HTG Molecular Diagnostics (HTGMQ) Risk Analysis

Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our common stock.

Our amended and restated certificate of incorporation and our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders; (3) any action asserting a claim against us or any of our directors or officers or other employees arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate or our amended and restated bylaws; and/or (4) any action asserting a claim against us or any of our directors or officers or other employees governed by the internal affairs doctrine. The foregoing provisions do not apply to actions brought to enforce a duty or liability created by the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction. These exclusive forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find the exclusive forum provision in our governing documents to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could seriously harm our business.

Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders and may prevent attempts by our stockholders to replace or remove our current management. These provisions include: - authorizing the issuance of "blank check" preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval;- limiting the removal of directors by the stockholders;- creating a staggered board of directors;- prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;- eliminating the ability of stockholders to call a special meeting of stockholders; and - establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings. These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board of Directors, which is responsible for appointing the members of our management. In addition, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our Board of Directors. This provision could have the effect of delaying or preventing a change of control, whether or not it is desired by or beneficial to our stockholders. Further, other provisions of Delaware law may also discourage, delay or prevent someone from acquiring us or merging with us.

We expect that significant additional capital will be needed in the future to continue our planned operations. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by these and subsequent sales. New investors could also gain rights superior to our existing stockholders. Pursuant to our 2020 Equity Incentive Plan ("2020 Plan"), we are authorized to grant stock options and other equity-based awards to our employees, directors and consultants. Pursuant to our 2021 Inducement Plan ("Inducement Plan"), we are authorized to grant up to 300,000 shares to new employees as inducements material to such new employees entering into employment with us. The number of shares which may be granted under the Inducement Plan may be increased in the future by our board of directors without stockholder approval. In addition, our amended and restated 2014 Employee Stock Purchase Plan ("ESPP") authorizes us to offer, sell and issue shares to our employees. Increases in the number of shares available for future grant or purchase may result in additional dilution, which could cause our stock price to decline.

Our common stock is currently listed on The Nasdaq Capital Market under the symbol "HTGM." In order to maintain this listing, we must continue to satisfy minimum financial and other continued listing requirements and standards. There can be no assurance that we will be able to continue to comply with the applicable listing standards. If we were not able to comply with applicable listing standards, our shares of common stock would be subject to delisting. The delisting of our common stock from trading on Nasdaq may have a material adverse effect on the market for, and liquidity and price of, our common stock and impair our ability to raise capital. Delisting from Nasdaq could also have other negative results, including, without limitation, the potential loss of confidence by customers and employees, the loss of institutional investor interest and fewer business development opportunities. In the event that our common stock is delisted from Nasdaq and is not eligible for quotation or listing on another market or exchange, trading of our common stock could be conducted only in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our common stock, and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline further.

The trading price of our common stock may be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. These factors include: - actual or anticipated quarterly variation in our results of operations or the results of our competitors;- announcements by us or our competitors of new products, significant contracts, commercial relationships or capital commitments;- failure to obtain or delays in obtaining product approvals or clearances from the FDA or foreign regulators;- adverse regulatory or coverage and reimbursement announcements;- issuance of new or changed securities analysts' reports or recommendations for our stock;- developments or disputes concerning our intellectual property or other proprietary rights;- commencement of, or our involvement in, litigation;- market conditions in the life sciences and molecular diagnostics markets;- manufacturing disruptions;- any future sales of our common stock or other securities;- any change to the composition of our Board of Directors, executive officers or key personnel;- our failure to meet applicable Nasdaq listing standards and the possible delisting of our common stock from Nasdaq;- announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;- general economic conditions and slow or negative growth of our markets - other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, such as the recent Russian invasion of Ukraine as well as continued and any new sanctions against Russia by, among others, the United States and the European Union, which restrict a wide range of trade and financial dealings with Russia and Russia parties, public health issues including health epidemics or pandemics, such as COVID-19, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, any of which could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability; and - the other factors described in this report under the caption "Risk Factors – Risks Related to Our Common Stock." The stock market in general, and market prices for the securities of health technology companies like ours in particular, have from time-to-time experienced volatility that often has been unrelated to the operating performance of the underlying companies. COVID-19 and recent and potential future bank closures, for example, has resulted in significant volatility in the stock market over the last several months. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our operating performance. In several recent situations where the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. If any of our stockholders were to bring a lawsuit against us, the defense and disposition of the lawsuit could be costly and divert the time and attention of our management and harm our operating results. In addition, to date our common stock has generally been sporadically and thinly traded. As a consequence, the trading of relatively small quantities of our shares may disproportionately influence the price of our common stock in either direction. The price for our common stock could decline precipitously if even a moderate amount of our common stock is sold on the market without commensurate demand.

We are a "smaller reporting company" and a "non-accelerated filer" as defined in the Exchange Act, and for as long as we continue to be a "smaller reporting company" or a "non-accelerated filer," we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to "smaller reporting companies" or "non-accelerated filers," including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 (for so long as we are a "non-accelerated filer") and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements (for so long as we are a "smaller reporting company"). We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock and our stock price may be more volatile.