Lifecore Biomedical (LFCR) risk factors, FY2025 10-K

Risks related to our internal controls and financial reporting

1. 01We have identified material weaknesses in our internal control over financial reporting that have affected the reliability of our financial statements and have had, and may continue to have, other adverse consequences

Risks related to our financial and cash position

1. 02We have a history of losses. We may need additional capital and any additional capital we seek may not be available in the amount we need, at the time we need it or on terms favorable to us
2. 03If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may be required to agree to economic or other terms or covenants that are not favorable to us, including relinquishing certain rights to intellectual property or future revenue streams

Risks related to our business and operations

1. 04If we are unable to retain existing customers, attract new customers and sell additional products and services to our existing and new customers, our revenue growth and profitability will be adversely affected
2. 05Our success as a stand-alone CDMO will be subject to customer demand based on factors beyond our control
3. 06A significant portion of our revenue has been concentrated on a few large customers, including Alcon, one of our primary lenders, and terminations of agreements or cancellations or delays of orders by these customers may adversely affect our business
4. 07We may be adversely impacted by the terms of our refinancing transactions with Alcon and by Alcon’s concentrated relationship with us as a significant customer of ours and as our lender
5. 08We are subject to increasing competition in the marketplace
6. 09Our profitability is dependent upon our ability to obtain appropriate pricing for our products and to control our cost structure or to pass along costs to our customers
7. 10Our CDMO services are highly complex, and our failure to provide quality and timely services to our CDMO customers could adversely impact our business
8. 11Our customers’ failure to receive or maintain regulatory approval for product candidates or products could negatively impact our revenue and profitability
9. 12Our business is highly regulated and our operations are subject to laws, regulations and standards that directly impact our business
10. 13Loss or compromise of our HA bacterial cell bank assets could materially impact our business operations, product quality and competitive position
11. 14Our development and manufacturing activities may expose us to product liability claims
12. 15We have a concentration of facilities and unforeseen events could materially disrupt our ability to provide services and manufacture products for our customers
13. 16Our dependence on single-source suppliers and service providers may cause disruption in our operations should any supplier fail to deliver materials
14. 17Changes to U.S. trade policy, tariff and import/export regulations may have a material adverse effect on our business
15. 18We may need to consider new business acquisitions to achieve our growth strategy, and any such acquisition would involve substantial effort and costs to complete and uncertainty relating to integration

Risks related to ownership of our Common Stock

1. 19Future resales, or the perception of future resales, of our Common Stock may cause the market price of our Common Stock to drop significantly, even if our business is doing well
2. 20Our stock price may fluctuate in response to various conditions, many of which are beyond our control
3. 21Our Redeemable Convertible Preferred Stock has rights, preferences, and privileges that are not held by, and are preferential to, the rights of holders of our Common Stock
4. 22Our stockholders will experience significant dilution as a result of the issuance of shares of our Common Stock upon conversion of the Redeemable Convertible Preferred Stock
5. 23Our corporate organizational documents and Delaware law have anti-takeover provisions that may inhibit or prohibit a takeover of us and the replacement or removal of our management

General risks

1. 24The outcome of existing and future litigation and regulatory proceedings and the related fees, costs and penalties could have a material adverse effect on our business
2. 25In addition, from time to time, we may be subject to claims or lawsuits during the ordinary course of business regarding, but not limited to, employment matters, safety standards, product liability, security of customer and employee personal information, contractual matters, and compliance with laws
3. 26We are dependent on our key employees and if one or more of them were to leave, we could experience difficulties in replacing them or effectively transitioning their replacements and our operating results could suffer
4. 27Our reputation and business may be harmed if our computer network security or any of the databases containing our trade secrets, proprietary information or the personal information of our employees, or those of third parties, are compromised
5. 28We are implementing a new enterprise resource planning system, and challenges with the implementation of the system may impact our business and operations
6. 29Third parties may claim that our services or our customers’ products infringe their intellectual property rights
7. 30We have access to certain intellectual property and information of our customers and suppliers, and failure to protect that intellectual property or information could adversely affect our future growth and success
8. 31We may be unable to protect our intellectual property and proprietary processes from infringement or claims of ownership or rights by third parties, which could materially and adversely affect the Company