Envoy Medical (COCH) risk factors, FY2024 10-K

Risks Relating to Our Business and Operations

1. 01We are an early-stage company with a history of losses. We have not been profitable historically and may not be able to achieve profitability in the future
2. 02We have generated limited revenue from product sales and may never be profitable
3. 03If the Acclaim CI contains design or manufacturing defects, our business and financial results could be harmed
4. 04We expect that we will need to raise substantial additional funding, which may not be available on acceptable terms, or at all. Failure to obtain funding on acceptable terms and on a timely basis may require us to curtail, delay or discontinue our product development efforts or other operations
5. 05Raising additional capital would cause dilution to our existing stockholders, which may adversely affect the rights of existing stockholders
6. 06Failure of a key information technology system, process or site could have an adverse effect on our business
7. 07Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations
8. 08Our financial statements contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable terms or at all
9. 09We are a development-stage company and are subject to all of the risks inherent in the establishment of a new product. We may not receive, or may be delayed in receiving, the necessary approval or clearance for the Acclaim CI
10. 10We operate in a very competitive business environment, and if we are unable to compete successfully against our existing or potential competitors, our business, financial condition and results of operations may be adversely affected
11. 11We expect to derive most of our revenues from sales of the Acclaim CI. Our inability to successfully commercialize this product candidate or any subsequent decline in demand for this product candidate, could severely harm our ability to generate revenues
12. 12If healthcare professionals do not recommend our product to their patients, the Acclaim CI may not achieve market acceptance and we may not become profitable
13. 13Our production of Acclaim CI devices is currently limited to production of prototype devices and devices for our early feasibility study. As a result, our purchases of supplies and components are limited to date
14. 14We depend on third parties to manage our pre-clinical studies and clinical trials, perform related data collection and analysis, and to enroll patients for our clinical trials, and, as a result, we may face costs and delays that are beyond our control
15. 15We have been and in the future may become a defendant in one or more stockholder derivative, class-action, and other litigation, and any such lawsuits may adversely affect our business, financial condition, results of operations and cash flows
16. 16See Part I, Item 3. Legal Proceedings for more information on these lawsuits
17. 17We are highly dependent on key members of our executive management team. Our inability to retain these individuals could impede our business plan and growth strategies, which could have a negative impact on our business and the value of your investment
18. 18Certain of our directors and officers may have different interests than other holders of Class A Common Stock
19. 19Our management team has limited experience managing a public company

Risks Relating to Our Intellectual Property

1. 20If we are unable to obtain significant patent protection for our products, or if our patents and other intellectual property rights do not adequately protect our products, we may be unable to gain significant market share and be unable to operate our business profitably
2. 21We rely on patents, trade secrets, copyrights, know-how, trademarks, license agreements and contractual provisions to establish our intellectual property rights and protect our products. These legal means, however, afford only limited protection and may not completely protect our rights
3. 22Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
4. 23We may become a party to lawsuits or administrative proceedings involving patents or other intellectual property. If we were to lose any future intellectual property lawsuits, a court could require us to pay significant damages and/or prevent us from selling our products
5. 24If we fail to execute invention assignment agreements with our employees and contractors involved in the development of intellectual property or are unable to protect the confidentiality of our trade secrets, the value of our products and our business and competitive position could be harmed
6. 25If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest and our competitive position may be harmed
7. 26Patent terms may not be sufficient to effectively protect our products and business for an adequate period of time
8. 27We may be unable to enforce our intellectual property rights throughout the world

Risks Relating to Our Organization and Structure

1. 28Our Charter provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees
2. 29As an “emerging growth company,” we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make the Class A Common Stock less attractive to investors
3. 30The requirements of being a public company may strain our resources and divert management’s attention

Risks Relating to Our Class A Common Stock and Warrants

1. 31We may not receive any proceeds from the exercise of Warrants, and if we do, we may be unable to invest the portion of the net proceeds from the exercise of Warrants on acceptable terms
2. 32The market prices of our Class A Common Stock and Public Warrants have been and may continue to be extremely volatile, which could cause purchasers of our securities to incur substantial losses
3. 33There is no guarantee that the Public Warrants will be in the money, and they may expire worthless and the terms of our Public Warrants may be amended
4. 34We may redeem unexpired Public Warrants prior to their exercise at a time that is disadvantageous to the holders of such Public Warrants, thereby making such Public Warrants worthless
5. 35We may amend the terms of the Public Warrants in a manner that may be adverse to holders of Public Warrants with the approval by the holders of at least 65% of the then outstanding Public Warrants
6. 36While we will pay dividends on shares of Series A Preferred Stock pursuant to the Certificate of Designation, we do not intend to pay dividends on shares of Class A Common Stock for the foreseeable future
7. 37If analysts do not publish research about our business or if they publish inaccurate or unfavorable research, our stock price and trading volume could decline
8. 38You may experience future dilution as a result of future equity offerings
9. 39We may be subject to securities litigation, which is expensive and could divert management attention
10. 40We are and may become involved in legal proceedings, and no assurance can be provided as to the outcome of these matters