Hyperfine (HYPR) risk factors, FY2024 10-K

Risks Related to Our Financial Condition and Capital Requirements

1. 01We are an early-stage health technology company with a history of net losses, which we expect to continue, and we may not be able to generate meaningful revenues or achieve and sustain profitability in the future
2. 02We have a limited operating history, which may make it difficult to evaluate the prospects for our future viability and predict our future performance. As such, you cannot rely upon our historical operating performance to make an investment decision regarding us
3. 03We may need to raise additional capital to fund commercialization plans for our products, including manufacturing, sales and marketing activities, expand our investments in research and development, develop clinical evidence, and commercialize new products and applications
4. 04Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide
5. 05The cumulative effects of the factors discussed above could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful
6. 06We maintain our cash at financial institutions, often in balances that exceed federally insured limits

Risks Related to Our Businesses

1. 07Our 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. 08dependence upon physicians’ and other healthcare practitioners’ acceptance of our products
3. 09Health technology development is costly and involves continual technological change, which may render our current or future products obsolete
4. 10We will be dependent upon the success of our sales and customer acquisition and retention strategies
5. 11technical or other problems preventing us from delivering products or services in a rapid and reliable manner or otherwise affecting the user experience
6. 12We expect to generate a substantial 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
7. 13potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers
8. 14We are subject to export and import control laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate such laws and regulations
9. 15If we experience decreasing prices for our products and are unable to reduce our expenses, including the per unit cost of producing our products, there may be a material adverse effect on our business, results of operations, financial condition and cash flows
10. 16We have undertaken internal restructuring activities that could result in disruptions to our business or otherwise materially harm our results of operations or financial condition
11. 17If we are unable to attract, recruit, train, retain, motivate and integrate key personnel and expand our organization, our operations may be disrupted and we may not achieve our goals
12. 18We have limited experience in marketing and selling our products and related services, and if we are unable to successfully commercialize our products and related services, our business and operating results will be adversely affected
13. 19We 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
14. 20We rely on a limited number of suppliers for our products. A loss of any of these suppliers could negatively affect our business
15. 21We have experienced and may continue to experience pricing pressures from contract suppliers or manufacturers on which we rely
16. 22If we do not successfully optimize and operate our sales and potential future distribution channels or we do not effectively expand and update our infrastructure, our operating results and customer experience may be negatively impacted
17. 23The market for our products and services is new, rapidly evolving, and increasingly competitive, as the healthcare industry in the United States is undergoing significant structural change, which makes it difficult to forecast demand for our products and services
18. 24Quality problems could lead to recalls or safety alerts and/or reputational harm and could have a material adverse effect on our business, results of operations, financial condition and cash flows
19. 25If we fail to meet any applicable product quality standards and our products are the subject of recalls or safety alerts, our reputation could be damaged, we could lose customers, and our revenue and results of operations could decline
20. 26We may acquire other companies or technologies, which could fail to result in a commercial product or net sales, divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results
21. 27As international expansion of our business occurs, it will expose us to market, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States
22. 28regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the U.S. Foreign Corrupt Practices Act, and comparable laws and regulations in other countries
23. 29Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations
24. 30The enactment of legislation implementing changes in the U.S. taxation of international business activities, the adoption of other tax reform policies or changes in tax legislation or policies in jurisdictions outside of the United States could materially impact our results of operations and financial condition
25. 31U.S. taxation of international business activities or the adoption of tax reform policies could materially impact our future financial position and results of operations
26. 32We may face exposure to foreign currency exchange rate fluctuations
27. 33Our ability to use net operating losses to offset future taxable income may be subject to certain limitations
28. 34related to our NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets

Risks Related to Healthcare Industry Shifts and Changing Regulations

1. 35We 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. 36The laws and regulations to which we and our products are subject are complex and subject to periodic changes. Regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales
3. 37We may be required to obtain a new 510(k) clearance or PMA approval for significant post-market modifications to our products, including any modifications made to our commercially marketed devices
4. 38Our employees, independent contractors, consultants, manufacturers and suppliers may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
5. 39There is no guarantee that the FDA will grant 510(k) clearance or premarket approval of our future products, and failure to obtain necessary clearances or approvals for our future products would adversely affect our ability to grow our business
6. 40It is unclear at this time whether and how various activities initiated or announced by the FDA to modernize the U.S. medical device regulatory system could affect our business, as some of the FDA’s new medical device safety and innovation initiatives have not been formalized and remain subject to change
7. 41If we fail to obtain regulatory authorizations in other countries for existing products or products under development, we will not be able to commercialize these products in those countries
8. 42regulatory process in others. Failure to obtain regulatory authorization in other countries or any delay or setback in obtaining such authorization could have the same adverse effects described above regarding FDA clearance or approval in the United States
9. 43Our 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
10. 44We may be subject to enforcement action if we engage in improper or off-label marketing or promotion of our commercial medical device products, including fines, penalties and injunctions
11. 45Digital marketing and social media efforts may expose us to additional regulatory scrutiny, including from the Federal Trade Commission (the “FTC”) and other consumer protection agencies and regulators
12. 46If we are found to have violated laws protecting the confidentiality of health information, we could be subject to civil or criminal penalties, which could increase our liabilities and harm our reputation or our business
13. 47Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation
14. 48implement additional protective measures to reduce the risk of and detect cyber incidents, cyber-attacks are becoming more sophisticated and frequent, and the techniques used in such attacks change rapidly
15. 49Broad-based domestic and international government initiatives to reduce spending, particularly those related to healthcare costs, may reduce reimbursement rates for medical procedures, or make it more difficult for customers to purchase our products and services, all of which could adversely affect our business

Risks Related to our Intellectual Property

1. 50The U.S. law relating to the patentability of certain inventions in the life sciences and medical technology industry is uncertain and rapidly changing, which may adversely impact our existing patents or our ability to obtain patents in the future
2. 51We may not be able to protect our intellectual property rights throughout the world
3. 52Issued patents covering our products could be found invalid or unenforceable if challenged
4. 53If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected and our business could be harmed
5. 54We may be subject to claims challenging the inventorship and ownership of our patents and other intellectual property
6. 55We may not be able to protect and enforce our trademarks and trade names or build name recognition in our markets of interest thereby harming our competitive position
7. 56Patent terms may be inadequate to protect our competitive position on our products for an adequate amount of time
8. 57We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed to us alleged trade secrets of their other clients or former employers, which could subject us to costly litigation
9. 58litigation could result in substantial costs and be a distraction to our management team. If we are not successful, we could lose access or exclusive access to valuable intellectual property
10. 59Obtaining and maintaining our patent protection depends on compliance with various required procedures, document submissions, fee payments and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
11. 60We currently rely on licenses from third parties, and in the future may rely on additional licenses from other third parties, and if we lose any of these licenses, then we may be subjected to future litigation
12. 61the priority of invention of patented technology
13. 62If we cannot license rights to use technologies on reasonable terms, we may not be able to commercialize new products in the future
14. 63Certain of our future owned and in-licensed patents may be, subject to a reservation of rights by one or more third parties, including government march-in rights, that may limit our ability to exclude third parties from commercializing products similar or identical to ours
15. 64Our 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 and provide third parties access to our proprietary software
16. 65Intellectual property rights do not necessarily address all potential threats
17. 66We face the risk of product liability claims and may be subject to damages, fines, penalties and injunctions, among other things

Risks Related to Our Securities and to Being a Public Company

1. 67Future sales of substantial amounts of our Class A common stock, or the possibility that such sales could occur, could adversely affect the market price of our Class A common stock
2. 68We could fail to maintain the listing of our Class A common stock on Nasdaq, which could seriously harm the liquidity of our shares and our ability to raise capital or complete a strategic transaction
3. 69Because we are a “controlled company” within the meaning of the Nasdaq listing rules, our stockholders may not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies
4. 70Potential conflicts of interest may arise among the holders of our Class B common stock and the holders of our Class A common stock
5. 71As described above, in June 2024, our stockholders voted to approve an amendment to our Charter to add a provision with respect to the automatic conversion of our Class B common stock effective as of December 22, 2028
6. 72Delaware law and provisions in our Charter and bylaws could make a takeover proposal more difficult
7. 73Changes in laws or regulations, or a failure to comply with any laws and regulations, or any litigation that we may be subject to or involved in may adversely affect our business, investments and results of operations
8. 74Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our Class A common stock
9. 75Our business and operations could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of our business and growth strategy and impact our stock price
10. 76The grant of registration rights pursuant to the Registration Rights Agreement, the PIPE Subscription Agreements and the Letter Agreement, and the future exercise of such rights, may adversely affect the market price of our Class A common stock
11. 77The obligations associated with being a public company involve significant expenses and require significant resources and management attention, which may divert from our business operations
12. 78We do not intend to pay cash dividends for the foreseeable future