CapsoVision (CV) risk factors, FY2025 10-K

Other

1. 01We have a history of net losses, and we expect to incur additional losses in the foreseeable future
2. 02Our audited financial statements for the years ended December 31, 2025 and December 31, 2024 include a footnote raising substantial doubt about our ability to continue as a “going concern” and we will likely need to raise additional financing to fund our business and revenue growth plans
3. 03Near term actions to grow our CapsoCam Plus small-bowel-related revenues include those set forth below. We may be unable to timely and effectively execute these or other activities designed to increase our small-bowel-related revenues
4. 04CapsoCam Colon is our initial strategic effort to expand revenues for our GI-tract capsule endoscopy solution beyond small-bowel-related sales; we do not currently expect to generate CapsoCam Colon-related revenues until FDA clearance for the second generation of our CapsoCam Colon solution
5. 05Our longer term efforts to expand our GI-tract capsule endoscopy solutions beyond small bowel and colon pathologies and medical conditions may not succeed
6. 06Any failure or defect in our GI-tract capsule endoscopy solution could harm our reputation, expose us to liability, and reduce our sales
7. 07We face substantial geopolitical and trade risks (including a possible trade war and imposition of tariffs and supply chain interruptions) and natural disaster risks associated with our business operations in Asia (particularly Taiwan and Japan)
8. 08We may face expansion risks when expanding in existing and entering into new foreign markets
9. 09The need to grow our sales and marketing team (including potentially through qualified distributors) in these markets
10. 10The clinical results of our various clinical studies (including those for our CapsoCam Colon capsule) may not be released in any peer-reviewed publications
11. 11We operate in a highly competitive industry, and competitive pressures could have a material adverse effect on our business, financial condition, results of operations, and prospects
12. 12The combination of these factors could significantly affect our ability to attract and retain customers, thereby adversely impacting our overall business performance and future growth prospects
13. 13The effectiveness of our CapsoCam capsules heavily relies on patients adhering to our use protocols. Other companies or institutions may develop and market novel or improved methods that may make our technologies less competitive or obsolete
14. 14Our CapsoCam capsule endoscopy is generally a safe procedure providing non-invasive visualization of the entire small bowel and colon (once cleared). However, there are risks associated with this procedure, including capsule retention, component failures and, in rare cases, aspiration
15. 15We may need additional capital to execute our business plan, and we may be unable to raise additional capital on acceptable terms
16. 16Our existing sales and marketing team may face challenges in selling additional products and features added to our GI-tract capsule endoscopy solution
17. 17The success of our business is substantially dependent upon the efforts of our senior management team and certain other key personnel and our ability to retain these individuals and to attract additional key personnel
18. 18Macroeconomic conditions could materially adversely affect our business, financial condition, results of operations, and prospects
19. 19Adverse developments affecting the financial services industry could adversely affect our current and projected business operations, financial condition and results of operations
20. 20Shutdowns of the U.S. federal government could materially adversely affect our business, financial condition, results of operations, and prospects

Risk Related to Regulatory Matters

1. 21We may not obtain or may experience delays in obtaining 510(k) clearance for our planned second generation of our CapsoCam Colon solution (with improved optics and other components), which would adversely impact our ability to commercialize this product and generate related revenue
2. 22We may face regulatory challenges and delays in obtaining 510(k) clearance for marketing of those CapsoCam capsules incorporating our self-developed AI technology, including our CapsoCam Colon capsule endoscopy solution and CapsoCam Plus capsule endoscopy solution (small bowel)
3. 23regulatory reforms to better foster innovation while maintaining patient safety. We proactively monitor new FDA policies and programs and will update our regulatory strategy to reduce regulatory uncertainty and burden where applicable
4. 24If Medicare and other third-party payors, including managed care organizations, do not approve reimbursement for our products at adequate reimbursement rates, we may be unable to successfully commercialize our products which would likely have a material adverse effect on our business
5. 25gastrointestinal disorders; not experimental or investigational; approved by the major guidelines organizations; reliable, safe and minimally invasive; medically necessary; appropriate for the specific patient; and cost-effective
6. 26If we or our distributors fail to comply with regulatory requirements, we may be subject to stringent penalties and our business may be materially adversely affected
7. 27Healthcare policy and funding/budgetary changes could have a material adverse effect on our business, financial condition, results of operations, and prospects
8. 28Changes in tax laws or tax rulings could adversely affect our effective tax rates, results of operations and financial condition
9. 29Our relationships with board-certified physicians are subject to various state laws and there is no assurance that our current practices will remain compliant
10. 30Our products must be manufactured in accordance with applicable laws and regulations, and we could be forced to recall our products or terminate production if we fail to comply with these regulations
11. 31Some of our activities may subject us to risks under federal and state laws prohibiting “kickbacks” and false or fraudulent claims
12. 32federal health care programs. Violations of these laws can result in severe penalties, including criminal and civil fines, exclusion from participation in federal healthcare programs, and significant reputational harm
13. 33Failure to comply with the Foreign Corrupt Practices Act (the “FCPA”), economic and trade sanctions regulations, and similar laws could subject us to penalties and other adverse consequences

Risks Related to Our Reliance on Third Parties

1. 34We depend on our authorized agent and importer for a significant portion of our revenue
2. 35We utilize and depend upon independent investigators and collaborators, such as third-party clinical institutions and hospitals to conduct and support portions of our clinical trials under agreements with us, and may in the future rely on CROs
3. 36We rely on relationships with contracted physicians to provide reading services to certain customers
4. 37We may face risks associated with our use and development of artificial intelligence, including our AI technology
5. 38Actual or perceived failures to comply with applicable data privacy and security laws, regulations, standards and other requirements could adversely affect our business, financial condition, results of operations, and prospects
6. 39We leverage cloud-based CapsoCloud for easy access to patients’ in vivo videos, however use of CapsoCloud faces complicated compliance requirements
7. 40Our business and operations may suffer in the event of information technology system failures, cyberattacks, or deficiencies in our cybersecurity

Risks Relating to Our Intellectual Property

1. 41Our success will depend on our ability to obtain, maintain, enforce, and protect our intellectual property rights
2. 42If we fail to identify our patentable inventions or adequately protect our patent rights, the commercial value of our products, services or technologies may be adversely affected and our competitive position may be harmed
3. 43Obtaining 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. 44Our patents will eventually expire, and our patent protection will be reduced or eliminated by expiration of patents in our patent portfolio
5. 45We may not be able to protect our intellectual property rights throughout the world
6. 46If we cannot successfully enforce our intellectual property rights, the commercial value of our products, services, or technologies may be adversely affected and our competitive position may be harmed
7. 47We may become a party to intellectual property litigation or administrative proceedings that could be expensive, time-consuming, and unsuccessful, and could interfere with our ability to develop, manufacture, commercialize, import, or otherwise use our products, services, or technologies
8. 48We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property rights
9. 49If we are unable to protect the disclosure and use of our confidential information and trade secrets, the value of our products, services, and technologies and our business and competitive position could be harmed
10. 50If our trademarks and trade names are not adequately protected, we may not be able to build brand name recognition in our markets of interest and our competitive position may be harmed
11. 51Our products contain third-party open source software components and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our products, affect our ability to protect our proprietary information, and subject us to possible litigation

Risks Relating to Financial and Accounting Matters

1. 52Our ability to utilize our net operating loss carryforwards and research and development tax credits may be limited
2. 53We have identified two material weaknesses in our internal control over financial reporting. These material weaknesses could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner
3. 54We identified two material weaknesses in our internal control over financial reporting
4. 55We may face litigation and other risks as a result of the material weaknesses in our internal control over financial reporting

Risks Relating to Our Common Stock

1. 56We are an emerging growth company and a smaller reporting company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies and smaller reporting companies will make our common stock less attractive to investors
2. 57We will incur increased costs and are subject to additional regulations and requirements as a result of operating as a public company, which could lower our profits or make it more difficult to run our business
3. 58be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage
4. 59If we are unable to design, implement, and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may decline
5. 60We do not intend to pay dividends in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation in the market price of our common stock
6. 61We may require additional capital to support business growth, and this capital might not be available on terms favorable to us, or at all, and may dilute existing stockholders’ ownership of our common stock
7. 62Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall
8. 63Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management
9. 64Claims for indemnification by our directors, officers, and other employees or agents may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us
10. 65The rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees, and agents and to obtain insurance to indemnify such persons
11. 66The market price of our common stock may be volatile, which could cause the value of your investment to decline
12. 67If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline
13. 68Product and professional liability suits against us could result in expensive and time-consuming litigation, payment of substantial damages and increases in our insurance rates
14. 69We may engage in acquisitions that could disrupt our business, cause dilution to our stockholders and reduce our financial resources