ChronoScale Holdings (CHRN) risk factors, FY2024 10-K

Other

1. 01Protecting our intellectual proprietary rights can be costly, and our success in doing so is not certain
2. 02If we fail to obtain or maintain necessary regulatory clearances or approvals for our medical device products, or if clearances or approvals for future products or modifications to existing products are delayed or not issued, our commercial operations would be harmed

Business and Operational Risks

1. 03If we fail to manage the complex and lengthy reimbursement process, our business and operating results could be adversely affected
2. 04The markets in which our products are sold are highly competitive and continue to develop, and important assumptions about the potential market for our current and future products may be inaccurate
3. 05If we or our third-party manufacturers are unable to produce our products at a satisfactory quality, in a timely manner, in sufficient quantities or at an acceptable cost, our business could be negatively impacted
4. 06We have not entered into any long-term manufacturing or supply agreements for any of our products, and we may need to enter into additional agreements for the commercial development, manufacturing and sale of our products. There can be no assurance that we can do so on favorable terms, if at all
5. 07Shortages in the materials used to manufacture our products and supply chain disruptions, including as a result of changes in trade policies, could impact our future results
6. 08Coverage policies and reimbursement levels of third-party payers, including Medicare or Medicaid, may impact sales of our products
7. 09The acquisition and integration of other companies, businesses, or technologies could result in operating difficulties, dilution, and other harmful consequences
8. 10We may not be able to enhance our product offerings through our research and development efforts
9. 11obtain the necessary regulatory clearances and approvals for proposed products
10. 12We will experience long and variable sales cycles
11. 13International sales of our products are subject to factors outside of our control
12. 14We may never complete the development of any of our proposed products or product improvements into marketable products
13. 15We have historically relied, and in the future may rely, on sales of our EksoNR, Ekso Indego Therapy and Ekso Indego Personal for a significant portion of our revenue
14. 16We rely on independent distributors for the sale and marketing of our products in certain geographies
15. 17Our success depends on our management team, and on our ability to hire, train, retain, and motivate employees
16. 18Shutdowns of the U.S. federal government could materially impair our business and financial condition
17. 19Damage to our brand and reputation could have an adverse effect on our business and financial performance
18. 20We may not be able to reduce the cost to manufacture or service our products as planned

Financial & Accounting Risks

1. 21We have incurred significant losses to date and anticipate continuing to incur losses in the future, and we may not achieve or maintain profitability
2. 22Our loan agreement imposes certain financial and operational restrictions on us, limiting the discretion of our management in operating our business
3. 23We may be unable to generate sufficient cash flow to service our debt obligations and operate our business
4. 24We cannot assure our business will generate sufficient cash flow from operations, or future borrowings will be available to us in an amount sufficient to fund our liquidity needs
5. 25We might not be able to continue as a going concern
6. 26We may not be able to leverage our cost structure or achieve better margins
7. 27We could fail to maintain effective internal control over our financial reporting
8. 28Intellectual property litigation and infringement claims could cause us to incur significant expenses or prevent us from selling certain of our products
9. 29Some of the patents and patent applications in the intellectual property portfolio are not within our complete control, which could reduce the value of such patents
10. 30UC Berkeley has licensed their U.S. rights in two of these three co-owned patents to an unrelated third-party
11. 31If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third-parties or otherwise experience disruptions to our business relationships with our licensors, we could lose intellectual property rights that are important to our business
12. 32Patent terms may be inadequate to protect our competitive position on our devices for an adequate amount of time

Legal and Regulatory Compliance Risks

1. 33If we fail to obtain or maintain necessary regulatory clearances or approvals for our medical device products, or if clearances or approvals for future products or modifications to existing products are delayed or not issued, our commercial operations would be harmed
2. 34Our products and operations are subject to extensive government regulation and oversight in the United States and other countries where we commercialize our medical devices
3. 35In addition, violations of the FDCA relating to the promotion of approved products may lead to investigations alleging violations of federal and state healthcare fraud and abuse and other laws, as well as state consumer protection laws
4. 36Modifications to our current and our future products may require new 510(k) clearances or premarket approvals, or may require us to cease marketing or recall the modified products until clearances are obtained
5. 37We must obtain certain regulatory approvals in the EU, which could be costly and time-consuming and subject us to unanticipated delays or prevent us from marketing certain devices
6. 38Our failure to meet strict post-market regulatory requirements with respect to our products could require us to pay fines, incur other costs or even close our facilities
7. 39restrictions and criminal prosecutions, any of which would cause our business to suffer
8. 40We may be subject to fines, penalties or injunctions if we are determined to be promoting the use of our products for unapproved or “ off-label” uses
9. 41We may be subject to adverse medical device reporting obligations, voluntary corrective actions or agency enforcement actions
10. 42Failure to comply with anti-kickback and fraud regulations could result in substantial penalties and changes in our business operations
11. 43Changes in law or regulation could make it more difficult and costly for us to manufacture, market and distribute our products or obtain or maintain regulatory approval of new or modified products
12. 44Healthcare changes in the United States and other countries, including recently enacted legislation reforming the U.S. healthcare system, could have a negative impact on our future operating results
13. 45Additional changes may affect our business, including those governing enrollment in federal healthcare programs, reimbursement changes, fraud and abuse enforcement, and expansion of new programs, such as Medicare payment for performance initiatives
14. 46Failure to comply with HIPAA or the HITECH Act and implementing regulations could result in significant penalties
15. 47Pursuant to HIPAA, final regulations have been implemented to improve the efficiency and effectiveness of the healthcare system by facilitating the electronic exchange of information in certain financial and administrative transactions while protecting the privacy and security of the information exchanged
16. 48We are subject to cybersecurity risks to our systems, infrastructure, and technology, and data processed by us or third-party vendors
17. 49Our products may become subject to voluntary or involuntary recall
18. 50Our product liability insurance may not adequately cover potential claims or recalls
19. 51Warranty claims and our accelerated maintenance program results in additional operating costs to us

Risks Related to Ownership of Common Stock

1. 52You may be diluted from future issuances of our equity securities, including in future financings or strategic transactions, from compensatory equity awards and exercises of outstanding warrants, and such issuances, or perception that such issuances may occur, could depress the market price of our common stock
2. 53The ability of our Board of Directors to issue additional stock may prevent us from making more difficult transactions, including a sale or merger
3. 54We have never paid and do not intend to pay cash dividends
4. 55The market price of our common stock has been, and may continue to be, highly volatile
5. 56Trading of our common stock is limited, which may affect our stock price
6. 57If we do not regain compliance with or continue to satisfy the Nasdaq continued listing requirements, our common stock could be delisted from Nasdaq
7. 58We are a “smaller reporting company” and the reduced reporting requirements applicable to such companies may make our common stock less attractive to investors