Rafina Innovations (VICA) Risk Analysis

2 Followers

Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Rafina Innovations disclosed 33 risk factors in its most recent earnings report. Rafina Innovations reported the most risks in the “Finance & Corporate” category.

Risk Overview Q3, 2018

Risk Distribution

45% Finance & Corporate

21% Tech & Innovation

12% Ability to Sell

9% Legal & Regulatory

9% Production

3% Macro & Political

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

S&P500 Average

Sector Average

Risks removed

Risks added

Risks changed

Rafina Innovations Risk Factors

New Risk (0)

Risk Changed (0)

Risk Removed (0)

No changes from previous report

The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q3, 2018

Main Risk Category

Finance & Corporate

With 15 Risks

Finance & Corporate

With 15 Risks

Number of Disclosed Risks

No changes from last report

S&P 500 Average: 32

No changes from last report

S&P 500 Average: 32

Recent Changes

0Risks added

0Risks removed

0Risks changed

Since Sep 2018

0Risks added

0Risks removed

0Risks changed

Since Sep 2018

Number of Risk Changed

No changes from last report

S&P 500 Average: 4

No changes from last report

S&P 500 Average: 4

See the risk highlights of Rafina Innovations in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 33

Finance & Corporate

Total Risks: 15/33 (45%)Above Sector Average

Share Price & Shareholder Rights6 | 18.2%

Share Price & Shareholder Rights - Risk 1

We are an "emerging growth company," and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company until December 31, 2018, provided that, if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time or if we have annual gross revenues of $1 billion or more in any fiscal year, we would cease to be an emerging growth company as of December 31 of the applicable year. We also would cease to be an emerging growth company if we issue more than $1 billion of non-convertible debt over a three-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include: - providing only three years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced "Management's discussion and analysis of financial condition and results of operations" disclosure; - not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting; - not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements; - reduced disclosure obligations regarding executive compensation; and - exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of reduced reporting burdens in this filing. In particular, in this filing, we have provided only two years of audited financial statements and have not included all of the executive compensation related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. In addition, the JOBS Act also provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to delay such adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates, on which adoption of such standards is required for public companies that are not emerging growth companies. As a result of such election, our financial statements may not be comparable to the financial statements of other public companies.

Share Price & Shareholder Rights - Risk 2

Because we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and may experience further dilution.

We are authorized to issue up to 700,000,000 shares of common stock, of which 256,133,852 shares are issued and outstanding as of May 15, 2018. Our board of directors has the authority to cause us to issue additional shares of common stock, and to determine the rights, preferences and privileges of such shares, without consent of any of our stockholders. Consequently, the stockholders may experience more dilution in their ownership of our stock in the future.

Share Price & Shareholder Rights - Risk 3

Because we can issue shares of preferred stock which will have certain voting rights, which, if voted collectively, could result in a control of any matters put before the Company's stockholders, the shareholders of our common stock will suffer substantial dilution if issued or converted.

We have the right to issue a total of 5,000,000 shares of Series A Preferred Stock. Except with respect to matters which adversely affect the holders of Series A Preferred Stock, as required by law, or as required by the Articles of Incorporation, the holders of Series A Preferred and the holders of Common Stock shall be entitled to notice of any stockholders' meeting and to vote as a single class upon any matter submitted to the stockholders for a vote, on the following basis: (a) holders of Common Stock shall have one vote per share of Common Stock held by them; and (b) holders of Series A Preferred Stock shall have 50 votes per share of Series A Preferred Stock held by them. Holders of the Series A Preferred Stock have voting rights with respect to matters that generally require the approval of voting stockholders, in addition to voting rights as specifically required by Nevada law. In the event the holders of Series A Preferred Stock vote collectively as to any matter put before a vote, such holders of Series A Preferred Stock could control the vote. While the holders of Series A Preferred Stock have not advised that they intend to vote collectively on any matter, nor are we aware of any voting agreements currently in place, we cannot know with certainty that such holders of Series A Preferred Stock will not vote collectively in the future or enter into any voting agreements. Further, the holders of any Series A Preferred Stock will have the right to convert to common stock at their election on the basis of 20 shares of common stock for each one share of Series A Preferred Stock issued, thus the holders of our common stock would suffer substantial dilution upon conversion.

Share Price & Shareholder Rights - Risk 4

A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations, and we may go out of business.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.

Share Price & Shareholder Rights - Risk 5

Our stock is a penny stock. Trading of our stock may be restricted by the Securities and Exchange Commission's penny stock regulations which may limit a stockholder's ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

Share Price & Shareholder Rights - Risk 6

Technology company stock prices are especially volatile, and this volatility may depress the price of our common stock.

The stock market has experienced significant price and volume fluctuations, and the market prices of technology companies have been highly volatile. We believe that various factors may cause the market price of our common stock to fluctuate, perhaps substantially, including, among others, the following: - announcements of developments in our patent enforcement actions, should patents be granted to us; - developments or disputes concerning our inventions or patents, if granted; - our competitors' technological innovations; - developments in relationships with licensees;- variations in our quarterly operating results; - our failure to meet or exceed securities analysts' expectations of our financial results; - a change in financial estimates or securities analysts' recommendations; - changes in management's or securities analysts' estimates of our financial performance; - changes in market valuations of similar companies; - the current sovereign debt crises affecting several countries in the European Union and concerns about sovereign debt of the United States; - announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital commitments, new technologies, or patents, if granted; and - failure to complete significant transactions. The financial crisis affecting the banking system and financial markets and the uncertainty in global economic conditions, which began in late 2007 and has continued up until today, have resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in the credit, equity and fixed income markets. If investors have concerns that our business, operating results and financial condition will be negatively impacted by global economic conditions, our stock price could fluctuate significantly in future periods. In addition, we believe that fluctuations in our stock price during applicable periods can also be impacted by court rulings and/or other developments in our patent licensing and enforcement actions. Court rulings in patent enforcement actions are often difficult to understand, even when favorable or neutral to the value of the patents we intend to apply for and our overall business, and we believe that investors in the market may overreact, causing fluctuations in our stock prices that may not accurately reflect the impact of court rulings on our business operations and assets. In the past, companies that have experienced volatility in the market price of their stock have been the objects of securities class action litigation. If our common stock was the object of securities class action litigation, it could result in substantial costs and a diversion of management's attention and resources, which could materially harm our business and financial results.

Accounting & Financial Operations4 | 12.1%

Accounting & Financial Operations - Risk 1

Our financial results may vary significantly from quarter-to-quarter due to a number of factors, which may lead to volatility in our stock price.

Our quarterly revenue and results of operations may vary significantly from quarter-to-quarter if, and when, we (i) expand our chain of P&O Clinics to increase our revenue in this segment, and (ii) successfully commercialize any one of our technologies so that we are actively receiving both licensing fees and royalties from the ongoing sales of our products. While we are generating revenue at our flagship P&O clinic and we are earning revenue from licensing fees for access to our technology by industry partners, we are still working on expanding our revenue base so that we can cover operations and so that we can make accurate predictions about our annual operating costs and funding requirements. This variability may lead to volatility in our stock price as research analysts and investors respond to these quarterly fluctuations. These fluctuations are due to numerous factors, including: fluctuations in consumer demand for our products; our ability to design and deliver products to our consumers in a timely and cost-effective manner; quality control problems in the manufacturing operations; our ability to timely obtain adequate quantities of the components used in our products; new product introductions and enhancements by us and our competitors; unanticipated increases in costs or expenses; and fluctuations in foreign currency exchange rates. The foregoing factors are difficult to forecast, and these, as well as other factors, could materially and adversely affect our quarterly and annual results of operations.

Accounting & Financial Operations - Risk 2

We do not intend to pay dividends on any investment in the shares of our stock.

We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stock's price. This may never happen and investors may lose all of their investment in us.

Accounting & Financial Operations - Risk 3

We have a limited business history and have losses that we expect to continue into the future. If the losses continue we will have to suspend operations or cease functioning.

We were incorporated on March 26, 2007, and have commenced our proposed business operations after a change in business focus in fiscal 2013. To date we have earned minimal revenues, and gross profit of $225,564 in fiscal 2017, which has not been sufficient to cover our operational overheads. Our net loss since inception is $34,736,633, While we have existing operations and have commenced revenue generating operations, we do not have revenues sufficient to meet our ongoing overhead and have no significant assets other than fixed assets and cash on hand. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. We have a limited operating history, upon which an evaluation of our future success or failure can be made. Prior to completion of the development stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. If our business plan is not successful and we are not able to operate profitably, then our stock may become worthless and investors may lose all of their investment in our company. Our ability to achieve and maintain profitability and positive cash flow is dependent upon: - our ability to find profitable markets in which to operate our P&O total rehabilitation clinics and launch commercial products derived from our technologies; - our ability to generate revenues; and - our ability to manage research, development and costs of operations. While we believe that our business plan has merit, there can be no assurance that we will be able to achieve any of the above and be successful in our future planned operations, and if our losses continue we will have to suspend operations or cease functioning.

Accounting & Financial Operations - Risk 4

Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

While we were incorporated in 2007 we commenced operations in our chosen field of business focus in fiscal 2013. We have commenced revenue generating operations in our two targeted fields of operation, however, neither revenue stream is presently sufficient to meet our operational overheads. We will require further capital and additional expansion of our areas of business focus in order to achieve profitable operations. While we are operating a successful P&O clinic in Glasgow, Scotland we have not yet demonstrated our ability to successfully franchise our "P&O Clinics concept" or open additional clinics following our flagship location. In addition, we have not yet successfully commercialized any of our developed technologies. We are currently working with industry partners towards the presentation of products based on our technologies to the marker. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history demonstrating successful operations across all our areas of business focus. In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition from a company with a research and development focus to a company capable of supporting commercial activities. We may not be successful in such a transition.

Debt & Financing2 | 6.1%

Debt & Financing - Risk 1

We may be unable to raise additional capital if it should be necessary, which could harm our ability to compete.

We expect to incur significant expenditures in order to establish an international brand, to develop both product and process technology, and to operate P&O clinics around the world. We do not currently have the funds available to effectuate our business plan. We have to date relied on loans from our chief executive officer and certain private placements of our common stock to fund our ongoing operations, as well as revenues generated from our Glasgow Clinic and initial technology access fees, however, we cannot be assured that these opportunities will provide funding for our ongoing operations and we may require substantial funding that may not be available when required. We will be required to seek substantial funding in the equity markets or by loans for operations. We may not be able to raise funds when needed, or on acceptable terms.

Debt & Financing - Risk 2

We may not generate sufficient cash flow to service our debt, pay our contractual obligations and operate our business.

Our ability to make payments on our indebtedness and contractual obligations, and to fund our operations depends on our future performance and financial results, which, to a certain extent, are subject to general economic, financial, competitive, regulatory and other factors, including the interest rate environment, that are beyond our control. Until such time as we can establish operations to generate sufficient liquidity to meet our obligations as they come due you are at risk of our business failing and the loss of your investment. There can be no assurance that our business will generate sufficient cash flow, if any, from operations in the future to service our debt, pay our contractual obligations and operate our business as currently planned.

Corporate Activity and Growth3 | 9.1%

Corporate Activity and Growth - Risk 1

Our results of operations will suffer if we are unable to manage our operations effectively.

The sale and shipment of our products across international borders will subject us to extensive foreign governmental trade, import and export, and custom regulations and laws. Compliance with these regulations is costly and exposes us to penalties for non-compliance. Other laws and regulations that can significantly impact us include various anti-bribery laws and anti-boycott laws. Any failure to comply with applicable legal and regulatory obligations could impact us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties, including imprisonment of individuals, fines and penalties, denial of export privileges, seizure of shipments, restrictions on certain business activities and exclusion or debarment from government contracting. Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our distribution and sales activities. In addition, some of the countries in which we may sell our products may be subject to political, economic or social instability. Our intended international operations expose us and our distributors to risks inherent in operating in foreign jurisdictions. These risks include: - adverse changes in tariffs and trade restrictions; - political, social and economic instability and increased security concerns;- longer collection periods and difficulties in collecting receivables from foreign entities; - exposure to different legal standards;- transportation delays and difficulties of managing international distribution channels; - lack of stringent protection of intellectual property;- potentially adverse tax consequences and the complexities of foreign value-added tax systems; - difficulties in staffing and managing foreign operations;- obstacles to obtaining domestic and foreign export, import and other governmental approvals, permits and licenses and compliance with foreign laws; - limitations on the repatriation of earnings; and - increased financing costs. These risks may limit or disrupt our operations, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization or expropriation without fair compensation. Our continued success as a global company depends, in part, on our ability to develop and implement policies and strategies that are effective in anticipating and managing these and other risks in the countries in which we do business. Failure to manage these and other risks may have a material adverse effect on our operations in any particular country and on our business as a whole.

Corporate Activity and Growth - Risk 2

If we cannot successfully implement our business strategy, our business, results of operations and potential for growth will be adversely affected.

Our business strategy includes the development and marketing of our products and the obtaining of regulatory approval to sell our products in certain key markets and the acquisition or direct development of P&O clinics in various jurisdictions. Our ability to achieve our business strategy is subject to a variety of factors, many of which are beyond our control. In addition, the implementation of our business strategy may not improve our operating results. We may decide to alter or discontinue aspects of our business strategy and may adopt alternative or additional strategies due to business or competitive factors not currently foreseen, such as the introduction of new products or technologies by our competitors or the lack of clients for our clinics. Any failure to successfully implement our business strategy would have a material adverse effect on our business, financial condition and results of operations.

Corporate Activity and Growth - Risk 3

Implications of being an emerging growth company

As a company with less than $1 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we may remain an emerging growth company until December 31, 2018, subject to satisfaction of certain conditions. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure and other requirements that are applicable to other public companies that are not emerging growth companies. In particular, in this annual report, we have provided only two years of audited financial statements and have not included all of the executive compensation related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

Tech & Innovation

Total Risks: 7/33 (21%)Below Sector Average

Innovation / R&D2 | 6.1%

Innovation / R&D - Risk 1

We may fail to receive positive clinical results for our products in development that require clinical trials, and even if we receive positive clinical results, we may still fail to receive the necessary clearance or approvals to market our products.

In the development of new products or new indications for, or modifications to, existing products, we may conduct or sponsor clinical trials. Clinical trials are expensive and require significant investment of time and resources. Clinical trials are subject to regulations for clinical studies in each respective country and, failure to comply with such regulations, including, but not limited to, failure to obtain adequate consent of subjects, failure to adequately disclose financial conflicts, or failure to report data or adverse events accurately, could result in fines, penalties, and/or suspension of trials.

Innovation / R&D - Risk 2

Our business may be harmed by technological and therapeutic changes, or the demand for our services could be diminished by the development of alternative treatments. Future innovations could make our inventions obsolete.

Our success will depend, in part, on continued demand for products that will incorporate our inventions. Changes in technology or customer requirements could render these inventions obsolete or unmarketable.

Trade Secrets3 | 9.1%

Trade Secrets - Risk 1

Our success depends in part on our proprietary technology and if we are unable to successfully enforce our intellectual property rights, our competitive position may be harmed.

Our success will depend in part on our ability to maintain existing intellectual property and to obtain and maintain further intellectual property protection for our products, in the U.K., Europe, the U.S.A., and in other countries. Our inability to do so could harm our competitive position. We do not currently have any granted patents related to our technology and our current technology could be at risk if we successfully obtain patent protection. While we have applied for patents for various products based on our IPR, there is no assurance we will be successful in obtaining these patents. We will rely on our IP portfolio of future patent applications to protect a large part of our intellectual property and our competitive position. However, our future patent filings may not issue as patents. Additionally, any patents issued to us may be challenged, invalidated, held unenforceable, circumvented, or may not be sufficiently broad to prevent third parties from producing competing products similar in design to our products. In addition, protection afforded by foreign patents may be more limited than that provided under U.S. patents and intellectual property laws.

Trade Secrets - Risk 2

We rely on confidentiality agreements that could be breached and may be difficult to enforce which could have a material adverse effect on our business and competitive position.

Our policy is to enter into agreements relating to the non-disclosure of confidential information with third parties, including our contractors, consultants, advisors and research collaborators, as well as into agreements that purport to require the disclosure and assignment to us of the rights to the ideas, developments, discoveries and inventions of our employees and consultants while we employ them. However, these agreements can be difficult and costly to enforce. Moreover, to the extent that our contractors, consultants, advisors and research collaborators apply or independently develop intellectual property in connection with any of our projects, disputes may arise as to the proprietary rights to this type of information. If a dispute arises, a court may determine that the right belongs to a third party, and enforcement of our rights can be costly and unpredictable. In addition, we rely on trade secrets and proprietary know-how that we will seek to protect in part by confidentiality agreements with our employees, contractors, consultants, advisors or others. Despite the protective measures we employ, we still face the risk that: - these agreements may be breached; - these agreements may not provide adequate remedies for the applicable type of breach; or - our trade secrets or proprietary know-how will otherwise become known. Any breach of our confidentiality agreements or our failure to effectively enforce such agreements would have a material adverse effect on our business and competitive position.

Trade Secrets - Risk 3

The medical device industry is characterized by extensive litigation over patents and other intellectual property rights and we could become subject to litigation that could be costly, result in the diversion of management's time and efforts, require us to pay damages, and/or prevent us from marketing our existing or future products.

We may be the subject of patent or other litigation in the future. An adverse determination in a patent suit in any litigation or interference proceeding to which we may become a party could subject us to significant liabilities. An adverse determination of this nature could also put our patents, when granted, at risk of being invalidated or interpreted narrowly or require us to seek licenses from third parties. Licenses may not be available on commercially reasonable terms or at all, in which event our business would be materially adversely affected. We may also receive letters from third parties drawing our attention to their patent rights. While we do not believe that we infringe any valid and enforceable rights which have been brought to our attention, there may be other more pertinent rights of which we are presently unaware. If we infringe the patents or proprietary rights of other parties, our ability to grow our business will be severely limited. The defense and prosecution of intellectual property suits, interference proceedings and related legal and administrative proceedings could result in substantial expense to us and significant diversion of effort by our technical and management personnel.

Technology2 | 6.1%

Technology - Risk 1

We will rely on information technology systems for accounting and finance, inventory management, engineering, distribution and other functions, and to maintain our research and development data. If such adopted information technology systems fail to adequately perform these functions, or if we experience an interruption in their operation, our business, financial condition and results of operations could be adversely affected.

The efficient operation of our business will be dependent on our information technology systems which we intend to develop. We will rely on our information technology systems to effectively manage: - sales and marketing, accounting and financial functions; - order entry, order fulfillment and inventory replenishment processes;- engineering tasks; and - our research and development data. The failure of our intended information technology systems to perform as we anticipate, or our failure to effectively implement new systems, could disrupt our business and product development and could result in decreased sales, increased overhead costs, excess inventory and product shortages, all of which could have a material adverse effect on our business, financial condition and results of operations. In addition, our information technology systems are vulnerable to damage or interruption from: - tornado, earthquake, fire, flood and other natural disasters; - terrorist attacks and attacks by computer viruses or hackers;- power loss; and - network failure of computer systems, Internet, telecommunications or data. Any such interruption could have material adverse effect on our business, financial condition and results of operations.

Technology - Risk 2

Software defects may be discovered in our products which would damage our ability to sell our products, our results of operations, financial condition and cash flows.

Our systems will incorporate sophisticated computer software. Complex software frequently contains errors, especially when first introduced. Because our products are designed to be used to perform complex interventional procedures, we expect that physicians and hospitals will have an increased sensitivity to the potential for software and other defects. We cannot assure you that our software will not experience errors or performance problems in the future. If we experience software errors or performance problems, we would likely also experience: - loss of revenue; - increase in reportable adverse events to applicable authorities; - delay in market acceptance of our products; - damage to our reputation; - additional regulatory filings; - product recalls; - increased service or warranty costs; and/or - product liability claims relating to the software defects.

Ability to Sell

Total Risks: 4/33 (12%)Above Sector Average

Competition1 | 3.0%

Competition - Risk 1

If we do not enhance our product offerings, either through the acquisition of or investment in new and complementary technologies, products or businesses, or our research and development efforts, we may be unable to compete effectively.

Our success depends in part on our ability to continually enhance and broaden our product offerings in response to changing customer demands, competitive pressures and technologies, and our ability to increase our market share. Accordingly, we expect to consider opportunities to acquire or make investments in other technologies, products and businesses that could enhance our capabilities, complement our current technology, or expand the breadth of our markets or customer base. Acquisitions and strategic investments involve numerous risks, including: - problems assimilating the purchased technologies, products or business operations; - issues maintaining uniform standards, procedures, controls and policies;- unanticipated costs associated with the acquisition or strategic investment; - diversion of management's attention from our core business;- adverse effects on existing business relationships with third-party distributers, suppliers and customers; - risks associated with entering new markets in which we have limited experience;- our ability to obtain regulatory approvals to market new products; and - potential loss of key employees of acquired businesses. While we are working on complementary products to expand our product portfolio, currently our sole commitment is for the development of our Flexisense technology. We do not know if we will be able to successfully complete any further acquisitions and/or product development, or whether we will be able to successfully integrate any acquired business, product or technology into our business or retain any key personnel, suppliers or distributors. Our ability to successfully grow through acquisitions depends upon our ability to identify, negotiate, complete and integrate suitable acquisitions and to obtain any necessary financing. If we are unable to integrate any acquired technology, products or business effectively, our business, financial condition and results of operations could be materially adversely affected. Furthermore, research and development efforts may require a substantial investment of time and resources before we are adequately able to determine the commercial viability of a new product, technology, material or other innovation. In addition, even if we are able to successfully develop enhancements or new generations of our products, these enhancements or new generations of products may not produce net sales in excess of the costs of development and they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of products embodying newer technologies or features.

Demand2 | 6.1%

Demand - Risk 1

If healthcare professionals do not adopt our products in sufficient numbers or as rapidly as we anticipate, our operating results will be harmed.

The success of any of our products which we may develop will depend heavily on acceptance by healthcare professionals who will prescribe and recommend our products, and our failure to maintain a high level of confidence by key healthcare professionals in our products could adversely affect our business.

Demand - Risk 2

Consumers may not use our services, and thus we may never become profitable.

Our products represent a significant change from traditional diabetes treatment, and patients may be reluctant to accept them, or may not find them preferable to conventional treatment. In addition, patients may not comply with recommended treatment guidelines which could compromise the effectiveness of their treatment. Our success will depend upon the rapid acceptance of our products by a large number of potential patients to whom we intend to actively market. Market acceptance will depend in part upon the recommendations of prosthetists and orthotists, as well as other factors including effectiveness, safety, reliability, improved treatment aesthetics and greater comfort and hygiene compared to conventional prosthetic-orthotic products. Furthermore, consumers may not respond to our direct marketing campaigns or we may be unsuccessful in reaching our target audience. If consumers prove unwilling to adopt our products as rapidly or in the numbers that we anticipate, our operating results will be harmed.

Sales & Marketing1 | 3.0%

Sales & Marketing - Risk 1

While we have entered into agreements with a handful of licensing partners, we have not yet introduced commercial, saleable products into the market, and may never have saleable products.

We have only recently entered into preliminary licensing agreements with commercial partners with a goal of bringing commercial products to market. As yet we have not introduced any commercial products with these partners. Further, many of our products require additional research and development. We will also need to develop a market for our products if our commercial partners do not have an established marketing channel. There can be no assurance that we will successfully find commercial partners, market our products or complete our research and development of new products.

Legal & Regulatory

Total Risks: 3/33 (9%)Below Sector Average

Regulation2 | 6.1%

Regulation - Risk 1

Extensive and changing government regulation of the healthcare industry may be expensive to comply with and exposes us to the risk of substantial government penalties.

We face risks related to our international operations, including the need to obtain necessary foreign regulatory clearance or approvals. If we fail to obtain regulatory clearances in countries in which we intend to operate for products under development, we will not be able to commercialize these products in those countries. Sales of our products will be subject to regulatory requirements that vary widely from country to country. We may be unable to obtain regulatory approvals in the countries in which we intend to operate or to market our products. We may also incur significant costs in attempting to obtain and in maintaining regulatory approvals. If we experience delays in receipt of approvals to market our products or if we fail to receive these approvals, we may be unable to market our products or enhancements in our intended markets in a timely manner, if at all. - Noncompliance with applicable regulatory requirements can result in enforcement action which may include recalling products, ceasing product marketing, and paying significant fines and penalties, which could limit product sales, delay product shipment and adversely affect our profitability.

Regulation - Risk 2

FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.

In addition to the "penny stock" rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

Litigation & Legal Liabilities1 | 3.0%

Litigation & Legal Liabilities - Risk 1

Our business exposes us to risks of product liability claims, and we may incur substantial expenses if we are sued for product liability.

Medical devices involve an inherent risk of product liability claims. We may be held liable if any product we develop or any product that uses or incorporates any of our technologies causes injury or is otherwise found unsuitable. Although we intend to continue to maintain product liability insurance, adequate insurance may not be available on acceptable terms and may not provide adequate coverage against potential liabilities. A product liability claim, regardless of its merit or eventual outcome, could result in significant legal defense costs. Costs associated with these potential claims would increase our expenses, and could have a material adverse effect on our business, financial condition and results of operations.

Production

Total Risks: 3/33 (9%)Below Sector Average

Manufacturing1 | 3.0%

Manufacturing - Risk 1

Issues related to the quality and safety of our products, packaging or sterilization could cause a product recall resulting in harm to our reputation and negatively impact our operating results.

Issues related to quality and safety of products, packaging or sterilization could jeopardize our image and reputation. Negative publicity related to these types of concerns, whether valid or not, might negatively impact demand for our products, or cause production and delivery disruptions. We may need to recall products if they become unfit for use.

Employment / Personnel1 | 3.0%

Employment / Personnel - Risk 1

If we lose our key personnel or are unable to attract and retain key personnel, we may be unable to pursue business opportunities or develop our products.

We are highly dependent upon the experience and ability of certain key employees in our management and clinical bioengineering teams, including Sotirios Leontaritis, Director, President, Chief Financial Officer and Chief Executive Officer; Nikolaos Kardaras, Director and Secretary, and Dr. Christos Kapatos, Director and CTO, who heads the development of our technology. The loss of the services of any one of those individuals could have an adverse effect on our business, and may significantly delay or prevent the achievement of our product development and other business objectives. Our future success will also depend on our ability to identify, recruit, train and retain additional qualified personnel. There is currently a shortage of skilled clinical, bioengineering and management personnel and intense competition for these personnel. Thus, we may not be successful in retaining our key personnel or their services.

Supply Chain1 | 3.0%

Supply Chain - Risk 1

If the manufacturers of our products encounter problems or delays in the manufacturing process, our ability to generate revenue will be limited.

We intend to rely on third parties for our manufacturing process if we determine to manufacture and market our products directly. Our rapid growth may exceed the capacity of these manufacturers to produce our products in sufficient quantities to support our growth. In the event of delivery delays or shortages of our products, our business and growth prospects may be harmed. The manufacturers of our products may encounter difficulties in scaling up production to meet demand, including: - problems involving production yields; - shortages of key manufacturing equipment;- shortages of qualified personnel; and - failure to develop new software processes. If demand for our products exceeds manufacturing capacity, we could develop a substantial backlog of customer orders. If our manufacturers are unable to establish and maintain larger-scale manufacturing capabilities, our ability to generate revenue will be limited and our reputation in the marketplace would be damaged.

Macro & Political

Total Risks: 1/33 (3%)Below Sector Average

Economy & Political Environment1 | 3.0%

Economy & Political Environment - Risk 1

Prolonged negative economic conditions in domestic and global markets may adversely affect our suppliers and consumers, which could harm our financial position.

Global credit and financial markets have experienced extreme disruptions over the past few years, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. Although these markets have recently shown signs of rebounding, there can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by the recent economic downturn, volatile business environments and continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate further, or do not improve, it may make debt or equity financings, if needed, more difficult, more costly and more dilutive. Failure to secure financing, if needed, in a timely manner, on favorable terms or at all could have a material adverse effect on our growth strategy, financial performance and stock price, and could require us to delay or abandon certain aspects of our business strategy. These negative changes in domestic and global economic conditions or additional disruptions of either or both of the financial and credit markets may have a material adverse effect on our business, financial condition and results of operations.

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?

Risk factors are any situations or occurrences that could make investing in a company risky.

The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.

They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.

It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.

How do companies disclose their risk factors?

Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.

Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.

Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.

According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.

How can I use TipRanks risk factors in my stock research?

Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.

You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.

Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.

A simplified analysis of risk factors is unique to TipRanks.

What are all the risk factor categories?

TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.

1. Financial & Corporate

Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.

2. Legal & Regulatory

Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
Regulation – risks related to compliance, GDPR, and new legislation.
Environmental / Social – risks related to environmental regulation and to data privacy.
Taxation & Government Incentives – risks related to taxation and changes in government incentives.

3. Production

Costs – risks related to costs of production including commodity prices, future contracts, inventory.
Supply Chain – risks related to the company’s suppliers.
Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.

4. Technology & Innovation

Innovation / R&D – risks related to innovation and new product development.
Technology – risks related to the company’s reliance on technology.
Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.

5. Ability to Sell

Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
Competition – risks related to the company’s competition including substitutes.
Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
Brand & Reputation – risks related to the company’s brand and reputation.

6. Macro & Political

Economy & Political Environment – risks related to changes in economic and political conditions.
Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
International Operations – risks related to the global nature of the company.
Capital Markets – risks related to exchange rates and trade, cryptocurrency.

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