Sanara MedTech (SMTI) risk factors, FY2024 10-K

Risks Related to How We Operate Our Business

1. 01We have had a history of losses, which may continue as we expand our investment in THP
2. 02Our revenue growth for a particular period is difficult to predict, and a shortfall in forecasted revenues may harm our operating results
3. 03Our current comprehensive, value-based wound and skincare strategy involves growth through technology development, acquisitions and investments, which requires us to incur substantial costs and potential liabilities for which we may never realize the anticipated benefits
4. 04Failure to manage our growth strategy could harm our business
5. 05If we are unable to compete within our markets or our products, services and technologies do not gain market acceptance, our financial condition and operating results could suffer
6. 06Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer
7. 07If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results or prevent fraud and our business may be harmed and our stock price may be adversely impacted

Risks Related to Our Indebtedness

1. 08Our indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations
2. 09Our outstanding indebtedness is subject to certain operating and financial covenants that restrict our business and financing activities and may adversely affect our cash flow and our ability to operate our business

Risks Related to Our Products and Our Product Pipeline

1. 10Revenue generated from the sale of certain products is dependent on license agreements with certain manufacturers, and the termination of any of these license agreements could harm our business
2. 11Certain of our product candidates are still under development, and we may not be able to successfully commercialize any of these product candidates
3. 12Our future success will largely depend on our ability to maintain and further grow clinical acceptance and adoption of our products, and we may be unable to adequately educate healthcare practitioners on the use and benefits of our products
4. 13Disruption of, or changes in, our distribution model or customer base could harm our sales and margins
5. 14Interruptions in the supply of our products or inventory loss may adversely affect our business, financial condition and results of operations
6. 15Failure of any third-party assessments to demonstrate desired outcomes in proposed endpoints could have a negative impact on our business performance
7. 16Increased prices for, or unavailability of, raw materials used in our products could adversely affect our business, financial condition and results of operations

Risks Related to Our THP Platform and Planned Expansion into Value-Based Wound, Skincare and Other Services

1. 17Our planned expansion into value-based wound, skincare and other services could have a material adverse effect on our business, financial condition and results of operations
2. 18Our planned expansion into value-based wound, skincare and other services will require entrance into certain markets in which, in some cases, we have limited experience, which may not be successful and could be costly

Risks Related to Intellectual Property

1. 19If we are unable to adequately protect our intellectual property rights, we may not be able to compete effectively
2. 20CellerateRX Surgical is not currently protected by any pending patent application or any unexpired patent. CellerateRX Surgical may be subject to competition from the sale of substantially equivalent products that could adversely affect our business and operations
3. 21We may be found to infringe on or violate the intellectual property rights of others

Risks Related to Regulations

1. 22Our business is affected by numerous regulations relating to the development, manufacture, distribution, labeling, marketing and sale of our products
2. 23In addition, private consumer and competitor litigation tends to follow FDA enforcement actions and publications, such that a company that is targeted by FDA or another regulatory body is also at an increased risk of facing civil litigation (often in the form of class actions)
3. 24We are subject to various governmental regulations relating to the labeling, marketing and sale of our products
4. 25If we fail to obtain or experience significant delays in obtaining regulatory clearances or approvals to market future medical device products, we will be unable to commercialize these products until such clearance or approval is obtained
5. 26Delays in or changes to the FDA clearance and approval processes or ongoing regulatory requirements could make it more difficult for us to obtain FDA clearance or approval of new products or comply with ongoing requirements
6. 27We rely on our research and development partners to comply with applicable laws and regulations relating to product classification and when and what types of FDA marketing authorizations are needed to lawfully commercialize a new or updated medical product in the United States
7. 28We and our employees and contractors are subject, directly or indirectly, to federal, state and foreign healthcare fraud and abuse laws, including false claims laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties
8. 29Our officers, employees, independent contractors, principal investigators, consultants and commercial partners may engage in misconduct or activities that are improper under other laws and regulations, which would create liability for us
9. 30We could be adversely affected if healthcare reform measures substantially change the market for medical care or healthcare coverage in the United States

Risks Related to Ownership of Our Common Stock

1. 31It is possible that we will require additional capital to meet our financial obligations and support business growth, and this capital might not be available on acceptable terms or at all
2. 32The trading price of the shares of our common stock is highly volatile, and purchasers of our common stock could incur substantial losses
3. 33Our common stock does not have a vigorous trading market, and you may not be able to sell your securities at or near ask prices, or at all
4. 34The potential sale of large amounts of common stock may have a negative effect upon the market value of our shares
5. 35A few of our existing shareholders own a large percentage of our voting stock and have control over matters requiring shareholder approval and may delay or prevent a change in control or otherwise lead to actual or potential conflicts of interest
6. 36Our Certificate of Formation includes provisions limiting the personal liability of our directors for breaches of fiduciary duties under Texas law
7. 37Texas law, our Certificate of Formation and our Amended and Restated Bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that shareholders may consider favorable
8. 38Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a delisting of our common stock