Intelligent Bio Solutions (INBS) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in our Annual Report on Form 10-K for the Fiscal year ended June 30, 2024
2. 02Neither we nor the Licensor have yet launched the BPT and the ability to do so will depend on the acceptance of the BPT in the global healthcare market
3. 03We are subject to the risks associated with new businesses generally
4. 04In addition, in connection with our recent acquisition of IFP, there are risks relating to the integration of IFP with the Company, including with regard to integrating technology, processes, information systems and other matters that can lead to challenges in economies of scale and leadership
5. 05We have incurred significant losses since inception and continue to incur losses, and we may not be able to achieve significant revenues or profitability
6. 06We rely on third parties to perform certain confirmatory tests for our IFP Drug Screening System
7. 07We depend on a limited number of single-source suppliers to manufacture certain components of IFP Drug Screening System, which makes us vulnerable to supply shortages and price fluctuations that could negatively affect our business, financial condition and results of operations
8. 08Our results may be impacted by changes in foreign currency exchange rates
9. 09If we fail to retain marketing and sales personnel, or if we fail to increase our marketing and sales capabilities as we grow, or if we fail to develop broad awareness of our product in a cost-effective manner, we may not be able to generate revenue growth
10. 10Our results of operations will be materially harmed if we are unable to accurately forecast customer demand for our products and manage our inventory
11. 11If our facilities become damaged or inoperable, we will be unable to continue to research, develop and supply our product which could negatively affect our business, financial condition and results of operations until we are able to secure a new facility and rebuild our inventory
12. 12Our ability to achieve profitability depends in part on maintaining or increasing our gross margins on product sales which we may not be able to achieve
13. 13The license agreement with the Licensor, which covers the license of the core technology used in our Biosensor Platform products, contains significant risks that may have a material adverse effect on us and our business, assets and prospects
14. 14We cannot accurately predict the volume or timing of any sales of any of our products, making the timing of any associated revenues uncertain and difficult to forecast
15. 15If the BPT fails to satisfy current or future customer requirements, we may be required to make significant expenditures to redesign the product candidate, and we may have insufficient resources to do so
16. 16We expect to rely in part on third-party distributors to effectively distribute our products, if our distributors fail to effectively market and sell the BPT and IFP products in full compliance with applicable laws, our operating results and business may suffer
17. 17Failure in our conventional, online and digital marketing efforts could impact our ability to generate sales
18. 18As we intend to conduct business internationally, we are susceptible to risks associated with international relationships, which could adversely impact our results of operations and financial condition
19. 19If third-party payors do not provide coverage and reimbursement for the use of the BPT and IFP products, our business and prospects may be negatively impacted
20. 20Non-United States governments often impose strict price controls, which may adversely affect our future profitability
21. 21The BPT and IFP Drug Screening System, including its software and systems, may contain undetected errors, which could limit our ability to provide our products and services and diminish the attractiveness of our service offerings
22. 22Our future performance will depend on the continued engagement of key members of our management team, and the loss of one or more of the key members of our management team could have a negative impact on our business
23. 23If we are not able to attract and retain highly skilled managerial, scientific and technical personnel, we may not be able to implement our business model successfully
24. 24If we or our manufacturers fail to comply with applicable regulations, our proposed operations could be interrupted, and our operating results may be negatively impacted
25. 25We may be subject to healthcare fraud and abuse laws and regulations which, if violated, could subject us to substantial penalties. Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business
26. 26Product liability suits, whether or not meritorious, could be brought against us due to an alleged defective product or for the misuse of the BPT and IFP Drug Screening System. These suits could result in expensive and time-consuming litigation, payment of substantial damages, and an increase in our insurance rates
27. 27If we are found to have violated laws protecting the confidentiality of patient health information, we could be subject to penalties, which could increase our liabilities and harm our reputation or our business
28. 28We could be party to litigation or other legal proceedings that could adversely affect our business, results of operations and reputation

Risks Related to Product Development and Regulatory Approval

1. 29The regulatory clearance/approval process which we may be required to navigate may be expensive, time-consuming, and uncertain and may prevent us from obtaining clearance for any product launch by the Company of the BPT and IFP products in certain jurisdiction or our any future product
2. 30Clinical data obtained subsequent to the implementation of the clinical evidence module may not meet the required objectives, which could delay, limit or prevent additional regulatory clearance or approval
3. 31We may be unable to complete required clinical evaluations, or we may experience significant delays in completing such clinical evaluations, which could prevent or significantly delay our targeted product launch timeframe and impair our business plan
4. 32We are subject to the risk of reliance on third parties to conduct our clinical evaluation work, their inability to comply with good clinical practice and relevant regulation could adversely affect the clinical development of our product candidates and harm our business

Risks Related to Our Intellectual Property

1. 33Our success will depend on our ability to obtain, maintain and protect our intellectual property rights
2. 34Obtaining 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
3. 35Patent terms may not be able to protect our competitive position for an adequate period of time with respect to our current or future technologies
4. 36Extensions of patent term may be available, but there is no guarantee that we would succeed in obtaining any particular extension and no guarantee any such extension would confer patent term for a sufficient period of time to exclude others from commercializing products similar or identical to ours
5. 37We and/or the Licensor may be subject to claims alleging the violation of the intellectual property rights of others, which could involve in lawsuits to protect or enforce our intellectual property rights, which could be expensive, time consuming and unsuccessful
6. 38We depend on intellectual property licensed from the Licensor for our BPT related products, and any absence of legal effect of the license or dispute over the license would significantly harm our BPT related business
7. 39We will depend primarily on the Licensor to file, prosecute, maintain, defend and enforce intellectual property that we license from it and that is material to our business
8. 40We and the Licensor may be unable to protect or enforce the intellectual property rights licensed to us, which could impair our competitive position
9. 41We and the Licensor rely on confidentiality agreements that could be breached and may be difficult to enforce, which could result in third parties using our intellectual property to compete against us
10. 42We and the Licensor may be subject to claims challenging the invention of the intellectual property we license

Risks Related to Our Industry

1. 43If we fail to remain in compliance with applicable European laws and directives, we would be unable to continue to affix the CE mark to our products, which would prevent us from selling them within the European Economic Area (“EEA”)
2. 44If any of these events were to occur, it will negatively affect our business, financial condition and results of operations
3. 45Compliance with environmental laws and regulations could be expensive, and the failure to comply with these laws and regulations could subject us to significant liability
4. 46If we or our suppliers fail to comply The United Kingdom Accreditation Services (UKAS), FDA’s Quality System Regulation (QSR) and CE (European Conformity) markings and other relevant regulations regulation, our manufacturing or distribution operations could be delayed or shut down and our revenue could suffer
5. 47If we or the Licensor fail to respond quickly to technological or other developments, our products may become uncompetitive and obsolete
6. 48Fluctuation in the value of foreign currencies may have a material adverse effect on your investment
7. 49We are subject to laws and regulations governing business conduct, which will require us to develop and implement costly compliance programs
8. 50Changes in the economic, political or social conditions or government policies in our target markets could have a material adverse effect on our business and operations

Risks Related to the Ownership of Our Common Stock

1. 51Minimum Bid Price Requirement
2. 52Stockholders’ Equity Requirement
3. 53We are an emerging growth company and currently have limited accounting personnel and other supervisory resources. This can result in a lack of necessary resources to adequately execute our accounting processes and address our internal controls over financial reporting requirements
4. 54Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or products
5. 55The market price of our common stock may be significantly volatile
6. 56If we are unable to achieve certain agreed milestones for the government grant, we received, we may become liable to refund the grant we received. The Company has only completed 4 of the 8 agreed milestones set forth in the Company’s grant agreement with the Australian Government
7. 57We may have difficulties integrating acquired businesses and as a result, our business, results of operations and/or financial condition may be materially adversely affected