| ORCHID CELLMARK INC Item 1A RISK FACTORS If any of the matters included in the following risks were to occur, our business, financial condition, results of operations, cash flows or prospects could be materially adversely affected |
| In such case, the value of our common stock could decline and you could lose all or part of your investment |
| Risks Related to Our Business If we fail to maintain the service contracts we have with various state and governmental agencies or fail to enter into additional contracts, we would lose a significant source of revenues |
| We currently derive approximately 98prca of our revenues from the forensic, family relationship and animal and agricultural testing fields |
| These services are heavily dependent upon contracts with various governmental agencies, which are typically open to bid and usually have a term from one to three years |
| The process and criteria for these awards are typically complex and highly competitive, particularly with respect to price of services offered |
| Although we have not previously been debarred or disqualified for breach or non-performance of any contract, if such debarment or disqualification were to occur we may not be awarded future state or government contracts |
| We may not be able to maintain any of our existing governmental contracts or be the successful bidder on any additional governmental contracts which may become available in the future, or negotiate terms acceptable to us in connection with any governmental contract awarded to us, which could adversely affect our results of operations and financial condition |
| We currently receive a significant percentage of our annual gross revenue through relationships with two customers and agreements with these customers may terminate |
| In August of 2001, we entered into a three-year agreement with DEFRA to provide genotyping on sheep in order to test the animals for their susceptibility or resistance to scrapie, which agreement was renewed in June of 2004 for two additional years |
| These services were provided under an initiative called the National Scrapie Plan to provide genotyping services in the hopes of aiding British farmers to breed sheep with reduced susceptibility to scrapie |
| Under the agreement, we received income during 2005 that was approximately 8prca of our total annual revenues |
| This agreement expires in December of 2006 and if we cannot renew this agreement with DEFRA, we would lose our scrapie genotyping business, which would have a material impact on the financial condition of our business |
| We also signed a five-year agreement in July of 2002 with FAL, an agency through which we perform forensic testing services for multiple police forces throughout the UK It is by virtue of our relationship with FAL that we have been able to increase our revenues based on forensic testing such that the income we received was approximately 29prca of our gross revenues for the fiscal year ended December 31, 2005 |
| In 2005, FAL was acquired by LGC, a provider of analytical and diagnostic services, including DNA testing services, and to that extent is in a position to compete for the business we currently conduct for FAL If our agreement with FAL is terminated and we are unable to implement plans to enable us to directly provide our services to UK police forces, including having in place in a timely manner the necessary personnel and infrastructure, or are unsuccessful in securing a sufficient number of agreements directly with UK police forces, our business would be materially adversely affected |
| Together, these two agreements constituted 78prca of international revenues and 37prca of our total revenues for the fiscal year ended December 31, 2005 |
| We cannot guarantee the receipt of revenue from our government contracts |
| We regularly compete in an open bid forum in order to secure or renew contracts with various law enforcement and governmental agencies for the provision of DNA-based testing services |
| While many times a contract award may have limits that may be paid out under the contract (as allowed by state or other approved 13 ______________________________________________________________________ [37]Table of Contents funding), we are not always able to rely on a fixed amount of revenue based on services provided under the contract |
| For example, there may be a regulatory or other administrative basis beyond our control for which we do not receive the anticipated number of samples to be tested under a contract, which may have an adverse outcome on services billed or revenue received during a given fiscal period |
| Also, many contracts with governmental agencies allow for the agency to terminate a contract at any time if funding is not available to pay for our services |
| Our failure to comply with applicable government and industry regulations or to maintain accreditations may affect our ability to develop, produce or market our potential products and services and may adversely affect our results of operations |
| All of our laboratories maintain applicable industry accreditations for paternity and forensic testing both in the US and the UK, and voluntary accreditation by the New York State Department of Health and by the Standards Council of Canada |
| In addition, our UK laboratory must maintain ISO 17025 accreditation in order to continue to provide forensic testing services |
| We cannot assure you that we will be able to maintain our accreditations |
| The loss of our accreditations could adversely affect our existing contracts which, in many cases, require that we maintain these accreditations, and could adversely affect our ability to enter into new contracts |
| As a result, our revenues could be eliminated or significantly reduced |
| Our development and testing activities also involve the controlled use of hazardous materials |
| We are subject to laws and regulations governing the use, storage, handling and disposal of such materials and certain waste products, as well as the conveyance, processing and storage of biological specimens |
| If we were in violation of any laws or regulations pertaining to the handling or use of hazardous materials, the remediation costs could be high and could have an adverse effect on our business and financial results |
| We currently rely primarily on a single supplier for the majority of reagents and other components for the performance of our DNA testing services |
| We currently have a purchase agreement with one supplier through which we purchase the majority of reagents and other components for use in our DNA testing services |
| Through this purchase agreement we have negotiated favorable discounts for the purchase of these products based on the volume of what we purchase |
| In the event our current supplier was to experience a major supply problem, we do have the ability to purchase reagents and components from other suppliers |
| However, if we had to switch to a different supplier or multiple suppliers, we may be required to also change the instruments on which we perform DNA testing services, which could require significant capital investment |
| International sales are subject to increased costs and other risks, which could affect our revenues |
| Our business includes international sales which are subject to certain inherent risks, including difficulties in collecting accounts receivable, potentially longer payment cycles, increased costs associated with maintaining international marketing efforts, currency fluctuations as they impact reported results, changes in regulatory requirements and difficulties in enforcement of contractual obligations and intellectual property rights |
| During 2005, we derived 47prca of our revenues from international sales |
| We had an accumulated deficit of dlra306 million as of December 31, 2005 |
| If we fail to reach profitability and need to acquire additional capital to fund our current and future operating plans or obtain it on unfavorable terms, then we may have to take further cost-cutting measures |
| We have expended significant resources developing our facilities and funding commercialization activities |
| As a result, we have incurred significant losses to date |
| We had net losses of approximately dlra9dtta4 million, dlra8dtta8 million and dlra23dtta6 million for the years ended December 31, 2005, 2004 and 2003, respectively |
| We anticipate that our existing cash on hand will be sufficient to fund our operations at least through the next twelve months |
| If 14 ______________________________________________________________________ [38]Table of Contents we fail to reach cash flow self sufficiency, we may need to raise additional funds through the sale of equity, convertible debt or equity-linked securities or we may have to further review our existing operations to determine new measures of cost reduction, such as further consolidation of operational facilities and/or reductions in staff |
| As a result of our failure to file this Annual Report on Form 10-K by its filing deadline, we are not eligible to register our securities on a registration statement on Form S-3 |
| Therefore, our ability to raise additional capital in the public markets may be adversely affected because registering our securities on other forms, including registration statements on Form S-1, is time consuming and costly |
| In addition, if our common stock were delisted from The Nasdaq National Market stock, such delisting would impair the liquidity of our common stock and there is no assurance that a market would continue to exist for our common stock |
| Our potential to raise future capital through the sale of our equity securities would be limited, which could have a material adverse effect on our future business prospects |
| We have determined that we have material weaknesses in our internal control over financial reporting |
| Under Section 302 of the Sarbanes-Oxley Act of 2002, we are required to evaluate and determine the effectiveness of our internal control over financial reporting |
| As of December 31, 2005, we did not maintain effective internal control over the application of generally accepted accounting principles, or GAAP, related to the financial reporting process, and we determined that we experienced two control deficiencies, one of which resulted in an adjustment being required to restate our consolidated financial statements for them to be in compliance with GAAP Accordingly, management has determined that these control deficiencies constitute material weaknesses |
| Because of these material weaknesses, our management concluded that, as of December 31, 2005, we did not maintain effective internal control over financial reporting |
| If we are not successful in remediating the material weaknesses, or if we determine in future fiscal periods that we have additional material weaknesses in our internal control over financial reporting, the reliability of our financial reports may be impacted |
| Future acquisitions or mergers could disrupt our ongoing operations, increase our expenses and adversely affect our revenues |
| Although we have no commitments or agreements with respect to any acquisitions or mergers at present, we anticipate that a portion of our future growth may be accomplished either by acquiring or merging with existing businesses |
| Factors that will affect the success of any potential acquisition or merger to be made by us include our ability to integrate acquired personnel, operations, products and technologies into our organization effectively, to motivate personnel and to retain customers of acquired or merged businesses |
| We may not be able to identify suitable acquisition or merger opportunities, obtain necessary financing for an acquisition on acceptable terms or successfully integrate acquired personnel and operations |
| While we have not experienced material disruption to our ongoing business or distraction to our management and employees as a result of past acquisitions, we may experience such disruptions or distractions in the future |
| Our improvement of existing technologies and our ability to capture and develop future technologies to be utilized in our service offerings may not be commercially successful, which could adversely affect our revenues |
| We are currently developing and commercializing a limited number of services based on our technologies in DNA testing of humans and animals |
| These services involve uses of products, software and technologies that require validation for commercial application, and we cannot assure you that we or our customers will be able to recognize a cost-effective, commercial benefit in using our technology |
| In addition, any assays we develop utilizing SNP analysis technology may not be useful in assisting in food safety testing |
| Only a limited number of companies have developed or commercialized products based on utilizing SNP technology to date |
| Accordingly, even if we or our customers are successful in developing effective assays utilizing SNP technology, we cannot 15 ______________________________________________________________________ [39]Table of Contents assure you that these discoveries will lead to commercially successful service offerings |
| If we fail to successfully develop our SNP scoring technologies or any products and services based on such technologies, we may not achieve a competitive position in the market |
| We may be unable to hire an adequate number of DNA analysts or successfully apply new technology |
| Our growth and future operating results will also depend, in part, upon our ability to apply new technologies to automate and improve our DNA testing services to take advantage of new technologies |
| There can be no assurance that our development efforts will result in any additional commercially viable or successful improvements or efficiencies to our testing processes |
| Any potential improvements to the testing process may require substantial additional investment and possibly regulatory approvals, prior to implementation |
| Our inability to recruit trained DNA analysts, to develop improvements to our testing processes, to increase efficiencies, or to achieve market acceptance of such improvements could have a material adverse effect on our business, financial condition and results of operations |
| Our future sales and marketing efforts may not be successful in achieving our expected revenue growth |
| We plan to continue to market our products and services to governments, commercial companies and private individuals |
| Our ability to successfully obtain new business, and where appropriate, enter into and maintain agreements with our customers, depends in part on the quality and pricing of our products and services |
| If we are unable to successfully implement our marketing plans, fail to maintain or enhance the quality of our products and services, or fail to offer attractive pricing for our products and services, our expected revenue growth and financial condition could be adversely affected |
| We have adequate sales and marketing resources, but if our resources become limited, we may not achieve our expected revenue growth |
| We believe that we currently have adequate resources in marketing and sales, but are subject to the possibility that our competitors may recruit our employees |
| As of December 31, 2005, we had 12 key marketing and sales employees, none of whom have employment contracts with us |
| We do not maintain key man life insurance policies for any of these individuals |
| Our sales and marketing resources are used to market our services to governments, commercial companies and private individuals |
| If we do not have adequate sales and marketing resources, our expected revenue growth and financial condition could be adversely affected |
| We may be held liable for any inaccuracies associated with our services, which may require us to defend ourselves in costly litigation |
| We provide forensic, family relationship and animal and agriculture testing services |
| Claims may be brought against us for incorrect identification of family relationships or other inaccuracies |
| Litigation of these claims in most cases is covered by our existing insurance policies |
| However, we could expend significant funds during any litigation proceeding brought against us and litigation can be a distraction to management |
| If a court were to require us to pay damages to a plaintiff, if not covered by our existing insurance, the amount of such damages could significantly harm our financial condition, and even if insured, damages could exceed our insurance policy coverage limits |
| We currently maintain product liability insurance with a maximum coverage limitation of dlra5 million and general laboratory professional liability insurance with a maximum coverage limitation of dlra10 million |
| We have been named a defendant in a number of minor suits relating to our DNA testing services, including claims of incorrect results |
| 16 ______________________________________________________________________ [40]Table of Contents Our ability to provide services may be seriously impaired by the occurrence of a natural disaster affecting any one or more of our laboratories |
| Should we experience the occurrence of a natural disaster affecting any one or more of our laboratories such that we would be unable to continue to provide services out of a particular facility for an extended period of time, and we were not able to scale up operations at our other facilities in order to continue to provide such services, we would be at risk of losing significant contractual revenue from governmental agencies since many of our governmental agency contracts allow for the agency to terminate the contract early if we became unable to continue to render such services for an extended period of time, usually 90 days or more |
| However, we have multiple facilities, and may be able to shift operations from one facility to another in the event of a natural disaster, thereby mitigating the effects thereof |
| Although we carry insurance for recovery in the instance of a natural disaster, the limits of this insurance are dlra70 million, and it is possible that our coverage will not be the same in all locations or that a loss in such an instance could exceed our ability to recover such costs |
| Our success will depend partly on our ability to operate without misappropriating the intellectual property rights of others |
| We may be sued for infringing, or may initiate litigation to determine that we are not infringing, on the intellectual property rights of others |
| Intellectual property litigation is costly, and could adversely affect our results of operations |
| If we do not prevail in any intellectual property litigation, in addition to any damages we might have to pay, we could be required to stop the infringing activity, or obtain a license to or design around the intellectual property in question |
| If we are unable to obtain a required license on acceptable terms, or are unable to practice non-infringing technologies or processes, we may be unable to sell some of our products and services, which would result in reduced revenues |
| We are named a defendant in a patent litigation matter |
| However, we believe we have the right to practice such technology by virtue of a third-party agreement, and we are actively engaged in defending this litigation |
| Other than the foregoing, we are not aware that we are misappropriating the intellectual property rights of others |
| If we cannot enter into new development or licensing agreements, we may be unable to further enhance our service offerings |
| Our strategy for developing and commercializing technologies and services based on our discoveries depends upon our ability to enter into development and licensing arrangements |
| Our ability to enter into advantageous licensing or development agreements will depend upon whether or not companies that have technology complimentary to ours are willing or able to enter into an agreement with us, and on our financial resources allocated to such investment |
| We also may have to rely on our collaborators and licensees or licensors for marketing of services, or distribution of products and services |
| If we are unable to enter into such development and licensing arrangements or implement our strategy to develop and commercialize additional products and services, it would have a material adverse effect on our results of operation and financial condition |
| If we enter into collaborations or licensing arrangements, we may be forced to relinquish rights to certain of our technologies or products, or grant licenses to third parties on terms that are unfavorable to us |
| If our patent applications do not result in issued patents, our competitors may obtain rights to commercialize our discoveries, which would harm our competitive position |
| Our success will depend, in part, on our ability to obtain patent protection on our proprietary technologies, products and services and to enforce such protection |
| We may not be able to obtain new patents for these technologies, products and services |
| We also may not have the resources to aggressively protect and enforce existing patent protection |
| We may need to obtain a license from certain third parties with respect to any patent covering technologies or methodologies which we wish to incorporate into our service offerings, but we may not be able to acquire such licenses on terms acceptable to us, if at all |
| 17 ______________________________________________________________________ [41]Table of Contents The scope of our issued patents may not provide us with adequate protection of our intellectual property, which would harm our competitive position |
| Any issued patents that cover our proprietary technologies may not provide us with substantial protection or be commercially beneficial to us |
| The issuance of a patent may be challenged with respect to its validity or its enforceability |
| The US Patent and Trademark Office (or a court of appropriate jurisdiction), or any one of a number of foreign patent offices where we have pursued patent protection may invalidate one or more of our patents |
| In addition, third parties may have patents of their own which could, if asserted, prevent us from practicing our proprietary technologies, including the methods we use to conduct genotyping |
| If we are otherwise unable to practice our patented technologies, we may not be able to commercialize our technologies or services and our competitors could commercialize our technologies |
| We currently believe that there may be at least one company actively infringing our proprietary single base primer extension technology |
| However, we have not completed an analysis of this third party’s practices or of the practices of any other third parties and cannot form a conclusion at this time as to infringement |
| We may need to initiate lawsuits to protect or enforce our patents and other intellectual property rights, which could result in the forfeiture of these rights |
| In order to protect or enforce our patent rights, we may need to initiate patent litigation against third parties |
| These lawsuits could be expensive, take significant time and could divert management’s attention from other business concerns |
| These lawsuits could result in the invalidation or a limitation in the scope of our patents or forfeiture of the rights associated with our patents |
| We cannot assure you that we will prevail in any future litigation or that a court will not find damages or award other remedies in favor of the opposing party in any of these suits |
| During the course of these suits, there may be public announcements of the results of hearings, motions and other interim proceedings or developments in the litigation |
| Securities analysts or investors may perceive these announcements to be negative, which would likely cause the market price of our stock to decline |
| Other rights and measures that we rely upon to protect our intellectual property may not be adequate to protect our products and services and could reduce our ability to compete in the market |
| In addition to patents, we rely on a combination of trade secrets, copyright and trademark laws, non-disclosure agreements and other contractual provisions and technical measures to protect our intellectual property rights |
| While we require employees, collaborators, consultants and other third parties to enter into confidentiality and/or non-disclosure agreements where appropriate, any of the following could still occur: • the agreements may be breached; • we may have inadequate remedies for any breach; • proprietary information could be disclosed to our competitors; or • others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose such technologies |
| To our knowledge, we have never been materially harmed by a breach under any of circumstances listed above |
| However, if for any of the above reasons our intellectual property is disclosed or misappropriated, it would harm both our ability to protect our rights and our competitive position |
| The pursuit of a remedy for such an alleged breach may cost substantially in terms of the time, effort and expenses of our resources |
| Our ability to utilize our net operating loss carryforwards may be limited |
| As of December 31, 2005, our net operating loss, or NOL, carryforwards were approximately dlra234 million and approximately dlra194 million for Federal and state income tax purposes, respectively |
| Our Federal and state NOL carryforwards begin to expire in 2006 |
| Utilization of our NOLs to offset future taxable income, if any, 18 ______________________________________________________________________ [42]Table of Contents may be substantially limited due to “change of ownership” provisions in the Tax Reform Act of 1986, or the Act |
| The Act provides for a limitation on the annual use of NOL carryforwards and research and development credits following certain ownership changes, as defined by the Act, which could significantly limit our ability to utilize these carryforwards and research and development credits |
| We have determined that an ownership change, as defined by the Act, occurred in 1999 |
| Approximately dlra36 million of NOL carryforwards is limited due to this ownership change |
| Additionally, because US tax laws limit the time during which these carryforwards may be applied against future taxes, we may not be able to take full advantage of these attributes for Federal income tax purposes |
| The NOL carryforwards subject to expiration through the year 2019 is approximately dlra32 million |
| We may have experienced other ownership changes, as defined by the Act, as a result of past financings and may experience others in connection with future financings |
| Accordingly, our ability to utilize the aforementioned Federal NOL carryforwards may be further limited in the future |
| Risks Associated with Our Common Stock Future issuance of our securities may dilute the rights of our stockholders |
| Our Board of Directors has the authority to issue shares of preferred stock and to determine the price, preferences, privileges and other terms of these shares |
| Our Board of Directors may exercise this authority without any further approval of our stockholders |
| Additionally, if we need to raise additional funds through the sale of equity, convertible debt or equity-linked securities, your percentage ownership in the Company on a diluted basis will be reduced |
| These transactions may dilute the value of our outstanding common stock |
| We may also issue securities that have rights, preferences and privileges senior to our common stock |
| We have various mechanisms in place that you as a stockholder may not consider favorable, which may discourage takeover attempts and may prevent or frustrate attempts by stockholders to change our direction or management |
| Certain provisions of our certificate of incorporation and by-laws, as well as Section 203 of the Delaware General Corporation Law and our adoption of a shareholder’s rights plan, may discourage, delay or prevent a change in control or the ability of stockholders to change our direction or management, even if the changes would be beneficial to stockholders |
| These provisions include: • authorizing the issuance of “blank check” preferred stock that could be designated and issued by our Board of Directors to increase the number of outstanding shares and thwart a takeover attempt; • creating a classified board of directors with staggered, three-year terms, which may lengthen the time required to gain control of our Board of Directors; • prohibiting cumulative voting in the election of directors, which will allow a majority of stockholders to control the election of all directors; • requiring super-majority voting to effect certain amendments to our certificate of incorporation and by-laws; • limiting who may call special meetings of stockholders; • prohibiting stockholder action by written consent, which requires all actions to be taken at a meeting of stockholders; and • establishing advance notice requirements for nominations of candidates for election to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings |
| In addition, pursuant to our stockholder rights plan, each share of our common stock has an associated preferred share purchase right |
| The rights will not trade separately from the common stock until, and are exercisable only upon, the acquisition or the potential acquisition through tender offer by a person or group of 15prca or more of our outstanding common stock |
| 19 ______________________________________________________________________ [43]Table of Contents Our common stock may be delisted from The Nasdaq National Market |
| Because of material weaknesses in our internal control over financial reporting and the restatement of our consolidated financial statements for the quarters ended June 30, 2005 and September 30, 2005, we did not file this Annual Report on Form 10-K in a timely manner |
| As a result, The Nasdaq National Market, or Nasdaq, notified us that we were not in compliance with a listing standard of Nasdaq |
| We subsequently submitted a request for a Nasdaq Listing Qualifications Panel, or the Panel, to consider our continued listing |
| The hearing was held April 27, 2006, and as of the filing of this Annual Report on Form 10-K, the Panel had yet to render its decision regarding the continued listing of our common stock on Nasdaq |
| In addition, as a result of the delay in filing this Annual Report on Form 10-K, we did not file our Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 by the date required by the SEC On May 16, 2006, we received a letter from Nasdaq indicating that the failure to file our Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 serves as an additional basis for delisting our common stock |
| If the Panel rules against us or if we fail to demonstrate compliance with applicable Nasdaq rules in the future, our common stock may be delisted from Nasdaq, which could materially adversely affect the trading price and volumes of our common stock regardless of our actual results of operations |
| Public announcements regarding the possible delisting of our common stock could result in extreme price and volume fluctuations that are unrelated or disproportionate to our actual operating performance |
| In addition, the delisting of our common stock would impair the liquidity of our common stock and there is no assurance that a market would exist for our common stock |
| Even though we have filed this Annual Report on Form 10-K and expect to file our Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 as soon as possible, we cannot assure you that the Panel will not determine to delist our common stock from Nasdaq |
| Our stock price has been, and likely will continue to be, volatile and your investment may suffer a decline in value |
| The market prices for securities of companies quoted on The Nasdaq Stock Market, including our market price, have in the past been, and are likely to continue in the future to be, very volatile |
| Between January 1, 2004 and December 31, 2005, the closing price of our common stock (adjusted for our reverse stock split on March 31, 2004) ranged from a low of dlra5dtta46 to a high of dlra14dtta25 |
| The Nasdaq Composite Index has significantly declined since our initial public offering in May 2000 and remains very volatile |
| The market price of our common stock has been, and likely will continue to be, subject to substantial volatility depending upon many factors, many of which are beyond our control, including: • announcements regarding the results of development efforts by us or our competitors; • announcements regarding the acquisition of technologies or companies by us or our competitors; • changes in our existing development or licensing arrangements or formation of new development or licensing arrangements; • technological innovations or new service offerings developed by us or our competitors; • changes in our intellectual property portfolio; • developments or disputes concerning our proprietary rights; • issuance of new or changed securities analysts’ reports and/or recommendations applicable to us; • additions or departures of our key personnel; • our operating losses; and • continued economic uncertainty with respect to the valuation of certain technology companies and other market conditions |
| 20 ______________________________________________________________________ [44]Table of Contents Fluctuations in our quarterly revenues and operating results may negatively impact our stock price |
| Our revenues and results of operations have fluctuated significantly in the past and these fluctuations are likely to continue in the future due to a variety of factors, many of which are outside of our control |
| These factors include: • the timing of US Federal funding for forensic DNA testing through the NIJ; • our ability to secure new contractual relationships for forensic, family relationship and animal and agricultural testing or retain existing relationships upon contract expirations; • the volume and timing of testing samples received in our laboratories for testing services; • the number of trained DNA analysts which are available to process the samples for testing services; • the number, timing and significance of new services introduced by our competitors; • our ability to develop, market and introduce new services on a timely basis; • our ability to maintain and grow the volume of forensic testing services in the UK, either through extension of our agreement with FAL or by directly providing our services to UK police forces; • changes in the cost, quality and availability of intellectual property and components required to perform our services; • availability of commercial and government funding to researchers who use our services; and • the inherent seasonality in our animal testing business during the winter months |
| Fixed operating costs associated with our technologies and services, as well as personnel costs, marketing and sales programs and overhead costs, account for a substantial portion of our operating expenses |
| We cannot adjust these expenses quickly in the short term |
| If our testing volumes and related pricing decline due to market pressure, our revenues will decline and we may not be able to reduce our operating expenses accordingly |
| Our loss of revenues and failure to reduce operating expenses could harm our operating results for a particular fiscal period |
| In addition, market and other conditions may require certain non-cash charges such as impairment charges related to long-lived assets and restructuring charges to be recorded by us in future periods |
| If our operating results in any quarter or quarters fail to meet the expectations of public market analysts or investors, the market price of our common stock is likely to fall |
| We cannot assure you that your investment in our common stock will not fluctuate significantly |
| One or more of these factors could significantly harm our business and cause a decline in the price of our common stock in the public market |