our tax attribute carryforwards to reduce our income taxes.
−Removed: At December 31, 2023, we had federal and state net operating loss, or NOL, carryforwards of $656.9 million and had research and experimental credit carryforwards of $15.3 million.
−Removed: NOL carryforwards in the amount of $196.4 million will expire in varying amounts between 2024 and 2037 and tax credits of $15.3 million will expire in varying amounts between 2024 and 2043.
+Added: At December 31, 2024, we had gross federal and state net operating loss (“NOL”) carryforwards of $703.3 million and $89.7 million, respectively and research and experimental credit carryforwards of $17.1 million.
+Added: Federal NOL carryforwards in the amount of $193.3 million will expire in varying amounts between 2025 and 2037 and tax credits of $17.1 million will expire in varying amounts between 2025 and 2044.
These net operating loss carryforwards and credits could expire unused and be unavailable to offset future income tax liabilities.
−Removed: Under the Tax Cuts and Jobs Act of 2017 (“TCJA”), as modified by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, federal NOL carryforwards generated in tax years beginning after December 31, 2017 may be carried forward indefinitely, but limited to offset 80% of our taxable income annually.
−Removed: In addition, under Section 382/383 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation undergoes an "ownership change," which generally occurs if the percentage of the corporation's stock owned by 5% stockholders increases by more than 50% over a three-year period, the corporation's ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
+Added: Federal NOL carryforwards generated in tax years beginning after December 31, 2017 may be carried forward indefinitely, but limited to offset 80% of our taxable income annually.
+Added: State NOLs have various expiration dates beginning in 2032.
+Added: Under Section 382/383 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation undergoes an "ownership change," which generally occurs if the percentage of the corporation's stock owned by 5% stockholders increases by more than 50% over a three-year period, the corporation's ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
We have not determined if we have experienced Section 382/383 ownership changes and if a portion of our NOL and tax credit carryforwards are subject to an annual limitation under Section 382/383.
In addition, we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, which may be outside of our control.
−Removed: If we determine that an ownership change has occurred and our ability to use our historical NOL and tax credit carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations.
+Added: If we determine that an ownership change has occurred and our ability to use our historical NOL and tax credit carryforwards is significantly limited, it would harm our future operating results by effectively increasing our future tax obligations.
Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition, or results of operations .
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For instance, the Inflation Reduction Act (“IRA”) imposes, among other rules, a 15% minimum tax on the book income of certain large corporations and a 1% excise tax on certain corporate stock repurchases.
−Removed: The TCJA as amended by the CARES Act significantly reformed the Code by lowering U.S.
−Removed: federal corporate income tax rates, changing the utilization of future net operating loss carryforwards, permitting for the expensing of certain capital expenditures, eliminating the option to currently deduct research and development expenditures and requiring taxpayers to capitalize and amortize U.S.-based and non-U.S.-based research and development expenditures over five and fifteen years, respectively and putting into effect significant changes to U.S.
−Removed: taxation of international business activities.
+Added: The Tax Cuts and Jobs Act of 2017 (“TCJA”), as modified by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act significantly reformed existing tax laws.
The IRA, TCJA, or any future tax reform legislation could have a material impact on the value of our deferred tax assets, result in significant one-time charges, and increase our future tax expenses.
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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.