ITEM 1A. RISK FACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below together with the ones in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021, as well as other information contained elsewhere in this Quarterly Report on Form 10-Q, including Part I, Item 1 “Financial Statements” and Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our other filings with the Securities and Exchange Commission, or SEC, before deciding whether to invest in our common stock. The occurrence of any of the events or developments described in our filings with the SEC could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.
Risks Related to our Financial Condition and Capital Requirements
Our strategic alternative review plan and cost restructuring plan may not be successful.
On November 2, 2022, the Company announced that it had initiated a review of strategic alternatives to maximize stakeholder value and engaged professional advisors, including investment banking and financial advisors, to support this process. We are considering possible strategic alternatives including a sale of the Company or its assets, a merger, reverse merger, wind-down, liquidation and dissolution or other strategic transaction. As the Company pursues strategic alternatives, on November 8, 2022, it put into place a reduction in force plan which includes an approximate 57.0% reduction in workforce in November 2022. There is no guarantee that the Company’s review of strategic alternatives to maximize stakeholder value will achieve their intended benefits or that our post-restructuring focus will be sufficient for us to achieve success. For example, our cost restructuring efforts may not result in the anticipated savings or other economic benefits, or could result in total costs and expenses that are greater than expected.
Our Board of Directors remains dedicated to diligently deliberating upon and making informed decisions that the directors believe are in the best interests of the Company and its stakeholders. There can be no assurance, however, that the Company’s current strategic direction, or the Board’s evaluation of strategic alternatives, will result in any initiatives, agreements, transactions or plans that will further enhance stakeholder value or result in any return for stockholders.
We will require substantial additional financing to continue operations beyond the first quarter of 2023. A failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our operations altogether.
As of September 30, 2022, we had working capital of $65.6 million and cash, cash equivalents and investments of $80.2 million. We believe that we will continue to expend substantial resources for the foreseeable future as we explore strategic alternatives related to veverimer.
We believe that our cash, cash equivalents and investments of $80.2 million as of September 30, 2022, will allow us to continue funding our operations through the first quarter of 2023. However, our existing cash, cash equivalents and investments are not likely to be sufficient to fund our operations through the second quarter of 2023. We have based these estimates on assumptions that may prove to be wrong, and we could spend our available capital resources much faster than we currently expect or require more capital to fund our operations than we currently expect. Moreover, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned and our review of strategic alternatives may not identify any available sources of funds. Any financing we identify may result in dilution to stockholders, imposition of debt covenants and repayment obligations, or other restrictions that may affect our business.
The amount and timing of our future funding requirements and our ability to raise additional capital will depend on many factors, including, but not limited to:
• the cost of fulfilling our minimum contractual obligations to our suppliers and vendors;
• the costs of operating as a public company;
• the costs of hiring and retaining personnel;
• the costs of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, including litigation costs and the outcome of such litigation; and
• the costs of defending against claims brought against the Company, its management and/or its Board of Directors, including litigation costs associated with shareholder, class action and derivative suits.
We cannot assure you that anticipated additional financing will be available to us on favorable terms, or at all. Any future debt financing into which we enter may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, redeem our stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.
Although we have been successful in obtaining financing through the issuance of our equity and debt securities and other debt financing, we cannot assure you that we will be able to do so in the future. If financing is not available at adequate levels, on reasonable terms or within a reasonable time frame, the Company will need to reevaluate its operating plans and could be required to significantly reduce operating expenses, out-license intellectual property rights to its investigational drug candidates and sell unsecured assets, or a combination of the above, any of which may have a material adverse effect on its business, results of operations, financial condition and/or its ability to fund its scheduled obligations on a timely basis or at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of this report.
Risks Related to Strategic Alternative Process and Potential Strategic Transaction
We may not be successful in identifying and implementing any strategic transaction and any strategic transactions that we may consummate in the future may not be successful.
Potential counterparties in a strategic transaction involving our Company may place minimal or no value on our assets. Further, the development and any potential commercialization of veverimer will require substantial additional cash. Consequently, any potential counterparty in a strategic transaction involving our Company may choose not to spend additional resources and continue development of veverimer or any alternative product candidates and may attribute little or no value, in such a transaction, to our assets.
While we are devoting significant efforts to identify and evaluate potential strategic alternatives, there can be no assurance that this strategic review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated, or lead to any stockholder value.
If a strategic transaction is not consummated, we may decide to pursue a dissolution and liquidation. In such an event, the amount of cash, if any, available for distribution to our stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.
We continue to evaluate all potential strategic options for the Company, including a sale of the Company or its assets, a merger, reverse merger, wind-down, liquidation and dissolution or other strategic transaction. However, there can be no assurance that we will be able to successfully consummate any particular strategic transaction. The process of continuing to evaluate these strategic options may be very costly, time consuming and complex and we have incurred, and may in the future incur, significant costs related to this continued evaluation, such as legal and accounting fees and expenses and other related charges. We may also incur additional unanticipated expenses in connection with this process. A considerable portion of these costs will be incurred regardless of whether any such course of action is implemented or transaction is completed. Any such expenses will decrease the remaining cash available for use in our business.
There can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated, lead to increased stockholder value, or achieve the anticipated results.
In addition, if our Board were to approve and recommend, and our stockholders were to approve, a dissolution and liquidation, we would be required under Delaware corporate law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to our stockholders. As a result of this requirement, a portion of our assets may need to be reserved pending the resolution of such obligations and the timing of any such resolution is uncertain. In addition, we may be subject to litigation or other claims related to a dissolution and liquidation. If a dissolution and liquidation were pursued, our Board, in consultation with our advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of our common stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or wind-down.
If we are successful in completing a strategic transaction, we may be exposed to other operational and financial risks.
Although there can be no assurance that a strategic transaction will result from the process we have undertaken to identify and evaluate strategic alternatives, the negotiation and consummation of any such transaction will require significant time on the part of our management, and the diversion of management’s attention may disrupt our business. The negotiation and consummation of any such transaction may also require more time or greater cash resources than we anticipate and expose us to other operational and financial risks, including:
•increased near-term and long-term expenditures;
•exposure to unknown liabilities;
•higher than expected acquisition or integration costs;
•incurrence of substantial debt or dilutive issuances of equity securities to fund future operations;
•write-downs of assets or goodwill or incurrence of non-recurring, impairment or other charges;
•increased amortization expenses;
•impairment of relationships with key suppliers or customers of any acquired business due to changes in management and ownership;
•inability to retain key employees of our Company; and
•possibility of future litigation.
Any of the above risks could have a material adverse effect on our business, financial condition and prospects.
Our ability to consummate a strategic transaction depends on our ability to retain our employees required to consummate such transaction.
Our ability to consummate a strategic transaction depends upon our ability to retain our employees required to consummate such a transaction, the loss of whose services may adversely impact the ability to consummate such transaction. On November 8, 2022, we undertook an organizational reduction in force that reduced our workforce in order to conserve our capital resources. Our cash conservation activities may yield unintended consequences, such as attrition beyond our planned reduction in workforce and reduced employee morale, which may cause remaining employees to seek alternative employment. Our ability to successfully complete a strategic transaction depends in large part on our ability to retain certain of our remaining personnel. If we are unable to successfully retain our remaining personnel, we are at risk of a disruption to our exploration and consummation of a strategic alternative as well as business operations.
Our strategic alternative review process and the associated headcount reduction may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business.
Our strategic alternative review plan may include additional restructuring and exit activities in the future, which may lead to additional expenses. For example, if the termination provisions are triggered in our contract manufacturing agreement with Patheon Austria GmbH & Co KG, or Patheon, we may become liable for a termination payment. In addition, if we take steps to terminate or sublease our existing property, we may realize losses.
In November 2022, we undertook an organizational reduction in force that significantly reduced our workforce. We may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from our restructuring efforts due to unforeseen difficulties, delays or unexpected costs. If we are unable to realize the expected operational efficiencies and cost savings from the restructuring, our operating results and financial condition would be adversely affected. Furthermore, our strategic alternative review plan may be disruptive to our operations. For example, our headcount reductions could yield unanticipated consequences, such as increased difficulties in implementing our business strategy, including retention of our remaining employees. Any employee litigation related to the headcount reduction could be costly and prevent management from fully concentrating on the business. Due to our limited resources, we may not be able to effectively manage our operations or recruit and retain qualified personnel, which may result in weaknesses in our infrastructure and operations, risks that we may not be able to comply with legal and regulatory requirements, and loss of employees and reduced productivity among remaining employees. If our management is unable to successfully manage this transition and restructuring activities, our expenses may be more than expected and we may be unable to implement our business strategy. As a result, our future financial performance, operations, and prospects would be negatively affected.
We may become involved in securities and shareholder litigation that could divert management’s attention and harm the Company’s business, and insurance coverage may not be sufficient to cover all costs and damages.
In the past, securities and shareholder litigation has often followed certain significant business transactions, such as the sale of a Company or announcement of any other strategic transaction, or the announcement of negative events, such as negative results from clinical trials. We may be exposed to such litigation even if no wrongdoing occurred. Litigation is usually expensive and diverts management’s attention and resources, which could adversely affect our business and cash resources and our ability to consummate a potential strategic transaction or the ultimate value our stockholders receive in any such transaction.
Risks Related to Government Regulation
We are dependent on the success of veverimer, our only investigational drug candidate. We did not conduct a successful VALOR-CKD trial and do not currently intend to pursue regulatory approval for and commercialization of veverimer. Even if we conduct a successful trial (or trials) in the future, we may still be unable to obtain regulatory approval.
To date, we have invested all our efforts and financial resources in the research and development and potential commercial launch of veverimer, which is our only investigational drug candidate. On October 24, 2022, the Company announced that the VALOR-CKD renal outcomes clinical trial (also known as TRCA-303) did not meet its primary endpoint, which was defined as the time to the first occurrence of any event in the composite endpoint of renal death, end-stage renal disease, or ESRD, or a confirmed greater than or equal to 40% reduction in estimated glomerular filtration rate, or eGFR, also known as DD40. As a result, we do not intend to pursue regulatory approval for and commercialization of veverimer.
Even if we were able to conduct a successful trial (or trials) in the future, we may be unable to obtain approval for veverimer. To obtain approval to market a drug product, a company must provide the U.S. Food and Drug Administration, or FDA, with clinical data that adequately demonstrate the safety and efficacy of the product for the indication sought in the New Drug Application, or NDA.
The FDA has broad discretion in determining whether to approve a drug and the FDA could find data from any future clinical trial or trials, in whole or in part, to be insufficient for a number of reasons, including the following reasons:
•concerns regarding the robustness and reliability of the trial results;
•concerns regarding the integrity of the trial data; and
•concerns that the trial results are not applicable to patients and medical practice in the United States.
If the FDA were to find that the results of any future clinical trial or trials, either in whole or in part, are inadequate for approval of veverimer, the FDA would not approve the NDA. Furthermore, the approval could be subject to rigorous postmarketing requirements and the FDA could seek to withdraw the approval for multiple reasons, including if there is a failure to conduct any required postmarketing trial with due diligence, a confirmatory postmarketing trial does not confirm the predicted clinical benefit, other evidence shows that the product is not safe or effective under the conditions of use, or promotional materials for the product are found by the FDA to be false and misleading.
Any further delay in obtaining, or inability to obtain, approval would delay or prevent commercialization of veverimer.
Even if we obtain regulatory approval for veverimer, we may be unable to successfully commercialize veverimer.
Even if we obtain regulatory approval for veverimer, we will need to develop or have a commercial organization, or collaborate with a third party for the commercialization of veverimer, establish commercially viable pricing and obtain approval for coverage and adequate reimbursement from third parties, including government payers. If we are unable to successfully commercialize veverimer, we may not be able to generate sufficient revenue to continue business.
The clinical and commercial success of veverimer will depend on a number of factors, including the following:
•an ability to conduct a successful trial;
•an ability to demonstrate veverimer’s safety and efficacy to the satisfaction of the FDA and/or foreign regulatory agencies;
•the timely reporting of trial results;
•the participation in a trial or trials by a sufficient number of subjects to demonstrate applicability of the trial results to the U.S. population;
•whether we are required by the FDA and/or foreign regulatory agencies to conduct additional clinical trials prior to or after approval to market veverimer;
•the prevalence and severity of adverse side effects of veverimer in clinical trials and during commercial use, if approved;
•the timely receipt of necessary regulatory and marketing approvals from the FDA and/or foreign regulatory agencies for veverimer;
•an ability to successfully commercialize veverimer, if approved for marketing and sale by the FDA and/or foreign regulatory agencies;
•an ability to manufacture clinical trial and commercial quantities of veverimer drug substance and drug product and to develop and maintain commercially viable and validated manufacturing processes that are compliant with current good manufacturing practices, or cGMP, at a scale sufficient to meet anticipated demand and over time enable us to reduce our cost of manufacturing;
•achieving and maintaining compliance with all regulatory requirements applicable to veverimer;
•success in educating physicians and patients about the potential benefits, risks, administration and use of veverimer;
•acceptance of veverimer as safe and effective by patients and the medical community;
•the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments;
•an ability to obtain and sustain an adequate level of reimbursement for veverimer by third-party payers;
•the effectiveness of marketing, sales and distribution strategy and operations;
•an ability to continue to obtain protection for and to enforce intellectual property rights in and to veverimer; and
•an ability to avoid and defend against third-party patent interference or patent infringement claims or similar proceedings with respect to applicable patent rights and patent infringement claims.
Many of these factors are beyond our control. Accordingly, we cannot assure you that we will ever be able to generate revenue through the sale of veverimer. If we are not successful in gaining approval of or in commercializing veverimer, or are significantly delayed in doing so, the business will be materially harmed.
Risks Related to Our Common Stock
The price of our common stock has, and may continue to fluctuate significantly, which could result in substantial losses for investors and securities class action and shareholder derivative litigation.
The trading price of our common stock has been and is likely to continue to be highly volatile and is subject to wide fluctuations in response to various factors, some of which are beyond our control. These factors include:
•announcements regarding the VALOR-CKD trial results, including the failure to meet the primary endpoint;
•adverse actions by the FDA or other regulatory authorities;
•changes in existing tax laws, treaties or regulations or the interpretations or enforcement thereof, or the enactment or adoption of new tax laws, regulations or policies;
•any adverse changes to our relationship with any manufacturers or suppliers;
•the success of our efforts to scale-up and optimize our manufacturing process;
•any intellectual property infringement actions in which we may become involved;
•actual or anticipated fluctuations in our operating results;
•changes in financial estimates or recommendations by securities analysts;
•announcements regarding shareholder or other litigation;
•trading volume of our common stock;
•sales of our common stock by us, our executive officers and directors or our stockholders in the future;
•announcements regarding the strategic alternative review process;
•general economic and market conditions and overall fluctuations in the United States equity markets; and
•the loss of any of our key scientific or management personnel.
Following announcement of the top-line results from the VALOR-CKD renal outcomes clinical trial, there was a significant decline in our stock price. Following announcement of the deficiency letter from the FDA, there was a significant decline in our stock price. An additional decline occurred after our announcement of the results of the End-of-Review Type A meeting in late October 2020.
On January 6, 2021, a putative securities class action was filed in the U.S. District Court for the Northern District of California against the Company and its CEO and CFO, Pardi v. Tricida, Inc., et al., 21-cv-00076 (the "Securities Class Action"). In April 2021, the court appointed Jeffrey Fiore as lead plaintiff and Block & Leviton LLP as lead plaintiffs’ counsel. In June 2021, the lead plaintiff filed an amended complaint which alleges that during the period between June 28, 2018 through February 25, 2021, the Company and its senior officers violated federal securities laws, including under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, through alleged public misrepresentations and/or omissions of material facts concerning the Company's New Drug Application, or NDA, for veverimer and the likelihood and timing of approval of veverimer by the FDA.
The amended complaint makes claims against the Company and its CEO. In July 2021, the defendants filed a motion to dismiss the amended complaint. On July 29, 2022, the court issued an order granting in part and denying in part the defendants’ motion to dismiss. The court granted the defendants’ motion with respect to all but one of the alleged misrepresentations on the grounds that the lead plaintiff had failed to meet the required pleading standards for a securities fraud claim, but ruled that those requirements had been satisfied with respect to one alleged misrepresentation from May 7, 2020. The court granted the lead plaintiff leave to file an amended complaint within 21 days of the court’s order, but the plaintiff chose to proceed with the case based solely on the surviving alleged misrepresentations. A case management conference was held on September 20, 2022 and, on October 5, 2022, the court entered a scheduling order for the case which provides that fact discovery will close on July 14, 2023, summary judgment motions will be due by November 17, 2023 and, assuming the case proceeds, a jury trial would be held on June 3, 2024. The defendants filed their answer to the amended complaint on October, 7, 2022 and the case is currently in the fact discovery phase. No damages amount is specified in the Securities Class Action.
On February 15, 2021, a derivative action was filed in the District of Delaware, brought by and on behalf of Tricida, Inc. as a Nominal Defendant, against the Company’s directors as well as its CEO and CFO, Ricks v. Alpern et al., Case No, 1:21-cv-000205 (the "Ricks Derivative Case"). The Ricks Derivative Case is based on the allegations of the Securities Class Action and asserts that by allowing the Company and senior executives to make the allegedly false and misleading statements at issue in the Securities Class Action, the defendants breached their fiduciary duties and wasted corporate assets. Additionally, the complaint asserts claims against the senior officers for violation of Sections 10(b) and 21D of the Securities Exchange Act of 1934. No damages amount is specified in the Ricks Derivative Case.
On April 8, 2021 a second derivative action was filed in the District of Delaware, brought by and on behalf of Tricida, Inc. as a Nominal Defendant, against the Company’s directors as well as its CEO and CFO, Goodman v. Klaerner et al., Case No, 1:21-cv-00510 (the “Goodman Derivative Case”). As with the Ricks Derivative Case, the Goodman Derivative Case is based on the allegations of the Securities Class Action and asserts that by allowing the Company and senior executives to make the allegedly false and misleading statements at issue in the Securities Class Action, the defendants breached their fiduciary duties. Additionally, the complaint asserts claims against the senior officers for violation of Sections 10(b) and 21D of the Securities Exchange Act of 1934. No damages amount is specified in the Goodman Derivative Case.
On May 27, 2021, a third derivative action was filed in the District of Delaware, brought by and on behalf of Tricida, Inc. as a Nominal Defendant, against the Company’s directors as well as its CEO and CFO, Verica v. Veitinger et al., Case No, 1:21-cv-00759 (the "Verica Derivative Case" and collectively with the Goodman Derivative Case and Ricks Derivative Case, the "Derivative Cases"). As with the Goodman Derivative Case and Ricks Derivative Case, the Verica Derivative Case is based on the allegations of the Securities Class Action and asserts that by allowing the Company and senior executives to make the allegedly false and misleading statements at issue in the Securities Class Action, the defendants breached their fiduciary duties. Additionally, the complaint asserts claims for violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and for unjust enrichment and waste of corporate assets. No damages amount is specified in the Verica Derivative Case.
The Derivative Cases were consolidated by order of the District of Delaware Court and lead plaintiffs' counsel has been appointed. Pursuant to an agreement between the parties, the Delaware court issued an order on October 12, 2021, staying the consolidated derivative case pending final resolution of any motions to dismiss filed in the Securities Class Action. Because the Securities Class Action case is now moving forward, the derivative plaintiffs have informed defendants that they plan to file an amended consolidated derivative complaint. The defense of the Securities Class Action and the Derivative Cases may cause us to incur substantial costs and may divert the attention of management.
The stock markets in general, and the markets for pharmaceutical and biotechnology stocks in particular, have historically experienced extreme volatility that may have. Such volatility may continue in the future and may impact our common stock price. The spread of COVID-19, which has caused a broad impact globally, may also materially affect us economically. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, it has significantly disrupted global financial markets, and may limit our ability to access capital, which could in the future negatively affect our liquidity. A recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock. These broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial
costs defending the lawsuit and the attention of our management would be diverted from the operation of our business, which could seriously harm our financial position. Any adverse determination in litigation could also subject us to significant liabilities.
If we sell shares of our common stock or warrants exercisable for our common stock in future financings, or our outstanding warrants are exercised for our common stock, stockholders may experience immediate dilution and, as a result, our stock price may decline.
We may from time to time issue additional shares of common stock at a discount from the current trading price of our common stock. As a result, our stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at such discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock or common stock. If we issue common stock or securities convertible into common stock, our common stockholders would experience additional dilution and, as a result, our stock price may decline.
Stockholders may not receive any distribution of proceeds in the event of bankruptcy, liquidation or wind-down of the Company.
In the event of bankruptcy, liquidation or wind-down, our assets will be available for distribution to our stockholders only after all of our other liabilities have been satisfied. As of September 30, 2022, our total liabilities were $230.0 million, which included $200.0 million aggregate principal amount of 3.50% convertible senior notes due 2027, while our cash, cash equivalents and investments were $80.2 million. It is uncertain what value, if any, may be realized from sale of our intellectual property or other non-cash assets in the event of bankruptcy, liquidation or wind-down of the Company. We also have contractual commitments under our leases and vendor contracts, including our manufacturing contract with Patheon, which may further reduce the assets available to our stakeholders. In addition, we will continue to incur claims, liabilities and expenses from operations, such as operating costs, directors and officers insurance, general liability and other insurance, franchise, payroll and local taxes, retention and severance payments, legal, accounting and consulting fees, rent and facility costs, and miscellaneous office expenses that would reduce the amount available for payment to creditors or distribution to our stockholders upon liquidation. Stockholders would be entitled to proceeds from liquidation only if the aggregate principal amount of our then outstanding convertible notes and any other outstanding claims, liabilities and expenses are repaid in full or otherwise settled. We expect to devote substantial time and resources to exploring strategic alternatives to maximize stakeholder value, but there can be no assurance that this strategic alternative review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stakeholder value or any value to stockholders.
There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.
If Nasdaq delists our shares of common stock from trading on its exchange for failure to meet Nasdaq’s listing standards, we and our stockholders could face significant material adverse consequences including:
•a limited availability of market quotations for our securities;
•reduced liquidity for our securities;
•a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
•a limited amount of news and analyst coverage; and
•a decreased ability to issue additional securities or obtain additional financing in the future.