$AXDX Risk Factor changes from 00/03/14/22/2022 to 00/03/28/24/2024

Item 1A. Risk FactorsInvesting in our securities involves a high degree of risk.

Risks Related to Our Financial Condition, Liquidity and IndebtednessOur financial condition, including our substantial indebtedness, raises substantial doubt regarding our ability to continue as a going concern.Since inception, we have not achieved profitable operations or positive cash flows from operations. Our accumulated deficit totaled $668.9 million as of December 31, 2023. During the year ended December 31, 2023, we had a net loss of $61.6 million and negative cash flows from operations of $40.2 million. As of December 31, 2023, we had $13.2 million in cash and cash equivalents and working capital of $12.4 million. Additionally, we have a substantial amount of indebtedness comprised of $67.00% Notes and $0.50% Notes outstanding.

As a result of our financial condition, we have determined that, as of the date of this Form 10-K filing, there is substantial doubt about our ability to continue as a going concern, as we do not currently have adequate financial resources to fund our forecasted operating costs for at least twelve months from the date of the filing of this Form 10-K. The report of our independent registered public accountant on our financial statements as of December 31, 2023 and 2022 and for each of the three years in the period ended December 31, 2023 also includes explanatory language describing the existence of substantial doubt about our ability to continue as a going concern. The presence of this going concern explanatory language could adversely affect our ability to raise additional debt or 19sequity financing, as well as to further develop and market our products, all of which could have a material adverse impact on our business, results of operations and financial condition.

See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - “Capital Resources and Liquidity” and Part II, Item 8, Note 1, Organization and Nature of Business; Basis of Presentation; Principles of Consolidation of this Form 10-K for additional information.Management currently believes that it will be necessary for us to secure additional funds to continue our existing business operations and to fund our obligations. While we continue to explore additional funding in the form of potential equity and/or debt financing arrangements or similar transactions, there can be no assurance the necessary financing will be available on terms acceptable to us, or at all. If we raise funds by issuing equity securities, dilution to stockholders may result. Any equity securities issued may also provide for rights, preferences or privileges senior to those of holders of common stock. If we raise funds by issuing additional debt, it is likely any new debt would have rights, preferences and privileges senior to common stockholders. The terms of borrowing could impose significant restrictions on our operations. The capital markets have in the past, and may in the future, experience periods of upheaval that could impact the availability and cost of equity and debt financing. In addition, increases in federal fund rates set by the Federal Reserve, such as the significant increases experienced throughout 2022 and 2023, which serve as benchmark rates on borrowing, and other general economic conditions have impacted, and in the future may further impact, the cost of debt financing or refinancing existing debt.If we are unable to obtain adequate capital resources to fund operations, we would not be able to continue to operate our business pursuant to our current plans. This may require us to, among other things, materially modify our operations to reduce spending; sell assets or operations; delay the implementation of, or revise certain aspects of, our business strategy; or discontinue our operations entirely. We have substantial indebtedness, which could have important consequences to our business.We have a substantial amount of indebtedness primarily comprised of our 5.00% Notes. As of December 31, 2023, we had $67.00% Notes outstanding, which mature on December 15, 2026. We pay interest on the 5.00% Notes by payment-in-kind (“PIK”), through the issuance of additional 5.00% Notes (“PIK Notes”). The indenture governing the 5.00% Notes (the “5.00% Notes Indenture”) provides that we may be required to repay amounts due under the 5.00% Notes Indenture in the event that there is an event of default for the 5.00% Notes that results in the principal, premium and interest, if any, becoming due prior to the maturity date for the 5.00% Notes.Additionally, our failure to repurchase 5.00% Notes at a time when the repurchase is required by the 5.00% Notes Indenture (whether upon a fundamental change or otherwise under the 5.00% Notes Indenture) would constitute a default under the 5.00% Notes Indenture. A default under the 5. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness, repurchase the 5.00% Notes or make cash payments upon conversions thereof.Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our debt.Our ability to make scheduled payments on the principal of or to refinance our indebtedness, primarily the 5.00% Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. For example, we are in default of payment obligations under the terms of our 2.50% Notes, which matured on March 15, 2023 and became due and payable. As a result, we consummated a series of transactions to allow for the restructuring of our capital structure (the “Restructuring Transactions”), including the 2.50% Notes, a secured promissory note with the Jack W. Schuler Living Trust (the “Schuler Trust”) (the “Secured Note”) and the then outstanding Series A Preferred Stock, as well as an amendment to a Securities Purchase Agreement that the Company entered into with the Schuler Trust in March 2022 (the “March 2022 Securities Purchase Agreement”), which resulted in significant dilution to the ownership interests of our existing stockholders.We are in default of payment obligations under the terms of our 2.50% Notes, which matured on March 15, 2023 and became due and payable.

As discussed in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - “Capital Resources and Liquidity - Convertible Notes” of this Form 10-K, the principal of the 2.50% Notes was due March 15, 2023. As of December 31, 2023, approximately $0.7 million remains in default and accruing interest at 2.50%.To the extent we deliver shares upon conversion of the 5.00% Notes, the ownership interests of existing stockholders could be diluted and our stock price may be adversely impacted.Upon conversion of the 5. To the extent we choose to deliver shares upon conversion of some or all of the 5.00% Notes, this will result in a dilution to the ownership interests of existing stockholders and may depress our stock price.Risks Related to Our Business and StrategyWe have limited revenues from our products and no assurance of future revenues.We have received limited revenue from sales of the Accelerate Pheno system and the Accelerate PhenoTest BC Kit.We have a history of losses and expect to continue to incur losses in the future, and we cannot be certain that we will achieve or sustain profitability.Until we received FDA approval to market the Accelerate Pheno system, we were a development-stage company and therefore incurred significant losses in prior years. While we are currently commercializing the Accelerate Pheno system and the Accelerate Arc system outside of the United States, we have incurred significant costs in connection with the development and commercialization of our technology and expect to continue to incur further costs in the development and commercialization of our future products, including the Accelerate Wave system.Any failure to do so could lead to an impairment of certain of our intellectual property, inventory, property and equipment, and may result in our ceasing operations.Additionally, our efforts to educate hospitals on the benefits of our products require significant resources, and we may experience reluctance from hospitals to purchase our products.We have entered into the Sales and Marketing Agreement with BD and will substantially depend on BD for the successful commercialization of our products.As part of our collaboration with BD pursuant to the Sales and Marketing Agreement, BD will perform certain sales, tactical marketing, technical service call forwarding, order preparation, research and development support and/or regulatory activities on our behalf as our exclusive sales agent for certain of our products, including the Accelerate Pheno system, Accelerate Arc system and related BC Kits. The successful commercialization of our products, including our ability to generate revenue from our arrangement with BD, will depend on BD’s ability to successfully perform the responsibilities assigned to it pursuant to the Sales and Marketing Agreement. While BD is largely responsible for the speed and scope of sales and marketing efforts, we cannot assure you that BD will dedicate the resources necessary to successfully perform its responsibilities pursuant to the Sales and Marketing Agreement, and our ability to cause BD to increase the speed and scope of its efforts may be limited. In addition, sales and marketing efforts could be negatively impacted by the delay or failure by us to obtain additional supportive clinical trial data for our products. We cannot predict the success of our collaboration with BD, and there can be no assurance that the efforts of BD will meet our expectations or result in any significant product sales or cost savings within the anticipated time frame or at all.In the event that BD fails to perform under the Sales and Marketing Agreement, or if the Sales and Marketing Agreement is terminated, this could delay our product commercialization efforts, which would materially and adversely affect our business, financial condition, results of operations and cash flows. The termination of the Sales and Marketing Agreement could also require us to revise our commercialization and business strategy going forward and divert management attention and resources. In addition, the termination of the Sales and Marketing Agreement could materially impact our ability to enter into additional collaboration agreements with new partners on favorable terms, if at all.Our success in part depends on our ability to obtain additional product marketing authorizations from the FDA for product candidates in our pipeline, including our Accelerate Wave system.Our operating expenses may fluctuate significantly in the future as a result of a variety of factors, many of which may be outside of our control.If we do not achieve our projected development goals in the time frames we announce and expect, the commercialization of our products may be delayed and, as a result, our stock price may decline.From time to time, we estimate the timing of the accomplishment of various scientific, clinical, regulatory and other product development goals. These goals may include the commencement or completion of clinical trials and the submission of regulatory filings, including those related to the ongoing development of our Accelerate Wave system.

For example, on October 21, 2022, the Company filed a Current Report on Form 8-K announcing it had been in recent discussions with the FDA regarding its Accelerate Arc Products. Pursuant to such discussions, the FDA has challenged the Company’s commercialization of the Accelerate Arc Products in the United States as a Class I device exempt from 510(k) clearance requirements. The Company is in active dialogue with the FDA to determine the appropriate regulatory pathway. While these discussions are ongoing, the Company has put on hold in the United States its sales and marketing efforts of the Accelerate Arc Products. See “Risks Related to Government Regulation - The regulatory processes applicable to our products and operations are expensive, time-consuming, and uncertain and may prevent us from obtaining required authorizations for the commercialization of our products” for additional information.We may not be able to enhance the capabilities of our current and new products to keep pace with our industry’s rapidly changing technology and customer requirements.Our industry is characterized by rapid technological changes, frequent new product introductions and enhancements and evolving industry standards.Further, there can be no assurance that we will be successful in developing or acquiring product enhancements or new products to address changing technologies and customer requirements adequately, that we can introduce such products on a timely basis or that any such products or enhancements will be successful in the marketplace.The failure of our current or any future diagnostic products to perform as expected could significantly impair our reputation and the public image of our products, and we may be subject to legal claims arising from any defects or errors.Our success will depend on the market’s confidence that our technologies can provide reliable, high-quality diagnostic results. We believe that our customers are likely to be particularly sensitive to any defects or errors in the Accelerate Pheno system or any future diagnostic products, including the Accelerate Wave system.In the past, we have experienced disappointing or negative publication results regarding the efficacy of our products.If treatment guidelines for bacterial infections change, or the standard of care evolves, we may need to redesign and seek new marketing authorization from the FDA or other regulatory clearance for our product candidates.Breaches of our information technology systems could have a material adverse effect on our operations and potentially result in liability, depending on the type of breach and information compromised.We rely on information technology systems to process, transmit and store electronic information, which may include protected health information, in our day-to-day operations.Failure to comply with a variety of U.S. and international privacy laws to which we are subject could harm the Company.Any failure by us or our vendor or other business partners to comply with federal, state or international privacy, data protection or security laws or regulations relating to the collection, use, retention, security and transfer of personally identifiable information could result in regulatory or litigation-related actions against us, legal liability, fines, damages, ongoing audit requirements and other significant costs.We are dependent on our key employees.Because of the complex and technical nature of our products and the dynamic market in which we compete, our future success depends on our ability to recruit, train and retain key personnel, including our senior management, research and development, science and engineering, manufacturing and sales and marketing personnel. Phillips or any of our employees. Phillips would be unavailable to us, we may be unable to employ another qualified person with the appropriate background and expertise to replace Mr. Phillips on terms suitable to us. Like many companies, we have experienced an increased level of employee attrition since the COVID-19 pandemic.Our industry is highly competitive, and we may not be successful in competing with our competitors.The industry in which we compete is subject to rapid technological changes, and we face and expect to continue to face strong competition for our products.Our competitors could develop new products or technologies that are more effective than the Accelerate Pheno system, the Accelerate Arc system and any of our other products or product candidates.We generate a portion of our future revenue internationally and are subject to various risks relating to our international activities which could adversely affect our operating results.We market and sell the Accelerate Pheno system in other countries outside of the United States.S. Foreign Corrupt Practices Act and the U.K.Our employees, independent contractors, principal investigators, consultants, commercial partners, vendors and other agents may engage in misconduct or other improper activities, including non-compliance with legal standards and requirements.We are exposed to the risk of fraud or other misconduct by our employees, independent contractors, principal investigators, consultants, commercial partners, vendors and other agents, including BD.Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate.

We are exposed to risks associated with long-lived assets that may become impaired and result in an impairment charge.The carrying amounts of long-lived assets are affected whenever events or changes in circumstances indicate that the carrying amount of any asset may not be recoverable. Similarly, the recoverability of the book value of instrument-related inventory could be impacted by changes in growth expectations and require a reduction in their carrying value to the lower of cost or market.Providing instrument systems to our customers through reagent rental agreements may harm our liquidity. The amount of capital required to provide instrument systems to customers depends on the number of systems subject to such arrangements.If we fail to estimate customer demand properly, our financial results could be harmed.Our products are manufactured based on estimates of customers’ future demand and our manufacturing lead times are very long. This could lead to a significant mismatch between supply and demand, giving rise to product shortages, excess inventory or further instrument-related inventory write-downs, and make our demand forecast more uncertain. In order to have shorter shipment lead times for our customers, we have built up inventory for anticipated growth which has not occurred, or may build up inventory to serve what we believe is pent-up demand. In periods with limited available capacity, we may and have placed inventory orders significantly in advance of our normal lead times, which could negatively impact our financial results. Additionally, customer behavior changes due to significant events and economic conditions have historically made it more difficult for us to estimate future demand. For example, excess inventory write-downs were recorded during the year ended December 31, 2023, as well as during the year ended December 31, 2021, as a result of excess quantities of instrument inventory on hand above and beyond our forecast of future demand for those products. Situations that may result in excess or obsolete inventory include:•changes in business and economic conditions, including downturns in our target markets and/or overall economy;•changes in consumer confidence caused by changes in market conditions, including changes in the credit market;•a sudden and significant decrease in demand for our products;•a higher incidence of inventory obsolescence because of rapidly changing technology or customer requirements;•our introduction of new products resulting in lower demand for older products;•less demand than expected for newly-introduced products; or•increased competition, including competitive pricing actions.The cancellation or deferral of customer purchase orders could result in our holding excess inventory, which could adversely affect our gross margins.Conversely, if we underestimate our customers’ demand for our products, our partners may not have adequate lead-time or capacity to increase production and we may not be able to obtain sufficient inventory to fill customers’ orders on a timely basis. We may also face supply constraints caused by natural disasters or other 28sfactors as discussed in this “Risk Factors” section.The COVID-19 pandemic has adversely affected our business and a resurgence of COVID-19 or the occurrence of another health epidemic or pandemic may have an adverse impact on our business in the future.Our business, including our workforce, supply chain and customer base, has been adversely affected by COVID-19 in the past and a resurgence of COVID-19 or the occurrence of another health epidemic or pandemic may adversely affect us in the future. The COVID-19 pandemic, containment measures, and downstream impacts to hospital staffing and financial stability significantly impacted our business and results of operations, starting in the first quarter of 2020 and continuing through 2022, albeit to a lesser degree. It is possible that a resurgence of COVID-19 or the occurrence of another health epidemic or pandemic will adversely affect our business, our workforce, our supply chains and distribution networks or otherwise impact our ability to conduct business in the future. Further, to the extent our customers’, suppliers’ or service providers’ businesses are adversely affected by such occurrences, they might delay or reduce purchases from us or impact our ability to meet customer demand or development timelines, which could adversely affect our business and results of operations. The effects of ongoing or future health epidemics or pandemics on our business remain uncertain and subject to change.Disruptions in the supply of raw materials, consumable goods or other key product components, or issues associated with their quality from our single source suppliers, could result in a significant disruption in sales and profitability.We must manufacture or engage third parties to manufacture components of our products in sufficient quantities and on a timely basis, while maintaining product quality, acceptable manufacturing costs and complying with regulatory requirements. Certain of our components are custom-made by only a few outside suppliers and, in certain instances, we have a sole source supply for key product components. If this occurs, we may be unable to manufacture our products, meet key development milestones, and/or meet our customers’ needs in a timely manner or at all.Additionally, we have entered into supply agreements with most of our suppliers to help ensure component availability and flexible purchasing terms with respect to the purchase of such components.In determining the required quantities of our products and our manufacturing schedule, we will need to make significant judgments and estimates regarding factors such as market trends and any seasonality with respect to our sales. Prolonged elevated supply costs and further cost increases may further impact our cost to manufacture our Accelerate Pheno and Accelerate Arc systems and to develop our Accelerate Wave system.We previously identified a material weakness in our internal control over financial reporting, and if we fail to maintain an effective system of internal control, we may not be able to accurately or timely report our financial condition or results of operations.In connection with the audit of our consolidated financial statements for the year ended December 31, 2022, we identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. During 2023, management, with oversight from the Audit and Governance Committee, completed the implementation of our previously disclosed remediation plan that included a control to review the accounting treatment of outstanding debt instruments on a quarterly basis in accordance with applicable accounting guidance. We have concluded that our internal control over financial reporting was effective as of December 31, 2023.Completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly. If we are unable to maintain effective internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports and applicable listing requirements, investors may lose confidence in our financial reporting, and the share price of our common stock may decline as a result. In addition, we could become subject to investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional financial and management resources.

See Part II, Item 9A, Controls and Procedures - “Management’s Report on Internal Control over Financial Reporting” of this Form 10-K for further information on the remediated material weakness.Risks related to Our Intellectual PropertyIf we are unable to effectively protect our intellectual property, our business would be harmed.In addition to patent protection, we rely on trademark, copyright, trade secret protection and confidentiality agreements to protect intellectual property rights related to our proprietary technologies, both in the United States and in other countries. As of December 31, 2023, we owned 23 issued U.S.S. patents and had three pending applications as well as registered marks in the United States and foreign countries.Further, if we are unable to prevent unauthorized disclosure of our non-patented intellectual property, and there is no guarantee that we will have any such enforceable trade secret protection, we may not be able to establish or maintain a competitive advantage.We may not be successful in our currently pending or future patent applications, and even if such applications are successful, we cannot guarantee that the resulting patents will sufficiently protect our products and proprietary technology.We cannot assure you that any of our currently pending or future patent applications will result in issued patents with claims that adequately cover our products and technologies in the United States or in other foreign countries, and we cannot predict how long it will take for such patents to be issued.Even if patents do successfully issue and even if such patents cover our products and technologies, we cannot assure you that other parties will not challenge the validity, enforceability or scope of such issued patents in the United States and in foreign countries, including by proceedings such as reexamination, inter-partes review, interference, opposition, or other patent office or court proceedings.Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our inventions, provide exclusivity for our products and technologies or prevent others from designing around our claims.Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product under patent protection could be reduced. We may not prevail in such proceedings.We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive and time consuming.Third parties may infringe or misappropriate our intellectual property, including our existing patents and patent claims that may be allowed in the future.If we file an infringement action against a third party, that party may challenge the scope, validity or enforceability of our patents, requiring us to engage in complex, lengthy and costly litigation or other proceedings.Enforcing our intellectual property rights through litigation is very expensive and time-consuming.S. intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure.We could face claims that our proprietary technologies infringe on the intellectual property rights of others.Due to the significant number of U.S. and foreign patents issued to, and other intellectual property rights owned by, entities operating in the industry in which we operate, we believe that there is a risk of litigation arising from allegations of infringement of these patents and other rights.In addition, patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after the earliest filing date for which a benefit is claimed.S. patent application on inventions similar to ours, we may have to participate in an interference proceeding declared by the U.S. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful if the other party had independently arrived at the same or similar invention prior to our own invention, or had filed applications directed to such applications before us, resulting in a loss of our U.S. patent position with respect to such inventions.We may have to pay substantial damages, including treble damages, for past infringement if it is ultimately determined that our products infringe on a third party’s proprietary rights.Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Litigation may be necessary to defend against these claims.In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property in the performance of their work to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing an enforceable agreement with each party who in fact develops intellectual property that we regard as our own.If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.The Accelerate Pheno system integrates several of our component products, systems and processes. There can also be no assurance that we will be able to develop additional types of tests and instruments in the future nor whether these will result in commercial products that will generate revenues.We have a single research and development facility and we may be unable to continue to conduct our research and development activities if we lose this facility. If our facility or our equipment were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability to continue to operate our business could be materially harmed.The manufacture of components of our products involves complex processes, sophisticated equipment and strict adherence to specifications and quality systems procedures.While we carry a nominal amount of business interruption insurance to cover lost revenue and profits, this insurance does not cover all possible situations.We use hazardous materials in some of our research, development and manufacturing processes and face the accompanying risks and regulations governing environmental safety.Our operations are subject to complex and stringent environmental, health, safety and other governmental laws and regulations that both public officials and private individuals may seek to enforce.Risks Related to Government RegulationLegislative and Administrative Action May Have an Adverse Effect on Our CompanyPolitical, economic and regulatory influences are subjecting the health care industry in the U.S. to fundamental change.We and our suppliers, contract manufacturers and customers are subject to various governmental laws and regulations, and we may incur significant expenses to comply with, and experience delays in our product commercialization as a result of, these laws and regulations.Our operations are affected by various state, federal, and international healthcare, environmental, anti-corruption, fraud and abuse (including anti-kickback and false claims laws), privacy, and employment laws as well as international political sanctions.We are also subject to various U.S. healthcare related laws regulating sales, contracting, marketing, and other business arrangements and the use and disclosure of individually identifiable health information. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. Violations of the federal Anti-Kickback Statute can result in significant civil monetary penalties and criminal fines, as well as imprisonment and exclusion from participation in federal healthcare programs. •The federal False Claims Act, which imposes significant civil penalties, treble damages and potential exclusion from participation in federal healthcare programs against any person or entity that, among other things, knowingly presents, or causes to be presented, to the federal government claims for payment that are false or fraudulent or for making a false record or statement material to an obligation to pay the federal government or for knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government Further, a violation of the federal Anti-Kickback Statute can serve as a basis for liability under the federal civil False Claims Act. The qui tam provisions of the False Claims Act allow private individuals to bring actions on behalf of the federal government and to share in any monetary recovery. There is also the federal Criminal False Claims Act, which is similar to the federal Civil False Claims Act and imposes criminal liability on those that make or present a false, fictitious or fraudulent claim to the federal government.•The federal Stark law, which prohibits physicians from referring patients to receive “designated health services” payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. Financial relationships include both ownership/investment interests and compensation arrangements. Violation of the federal Stark law can result in significant civil monetary penalties and exclusion from participation in the federal healthcare programs. Violations of the law may result in penalties per occurrence and imprisonment.•The federal Physician Payment Sunshine Act, which requires applicable manufacturers of certain medical devices that may be reimbursed by Medicare, Medicaid, or CHIP, among others, to annually track and report payments or other transfers of value provided to U.S. licensed physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse-midwives, and U.S. teaching hospitals as well as certain ownership and investment interest held in the manufacturer by physicians and their immediate family members.Similar requirements have been adopted by many states and foreign countries.Any of these actions, in combination or alone, could prevent us from marketing, distributing and selling our products. New legislation could also be enacted, and/or governmental agencies may also impose new requirements under existing laws, regarding registration, labeling or prohibited materials that may require us to modify or re-register, or seek new approvals or clearances for, products already on the market, may otherwise adversely impact our ability to market our products, or may otherwise reduce demand for our products. In addition, a product defect or regulatory violation could lead to a government-mandated or voluntary recall by us.Maintaining adequate sales of our product may depend on the availability of adequate reimbursement to our customers from third-party payers, including government programs such as Medicare and Medicaid, private insurance plans, and managed care programs.Additionally, third-party payers are increasingly reducing reimbursement for medical products and services.S. government, state legislatures, and foreign governments have and may continue to implement cost-containment measures and more restrictive policies, including price controls and restrictions on reimbursement. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular products. The Bipartisan Budget Act of 2015, approved in November 2015, extended sequestration an additional year to 2025, Medicare reimbursements were lowered, and other changes were made to compliance measures. The Bipartisan Budget Act of 2019 signed by President Trump in August 2019 also extended sequestration for another two years to fiscal year 2029. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, signed into law in March 2020, included critical relief from sequestration cuts as it applies to Medicare payments, exempting Medicare from the effects of sequestration from May 1, 2020, through March 31, 2022. Cuts of 1% were imposed from April 1 through June 30, 2022. As of July 1, 2022, cuts of two percent were reimposed and are set to remain in effect until 2031 unless unless additional Congressional action is taken. To offset the temporary suspension during the COVID-19 pandemic, in 2030, the sequestration will be 2.25% for the first half of the year, and 3% in the second half of the year.While we cannot predict whether third-party reimbursement to our customers will be adequate, cost-containment measures and similar efforts by third-party payers, including government programs such as Medicare and Medicaid, could substantially impact the sales of our products and potentially limit our net revenue and results.We may be adversely affected by healthcare policy changes, including additional healthcare reform and changes in managed healthcare.Healthcare reform and the growth of managed care organizations have been considerable forces in the medical diagnostics industry and in recent political discussions.For example, the ACA requires CMS to reduce payments to hospitals reimbursed under Medicare’s Inpatient Prospective Payment System (“IPPS”) that have excess readmissions.In recent years, other legislative, regulatory, and political changes aimed at regulating healthcare delivery in general and clinical laboratory tests in particular have been proposed and adopted in the United States. In particular, the FDCA and implementing FDA regulations govern activities for devices such as design, development, testing, manufacturing, storage, distribution, labeling, registration and listing, premarket clearance or approval, advertising, promotion, sales, and reporting for devices, including reporting of certain malfunctions, deaths, and injuries associated with the device, and reporting of certain recalls and corrective field actions. Some of our products, depending on their intended use, will require approval of a PMA application or clearance of a 510(k) notification, or granting of a request for de novo classification from the FDA prior to marketing. The PMA process is typically required for Class III devices that are deemed to pose the greatest risk, including devices for which general controls would be insufficient, and special controls cannot be developed, to provide a reasonable assurance of safety and effectiveness of the device, such as life-sustaining, life-supporting or implantable devices, or devices that otherwise present a potential unreasonable risk of illness or injury. However, some devices are automatically classified as Class III and subject to the PMA pathway regardless of the level of risk they pose, because there is no legally marketed predicate device to which the proposed device may demonstrate substantial equivalency. Further, even if we were to obtain regulatory clearance, approval or de novo classification, it may not be for the uses we believe are important or commercially attractive, in which case we would not be permitted to market our product for those important or commercially attractive uses that were not cleared, approved or de novo classified.38sOn October 21, 2022, the Company announced it has been in recent discussions with the FDA regarding its Accelerate Arc Products. Pursuant to such discussions, the FDA has clarified that the Company must obtain a 510(k) clearance in order to continue marketing and distributing the Accelerate Arc Products in the United States. The Company had been listing the Accelerate Arc Products as a Class I device exempt from 510(k) clearance requirements. Additionally, the FDA requested that the Company promptly take certain corrective actions, including, among other things, (i) discontinuing the U.S. marketing and distribution of the Accelerate Arc Products for positive blood culture processing and subsequent identification by mass spectrometry for diagnostic use; (ii) removing and/or correcting all U.S. promotional information within the Company’s control (e.g., website, labeling, social media, sales associate information, or other promotional material) regarding the diagnostic use of the Accelerate Arc Products as Class I devices or as devices intended as positive blood culture processing devices for subsequent identification of microorganisms by mass spectrometry; and (iii) revising/removing the Company’s registration and listing of the Accelerate Arc Products as Class I devices. The Company intends to continue to fully cooperate with the FDA, including promptly taking the corrective actions requested by the FDA. On October 21, 2022, the Company also submitted a pre-submission package to the FDA, which is intended to obtain FDA feedback regarding the Company’s contemplated submission of an application for 510(k) clearance for the Accelerate Arc Products. The Company cannot, however, give any assurances that FDA will be satisfied with the Company’s actions taken in response to the matters raised by the FDA in its discussions. The Company also cannot give any assurances as to the timing of the FDA’s response to the Company’s pre-submission package or whether the Company will be successful in obtaining 510(k) clearance for the Accelerate Arc Products. In particular, on October 3, 2023, the FDA proposed to regulate LDTs as medical devices, and to phase out its historical exercise of enforcement discretion for such tests. If the proposed rule is finalized, laboratories offering LDTs would be expected to come into compliance with FDA regulation of medical devices over a period of time. Even if the proposed rule is not finalized, the FDA could seek to increase its oversight of LDTs as medical devices under existing regulations. We continue to monitor these developments and analyze how they will impact the clearance approval and classification of our products, as well as the demand for our products by customers. With regard to products for which we seek 510(k) clearance, PMA approval or de novo classification from the FDA, any failure or material delay to obtain such clearance, approval or de novo classification could harm our business. If the FDA were to disagree with our regulatory assessment and conclude that approval, clearance or de novo classification is necessary to market the devices, we could be forced to cease marketing the products and seek approval, clearance or de novo classification before continuing to market such devices.Our manufacturing facility located in Tucson, Arizona, where we assemble and produce our products, may be subject to regulatory inspections by the FDA and other federal and state and foreign regulatory agencies. For example, this facility is subject to QSRs of the FDA and is subject to annual inspection and licensing by the State of Arizona.Sales of our diagnostic product candidates outside the United States are subject to foreign regulatory requirements governing clinical studies, vigilance reporting, marketing approval, manufacturing, product licensing, pricing and reimbursement.Global health crises may divert regulatory resources and attention away from approval processes for our products.Modifications to our products, if cleared or approved, may require new 510(k) clearances or pre-market approvals, or may require us to cease marketing or recall the modified products until clearances are obtained.Any modification to a 510(k)-cleared or de novo classified device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design or manufacture, requires a new 510(k) clearance, unless a predetermined change control plans (“PCCP”) for the device has been cleared. If a PCCP has been cleared for the device, then the manufacturer may make changes to the device consistent with the cleared PCCP without submitting a new 510(k), even though such changes would typically require 510(k) clearance. If the modification would result in the device becoming a different type of device, including a novel device or a Class III device, then a de novo classification request or PMA, rather than a new 510(k), may be required. Similarly, any modification to a PMA-approved device that affects the safety or effectiveness of the device, including significant modifications to the manufacturing process, labeling of the product, or design of the device, requires a PMA supplement or new PMA, unless a PCCP has been approved for the device. If a PCCP has been approved for a PMA-approved device, then changes may be made to the device consistent with the approved PCCP without submitting a PMA supplement, even though such changes would typically require a PMA supplement. The FDA requires each manufacturer to make the determination initially whether a new 510(k), de novo classification request, or PMA is required for a modification to a device, or whether the modification may be documented without further FDA premarket review, but the FDA may review any manufacturer’s decision. The FDA may not agree with our decisions regarding whether new clearances, de novo classifications, or PMA approvals are necessary.A recall of our products, either voluntarily or at the direction of the FDA, or the discovery of serious safety issues with our products that leads to corrective actions, could have a significant adverse impact on us.The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products. In addition, manufacturers may, under their own initiative, recall a product for any reason, including if any material deficiency in a device is found. Additionally, under the FDA’s regulations for corrections and removals, we are required to report to the FDA any field correction or other recall action that is initiated to reduce a risk to health, or to remedy a violation of the FDCA caused by the device which may present a risk to health. Seeking such approvals, clearances or de novo classification may delay our ability to replace the recalled devices in a timely manner.Any adverse event involving our products could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection, mandatory recall or other enforcement action.Risks Related to Our Common StockOur common stock may be delisted from The Nasdaq Capital Market, which could affect its market price and liquidity.We are required to continually meet Nasdaq’s listing requirements in order to maintain the listing of our common stock on The Nasdaq Capital Market. As described in a Current Report on Form 8-K filed with the SEC on March 5, 2024, we received written notice (the “Notice”) from Nasdaq’s Listing Qualifications Staff (the “Staff”) on March 4, 2024 notifying us that for the last 31 consecutive business days prior to the date of the Notice, our Market Value of Listed Securities (as defined under Nasdaq rules) was below the minimum of $35 million required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(2) (the “MVLS Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), Nasdaq has provided us with 180 calendar days, or until September 3, 2024 (the “Compliance Date”), to regain compliance with the MVLS Requirement. If, at 41sany time before the Compliance Date, the market value of our common stock (calculated in accordance with Nasdaq rules) closes at $35 million or more for a minimum of ten consecutive business days, Nasdaq will provide written confirmation to us and close the matter.If we do not regain compliance with the MVLS Requirement prior to the Compliance Date, the Staff will provide written notification to us that our common stock will be subject to delisting. At that time, we may appeal the Staff’s delisting determination to a Nasdaq Hearing Panel. We are evaluating potential actions to regain compliance with the MVLS Requirement and intend to actively monitor the market value of our common stock. We may also, if appropriate, consider other options to regain compliance with Nasdaq’s continued listing standards. There can be no assurance that we will regain compliance with the MVLS Requirement or otherwise maintain compliance with any of the other Nasdaq listing requirements.Any delisting of our common stock from The Nasdaq Capital Market could adversely affect our ability to attract new investors, reduce the liquidity of our outstanding shares of common stock, reduce our ability to raise additional capital, reduce the price at which our common stock trades, result in negative publicity and increase the transaction costs inherent in trading such shares with overall negative effects for our stockholders. We cannot assure you that our common stock, if delisted from The Nasdaq Capital Market, will be listed on another national securities exchange or quoted on an over-the-counter quotation system. In addition, delisting of our common stock could deter broker-dealers from making a market in or otherwise seeking or generating interest in our common stock and might deter certain institutions and persons from investing in our securities at all. For these reasons and others, delisting could adversely affect our business, financial condition and liquidity.We have significantly increased the total number of authorized shares of common stock under our certificate of incorporation, which could cause significant dilution. Our management believes the successful achievement of our business objectives may require additional financing through one or a combination of the issuance of common stock in public or private equity offerings, debt financings, exercise of common stock warrants, collaborations, licensing arrangements, grants and government funding and strategic alliances. To effectuate that, in May 2023, we sought and obtained authorization from stockholders to increase the total number of authorized shares of common stock under our certificate of incorporation by 250,000,000 for a total of 450,000,000 shares. The future issuance of all or part of our remaining authorized common stock may result in substantial dilution to our stockholders and may adversely affect the market price of our common stock.Future issuances or sales of shares of our common stock may depress the price of our shares and be dilutive to our existing stockholders.We cannot predict whether future issuances of shares of our common stock or the availability of shares for resale in the open market will decrease the market price per share of our common stock. The exercise of any outstanding options or warrants, the issuance of future equity awards to retain and incentivize employees, the issuance of our common stock upon the conversion or exchange of our convertible notes and any other issuances of our common stock could have an adverse effect on the market price of the shares of our common stock.We have primarily relied upon capital from the sale of our securities to fund our operations. We may require additional capital to continue to operate as a going concern in the near-term and may require additional capital in the future to expand our product offerings, expand our sales and marketing 42sinfrastructure, increase our manufacturing capacity, fund our operations, and continue our research and development activities. Our future funding requirements will depend on many factors, including:•our ability to address existing obligations, including our 2.50% Notes and 5.If we require additional capital, we may attempt to raise it through a variety of strategies, including the issuance and sale of additional shares of our common stock.We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all.If we do not have, or are not able to obtain, sufficient funds, we may be required to delay additional product development or license to third parties the rights to commercialize our products or technologies that we would otherwise seek to commercialize ourselves.Our stock price has been volatile and may continue to be volatile and traded on low volumes.The trading price of our common stock has been, and is likely to continue to be, highly volatile. Factors that may contribute to volatility in the price of our common stock include, but are not limited to:•difficulties in resolving our continuing financial condition and our ability to obtain additional capital to meet our financial obligations;•low trading volume currently prevailing in the market for our shares;•concentration of our stock with one individual large shareholder who could decide to materially reduce his position;•the substantial current short interest in our stock;•our failure to meet applicable Nasdaq listing standards and the possible delisting of our common stock from Nasdaq; •adverse regulatory decisions, including failure to receive regulatory approvals for any of our product candidates;•our success in commercializing our product candidates, if and when approved;•the introduction of new products or product enhancements by us or others in our industry;•announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, capital commitments or restructurings;43s•disputes or other developments with respect to our or others’ intellectual property rights;•product liability claims or other litigation;•quarterly variations in our results of operations or those of others in our industry;•sales of large blocks of our common stock, including sales by our executive officers and directors;•changes in senior management or key personnel;•changes in laws or regulations which adversely affect our industry or us;•changes in earnings estimates or recommendations by securities analysts; and•changes in general market, economic, and political conditions in the U.S., and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war, other geopolitical uncertainties, public health concerns (including health epidemics, pandemics or outbreaks of communicable diseases), and responses to such events.30 per share, and during the year ended December 31, 2022, the sale price for our common stock ranged from $5. Share prices shown reflect the Company effected one-for-ten Reverse Stock Split which occurred on July 11, 2023.In addition, in the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted against that company. Any lawsuit to which we are a party, with or without merit, may result in an unfavorable judgment. We also may decide to settle lawsuits on unfavorable terms. Any such negative outcome could result in payments of substantial damages or fines, damage to our reputation or adverse changes to our product offerings or business practices. Furthermore, negative public announcements of the results of hearings, motions or other interim proceedings or developments could have a negative effect on the market price of our common stock.The ownership of our common stock is highly concentrated.As of December 31, 2023, our directors and executive officers beneficially owned in the aggregate, approximately 48% of our outstanding common stock, including 40% beneficially owned, directly or indirectly, by our director, Jack Schuler. Certain of our major shareholders hold their shares in certificate form, further limiting trading volume.Provisions in our Amended and Restated Certificate of Incorporation, as amended (our “Charter”) and Amended and Restated Bylaws (as amended, our “Bylaws”) and Delaware law may delay or prevent acquisition of our Company, which could adversely affect the value of our common stock.0 million shares of preferred stock, par value $0.001 per share, in one or more series, to fix the number of shares constituting such series and the designation of such series, the voting powers, if any, of the shares of such series, and the preferences and relative, participating, optional or other special rights, if any, and any qualifications, 44slimitations or restrictions thereof, of the shares of such series.General Risk FactorCurrent macroeconomic conditions and the uncertain economic outlook may remain challenging for the foreseeable future.Global economic conditions, which have led to market disruptions and significant volatility in credit and capital markets, may remain challenging and uncertain for the foreseeable future, including inflation, global health crises, international wars and disputes, and disruptions to the banking system due to bank failures.S. and foreign hospitals and other customers to slow spending on our products, which would delay and lengthen sales cycles. Item 1B. Unresolved Staff CommentsNot applicable. CybersecurityRisk Management and Strategy We recognize the importance of developing, implementing and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. As such, we have implemented cybersecurity programs designed to maintain compliance with applicable laws and regulations governing ethical business practices, including our relationships with suppliers, customers, and business partners. We maintain formal processes for our cybersecurity program and incident response procedures, which are updated at least annually. These processes include, among other things, detailed steps on how we assess cyber risks, identify threats, and determine the materiality of cyber incidents. These processes also designate certain roles within the company to execute these policies and certain leadership roles to manage material risk escalation. These processes endeavor to follow the National Institute of Standards and Technology (NIST) Cybersecurity Framework.Our Information Security team uses automated technology, third-party partners, and direct review of system indicators to monitor and implement the prevention, detection, mitigation, and remediation of cybersecurity incidents, and to stay current with the changing threat landscape. We also leverage encryption technologies and other measures to safeguard systems. We engage third parties as part of our cyber program, including external security firms that provide security technology, conduct regular security audits, and conduct penetration testing. We also engage third-party service providers to assist with managing various other aspects of our business. We review SOC 1 and similar documentation from these third-party service providers annually to better understand the information security programs maintained by them. 45sOur employees are responsible for complying with our data security standards and are required to complete annual training to understand the behaviors and technical requirements necessary to keep data secure. We also require that cybersecurity training be part of the onboarding process for new hires. As of December 31, 2023, cybersecurity risks have not materially affected our business strategy, results of operation, or financial condition.Governance Cybersecurity is an important component of our enterprise risk management program. While the full board of directors (the “Board”) has primary responsibility for risk oversight, the Board utilizes its committees, as appropriate, to monitor and address the risks that may be within the scope of a particular committee’s expertise or charter and receives updates at Board meetings on committee activities.The Audit and Governance Committee has oversight over the adequacy of the Company’s enterprise risk management and internal controls, including computerized information system controls and security, and regularly reviews our cybersecurity, including IT risks, controls, procedures, and plans to mitigate cybersecurity risks and respond to security incidents. Due to the importance of cybersecurity, the full Board receives a report on at least an annual basis from the IT Director, on, among other issues, our cyber risks and threats, the status of projects, management’s strategies to strengthen our IT systems, assessments of our security program, third-party assessments and testing, our emerging threat landscape, and the review of our cybersecurity insurance policy. Updates will be held more frequently with the Audit and Governance Committee as deemed appropriate for significant changes to the Company’s IT systems or cybersecurity processes. Pursuant to our incident response procedures, material cyber incidents will be reported to the Audit and Governance Committee upon a determination of material status.Management is responsible for our company’s day-to-day risk management activities. Our cybersecurity program is led by our IT Director, who is responsible for assessing and managing cybersecurity risks. He has 12 years of experience as a leader in both the medical and defense industries. As cybersecurity-centric manager our IT Director has also achieved high-level security clearance and held the title of Information System Security Officer for other organizations. As cybersecurity risks arise, our IT Director executes an incident response procedure and communicates the appropriate details to management in alignment with the escalation steps in the procedure. In addition, our IT Department conducts quarterly IT systems audits which include system log audits, backup and recovery assessment, account review, and project status..

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