LENSAR (LNSR) risk factors, FY2025 10-K

Risks Related to the Terminated Merger Agreement

1. 01The announcement of the termination of the Merger Agreement could negatively impact our business, financial condition, results of operations or our stock priceNew
2. 02We may experience shareholder litigation related to the termination of the Merger Agreement, which could result in payment of damagesNew

Risks Related to Our Business

1. 03Our results have been in the past, and could be in the future, adversely affected by economic uncertainty or deteriorations in economic conditions
2. 04We have experienced and expect to incur operating losses for the near-term future and we cannot assure you that we will be able to generate sufficient revenue to achieve or sustain profitability
3. 05Our growth depends on our ability to gain regulatory clearances and certifications, as well as our ability to meet production goals for our ALLY System
4. 06Patients may not be willing to pay for the price difference between a standard cataract procedure and an advanced cataract procedure in which a laser system such as ours is used, an increment which is typically not covered by Medicare, private insurance or other third-party payors
5. 07If we are not able to effectively grow our U.S. sales and marketing organization or maintain or grow an effective network of international distributors, our business prospects, results of operations and financial condition could be adversely affected
6. 08Our future capital needs are uncertain, and we may need to raise additional funds in the future, and such funds may not be available on acceptable terms or at all
7. 09Such capital may not be available on favorable terms, or at all. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, which may impact our ability to obtain additional capital on favorable terms
8. 10If the supply or manufacture of our Systems or other products associated with the Systems is materially disrupted, including by supply chain shortages and price increases, it may adversely affect our ability to manufacture products and could negatively affect our operating results
9. 11Our industry is global, highly competitive and subject to rapid and profound technological, market and product-related changes. We face significant competition from large multinational medical device companies, as well as smaller, emerging players focused on product innovation47% rewritten
10. 12more established sales and marketing programs and distribution networks
11. 13To successfully market, sell and lease our products in markets outside of the United States, we must address many international business risks with which we have limited experience39% rewritten
12. 14increased financial accounting and reporting burdens and complexities
13. 15We are exposed to the credit risk of some of our customers, which could result in material losses
14. 16We may be unable to accurately forecast customer demand and our inventory levels49% rewritten
15. 17Failure to secure adequate coverage or reimbursement by government or other third-party payors for certain procedures using our ALLY System or our other future products, or changes in current coverage or reimbursement, could materially impact our revenue and future growth41% rewritten
16. 18other future products, may negatively affect the adoption and use of our ALLY System or other future products and technologies, and the prices paid for such products may declineNew
17. 19We provide a limited warranty for our products
18. 20Product liability suits brought against us could cause us to incur substantial liabilities, limit the selling or leasing of our existing products and interfere with commercialization of any products that we may develop
19. 21Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured liabilities
20. 22Our financial results may fluctuate significantly and may not fully reflect the underlying performance of our business
21. 23changes in our ability to obtain regulatory clearance, certification or approval for our product candidates
22. 24If we fail to manage our anticipated growth effectively, or are unable to increase or maintain our manufacturing capacity, we may not be able to meet customer demand for our products and our business could suffer
23. 25the need to hire, train and manage additional qualified personnel
24. 26If we choose to acquire new and complementary businesses, products or technologies, we may be unable to complete these acquisitions or to successfully integrate them in a cost-effective and non-disruptive manner
25. 27Our future growth depends on our ability to retain members of our senior management and other key employees. If we are unable to retain or recruit qualified personnel for growth, our business results could suffer49% rewritten
26. 28to comprehensively apply patches or confirm that measures are in place to mitigate all such vulnerabilities, or that patches will be applied before vulnerabilities are exploited by a threat actorNew
27. 29The actual or perceived failure to comply with data privacy and security laws and other obligations could have a material adverse effect on our business, results of operations and financial condition41% rewritten
28. 30Performance issues, service interruptions or price increases by our shipping carriers could adversely affect our business and harm our reputation and ability to provide our products on a timely basis
29. 31Intangible assets on our books may lead to significant impairment charges

Risks Related to Government Regulation

1. 32Our products and operations are subject to extensive government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements could harm our business
2. 33the potential for approval or certification policies or regulations of the FDA or applicable foreign regulatory authority or notified body to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance, certification or approval26% rewritten
3. 34Failure to comply with post-marketing regulatory requirements could subject us to enforcement actions, including substantial penalties, and might require us to recall or withdraw a product from the market
4. 35Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our reputation, business, financial condition and results of operations
5. 36Our products must be manufactured in accordance with federal, state and foreign regulations, and we or any of our suppliers could be forced to recall products or terminate production if we fail to comply with these regulations
6. 37Any of these actions could significantly and negatively affect supply of our products. If any of these events occurs, our reputation could be harmed, we could be exposed to product liability claims and we could lose customers and experience reduced sales and increased costs
7. 38If we do not obtain and maintain international regulatory registrations, clearances, certifications or approvals for our products, we will be unable to market and sell our products outside of the United States
8. 39The clinical trial process is lengthy and expensive with uncertain outcomes. Results of earlier studies may not be predictive of future clinical trial results, or the safety or efficacy profile for such products
9. 40our current or future products may have undesirable side effects or other unexpected characteristics
10. 41Legislative or regulatory reforms in the United States or the EU may make it more difficult and costly for us to obtain regulatory clearances, certifications or approvals for our products or to manufacture, market or distribute our products after clearance, certification or approval is obtained83% rewritten
11. 42we are not able to maintain regulatory compliance, we may be subject to enforcement action and we may not achieve or sustain profitabilityNew
12. 43Enacted and future healthcare legislation may increase the difficulty and cost for us to commercialize our ALLY System or other products we may develop in the future and may affect the prices we may set27% rewritten
13. 44We may be subject to certain federal, state and foreign laws pertaining to healthcare fraud and abuse, including anti-kickback, self-referral, false claims and fraud laws, and any violations by us of such laws could result in fines or other penalties
14. 45EU and other foreign law equivalents of each of the laws, including reporting requirements detailing interactions with and payments to healthcare providers
15. 46We are subject to anti-corruption, anti-bribery and similar laws and any violations by us of such laws could result in fines or other penalties
16. 47Our employees, independent contractors, principal investigators, consultants, vendors, distributors and contract research organizations may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements

Risks Related to Intellectual Property Matters

1. 48Our success will depend on our ability to obtain, maintain, and protect our intellectual property rights94% rewritten
2. 49we do not adequately protect our intellectual property and proprietary technology, competitors may be able to use our technologies we have acquired in the marketplace and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitabilityNew
3. 50our commercial activities or products will not infringe upon the patents of others
4. 51Obtaining 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
5. 52Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our existing and future products
6. 53If we cannot license and maintain rights to use third-party technology on reasonable terms, we may not be able to successfully commercialize our products. Our licensed or acquired technology may lose value or utility or over time30% rewritten
7. 54We may become a party to intellectual property litigation or administrative proceedings that could be costly and could interfere with our ability to sell and market our products
8. 55attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all, or from third parties who may attempt to license rights that they do not have
9. 56If we are unable to protect the confidentiality of our other proprietary information, our business and competitive position may be harmed25% rewritten
10. 57A company may attempt to commercialize competing products utilizing our proprietary design, trademarks or trade names in foreign countries where we do not have any patents or patent applications and where legal recourse may be limited. This may have a significant commercial impact on our foreign business operations27% rewritten
11. 58We may be subject to claims that we or our employees have misappropriated the intellectual property of a third party, including trade secrets or know-how, or are in breach of non-competition or non-solicitation agreements with our competitors
12. 59The failure of third parties to meet their contractual, regulatory, and other obligations could adversely affect our business
13. 60disagreements could cause delays in, or termination of, the research, development or commercialization of our products or result in litigation or arbitration
14. 61If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets and our business may be adversely affected

Risks Related to Artificial Intelligence Technologies

1. 62We use artificial intelligence technologies in our business, and the deployment, use, and maintenance of these technologies involve significant technological and legal risks
2. 63We develop and use artificial intelligence, or AI, machine learning, and automated decision-making technologies, including proprietary AI and machine learning algorithms and models, or collectively AI Technologies, throughout our business, and are making significant investments in this area23% rewritten
3. 64The regulatory framework governing the use of AI Technologies is rapidly evolving, and we cannot predict how future legislation and regulation will impact our ability to offer products or services that we develop which leverage AI Technologies90% rewritten
4. 65always be able to anticipate how to respond to these laws or regulations. Failure to appropriately respond to this evolving landscape may result in reputational, competitive and business harm as well as litigation and regulatory action and fines, penalties and expenses related theretoNew

Risks Related to Owning Our Common Stock

1. 66The large number of shares eligible for public sale could depress the market price of our common stock
2. 67We are a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to us will make our common stock less attractive to investors73% rewritten
3. 68We have issued shares of redeemable convertible preferred stock, and may in the future issue additional shares of preferred stock, with terms that could dilute the voting power or reduce the value of our common stock
4. 69North Run and its affiliates’ ownership may limit or preclude other stockholders’ ability to influence corporate matters
5. 70We do not anticipate paying cash dividends, and accordingly, stockholders must rely on stock appreciation for any return on their investment
6. 71Certain provisions in our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment and, therefore, may depress the trading price of our common stock
7. 72Our amended and restated certificate of incorporation designates certain courts as the sole and exclusive forums for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us
8. 73An active, liquid and orderly market for our common stock may not be sustained, and the trading price of our common stock is likely to be volatile
9. 74investor perception of us and our industry; and31% rewritten
10. 75We are obligated to develop and maintain proper and effective internal control over financial reporting and will be subject to other requirements that will be burdensome and costly
11. 76Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
12. 77If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline
13. 78Scrutiny and stakeholder expectations regarding environmental, social, and governance matters may cause us to incur expenses and liabilities or otherwise adversely impact our business, financial condition, or operations
14. 79Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations82% rewritten
15. 80carryforwards could expire unused, to the extent subject to expiration, and be unavailable to offset future taxable incomeNew