Stock Performance and Market Conditions - The company's share price has experienced significant volatility, ranging from 92.50 from January 1, 2024, to December 31, 2024, with daily trading volumes fluctuating between approximately 156 and 2,539,556 shares[416]. - As of August 29, 2024, the company's average market capitalization was less than 1.00 for 30 consecutive business days[444]. - A reverse stock split of 1-for-25 was executed on January 3, 2025, to raise the trading price of the common stock to meet the Minimum Bid Price Standard, which was regained on February 3, 2025[445]. - The company is subject to quarterly monitoring by the NYSE for compliance with its business plan to regain compliance with listing standards[443]. Financial Strategy and Capital Raising - The company intends to retain future earnings to finance business development and does not plan to pay cash dividends in the foreseeable future[417]. - The company has entered into a Purchase Agreement with Chardan Capital Markets for a committed equity facility of up to 1.0 million raised from the sale of 75,618 shares as of March 21, 2025[420]. - The company plans to raise up to 48 million of Notes, with a potential conversion to 19,168 shares of common stock, representing 1% of the outstanding shares as of April 14, 2024[459]. - In July 2024, the company completed a private placement of 2,260,159 shares of Series A Preferred Stock, convertible to 90,407 shares of common stock, at a purchase price of 2.5 million, at a price of 5.23 per share, along with accompanying warrants[462]. - The company has the right to control the timing and amount of future sales of shares to Chardan, which may lead to substantial dilution for existing shareholders[457]. Compliance and Regulatory Challenges - The company is subject to increased legal, accounting, and financial compliance costs as a public entity, which may strain resources and divert management's attention[423]. - The company anticipates that ongoing changes in laws and regulations will increase compliance costs and complexity, potentially impacting business operations[424]. - The company is classified as an "emerging growth company" and a "smaller reporting company," allowing it to take advantage of certain exemptions from disclosure requirements, potentially affecting comparability with other public companies[430][432]. - The company may face substantial costs and management diversion due to potential securities class action litigation following periods of stock price volatility[433]. - The company is required to seek stockholder approval for the issuance of shares underlying certain warrants, which will be immediately exercisable upon receipt of such approval[465]. Internal Controls and Financial Reporting - The company identified material weaknesses in its internal control over financial reporting, including insufficient segregation of duties and lack of experienced staff, which may lead to misstatements in financial statements[435]. - If the company fails to maintain effective internal controls, it risks losing investor confidence, which could negatively impact its stock price[438]. - The company is currently working to remediate identified material weaknesses and has upgraded its enterprise resource planning system to SAP in August 2022[436]. Shareholder and Governance Issues - The company has established nomination rights for certain parties regarding its board of directors, which may lead to conflicts of interest[427]. - The company’s stockholders must provide advance notice to nominate individuals for election to the board, which may deter potential acquirers[456]. - The provisions in the company's Bylaws may discourage lawsuits against directors and officers, potentially increasing costs for stockholders[475]. - The exclusive forum provisions in the Bylaws may limit stockholders' ability to bring claims in preferred jurisdictions, which could lead to additional costs[475]. - The enforceability of the choice of forum provisions in the Bylaws has been challenged in legal proceedings, posing a risk to the company's operations and financial condition[475]. Currency and Interest Rate Risks - The company is exposed to foreign currency risks, particularly in Europe, the Middle East, and the Asia-Pacific region, which could significantly impact financial results[604]. - A 10% adverse change in foreign exchange rates could have impacted revenues by approximately 6% and expenses by 3%, affecting net loss by 2% for the year ended December 31, 2024[605]. - For the year ended December 31, 2023, a similar 10% adverse change in foreign exchange rates would have impacted revenues by approximately 5% and expenses by 2%, with a net loss impact of less than 1%[605]. - The company has not engaged in any foreign currency hedging activities to date but will reassess its approach as international operations grow[605]. - A hypothetical 10% change in interest rates would not have a material impact on the value of the company's cash, cash equivalents, net loss, or cash flows[601]. - The company had no variable rate debt outstanding as of December 31, 2024[602]. Financial Position - As of December 31, 2024, the company had cash and cash equivalents totaling $15.4 million, primarily invested in money market funds[601].
Allurion Technologies(ALUR) - 2024 Q4 - Annual Report