Butterfly Network (BFLY) risk factors, FY2024 10-K

Risks Related to Our Financial Condition and Capital Requirements

1. 01We have incurred significant losses since inception. As such, you cannot rely upon our historical operating performance to make an investment decision about us

Risks Related to Our Business and Operations

1. 02Our success depends upon market acceptance of our products and services, our ability to develop and commercialize existing and new products and services and generate revenues, and our ability to identify new markets for our technology
2. 03Medical device development is costly and involves continual technological change, which may render our current or future products obsolete
3. 04We will be dependent upon the success of our sales and customer acquisition and retention strategies
4. 05Our research and development efforts may not succeed in developing commercially successful products and technologies, which could adversely affect our business
5. 06We expect to generate an increasing portion of our revenue internationally in the future and may become subject to various additional risks relating to our international activities, which could adversely affect our business, operating results and financial condition
6. 07If we are unable to attract, recruit, train, retain, motivate, and integrate key personnel, we may not achieve our goals
7. 08The loss of one or more key employees, our inability to attract or develop additional qualified employees, and any delay in hiring key personnel could have a material adverse effect on our business results, cash flows, financial condition, or prospects
8. 09We rely on a single contract manufacturer, Benchmark, to test, assemble, and supply our finished products. If Benchmark fails to fulfill its obligations under its existing contractual arrangements with us or does not perform satisfactorily, our ability to source our devices could be negatively and adversely affected
9. 10We have and may continue to experience pricing pressures from contract suppliers or manufacturers on which we rely
10. 11We may experience manufacturing problems or delays that could limit the growth of our revenue or increase our losses
11. 12We rely on limited or sole suppliers for some of the materials and components used in our products, and we may not be able to find replacements or immediately transition to alternative suppliers, which could have a material adverse effect on our business, financial condition, results of operations, and reputation
12. 13Acquisitions, joint ventures, or other strategic transactions could disrupt our business, cause dilution to our stockholders, and otherwise harm our business
13. 14Foreign acquisitions involve unique risks in addition to those mentioned above, including those related to the integration of operations across different cultures and languages, currency risks, and the particular economic, political, and regulatory risks associated with specific countries
14. 15If we are unable to continue the development of an adequate sales and marketing organization and/or if our direct sales organization is not successful, we may have difficulty achieving market awareness and selling our products in the future
15. 16of our future products. Developing and managing a direct sales organization is a difficult, expensive, and time-consuming process
16. 17If we are unable to establish and maintain adequate sales and marketing capabilities, or enter into and maintain arrangements with third parties to sell and market our products, our business may be harmed
17. 18We operate in highly competitive markets, competition may increase in the future, and our industry may be further disrupted
18. 19Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations
19. 20Changes in applicable tax laws and regulations could adversely affect our business
20. 21Our ability to use net operating losses and certain other tax assets to offset future income may be subject to certain limitations
21. 22We could be adversely affected by violations of the FCPA and other worldwide anti-bribery laws by us or our agents

Risks Related to Government Regulation and Other Legal Compliance Matters

1. 23We are subject to extensive government regulation, which could restrict the development, marketing, sale, and distribution of our products and could cause us to incur significant costs
2. 24Any interruption in the operations of our manufacturing facilities, or our suppliers’ or customers’ facilities, may impair our ability to deliver products or provide services
3. 25In addition, any of our products shipped internationally are also required to comply with the International Organization for Standardization (“ISO”) quality system standards as well as EU Regulations and norms in order to produce products for sale in the EU
4. 26Our current or future products may be subject to product recalls even after receiving FDA clearance or approval. A recall of our products, either voluntarily or at the direction of the FDA, or the discovery of serious safety issues with our products, could have a significant adverse impact on us
5. 27We may be subject to enforcement action if we engage in improper or off-label marketing or promotion of our products, including fines, penalties, and injunctions
6. 28In some instances in our advertising and promotion, we may make claims regarding our product as compared to competing products, which may subject us to heightened regulatory scrutiny, enforcement risk, and litigation risks
7. 29Increased cybersecurity requirements, vulnerabilities, threats, and more sophisticated and targeted computer crimes pose a risk to our systems, networks, products, solutions, services, and data, as well as our reputation, which could adversely affect our business
8. 30Broad-based domestic and international government initiatives to reduce spending, particularly those related to healthcare costs, may reduce reimbursement rates for medical procedures, which will reduce the cost-effectiveness of our products and services
9. 31Healthcare industry cost-containment measures could result in reduced sales of our products and services

Risks Related to Butterfly’s Intellectual Property

1. 32If we are unable to protect our intellectual property, our ability to maintain any technological or competitive advantage over our competitors and potential competitors would be adversely impacted, and our business may be harmed
2. 33from competing. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries
3. 34Our wafer bonding technology for ultrasound applications is licensed to us by Stanford. Any loss of our rights to this technology could prevent us from selling our products
4. 35If we breach any of these obligations, Stanford may have the right to terminate the licenses, which could result in us being unable to develop, manufacture, and sell products using the licensed technology. Termination of our license agreements with Stanford would have a material adverse effect on our business
5. 36We may need or may choose to obtain licenses from third parties to advance our research or allow commercialization of our current or future products, and we cannot provide any assurances that we would be able to obtain such licenses
6. 37If disputes over licensed intellectual property prevent or impair our ability to maintain the licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product, or the dispute may have an adverse effect on our results of operations
7. 38Changes in patent laws or patent jurisprudence could diminish the value of patents in general, thereby impairing our ability to protect our products
8. 39If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected
9. 40We may use third-party open source software components in future products, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell such products
10. 41We use third-party software that may cause errors or failures of our products that could lead to lost customers or harm to our reputation

Risks Related to Our Securities and to Being a Public Company

1. 42If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, our ability to operate our business, and investors’ views of us
2. 43Delaware law and provisions in our certificate of incorporation and bylaws could make a takeover proposal more difficult
3. 44We face the risk of product liability claims and may be subject to damages, fines, penalties, and injunctions, among other things
4. 45risk of product liability claims may also increase if our products are subject to a product recall, whether voluntary or mandatory, or government seizure. Product liability claims may be brought by individuals or by groups seeking to represent a class
5. 46We are currently subject to a securities class action lawsuit and stockholder derivative actions, the unfavorable outcomes of which may have a material adverse effect on our financial condition, results of operations, and cash flows
6. 47The price of our common stock historically has been volatile, which may affect the price at which you could sell any shares of our common stock