In addition to effectively introducepotential FDA enforcement, the Department of Justice, as well as state attorneys general, may work with the FDA or on their own to bring enforcement action against us and/or our executives in connection with any off-label promotion of our products. Such action may include civil and marketcriminal penalties, including significant fines, among other serious consequences. Even if we are successful in resolving such matters without incurring penalties, responding to investigations or prosecutions will likely result in substantial costs and could significantly and adversely impact our reputation and divert management’s attention and resources, which could have a material adverse effect on our business, operating results, financial condition, and ability to finance our operations. In addition, the off-label use of our products whichmay increase the risk of injury to patients, and, in turn, the risk of product liability claims. Product liability claims are expensive to defend and could materially harmdivert our operating results.management’s attention and result in substantial damage awards against us.

Achieving market acceptance for our existing products such as our direct-to-consumer offerings (disposable breathalyzers) and clinical laboratory testing solutions (Particle ImmunoFiltration Assay (“PIFA”)-based heparin-induced thrombocytopenia and infectious disease rapid tests) and introducing new products (breath condensate detectors for the health & wellness categories) require substantial marketing efforts and will require us or our contract partners, sales agents, or distributors to make significant expenditures of time and money.  In some instances we will be significantly or totally reliant on the marketing efforts and expenditures of our contract partners, sales agents, distributors.  If they do not have or commit the expertise and resources to effectively market the products that we manufacture, our operating results will be materially harmed. Heparin-Induced Thrombocytopenia (“HIT”) is the development ofthrombocytopenia (a low platelet count), due to the administration of various forms of heparin, an anticoagulant / blood thinner. HIT may predispose a patient to thrombosis, the abnormal formation of life- and limb-threatening blood clots inside a blood vessel.

We may not have the resources to conduct clinical protocols sufficient to yield data suitable for publication in peer-reviewed journals and our inability to do so in the future could have an adverse effect on marketing our products effectively.

In order for our products targeted for use by hospital laboratory professionals and healthcare providers to be widely adopted, we would have to conduct clinical protocols that are designed to yield data suitable for publication in peer-reviewed journals should be carried out.journals. These studies are often time-consuming, labor-intensive and expensive to execute. The Company has not had the resources to effectively implement such clinical programs within its clinical development activities and may not be able to do so in the future. In addition, if a protocol is initiated, the results of which may ultimately not support the anticipated positioning and benefit proposition for the product. Either of these scenarios could hinder our ability to market our products and revenue may decline.

We have very limited marketing resources and limited sales capabilities, which may make commercializing our products difficult.

We currently have very limited marketing resources and sales capabilities. Therefore, in order to commercialize our products, some of which require regulatory clearance prior to market entrance, we must either develop our own marketing and distribution sales capabilities or consider collaborating with third parties to perform these functions. We may, in some instances, rely significantly on sales, marketing and distribution arrangements with collaborative partners and other third parties. In these instances, our future revenue will be materially dependent upon the success of the efforts of these third parties.

Should we determine that developing our own marketing and sales capabilities is required, we may not be able to attract and retain qualified personnel to serve in our sales and marketing organization, to develop an effective distribution network or to otherwise effectively support our commercialization activities. The cost of establishing and maintaining a sales and marketing organization may exceed its cost effectiveness. If we fail to develop sales and marketing capabilities, if sales efforts are not effective or if costs of developing sales and marketing capabilities exceed their cost effectiveness, our business, results of operations and financial condition would be materially adversely affected.

Technology is an important component of our business and growth strategy, and our success depends to a significant extent on the development, implementation and acceptance of new products. Commitments to develop new products must be made well in advance of any resulting sales, and technologies and standards may change during development, potentially rendering our products outdated or uncompetitive before their introduction. Our ability to develop products to meet evolving industry requirements and at prices acceptable to our customers will be dependent on a number of factors including, funding availability to complete development efforts, our ability to test and refine products, successfully conduct clinical trials and seek to obtain required FDA clearance or foreign approval/certification for products that require such regulatory authorizations. Physician patients and third party payors and the medical community may be slow to adopt any of our products. Moreover, there can be no assurance that the products that we are developing will receive FDA clearance, work effectively in the marketplace or gain market acceptance. We may expend considerable funds and other resources on the development of next-generation products without any guarantee that these products will be successful.

If we are not successful in bringing new products to market, whether because we fail to address marketplace demand, fail to develop viable technologies or otherwise, our revenue may decline and our results of operations could be seriously harmed.

If we fail to establish, maintain and expand relationships with distributors, sales of our products would decline.

The Company does not control the efforts of its distributors and its distributors are not prohibited from selling competing products. Our ability to sell our products depends largely on the Company’s relationships with such distributors. Accordingly, we are subject to the risk that they may not commit the financial and other resources to market and sell our products to our level of expectation, they may experience financial hardship or they may otherwise terminate our relationship on short notice. In the U.S. clinical laboratory marketplace, many of our existing and potential customers purchase our products through our two national distributors, Cardinal Health Inc. and Fisher HealthCare. ABI’s sales account executives work in tandem with distributor sales representatives to gain access to decision makers within the majority of U.S. medical facilities.Health. In addition, the Company relies on its distribution network to negotiate pricing arrangements and contracts with Group Purchasing Organizations and their affiliated hospitals and other members. For the years ended December 31 2011 and 2012 and the sixnine months ended JuneSeptember 30, 2013, 65%2019, two customers generated 47% and 34%, 77% and 83%, respectively of total revenue fromor 81% in the saleaggregate, of the Company’s Heparin/PF4 Assay products was generated through our U.S. distributors’ purchases, with Cardinal Health accounting for 59%, 68% and 66%, respectively of total sales forrevenue. For the years ended December 31 2011 and 2012 and the sixnine months ended JuneSeptember 30, 2013.2018, two customers generated 55%, and 17%, or 72% in the aggregate, of the Company’s revenue. In the future, if we are unable to maintain existing relationships, and/or grow to be recognized as a prominent medical device supplier within these organizations, and/or develop new relationships with additional U.S. and international distributors, our competitive position would likely suffer and our business would be harmed.

We have just begun to develop formal business relationships with foreign distributors for all of our in-line products. We will therefore be dependent upon the financial health of these organizations to further grow our business. If a distributor were to go out of business, it would take substantial time, cost and resources to find a suitable replacement and the product registrations and certifications held by such distributor may not be returned to us or to a subsequent distributor in a timely manner or at all. Any failure to produce foreign sales may negatively affect our profitability in the short- and long-term. Since some of our products have CE-Marks and/or are earmarked for sale in Europe where healthcare regulation and reimbursement for medical devices vary significantly from country to country, this changing environment could adversely affect our ability to sell our products in some European countries. In addition, the Company is working with an exclusive distributor in mainland China to register ABI’s PIFA Heparin/PF4 Rapid Assay for eventual sale. Since additional clinical studies must be performed by our distributor partner within Chinese healthcare facilities as part of their regulatory submission, there is no guarantee that the results of their protocol will support the successful registration of the product and permit sales activity. Failure to gain product registration in China will hinder the Company’s ability to increase its revenue.

Our business is vulnerable to the availability of raw materials, our ability to forecast customer demand and our ability to manage production capacity.

Our ability to meet customer demand depends, in part, on our production capacity and on obtaining supplies, a number of which can only be obtained from a single supplier or a limited number of suppliers. A reduction or disruption in our production capacity or our supplies could delay products and fulfillment of orders and otherwise negatively impact our business.

We must accurately predict both the demand for our products and the lead times required to obtain the necessary components and materials. If we overestimate demand, we may experience underutilized capacity and excess inventory levels. If we underestimate demand, we may miss delivery deadlines and sales opportunities and incur additional costs for labor overtime, equipment overuse and logistical complexities. Additionally, our production capacity could be affected by manufacturing problems. Difficulties in the production process could reduce yields or interrupt production, and, as a result, we may not be able to deliver products on time or in a cost-effective, competitive manner. Our failure to adequately manage our capacity could have a material adverse effect on our business, financial condition and results of operations.

Our ability to meet customer demand also depends on our ability to obtain timely and adequate delivery of materials, parts and components from our suppliers. We generally do not maintain contracts with any of our key suppliers. From time to time, suppliers may extend lead times, limit the amounts supplied to us or increase prices due to capacity constraints or other factors. Supply disruptions may also occur due to shortages in critical materials. In addition, a number of our raw materials are obtained from a single supplier. Many of our suppliers must undertake a time-consuming qualification process before we can incorporate their raw materials into our production process. If we are unable to obtain materials from a qualified supplier, it can take up to a year to qualify a new supplier, assuming an alternative source of supply is available. A reduction or interruption in supplies or a significant increase in the price of one or more supplies could have a material adverse effect on our business, financial condition and results of operations.

Our manufacturing facility is vulnerable to natural disasters and other unexpected losses, and we may not have adequate insurance to cover such losses.

We have one manufacturing facility, located in Thorofare, New Jersey, for production of all of our finished goods production. Our facility is susceptible to damage from fire, floods, loss of power or water supply, telecommunications failures and similar events. Since some of our raw materials and finished goods are temperature-sensitive and our facility currently does not have a back-up generator, a moderate-to-severe disruption in power may render various levels of our inventories unusable or unsalable, resulting in a sufficient write off of inventory and may immediately impact our ability to generate revenue.

Any natural disaster could significantly disrupt our operations. In the event that our facility was affected by a natural or man-made disaster, we would be forced to rely on third-party manufacturers. Our insurance for damage to our property and the disruption of our business from casualties may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all. If we are forced to seek alternative facilities, we may incur additional transition costs and we may experience a disruption in the supply of our products until the new facility is available and operating. In addition, much of the machinery we use in our production process is custom-made. If such machinery is damaged, we may experience a long lead-time before this unique machinery is replaced or rebuilt and we are able to resume production.

Our manufacturing and distribution operations are highly dependent on our information technology systems and we do not currently have a redundant data center. In the event of a failure of our primary data center, our manufacturing and distribution operations will be disrupted which will adversely affect our business.

In addition, any disruption, delay, transition or expansion of our manufacturing operations could impair our ability to meet the demand of our customers and our customers may cancel orders or purchase products from our competitors, which could adversely affect our business, financial condition and results of operations.

Some of our finished goods, including our PIFA products and control materials related to PIFA Heparin/PF4 assays, are temperature-sensitive.

Proper packaging and time in transit are critical to the stability of some of our clinical laboratory products when they are en route to our distributors or end users. If certain specialized packaging materials cannot be obtained, and/or if our contracted common carriers, or those of our distributors, cannot meet product-specific delivery requirements, our products may not perform as intended and may lead to requests for product replacement. If such issues become widespread it could hurt our reputation and we could potentially lose customers which would adversely affect our business.

Also, given the issue of temperature sensitivity, time in transit may limit our ability to service potential markets outside of the U.S. for those products, especially those with geographies that do not allow for shipment and customs clearance within four business days. This could adversely affect our potential to generate revenue for some products on an international level.

We are subject to environmental, health and safety laws, which could increase our costs and restrict our operations in the future.

Our operations are subject to environmental, health and safety laws and regulations in each of the jurisdictions in which we operate. These laws and regulations concern, among other things, the generation, handling, transportation and disposal of hazardous substances or wastes, the clean-up of hazardous substance releases, and the emission or discharge of materials into the air or water. Although we currently incur limited expenditures in connection with these environmental health and safety laws and regulations, if we fail to comply with the requirements of such laws and regulations or if such laws changes significantly in the future, we could incur substantial additional costs to alter our manufacturing processes and/or adjust our supply chain management. Such changes could also result in significant inventory obsolescence. Compliance with environmental, health and safety requirements could also restrict our ability to expand our facilities in the future.

Our business is vulnerable to inflation.

We are limited in our ability to raise prices for some products, particularly in the clinical laboratory marketplace where cost-containment pressures are significant. As a result, increases in our raw materials, production and transportation costs may have a material adverse impact on our results of operations.

Demands of third-party payors, cost reduction pressures among our customers and restrictive reimbursement practices may adversely affect our revenue.

Our ability to negotiate favorable contracts with non-governmental payors, including managed-care plans or Group Purchasing Organizations (“GPOs”), even if facilitated by our distributors, may significantly affect revenue and operating results. Our customers continue to face cost reduction pressures that may cause them to curtail their use of, or reimbursement for some of our products, to negotiate reduced feesprices or other concessions or to delay payment. Furthermore, the increasing leverage of organized buying groups among non-governmental payors may reduce market prices for our products and services, thereby reducing our profitability. Reductions in price increases or the amounts received from current customers or lower pricing for our products to new customers could have a material adverse effect on the financial position, cash flows and results of operations.

Failure to obtain medical reimbursement for our products, under development, as well as a changing regulatory and reimbursement environment, may impact our business.

The U.S. healthcare regulatory environment may change in a way that restricts our ability to market our products due to medical coverage or reimbursement limits. Sales of our diagnostic tests will depend in part on the extent to which the costs of such tests are covered by health maintenance, managed care, and similar healthcare management organizations, or reimbursed by government health payor administration authorities, private health coverage insurers and other third-party payors. These healthcare payors are increasingly challenging the prices charged for medical products and services. The containment of healthcare costs has become a priority of federal and state governments. Accordingly, our potential products may not be considered to be cost effective, and reimbursement may not be available or sufficient to allow us to sell our products on a competitive basis. Legislation and regulations affecting reimbursement for our products may change at any time and in ways that are difficult to predict and these changes may behave an adverse effect to us.

CMS, the federal agency responsible for administering the Medicare program, along with its contractors establishes coverage and reimbursement policies for the Medicare program. In addition, private payors often follow the coverage and reimbursement policies of Medicare. We cannot assure you that government or private third-party payors will cover and reimburse the procedures using our products in whole or in part in the future or that payment rates will be adequate.

For some of our products, our success in non-U.S. markets may depend upon the availability of coverage and reimbursement from the third-party payors through which health care providers are paid in those markets. Health care payment systems in non-U.S. markets vary significantly by country, and include single-payor, government managed systems as well as systems in which private payors and government-managed systems exist, side-by-side. For some of our products, our ability to achieve market acceptance or significant sales volume in international markets may be dependent on the availability of reimbursement for our products under health care payment systems in such markets. There can be no assurance that reimbursement for our products will be obtained or that such reimbursement will be adequate.

Health care legislation, including the Patient Protection and Affordable Care Act and the Health Insurance Portability and Accountability Act of 1996, may have a material adverse effect on us.

The Patient Protection and Affordable Care Act (PPACA) substantially changes the way healthcare is financed by government and private insurers, encourages improvements in healthcare quality, and impacts the medical device industry. The PPACA includes an excise tax on entities that manufacture or import medical devices offered for sale in the United States; a new Patient-Centered Outcomes Research Institute to conduct comparative effectiveness research; and payment system reforms.

The PPACA also imposes new reporting and disclosure requirements on device and drug manufacturers for any payment or transfer of value made or distributed to physicians or teaching hospitals. Under these provisions, known as the Physician Payment Sunshine Act, affected device and drug manufacturers need to begin data collection on August 1, 2013, with the first reports due in 2014. These provisions require, among other things, extensive tracking and maintenance of databases regarding the disclosure of relationships and payments to physicians and teaching hospitals. In addition, certain states have passed or are considering legislation restricting our interactions with health care providers and/or requiring disclosure of many payments to them. Failure to comply with these tracking and reporting laws could subject us to significant civil monetary penalties.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) created new federal statutes to prevent healthcare fraud and false statements relating to healthcare matters. The healthcare fraud statute prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private payors. A violation of this statute is a felony and may result in fines, imprisonment or exclusion from government sponsored programs such as the Medicare and Medicaid programs. The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. A violation of this statute is a felony and may result in fines or imprisonment or exclusion from government sponsored programs. HIPAA also established uniform standards governing the conduct of certain electronic healthcare transactions and protecting the security and privacy of individually identifiable health information maintained or transmitted by healthcare providers, health plans and healthcare clearinghouses.

Both federal and state government agencies are continuing heightened and coordinated civil and criminal enforcement efforts. As part of announced enforcement agency work plans, the federal government will continue to scrutinize, among other things, the billing practices of hospitals and other providers of healthcare services. The federal government also has increased funding to fight healthcare fraud, and it is coordinating its enforcement efforts among various agencies, such as the U.S. Department of Justice, the Office of Inspector General and state Medicaid fraud control units. We believe that the healthcare industry will continue to be subject to increased government scrutiny and investigations.

We may fail to recruit and retain qualified personnel.

We expect to rapidly expand our operations and grow our sales, development and administrative operations. This expansion is expected to place a significant strain on our management and will require hiring a significanthave substantially reduced the number of qualified personnel.our employees in order to reduce our costs. Accordingly, recruiting and retaining suchour remaining personnel in the future will be critical to our success. There is intense competition from other companies for qualified personnel in the areas of our activities, particularly sales, marketing and research & development. If we fail to identify, attract, retain and motivate these highly skilled personnel, we may be unable to continue our marketing and developmentoperating activities, and this could have a material adverse effect on the Company’s business, financial condition, results of operations and future prospects.

We may face risks in connection with potential acquisitions.

We may look toacquire businesses that complement or expand our operations as part of our business strategy going forward. We may not be able to successfully identify attractive acquisition candidates or negotiate favorable terms in the future. Furthermore, our ability to effectively integrate any future acquisitions will depend on, among other things, the adequacy of our implementation plans, the ability of our management to oversee and operate effectively the combined operations and our ability to achieve desired operational efficiencies. If we are unable to successfully integrate the operations of any businesses that we may acquire in the future, our business, financial position, results of operations or cash flows could be adversely affected.

We rely on the key executive officers, and their knowledgeofficer of our business and technical expertise would be difficult to replace.the management team.

We are highly dependent on our Executive Chairman, Raymond F. Akers, Jr. PhD, because of his expertise and experience in biotechnology and diagnostics, as well as Thomas A. Nicolette, our Chief Executive Officer. We have three year employment agreements with our executive officers containing customary non-disclosure, non-compete, confidentiality and assignment of inventions provisions. We do not have “key person” life insurance policies for any of our officers. The loss of the technical knowledge and management and industry expertise of any of our key personnelteam to execute against its business plan. Failure could result in delays in product development, loss of customers and sales and diversion of management resources, which could adversely affect our operating results.

We may need to obtain additional licenses to patents or other proprietary rights from other parties.

To facilitate development and commercialization of a proprietary technology base, we may need to obtain additional licenses to patents or other proprietary rights from other parties.  Obtaining and maintaining these licenses, which may not be available, may require the payment of up-front fees and royalties.  In addition, if we are unable to obtain these types of licenses, our product development and commercialization efforts may be delayed or precluded.

We may not be able to protect or enforce our intellectual property rights, which could impair our competitive position.

Our success depends significantly on our ability to protect our rights to the patents, trademarks, trade secrets, copyrights and all other intellectual property rights used in our products. Protecting our intellectual property rights is costly and time consuming. We rely primarily on patent protection and trade secrets, as well as a combination of copyright and trademark laws and nondisclosure and confidentiality agreements to protect our technology and intellectual property rights. However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or maintain any competitive advantage. Despite our intellectual property rights practices, it may be possible for a third party to copy or otherwise obtain and use our technology without authorization, develop similar technology independently or design around our patents.

We cannot be assured that any of our pending patent applications will result in the issuance of a patent to us. The U.S. Patent and Trademark Office, or PTO, may deny or require significant narrowing of claims in our pending patent applications, and patents issued as a result of the pending patent applications, if any, may not provide us with significant commercial protection or be issued in a form that is advantageous to us. We could also incur substantial costs in proceedings before the PTO. Our issued and licensed patents and those that may be issued or licensed in the future may expire or may be challenged, invalidated or circumvented, which could limit our ability to stop competitors from marketing related technologies. Upon expiration of our issued or licensed patents, we may lose some of our rights to exclude others from making, using, selling or importing products using the technology based on the expired patents. There is no assurance that competitors will not be able to design around our patents. We also rely on unpatented proprietary technology. We cannot assure you that we can meaningfully protect all our rights in our unpatented proprietary technology or that others will not independently develop substantially equivalent proprietary products or processes or otherwise gain access to our unpatented proprietary technology.

Further, we may not be able to obtain patent protection or secure other intellectual property rights in all the countries in which we operate, and under the laws of such countries, patents and other intellectual property rights may be unavailable or limited in scope. If any of our patents fail to protect our technology, it would make it easier for our competitors to offer similar products. Our trade secrets may be vulnerable to disclosure or misappropriation by employees, contractors and other persons. Any inability on our part to adequately protect our intellectual property may have a material adverse effect on our business, financial condition and results of operations.

Expenses incurred with respect to monitoring, protecting, and defending our intellectual property rights could adversely affect our business.

Competitors and others may infringe on our intellectual property rights, or may allege that we have infringed on theirs. Monitoring infringement and misappropriation of intellectual property can be difficult and expensive, and we may not be able to detect infringement or misappropriation of our proprietary rights.

We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights and we may be unable to protect our rights to, or use of, our technology.

Some or all of our patent applications may not result in the issue asof patents, or the claims of any issued patents may not afford meaningful protection for our technologies or products. In addition, patents issued to us or our licensors, if any, may be challenged and subsequently narrowed, invalidated, found unenforceable or circumvented. Patent litigation is widespread in the biotechnology industry and could harm our business. Litigation might be necessary to protect our patent position. Patentability, invalidity, freedom-to-operate or other opinions may be required to determine the scope and validity of third-party proprietary rights. If we choose to go to court to stop a third party from using the inventions protected by our patent, that third party would have the right to ask the court to rule that such patents are invalid and/or should not be enforced against that third party. These lawsuits are expensive and we may not have the required resources to pursue such litigation or to protect our patent rights. In addition, there is a risk that the court will decide that our patents are not valid or that we cannot stop the other party from using their inventions. There is also the risk that, even if the validity of these patents is upheld, the court will find that the third party’s activities do not infringe our rights in these patents.

Furthermore, a third party may claim that we are infringing the third party’s patent rights and may go to court to stop us from engaging in our normal operations and activities, including making or selling our products or product candidates. These lawsuits are costly and could affect our results of operations and divert the attention of managerial and technical personnel. There is a risk that a court would decide that we are infringing the third party’s patents and would order us to stop the activities covered by the patents. In addition, there is a risk that a court will order us to pay the other party’s treble damages or attorneys’ fees for having violated the other party’s patents. The biotechnology industry has produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our products or methods of use either do not infringe the claims of the relevant patent and/or that the third partythird-party patent claims are invalid, and we may not be able to do this. Proving invalidity in the United Sates in particular, is difficult since it requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.

In addition, changes in either patent laws or in interpretations of patent laws in the United States and other countries may materially diminish the value of our intellectual property or narrow the scope of our patent protection. In September 2011, the U.S. Congress passed the Leahy-Smith America Invents Act (AIA)(“AIA”) which became effective in March 2013. The AIA reforms United States patent law in part by changing the standard for patent approval for certain patents from a “first to invent” standard to a “first to file” standard and developing a post-grant review system. It is too earlydifficult to determine whatpredict the effect or impact the AIA will have on the operation of our business and the protection and enforcement of our intellectual property. However,While we believe that the AIA’s post-grant review system is less expensive than litigation should we need to challenge a third party patent or defend our own patent, the AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition. Because some patent applications in the United States may be maintained in secrecy until the patents are issued, patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing, and publications in the scientific literature often lag behind actual discoveries. We cannot be certain that others have not filed patent applications for technology covered by our issued patents or our pending applications or that we were the first to invent the technology (pre-AIA) or first to file (post-AIA). Our competitors may have filed, and may in the future file, patent applications covering technology similar or the same as ours. Any such patent application may have priority over our patent application and could further require us to obtain rights to such technologies in order to carry on our business. If another party has filed a U.S. patent application on inventions similar to or the same as ours, we may have to participate in an interference or other proceeding in the U.S. Patent and Trademark Office, or the USPTO, or a court to determine priority of invention in the United States, for pre-AIA applications and patents. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of our U.S. patent position with respect to such inventions.

Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

Our trademark applications in the United States and any other jurisdictions where we may file may not be allowed registration, and we may not be able to maintain or enforce our registered trademarks. During trademark registration proceedings, we may receive rejections. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in the USPTO and in corresponding foreign agencies, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our applications and/or registrations, and our applications and/or registrations may not survive such proceedings. Failure to secure such trademark registrations in the United States and in foreign jurisdictions could adversely affect our ability to market our product candidates and our business.

We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

As is common in the biotechnology and pharmaceutical industry, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although the Company has no knowledge of any claims against us, we may be subject to claims that these employees or wethe Company have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. To date, none of our employees have been subject to such claims.

We may be at risk that our former employees may wrongfully use or disclose our trade secrets.

In addition to patent protection, we rely heavily upon know-how and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees, consultants, and third parties, to protect our confidential and proprietary information, especially where we do not believe patent protection is appropriate or obtainable. In addition to contractual measures, we try to protect the confidential nature of our proprietary information using physical and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an employee, former employee, consultant, former consultant or third party with authorized access, provide adequate protection for our proprietary information. Our security measures may not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor, and recourse we take against such misconduct may not provide an adequate remedy to protect our interests fully. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our competitive position could be harmed.

The marketing, sale, and use of our PIFA products and any other devices we currently manufacture or may manufacture in the future could result in serious injuries, product liability claims, regulatory enforcement action, and/or recalls or market withdrawals, any of which would likely subject us to substantial costs and reputational harm and have a material adverse effect on our business.

Our success depends on the market’s confidence that we can continue to provide reliable, high-quality diagnostic tests. We believe that our customers are likely to be particularly sensitive to test defects and errors, as the conditions that the PIFA products are designed to identify may cause limb- and life-threatening complications if not accurately diagnosed in a timely manner. As a result, the failure of our tests or services to perform as expected could impair our reputation and the public image of our tests and services, and we may be subject to legal claims arising from any defects or errors.

The marketing, sale,and use of our PIFA products and our other products could lead to product liability (and other similar) claims against us if someone were to allege that one of our tests failed to perform as it was designed or as claimed in our promotional materials, was performed pursuant to incorrect or inadequate laboratory procedures, if we delivered incorrect or incomplete test results, or if someone were to misinterpret test results. In addition, we may be subject to liability for errors in, a misunderstanding of, or inappropriate reliance upon, the information we provide, or for failure to provide such information, in connection with our marketing and promotional activities or as part of the results generated by our products. A product liability or professional liability claim could result in substantial damages and be costly and time-consuming for us to defend.

While our PIFA products are highly accurate, they are not 100% accurate and may generate erroneous results that could cause patient harm. For example, PIFA could provide a so-called “false negative” result upon which a patient or physician may rely to make a conclusion about how to proceed with the patient’s treatment. If the false negative causes, or exacerbates, a patient injury or condition, the patient (and/or the patient’s family) may file a lawsuit against us based on product liability. On July 25, 2019, we received a product-liability petition, alleging that multiple false-negative PIFA Heparin/PF4 Rapid Assay results caused a patient’s treating hospital to delay the appropriate diagnosis by several days, which, the petition argues, was a substantial contributing factor in the ultimate amputation of the patient’s left leg. We are contesting this action vigorously and believe our product liability insurance will be adequate to cover any costs incurred in connection with this matter. However, we cannot guarantee that our insurance will fully protect us from the financial impact of defending against product liability claims or any judgments, fines, or settlement costs arising out of any such claims.

Any product liability or professional liability claim brought against us, with or without merit, could increase our insurance rates, cause our insurance coverage to be terminated or prevent us from securing insurance coverage in the future. Additionally, any product liability or professional liability lawsuit could harm our reputation, result in a cessation of our services or cause our partners to terminate our agreements with them, any of which could adversely impact our results of operations.

Further, under the FDA’s MDR regulations, we are required to report to the FDA any incident in which our product may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury. For example, once brought to our attention, we reported the injury described above in connection with alleged false-negative PIFA Heparin/PF4 Rapid Assay results. Repeated product malfunctions may result in a voluntary or involuntary product recall, which could divert managerial and financial resources, impair our ability to manufacture our products in a cost-effective and timely manner and have an adverse effect on our reputation, financial condition and operating results.

Any adverse event involving our products could result in future voluntary corrective actions, such as recalls or customer notifications, or regulatory agency action, which could include inspection, mandatory recall or other enforcement action. Any corrective action, whether voluntary or involuntary, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results.

We currently manufacture our products at a single location. Any disruption at this facility could adversely affect our business and results of operations.

We currently manufacture all our products at our manufacturing plant. If our manufacturing plant were damaged or destroyed, or otherwise subject to disruption, it would require substantial lead-time to replace or rebuild the facility for the manufacture of our products. In such event, we would be forced to rely entirely on third-party contract manufacturers for an indefinite period of time. We do not currently have established relationships with any back-up manufacturers. Even if we are able to establish a relationship with a third-party manufacturer, there is no assurance that such manufacturer will be able to meet our needs from a technical, timing, or cost effective manner.  

We are currently subject to a number of securities litigations and we may be subject to similar or other litigation in the future.

The Company is currently subject to a number of litigations, as discussed in the “Business” section. In connection with certain of these litigations, the Company has entered into settlements of claims for significant monetary damages. We may also be subject to judgements or enter into additional settlements of claims for significant monetary damages for the securities litigations that we have yet to enter into settlement agreements. Defending against the current litigations is or can be time-consuming, expensive and cause diversion of our management’s attention.

With respect to any litigation, our insurance may not reimburse us or may not be sufficient to reimburse us for the expenses or losses we may suffer in contesting and concluding such lawsuit. Substantial litigation costs, including the substantial self-insured retention that we are required to satisfy before any insurance applies to a claim, unreimbursed legal fees or an adverse result in any litigation may adversely impact our business, operating results or financial condition. We believe that our directors’ and officers’ liability insurance will cover our potential liability with respect to the securities class-action lawsuit; however, the insurer has reserved its rights to contest the applicability of the insurance to such claims and the limits of the insurance may be insufficient to cover our eventual liability.

We face substantial competition from other companies and our operating results may suffer if we fail to compete effectively.

Competition among providers of rapid, point-of-care screening and testing products is intense and subject to rapid technological change and evolving industry requirements and standards. We compete with many companies that have greater financial, product development, sales and marketing resources and experience than we do. Furthermore, new product development and technological change characterize the areas in which we compete. Our present or future products could be rendered obsolete or uneconomical as a result of technological advances by one or more of our present or future competitors. We must continue to develop and commercialize new products and technologies to remain competitive in the diagnostic testing industry. We believe that we compete primarily on the basis of our single-use testing. Customer and clinical support, and data that demonstrate both improvement in a patient’s quality of life and a product’s cost-effectiveness are additional aspects of competition.

We are aware of other rapid, point-of-care screening and diagnostic testing products in the U.S., Canada, and Europe. Specifically, Alere/Abbott, ACON Laboratories, Inc., Immucor, Inc., OraSure Technologies, Inc., and Quidel Corporation are companies that develop rapid, point-of-care screening and diagnostic testing products and currently maintain dominant market positions within the diagnostic testing market.

If we market products or interact with health care practitioners in a manner that violates healthcare fraud or abuse laws, we may be subject to civil or criminal penalties, including exclusion from participation in government healthcare programs.

We receive payments directly from or bill directly to Medicare, Medicaid or other national or third-party payers for our current product, U.S. federal and state healthcare laws and regulations pertaining to fraud or abuse are and will be applicable to our business. We are subject to healthcare fraud and abuse regulation by the U.S. federal government and the states in which we conduct our business.

The laws that may affect our ability to operate include the federal healthcare program anti-kickback statute, which prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce, or in return for, the purchase, lease or order, or arrangement for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs. This statute applies to arrangements between pharmaceutical manufacturers and prescribers, purchasers and formulary managers. Although there are a number of statutory exceptions and regulatory safe harbors protecting certain common activities, the exceptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. 

Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to get a false claim paid. Pharmaceutical companies have been prosecuted under these laws for a variety of alleged promotional and marketing activities, such as providing free product to customers with the expectation that the customers would bill federal programs for the product, reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates, engaging in off-label promotion that caused claims to be submitted to Medicaid for non-covered off-label uses and submitting inflated best price information to the Medicaid Drug Rebate Program.

The Health Insurance Portability and Accountability Act of 1996 also created prohibitions against healthcare fraud and false statements relating to healthcare matters. The healthcare fraud statute prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private payers. The false statements statute immediately noted above prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians. The ACA, through the Physician Payment Sunshine Act of 2010, imposed new requirements on manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services (“CMS”) information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians (as defined above) and their immediate family members and payments or other “transfers of value” to such physician owners and their immediate family members. Manufacturers are required to report such data to the government by the 90th calendar day of each year.

The majority of states also have statutes or regulations similar to these federal laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer. In addition, some states have laws that require pharmaceutical companies to adopt comprehensive compliance programs. For example, under California law, pharmaceutical companies must comply with both the April 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and the PhRMA Code on Interactions with Healthcare Professionals, as amended. Moreover, certain states mandate the tracking and reporting of gifts, compensation and other remuneration paid by us to physicians and other healthcare providers.

Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, cause reputational harm and divert our management’s attention from the operation of our business. Moreover, achieving and sustaining compliance with applicable U.S. federal and state laws may prove costly.

Data security breaches may disrupt our operations and adversely affect our operating results.

Our network security and data recovery measures and those of third parties with which we contract, may not be adequate to protect against computer viruses, cyber-attacks, breaches, and similar disruptions from unauthorized tampering with our computer systems. The misappropriation, theft, sabotage or any other type of security breach with respect to any of our proprietary and confidential information that is electronically stored, including patient data, could cause interruptions in our operations, could result in a material disruption of our business operations and could expose us to third-party legal claims. Furthermore, we could be required to make substantial expenditures of resources to remedy the cause of cyber-attacks or break-ins. This disruption could have a material adverse impact on our business, operating results and financial condition.

Our business processes personal medical information. The use of this information is critical to our operations and innovation. New and evolving regulations could bring increased scrutiny of our data management in the future. Any cyber-attacks or other failure to protect critical and sensitive systems and information could damage our reputation, prompt litigation or lead to regulatory sanctions, all of which could materially affect our financial condition and results of operation.

We are subject to various internal control reporting requirements under the Sarbanes-Oxley Act. We can provide no assurance that we will at all times in the future be able to report that our internal controls over financial reporting are effective.

As a public company, we are required to comply with Section 404 of the U.S.Sarbanes-Oxley Act of 2002 (“Section 404”). In any given year, we cannot be certain as to the time of completion of our internal control evaluation, testing and remediation actions or of their impact on our operations. Upon completion of this process, we may identify control deficiencies of varying degrees of severity under applicable SEC and Public Company Accounting Oversight Board (U.S.) rules and regulations. Our management, including our chief executive officer and principal financial officer, does not expect that our internal controls and disclosure controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints and the benefit of controls must be relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, in our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Further, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions. Over time, a control may be inadequate because of changes in conditions, such as growth of the company or increased transaction volume, or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

In addition, as a public company, we are required to report, among other things, control deficiencies that constitute material weaknesses or changes in internal controls that, or that are reasonably likely to, materially affect internal controls 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 consolidated financial statements will not be prevented or detected on a timely basis. If we fail to comply with the requirements of Section 404 or if we report a material weakness, we might be subject to regulatory sanction and investors may lose confidence in our consolidated financial statements, which may be inaccurate if we fail to remedy such material weakness.

We incur increased costs and demands on management as a result of compliance with laws and regulations applicable to public companies, which could harm our operating results.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting requirements. In addition, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010, as well as rules implemented by the SEC and the Nasdaq Stock Market, impose a number of requirements on public companies, including with respect to corporate governance practices. Our management and other personnel need to devote a substantial amount of time to these compliance and disclosure obligations. Moreover, compliance with these rules and regulations has increased our legal, accounting and financial compliance costs and has made some activities more time-consuming and costly. It is also more expensive for us to obtain director and officer liability insurance.

Risks Related to our Pursuit of Strategic Alternatives

We are reviewing strategic alternatives and there can be no assurance that we will be successful in identifying or completing any strategic transaction, that any such strategic transaction will result in additional value for our stockholders or that the process will not have an adverse impact on our business.

In November 2018, we announced that our Board of Directors had initiated a process to evaluate strategic alternatives to maximize shareholder value. We have not set a timetable for completion of this exploratory process and cannot provide any assurances that the process will result in the consummation of a strategic transaction of any kind, or that we will not abandon the process. We do not intend to discuss or disclose further developments during this process unless and until our board of directors has approved a specific action or we otherwise determine that further disclosure is appropriate. The process of reviewing strategic alternatives may be time consuming and disruptive to our business operations and, if we are unable to effectively manage the process, our business, financial condition and results of operations could be adversely affected. We could incur substantial expenses associated with identifying, evaluating and negotiating potential strategic alternatives. We may not be able to adequately protect our intellectual property outside of the United States.

The laws in some foreign jurisdictions may not provide protection for our trade secrets and other intellectual property. If our trade secretssuccessfully identify attractive acquisition candidates or other intellectual property are misappropriated in foreign jurisdictions, we may be without adequate remedies to address these issues. Additionally, we also rely on confidentiality and assignment of invention agreements to protect our intellectual property. These agreements may provide for contractual remediesnegotiate favorable terms in the event of misappropriation. We do not knowfuture. Furthermore, our ability to what extent, ifeffectively integrate any these agreements and any remedies for their breach,future acquisitions will be enforced by a foreign or domestic court. Independ on, among other things, the event our intellectual property is misappropriated or infringed upon and an adequate remedy is not available, our future prospects will likely diminish.

Additionally, prosecuting and maintaining intellectual property (particularly patent) rights are very costly endeavors. We do not know whether legal and government fees will increase substantially and therefore are unable to predict whether cost may factor into our intellectual property strategy.

If we deliver products with defects, we may be subject to product recalls or negative publicity, our credibility may be harmed, market acceptanceadequacy of our products may decrease and we may be exposed to liability.

The manufacturing and marketing of professional and consumer diagnostics involve an inherent risk of product liability claims. For example, a defect in oneimplementation plans, the ability of our diagnostic products could leadmanagement to a false positive or false negative result, affectingoversee and operate effectively the eventual diagnosis. Our product developmentcombined operations and production are extremely complex and could expose our productsability to defects. Manufacturing and design defects could lead to recalls (either voluntary or required by the FDA or other government authorities) and could result in the removal of a product from the market. Defects in our products could also harm our reputation, lead to product liability claims, claims that inaccurate test results lead to death or injury, negative publicity and decrease sales of our products. We have obtained product liability insurance and we have never received a product liability claim, and have generally not seen product liability claims for screening tests that are accompanied by appropriate disclaimers.  However, in the event there is a claim, this insurance may not fully cover our potential liabilities.  In addition, as we attempt to bring new products to market, we may need to increase our product liability coverage which would be a significant additional expense that we may not be able to afford.achieve desired operational efficiencies. If we are unable to obtain sufficient insurance coverage at an acceptable cost to protect us, we may be forced to abandon efforts to commercialize our products or those of our strategic partners, which would reduce our revenue.

If our estimates relating to our critical accounting policies are based on assumptions or judgments that change or prove to be incorrect, our operating results could fall below expectations of financial analysts and investors, resulting in a decline in our stock price.

The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates, assumptions and judgments that affectsuccessfully integrate the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of financial analysts and investors, resulting in a decline in our stock price. Significant assumptions and estimates used in preparing our financial statements include those related to revenue recognition, inventory, product warranties, allowance for doubtful accounts, stock-based compensation expense and income taxes.

As an emerging growth company within the meaning of the Securities Act, we will utilize certain modified disclosure requirements, and we cannot be certain if these reduced requirements will make our common stock less attractive to investors.

We are an emerging growth company within the meaning of the rules under the Securities Act. We have in this prospectus utilized, and we plan in future filings with the SEC to continue to utilize, the modified disclosure requirements available to emerging growth companies, including reduced disclosure about our executive compensation and omission of compensation discussion and analysis, and an exemption from the requirement of holding a nonbinding advisory vote on executive compensation. In addition, we will not be subject to certain requirements of Section 404 of the Sarbanes-Oxley Act, including the additional testing of our internal control over financial reporting as may occur when outside auditors attest as to our internal control over financial reporting, and we have elected to delay adoption of new or revised accounting standards applicable to public companies. As a result, our stockholders may not have access to certain information they may deem important.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act which allows us to delay the adoption of compliance with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to utilize this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards as they become applicable to public companies. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

We could remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenue exceeds $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

We have not performed an evaluation of our internal control over financial reporting, such as required by Section 404 of the Sarbanes-Oxley Act, nor have we engaged our independent registered public accounting firm to perform an audit of our internal control over financial reporting asoperations of any balance sheet date or for any period reported in our financial statements. Had we performed such an evaluation or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, material weaknesses may have been identified. For so long as we qualify as an “emerging growth company” under the JOBS Act, which may be up to five years following this offering, we will not have to provide an auditor’s attestation report on our internal controls in future annual reports on Form 10-K as otherwise required by Section 404(b) of the Sarbanes-Oxley Act. During the course of the evaluation, documentation or attestation, we or our independent registered public accounting firm may identify weaknesses and deficienciesbusinesses that we may not otherwise identifyacquire in a timely manner or at all as a result of the deferred implementation of this additional level of review.

Risks Related to the Market

Recent global economic trends could adversely affectfuture, our business, liquidity and financial results.

Recent global economic conditions, including a disruption of financial markets, could adversely affect us, primarily through limiting our access to capital. In addition, the continuation or worsening of general market conditions in economies important to our businesses may adversely affect our clients’ level of spending and ability to obtain financing, leading to us being unable to generate the levels of sales that we require. Current and continued disruption of financial markets could have a material adverse effect on the Company’s business, financial condition,position, results of operations and future prospects.

Risks Relating to This Offering and an Investment in Our Common Stock

Our insiders and affiliated parties beneficially own a significant portion of our stock and have significant influence over our affairs and all matters subject to shareholder vote.

Following this offering, our executive officers, directors and affiliated parties beneficially own approximately % of our outstanding common stock. As a result, our executive officers, directors and affiliated parties have significant influence to:

In addition, sales of significant amounts of shares held by our directors and executive officers, or the prospect of these sales,cash flows could be adversely affect the valuation of our Company.

affected. There can be no assurancesassurance that any potential transaction or other strategic alternative, if consummated, will provide greater value to our shares will be listed onstockholders than that reflected in the NASDAQ Capital Market and, if they are, our shares will be subject to potential delisting if we do not meet or continue to maintain the listing requirements of the NASDAQ Capital Market.

We have applied to list the shares of our common stock on the NASDAQ Capital Market, or NASDAQ. An approval of our listing application by NASDAQ will be subject to, among other things, our fulfilling all of the listing requirements of NASDAQ. In addition, NASDAQ has rules for continued listing, including, without limitation, minimum market capitalization and other requirements. Failure to maintain our listing, or de-listing from NASDAQ, would make it more difficult for shareholders to dispose of our common stock and more difficult to obtain accurate price quotations on our common stock. This could have an adverse effect on thecurrent price of our common stock. Our abilityUntil the review process is concluded, perceived uncertainties related to issue additional securities for financing or other purposes, or otherwise to arrange for any financing weour future may needresult in the future, may also be materiallyloss of potential business opportunities and adversely affected if our common stock is not traded on a national securities exchange.

We currently have a limited trading volume, which resultsvolatility in higher price volatility for, and reduced liquidity of, our common stock.

There has been no public market for our common stock in the U.S. prior to this offering. Since 2002, our shares of common stock have been listed for trading on the AIM market. However, historically there has been limited volume of trading in our common stock on the AIM market, which has limited the liquidity of our common stock on that market. We cannot predict whether or how investor interest in our common stock on the AIM market might translate to the market price of our common stock and may make it more difficult for us to attract and retain qualified personnel and business partners.

If we are unable to make acquisitions and investments, or successfully integrate them into our business, our business could be harmed.

As part of our business strategy, we may acquire other companies or businesses. However, we may not be able to find suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all. Acquisitions involve numerous risks, any of which could harm our business and negatively affect our operating results, including:

The Company, if it acquires a new business, or retains individuals with expertise in a new industry to pursue a strategic alternative, will have a limited operating history in such new industry, specifically the Cannabis industry, and may not succeed.

The Company will have a limited operating history within the Cannabis industry and may not succeed. The Company will be subject to all risks inherent in a developing business enterprise. The Company’s likelihood of continued success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with manufacturing specialty products and the competitive and regulatory environment in which the Company operates. For example, the Cannabis industry is a new industry that, as a whole, may not succeed, particularly if the Federal government changes course and decides to prosecute those dealing in Cannabis under Federal law. If that happens, there may not be an adequate market for the Company’s products. As a new industry, there are not established players on whose business models the Company can follow or build upon. Similarly, there is limited information about comparable companies available for potential investors to review in making a decision about whether to invest in the Company. Furthermore, as the industrial hemp industry is a new market, it is ripe for technological advancements that could limit or eliminate the need for the Company’s products. Furthermore, unanticipated expenses, problems, and technical difficulties may occur and they may result in material delays in the operation of the Company’s business, in particular with respect to the Company’s new products. The Company may not be able to successfully address these risks and uncertainties or successfully implement the Company’s operating strategies. If the Company fails to do so, such failure could materially harm the Company’s business to the point of having to cease operations and could impair the value of the Company’s common stock to the point investors may lose their entire investment.

If the Company acquires a business in the cannabis industry or otherwise pursues a strategic alternative, we would face additional unique and evolving risks.

Further legislative development beneficial to the cannabis industry is not guaranteed

If the Company acquires a business in the cannabis industry or otherwise pursues a strategic alternative, the success of such business would depend on the continued development of the cannabis industry and the activity of commercial business and government regulatory agencies within the industry. The continued development of the cannabis industry is dependent upon continued legislative and regulatory authorization of cannabis at the state level and a continued laissez-faire approach by federal enforcement agencies. Any number of factors could slow or halt progress in this area. Further regulatory progress beneficial to the industry cannot be assured. While there may be ample public support for legislative action, numerous factors impact the legislative and regulatory process, including election results, scientific findings or general public events. Any one of these factors could slow or halt progressive legislation relating to cannabis and the current tolerance for the use of cannabis by consumers, which could adversely affect the business we may acquire or pursue. These changes may require us, should we acquire a business or otherwise pursues a strategic alternative in the cannabis industry, to incur substantial costs associated with legal and compliance fees and ultimately require us to alter our business plan. Furthermore, violations of these laws, or alleged violations, could disrupt our business and result in a material adverse effect on our operations. In addition, we cannot predict the nature of any future laws, regulations, interpretations or applications, and it is possible that regulations may be enacted in the future that will be directly applicable to the business we may acquire or pursue.

The cannabis industry could face strong opposition from other industries

We believe that established businesses in other industries may have a strong economic interest in opposing the development of the cannabis industry. Cannabis may be seen by companies in other industries as an active trading marketattractive alternative to their products, including recreational marijuana as an alternative to alcohol, and medical marijuana as an alternative to various commercial pharmaceuticals. Many industries that could view the emerging cannabis industry as an economic threat are well established, with vast economic and federal and state lobbying resources. It is possible that companies within these industries could use their resources to attempt to slow or reverse legislation legalizing cannabis. Any inroads these companies make in halting or impeding legislative initiatives that would be beneficial to the cannabis industry could have a detrimental impact on our potential business.

The legality of marijuana could be reversed in one or more states

There is a substantial amount of change occurring in the U.S. regarding the use of medical and recreational marijuana products. While federal law prohibits the sale and distribution of cannabis products not approved or how liquid that marketauthorized by the FDA, at least 30 jurisdictions and the District of Columbia have enacted state laws to enable possession and use of marijuana in some form for medical purposes, and at least ten jurisdictions for recreational purposes. However, notwithstanding the permissive regulatory environment in some states, marijuana continues to be classified as a Schedule I controlled substance under the federal Controlled Substances Act and, thus, engaging in commercial activities involving such products violates federal law. Further, the voters or legislatures of states in which marijuana has already been legalized could potentially repeal applicable laws which permit the operation of both medical and retail marijuana businesses. These actions might become.force our potential business to cease operations in one or more states entirely.

Banking regulations could limit access to banking services

Since the use of marijuana is illegal under federal law, there is a compelling argument that banks cannot lawfully accept for deposit funds from businesses involved with marijuana. Consequently, businesses involved in the cannabis industry often have trouble finding a bank willing to accept their business. The inability to open bank accounts may make it difficult for our potential business to operate and our reliance on cash could result in a heightened risk of theft. Additionally, some courts have denied marijuana-related businesses bankruptcy protection, thus, making it very difficult for lenders to recoup their investments, which may limit the willingness of banks to lend to us.

Insurance risks

In the United States, many marijuana-related businesses are subject to a lack of adequate insurance coverage. In addition, many insurance companies may deny claims for any loss relating to marijuana or marijuana-related operations based on their illegality under federal law, noting that a contract for an illegal transaction is unenforceable. Thus, if we acquire a business or otherwise pursues a strategic alternative in the cannabis industry, we may have a difficult time obtaining certain insurances that are desired to operate our business, which may expose us to additional risks and financial liabilities.

Risks Related to our Securities and the Offering

Investors in this offering will suffer immediate and substantial dilution in the net tangible book value per share of our common stock.

Investors in this offering will experience immediate dilution in their net tangible book value per share to the extent of the difference between the effective public offering price per share of common stock included in the Class A Units or issuable upon exercise of the pre-funded warrants included in the Class B Units being offered and the “adjusted” net tangible book value per share after giving effect to the offering. Our net tangible book value as of September 30, 2019 was $3,384,790 or approximately $6.49 per share of common stock, based upon 521,520 shares outstanding as of September 30, 2019. Assuming that we issue 1,153,846 Class A Units at an assumed offering price of $6.50 per Class A Unit, and after deducting placement agents fees and estimated offering expenses payable by us, our net tangible book value as of September 30, 2019, would have been approximately $10.0 million, or $5.95 per share of our common stock. This calculation excludes the proceeds, if any, from the exercise of the warrants issued in this offering. See the section titled “Dilution” below.

The market price for our common stock was determined through negotiations with the underwriters based on a number of factors, including the historic trading prices ofmay be volatile, and your investment in our common stock oncould decline in value.

The stock market in general has experienced extreme price and volume fluctuations. The market prices of the AIM market, which might notsecurities of biotechnology and specialty pharmaceutical companies, particularly companies like ours without product revenues and earnings, have been highly volatile and may continue to be indicative of prices that will prevailhighly volatile in the trading market for our common stock afterfuture. This volatility has often been unrelated to the offering. An active trading market for our sharesoperating performance of particular companies. The following factors, in the U.S.addition to other risk factors described in this section, may never develop or be sustained following this offering. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. The absence of an active trading market increases price volatility and reduces the liquidity of our common stock. As long as this condition continues, the sale ofhave a significant number of shares of common stock at any particular time could be difficult to achieve at the market prices prevailing immediately before such shares are offered and, if an active market for our common stock does not develop, it may be difficult to sell shares you purchase in this offering without depressing the market price for the shares, or at all. In addition, in the event that an active trading market does not develop, the price of our common stock may not be a reliable indicator of the Company’s fair value.

Furthermore, if we cease to be listedimpact on AIM or NASDAQ, holders would find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, our common stock, and the market value of our common stock would likely decline.

If and when a larger trading market for our common stock develops, the market price of our common stock is still likely to be highly volatile and subject to wide fluctuations, and you may be unable to resell your shares at or above the price at which you acquired them.stock:

The market price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including, but not limited to:

In addition, if the market for biotech stocks or the stock market in general experiences loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or operating results. The trading price of our shares might also decline in reaction to events that affect other companies in our industry, even if these events do not directly affect us. Each of these factors, among others, could harm the value of your investment in our common stock. In the past, following periods ofsecurities class action litigation has often been brought against companies that experience volatility in the market securities class-actionprice of their securities. Whether or not meritorious, litigation has often been instituted against companies. Such litigation, if institutedbrought against us could result in substantial costs and a diversion of management'smanagement’s attention and resources, which could materially and adversely affect our business, operating results and financial condition.

Beneficial holdersOur failure to meet the continued listing requirements of ordinary shares throughThe NASDAQ Capital Market could result in a delisting of our common stock. The delisting could adversely affect the Depository Trust Company will not be legal shareholdersmarket liquidity of the Company and therefore will have no direct rights as shareholders and must act through their participating broker to exercise those rights.

The underwriters have designated that Cede & Co., as nominee for the Depository Trust Company, or DTC, will hold the ordinary shares in this offering on behalf of, and as nominee for, investors who purchase ordinary shares. We have no contractual relationship with DTC. Investors who purchase the common shares (although recorded as owners within the DTC system) are legally considered holders of beneficial interests in those shares only and will have no direct rights against the Company. Investors who purchase common stock in this offering must look solely to their participating brokerage in the DTC system for payment of dividends, the exercise of voting rights attaching to theour common stock and for all other rights arising with respect to the common stock.

Under our Bylaws, the required minimum notice period to convene a general meeting is not less than 10 and no more than 60 calendar days. When a general meeting is convened, you may not receive sufficient noticemarket price of a shareholders' meeting to permit you to withdraw your common stock from the DTC system to allow you to directly cast your vote with respect to any specific matter. In addition, a participating DTC brokerage firm may not be able to send voting instructions to you or carry out your voting instructions in a timely manner. We cannot assure you that you will receive voting materials in time to ensure that you can instruct your participating DTC brokerage, or its designee, to vote your shares. As a result, you may not be able to exercise your right to vote and you may lack recourse if your common shares are not voted as you requested. In addition, if you hold your shares indirectly through the DTC system, you will not be able to call a shareholder meeting.

Upon the completion of this offering, our common stock will be listed on two separate stock markets and investors seeking to take advantage of price differences between such markets may create unexpected volatility in our share price; in addition, investors may not be able to easily move shares for trading between such markets.could decrease.

Our common stock is already admittedlisted on NASDAQ. In order to trading on AIMmaintain our listing, we must meet minimum financial and other requirements, including requirements for a minimum amount of capital and a minimum price per share. On May 10, 2019, we are applyingreceived a notice from the staff (the “Staff”) of NASDAQ that, for our shares additionally to be listed and traded on The NASDAQ Capital Market. Price levels for our ordinary shares could fluctuate significantly on either market, independenta period of thirty (30) consecutive business days, the bid price of our common stock had closed below the minimum $1.00 per share requirement for continued inclusion under NASDAQ Rule 5550(a)(2) (the “Bid Price Rule”).

NASDAQ stated in its letter that in accordance with the NASDAQ Listing Rules we have been provided an initial period of 180 calendar days, or until November 6, 2019 to regain compliance.

On November 7, 2019, the Company received a written notification from NASDAQ notifying the Company that it is not eligible for a second 180 calendar day period to regain compliance due to the fact the Company fails to comply with Nasdaq’s Marketplace Rule 5550(b)(1) because the Company’s stockholders’ equity as of June 30, 2019 fell below the required minimum of $5,000,000.

NASDAQ indicated in its letter that the Company may appeal the Staff’s determination to a Nasdaq hearings panel pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series before 4:00 p.m. Eastern Time on or prior to November 14, 2019. On November 13, 2019, the Company filed such appeal and requested the staff grant a hearing (the “Hearing”) and stay any delisting or suspension action by the staff pending the issuance of the hearings panel’s decision. On November 14, 2019, the Company received a written letter from the NASDAQ Hearings Panel indicating that the requested hearing will be held on December 12, 2019 at 9:00 a.m. Eastern Time at the offices of NASDAQ. On November 22, 2019, the Company submitted its plan of compliance with the NASDAQ Hearing Panel.

At the Hearing, we plan to present a plan of compliance to illustrate to the NASDAQ Hearings Panel our intentions to regain compliance with the listing requirements, including the recent implementation of the reverse stock split of our common stock. However, we can provide no assurances that the NASDAQ Hearings Panel will accept our plan of compliance and may determine to delist our common stock. Even if the NASDAQ Hearings Panel accepts our plan of compliance, we can provide no assurance that any action taken by us would be successful, or that any such action would stabilize the market price onor improve the other market. Investors could seek to sell or buyliquidity of our shares to take advantage of any price differences between the two markets through a practice referred to as arbitrage. Any arbitrage activity could create unexpected volatility on either exchange with respect to both our share price and the volume of shares available for trading. In addition, holders of shares in either jurisdiction will not be immediately able to transfer such shares for trading on the other market without effecting necessary procedures with our transfer agent. This could result in time delays and additional cost for our shareholders. Further, ifcommon stock. If we are unablefail to continue to meet all applicable NASDAQ requirements, NASDAQ may determine to delist our common stock. If our common stock is delisted for any reason, it could reduce the regulatory requirements forvalue of our common stock and its liquidity.

If our common stock is delisted as a result of our failure to comply with the Bid Price Rule or any other NASDAQ continued listing on AIM or NASDAQ,requirement, we may losewould expect our listing on AIM or NASDAQ,common stock to be traded in the over-the-counter market, which could impairadversely affect the liquidity of our shares.common stock. Additionally, delisting would substantially impair our ability to raise additional funds to fund our operations, to meaningfully advance the development of our products, and we could face other significant material adverse consequences, including:

InOur reverse stock split may not result in a proportional increase in the event thatper share price of our common stock.

We effected the reverse stock split of our common stock is listedon November 25, 2019, with the primary intent of increasing the price of our common stock in order to regain compliance with the Bid Price Rule. The effect of the reverse stock split on the NASDAQmarket price for our common stock price could fall andcannot be accurately predicted. In particular, we could be delistedcannot assure you that the proportionate increase in which case U.S. broker-dealers may be discouragedthe prices of our common stock immediately after the reverse stock split from effecting transactions inthe prices for shares of our common stock because theyimmediately before the reverse stock split will be maintained for us to regain compliance with the Bid Price Rule or that the such market prices will be maintained for a substantial period of time. It is not uncommon for the market price of a company’s common stock to decline in the period following a reverse stock split. If the market price of our common stock declines following the reverse stock split, the percentage decline may be considered penny stocks and thusgreater than would occur in the absence of a reverse stock split. The market price of our common stock may also be subjectaffected by other factors which may be unrelated to the pennyreverse stock rules.split or the number of shares outstanding.

The SEC has adopted a number of rules to regulate “penny stock”Moreover, because some investors may view the Reverse Stock Split negatively, we cannot assure you that restricts transactions involving stock which is deemed to be penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended. These rules may haveReverse Stock Split will not adversely impact the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with amarket price of lessour common stock. Accordingly, our total market capitalization after the Reverse Stock Split may be lower than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on the NASDAQmarket capitalization before the Reverse Stock Market if current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our securities have in the past constituted, and may again in the future constitute, “penny stock” within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions inSplit.

If we sell shares of our common stock which could severely limitin future financings, stockholders may experience immediate dilution and, as a result, our stock price may decline.

We may from time to time issue additional shares of common stock at a discount from the current market liquidityprice of our common stock. As a result, our stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at such shares and impede their salediscount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the secondary market.future, including the issuance of debt securities, preferred stock or common stock. If we issue common stock or securities convertible or exercisable into common stock, our common stockholders would experience additional dilution and, as a result, our stock price may decline.

A U.S. broker-dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule prepared in accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to the “penny stock” held in a customer’s account and information with respect to the limited market in “penny stocks”.

Stockholders should be aware that, according to SEC, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.

We will have broad discretion in thehow we use of the net proceeds fromof this offering andoffering. We may not use them effectively.these proceeds effectively, which could affect our results of operations and cause our stock price to decline.

Our managementWe will have broadconsiderable discretion in the application of the net proceeds of this offering, including for any of the purposes described in the section of this prospectus entitled “Use of Proceeds.” We intend to use the net proceeds from this offering for working capital and other general corporate purposes. As a result, investors will be relying upon management’s judgment with only limited information about our specific intentions for the use of the balance of the net proceeds of this offering. We may use the net proceeds for purposes that do not yield a significant return or any return at all for our stockholders. In addition, pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

An active trading market for our common stock may not be sustained.

Although our common stock is listed on the NASDAQ, the market for our shares has demonstrated varying levels of trading activity. There has been limited trading of our common stock in the U.S since we began trading on NASDAQ in January 2014. Furthermore, the current level of trading may not be sustained in the future. The failurelack of an active market for our common stock may impair investors’ ability to sell their shares at the time they wish to sell them or at a price that they consider reasonable, may reduce the fair market value of their shares and may impair our ability to raise capital to continue to fund operations by selling shares and may impair our managementability to apply these funds effectively could harmacquire additional intellectual property assets by using our business.shares as consideration.

The reverse stock split may decrease the liquidity of the shares of our common stock.

The liquidity of the shares of our common stock may be affected adversely by the reverse stock split given the reduced number of shares that are outstanding following the reverse stock split. In addition, the reverse stock split increased the number of stockholders who own odd lots (less than 100 shares) of our common stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.

We do not anticipate paying dividends on our common stock and, accordingly, stockholders must rely on stock appreciation for any return on their investment.

We have notnever declared or paid cash dividends in the paston our common stock and do not expect to pay dividends for the foreseeable future, and any return on investment may be limited to potential future appreciation on the value of our common stock.

We currently intend to retain any future earnings to support the development and expansion of our business and do not anticipate paying cash dividendsso in the foreseeable future. Our paymentThe declaration of any future dividends will be atis subject to the discretion of our board of directors after taking into accountand limitations under applicable law, and will depend on various factors, including without limitation, our operating results, financial condition, operating results, cash needs, growth plansfuture prospects and the termsany other factors deemed relevant by our board of any credit agreements that we may be a party to at the time. To the extent we dodirectors. You should not pay dividends,rely on an investment in our stock may be less valuable because a return oncompany if you require dividend income from your investment in our company. The success of your investment will only occur if and tolikely depend entirely upon any future appreciation of the extent our stock price appreciates, which may never occur. In addition, investors must rely on sales of their common stock after price appreciation as the only way to realize their investment, and if themarket price of our common stock, does notwhich is uncertain and unpredictable. There is no guarantee that our common stock will appreciate then there will be no return on investment. Investors seeking cash dividends should not purchasein value.

Future sales of our common stock, or the perception that future sales may occur, may cause the market price of our common stock to decline, even if our business is doing well.

Sales by our stockholders of a substantial number of shares of our common stock in the public market could occur in the future. These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock.

Non-U.S. investors may have difficulty effecting service of process against us or enforcing judgments against us in courts of non-U.S. jurisdictions.

We are a company incorporated under the laws of the State of New Jersey. All of our directors and officers reside in the United States. It may not be possible for non-U.S. investors to effect service of process within their own jurisdictions upon our company and our directors and officers. In addition, it may not be possible for non-U.S. investors to collect from our company, its directors and officers, judgments obtained in courts in such non-U.S. jurisdictions predicated on non-U.S. legislation.

Holders of the pre-funded warrants or investor warrants will not have rights of common stockholders until such pre-funded warrants or warrants are exercised (and in the case of the warrants, the shares of Series C Preferred Stock are converted into shares of common stock), subject to certain limited exceptions.

Until holders of pre-funded warrants or investor warrants acquire shares of our common stock upon exercise of the pre-funded warrants or upon exercise of the investor warrants and conversion of the shares of Series C Preferred Stock underlying the investor warrants, holders of pre-funded warrants or investor warrants will have no rights with respect to the shares of our common stock underlying such securities. Upon exercise of the pre-funded warrants or exercise of the investor warrants and conversion of the Series C Preferred Stock underlying the investor warrants, the holders will be entitled to exercise the rights of a common stockholder only as to matters for which the record date occurs after the exercise, subject to certain limited exceptions.

There is no public market for the pre-funded warrants, investor warrants or Series C Preferred Stock being offered in this offering.

There is no established public trading market for the pre-funded warrants, investor warrants or Series C Preferred Stock being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to apply to list the pre-funded warrants, investor warrants or Series C Preferred Stock on any national securities exchange or other nationally recognized trading system, including The Nasdaq Capital Market. Without an active trading market, the liquidity of the pre-funded warrants, investor warrants and Series C Preferred Stock will be limited.

The investor warrants and the pre-funded warrants in this offering are speculative in nature.

Except in limited circumstances, neither the warrants nor the pre-funded warrants in this offering confer any rights of common stock or Series C Preferred Stock ownership on its holders, such as voting rights, but rather merely represent the right to acquire shares of common stock or Series C Preferred Stock at a fixed price, as the case maybe, and, with respect to the investor warrants, during a fixed period of time. Specifically, commencing on the date of issuance, holders of the investor warrants may exercise their right to acquire Series C Preferred Stock and pay an exercise price of $        per share of Series C Preferred Stock, subject to certain adjustments, prior to the expiration of the warrants.

Moreover, following this offering, the market value of the warrants and the pre-funded warrants, if any, is uncertain and there can be no assurance that the market value of the warrants or the pre-funded warrants will equal or exceed their imputed offering price. Neither the warrants nor the pre-funded warrants will be listed or quoted for trading on any market or exchange.

If there are insufficient number of authorized shares of common stock to cover the conversion of all outstanding shares of Series C Preferred Stock into common stock and we do not obtain shareholder approval to increase the number of our authorized shares of common stock in an amount sufficient to issue shares to those who purchase investor warrants in this offering, the warrants included in this offering may not have any value and you could lose part or all of your investment.

We may not have a sufficient number of authorized shares of common stock to cover the shares issuable upon conversion of the Series C Preferred stock being offered by this prospectus. If there are insufficient number of authorized shares of common stock to cover the conversion of all outstanding shares of Series C Preferred Stock into common stock, before the Series C Preferred Stock can become convertible, we will need to receive stockholder approval of the Charter Amendment (which is an amendment to our certificate of incorporation to sufficiently increase our authorized shares of common stock to cover the conversion of all outstanding shares of Series C Preferred Stock into common stock). In the event that there are insufficient number of authorized shares of common stock to cover the conversion of all outstanding shares of Series C Preferred Stock into common stock, we have agreed in the securities purchase agreement for this offering to use our reasonable best efforts to obtain such approval within 60 days from the date of this prospectus. We intend to seek stockholder approval to amend our amended and restated certificate of incorporation, as amended, to increase the number of authorized shares of common stock from 2,604,167 to 100,000,000 shares at our 2019 annual meeting of stockholders scheduled to be held on December 30, 2019. We cannot assure you that we will be able to obtain requisite stockholder approval of the Charter Amendment. In the event our stockholders do not approve the Charter Amendment, the Series C Preferred Stock will not be convertible into common stock and the value of the investor warrants and the Series C Preferred Stock will be negatively affected.

We may issue additional series of preferred stock that rank senior or equally to the Series C Preferred Stock as to dividend payments and liquidation preference.

Neither our certificate of incorporation nor the Certificate of Designation for the Series C Preferred Stock prohibits us from issuing additional series of preferred stock that would rank senior or equally to the Series C Preferred Stock as to dividend payments and liquidation preference. Our certificate of incorporation provides that we have the authority to issue up to 50,000,000 shares of preferred stock, no shares of which are outstanding prior to this offering. The issuances of other series of preferred stock could have the effect of reducing the amounts available to the Series C Preferred Stock in the event of our liquidation, winding-up or dissolution. It may also reduce cash dividend payments on the Series C Preferred Stock if we do not have sufficient funds to pay dividends on all Series C Preferred Stock outstanding and outstanding parity preferred stock.

The Series C Preferred Stock will rank junior to all our liabilities to third party creditors in the event of a bankruptcy, liquidation or winding up of our assets.

In the event of bankruptcy, liquidation or winding up, our assets will be available to pay obligations on the Series C Preferred Stock only after all our liabilities have been paid. The Series C Preferred Stock will effectively rank junior to all existing and future liabilities held by third party creditors. The terms of the Series C Preferred Stock do not restrict our ability to raise additional capital in the future through the issuance of debt. In the event of bankruptcy, liquidation or winding up, there may not be sufficient assets remaining, after paying our liabilities, to pay amounts due on any or all of the Series C Preferred Stock then outstanding.

Future issuances of preferred stock may adversely affect the market price for common stock.

Assuming that we issue 1,153,846 Class A Units at an assumed offering price of $6.50 per Class A Unit, upon completion of this offering, we will have issued investor warrants to purchase 1,153,846 shares of Series C Preferred Stock, which are convertible into an aggregate of 1,153,846 shares of common stock. These shares of common stock issuable upon conversion of the Series C Preferred Stock underlying investor warrants can be resold into the public market immediately without restriction, unless such shares are owned by our affiliates or subject to lock-up agreements. Additional issuances or sales of preferred stock, or the perception that such issuances or sales could occur, may cause prevailing market prices for common stock to decline and may adversely affect our ability to raise additional capital in the financial markets at times and prices favorable to us.

We are an “emerging growth company” and may elect to comply with reduced public company reporting requirements, which could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act. For as long as we continue to be an “emerging growth company”, we may take advantage of exemptions from various reporting requirements that are applicable to other public reporting companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports. We expect to cease to be an “emerging growth company” on December 31, 2019, although circumstances could cause us to lose that status earlier if our annual revenues exceed $1.07 billion, if we issue more than $1.0 billion in non-convertible debt in any three-year period or if the market value of our common stock held by non-affiliates exceeds $700.0 million as of any June 30th, in which case we would no longer be an “emerging growth company” as of the following December 31st. We cannot predict if investors will find our securities less attractive because we may rely on these exemptions. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the price of our securities may be more volatile.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

The requirements of being a U.S. public company may strain our resources and divert management’s attention.

As a U.S. public company, we will be or become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of NASDAQ, and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual and current reports with respect to our business and operating results.

As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert resources of our management and harm our business and operating results.

We will incur significant costs as a result of being a publicly traded company and such costs may increase when we cease to be an emerging growth company.

As a publicly traded company, we will incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Exchange, as well as additional corporate governance requirements, including applicable requirements under the Sarbanes-Oxley Act and other rules implemented by the SEC. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect compliance with these public reporting requirements and associated rules and regulations to increase our legal and financial costs, particularly after we are no longer an emerging growth company, and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Further, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and, potentially, civil litigation.

The recently enacted JOBS Act reduces certain disclosure requirements for emerging growth companies, thereby decreasing related regulatory compliance costs. We qualify as an emerging growth company as of the date of this offering. However, when we cease to be an emerging growth company, we will be unable to take advantage of the reduced regulatory requirements and any associated cost savings.

Efforts to comply with the applicable provisions of Section 404 of the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with Section 404 of the Sarbanes-Oxley Act may adversely affect us and the market price of our common stock.

Under current SEC rules, beginning with our fiscal year ending December 31, 2014, we will be required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, and related rules and regulations of the SEC; although, as an emerging growth company, we are exempt from the requirement to provide an auditor attestation to management’s assessment of its internal controls as required by Section 404(b) of the Sarbanes-Oxley Act. We will be required to review on an annual basis our internal control over financial reporting, and on a quarterly and annual basis to evaluate and disclose changes in our internal control over financial reporting. As a result, we expect to incur additional expenses in the near term that may negatively impact our financial performance and our ability to make distributions. This process also will result in a diversion of management’s time and attention. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations, and we may not be able to ensure that the process is effective or that our internal control over financial reporting is or will be effective in a timely manner. In the event that we are unable to maintain or achieve compliance with the applicable provisions of Section 404 of the Sarbanes-Oxley Act and related rules, we and the market price of our common stock may be adversely affected.

A sale of a substantial number of shares of the common stock may cause the price of our common stock to decline.

Following the closing of this offering, we will have shares of common stock issued and outstanding, assuming no exercise of the underwriters’ over-allotment option. Substantially all of these shares will be available for public sale, subject in some cases to volume and other limitations or delivery of a prospectus. Additionally, we will reserve for issuance shares of our common stock issuable upon exercise of the warrants offered pursuant to this prospectus, assuming no exercise of the underwriters’ over-allotment option. Upon exercise of these warrants, the underlying shares of our common stock may be resold into the public market. If the exercise price of these warrants is below the market price of our common stock from time to time, holders of warrants may exercise their warrants, in which case investors in our common stock would experience dilution. We cannot predict if future issuances or sales of our common stock, or the availability of our common stock for issuance or sale, will harm the market price of our common stock or our ability to raise capital.

Sales of a substantial number of shares of our common stock and the exercises of outstanding options and warrants may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. We may become involved in securities class action litigation that could divert management’s attention and harm our business.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includingand documents incorporated by reference in this prospectus contain forward-looking statements that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the sections entitledtitled “Prospectus Summary,” “Risk Factors”,Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business”, contains“Business,” but are also contained elsewhere in this prospectus and documents incorporated by reference in this prospectus. In some cases, you can identify forward-looking statements that include information relatingby the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future, although not all forward-looking statements contain these words. These statements relate to future events or our future financial performance strategies,or condition and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements.

Examples of forward-looking statements in this prospectus and documents incorporated by reference in this prospectus include, but are not limited to, our expectations competitive environment, regulationregarding our business strategy, business prospects, operating results, operating expenses, working capital, liquidity and capital expenditure requirements. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products and services, the cost, terms and availability of resources.components, pricing levels, the timing and cost of capital expenditures, competitive conditions and general economic conditions. These forward-looking statements include, without limitation, statements regarding: proposed new products or services; our statements concerning litigation or other matters; statements concerning projections, predictions, expectations, estimates or forecasts for our business, financial and operating results and future economic performance; statements of management’s goals and objectives; trends affecting our financial condition, results of operations or future prospects; our financing plans or growth strategies; and other similar expressions concerning matters that are not historical facts. Words such as “may”, “will”, “should”, “could”, “would”, “predicts”, “potential”, “continue”, “expects”, “anticipates”, “future”, “intends”, “plans”, “believes” and “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/orour management’s good faith belief as of that time with respect toexpectations, beliefs and assumptions concerning future events affecting us, which in turn are based on currently available information. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are subjectreasonable, our expectations may prove to risks and uncertaintiesbe incorrect.

Important factors that could cause actual performance or results to differ materially from what is expressed inthe results and events anticipated or suggestedimplied by thesuch forward-looking statements.statements include, but are not limited to:

Forward-looking

We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this prospectus and in the documents incorporated by reference herein are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extentmade, and unless required by applicable securities laws. Iflaw, we doexpressly disclaim any obligation or undertaking to publicly update oneany of them in light of new information, future events, or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.otherwise.

USE OF PROCEEDS

We estimate that thewe will receive net proceeds of approximately $6.6 million from the initial sale of common stock offered by us will be approximately $ million,the Units in this offering, based uponon an assumed public offering price of $6.50 per Class A Unit and assuming the sale of 1,153,846 of Class A Units and no sale of Class B Units in this offering, and after deducting the placement agent fees and estimated offering expenses payable by us. If all of the warrants sold in this offering were to be exercised in cash at an assumed exercise price of $              per share of Series C Preferred Stock, we would receive additional net proceeds of approximately $                million. However, the midpointinvestor warrants contain a cashless exercise provision that permits exercise of the warrants on a cashless basis at any time when there is no effective registration statement under the Securities Act of 1933, as amended, or the Securities Act, covering the issuance of the underlying shares of Series C Preferred Stock. We cannot predict when or if these warrants will be exercised. It is possible that these warrants may expire and may never be exercised.

Each $0.25 increase (decrease) in the assumed public offering price rangeof $6.50 per Class A Unit would increase (decrease) the net proceeds to us from this offering, after deducting the placement agent fees and estimated offering expenses payable by us, by approximately $264,000, assuming we sell all 1,153,846 of Class A Units (and no Class B Units), as set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters’ over-allotment option to purchase additional shares in this offering is exercised in full, we estimate that our net proceeds will be approximately $     million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.prospectus.

The principal purposesWe may also increase (decrease) the number of Units we are offering, as set forth on the cover page of this prospectus. An increase (decrease) of 50,000 Units we are offering are towould increase our capitalization and financial flexibility, and increase our visibility in the marketplace. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds of this offering. However, we currently intend to use(decrease) the net proceeds to us from this offering, together with existing cash, primarilyafter deducting the placement agent fees and estimated offering expenses payable by us, by approximately $297,000, assuming the public offering price stays the same and assuming no sale of any Class B Units. We do not expect that a change in the offering price or the number of Units by these amounts would have a material effect on our intended uses of the net proceeds from this offering, although it may impact the amount of time prior to which we may need to seek additional capital.

Although we currently anticipate that we will use the net proceeds from the offering for working capital and other general corporate purposes, there may be circumstances where a reallocation of funds is necessary. The amounts and timing of our actual expenditures will depend upon numerous factors, including working capital, product development,our sales and marketing activities, expandingand commercialization efforts, demand for our internal sales organizationproducts, our operating costs and further developing sales channels andthe other capital expenditures. Wefactors described under “Risk Factors” in this prospectus. Accordingly, our management will have flexibility in applying the net proceeds from this offering. An investor will not have the opportunity to evaluate the economic, financial or other information on which we base our decisions on how to use the proceeds.

Although we may also use a portion of the net proceeds of this offering for the acquisition or licensing, as the case may be, of or investment in, businesses, products,additional technologies, or other assets that complement our business, althoughor businesses, or for other strategic investments or opportunities, we have no presentcurrent understandings, agreements or commitments or agreements to enter into any material acquisitions or investments. We will have broad discretion over the usesdo so.

Pending our use of the net proceeds from this offering, we intend to invest the net proceeds in this offering.a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments and U.S. government securities.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our equity securities,common stock and currently do not planexpect to declarepay any cash dividends on shares of our common stock infor the foreseeable future. We expectintend to retain ouruse future earnings, if any, for use in the operation and expansion of our business. SubjectAny future determination relating to the foregoing, the payment of cash dividends in the future, if any,our dividend policy will be made at the discretion of our board of directors, and will depend upon such factors as earnings levels,based on our financial condition, results of operations, contractual restrictions, capital requirements, our overall financial conditionbusiness properties, restrictions imposed by applicable law and any other factors deemed relevant by our board of directors.directors may deem relevant.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

DETERMINATION OF OFFERING PRICEMarket Information

The offering price of theOur common stock has been arbitrarily determined and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value, historical earnings or net worth. No valuation or appraisal has been prepared for our business.

Prior to this offering, there has been no public market in the United States for our shares. The public offering price will be determined through negotiations between us and Aegis Capital Corp., as representative of the underwriters. The factors to be considered in determining the public offering price may include our future prospects and those of our industry in general, sales, earnings and certain of our other financial operating information in recent periods, and the market prices of securities and certain financial and operating information of companies engaged in activities similar to those we engage in. The price of our shares on AIM during recent periods will also be considered in determining the public offering price. It should be noted, however, that historically there has been a limited volume ofbegan trading in our shares on AIM. Therefore, the price of our shares on AIM will only be one factor in determining the public offering price. The estimated public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors.

We cannot assure you that the public offering price will correspond to the price at which the shares will trade in the public market subsequent to the offering or that an active trading market for the shares will develop in the United States and continue after the offering.

MARKET PRICE INFORMATION FOR OUR SHARES

We are making an application for our shares to be listed on The NASDAQ Capital Market upon consummationunder the symbol “AKER” on January 23, 2014. Prior to that, our common stock traded on the OTCQB of this offering. They have not previously been listedthe OTC Markets Group Inc. under the same symbol.

The last reported closing price for our common stock on Thethe NASDAQ Capital Market or any other U.S. market. However, our shares are currently listed on AIM underDecember 3, 2019 giving effect to the symbol “AKR.L”. Our shares began trading on AIM in May 2002.Reverse Stock Split, was $6.13 per share.

As of August 5, 2013, there were 279,515,666 shares outstanding and approximately 615 holders of record of our shares. On a fully diluted basis, there would be 329,826,010 shares outstanding.

On August 5, 2013, the closing price of our shares listed on AIM was 0.01180 £ or $0.0181 using an exchange rate of $1.530.CAPITALIZATION

The following table showssets forth our capitalization as of September 30, 2019:

You should read the highinformation in this table together with the section titled “Management’s Discussion and low market prices forAnalysis of Financial Condition and Results of Operations” and our shares for each fiscal quarter for the two most recent fiscal years. Market prices for our shares have fluctuated significantly since they were listed on AIMconsolidated financial statements and trading volume on AIM have been very small in relation to the number of our total outstanding shares. As a result, the market prices shownrelated notes incorporated by reference into this prospectus.

Each $0.25 increase (decrease) in the following table may notassumed public offering price of $6.50 per Class A Unit would increase (decrease) the amount of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization on an as adjusted basis by approximately $0.26 million, assuming no sale of any Class B Units in this offering. The as adjusted information discussed above is illustrative only and will be indicative of the market prices at which our shares will trade after this offering.

* The Company’s stock is listedadjusted based on the AIM where stock prices are in pounds. All shares prices in the table above are reflected in dollars after having been converted according to the periods average exchange rates.

DILUTIONactual public offering price and other terms of this offering determined at pricing.

The historical net tangible book valuenumber of shares of our common stock asto be outstanding upon completion of June 30, 2013 was approximately $ million, or $ per sharethis offering is based uponon 521,520 shares of our common stock outstanding on such date. Historical net tangible book value per share representsas of September 30, 2019, after giving effect to the amountreverse stock split, assumes that there is no sale of our total tangible assets reduced by the amount of our total liabilities, divided by the total number of shares of common stock outstanding.any Class B Units in this offering and excludes:

DILUTION

If you invest in shares in our common stock,securities, your interest will be immediately and substantially diluted to the extent of the difference between the effective public offering price per shareincluded in the Class A Units or issuable upon exercise of the sharespre-funded warrants included in our common stock as adjusted net tangible book value per share of our common stock immediately after completion of this offering. After giving effect to the receipt ofClass B Units being offered and the net proceeds from our sale in this offering of shares of common stock at an assumed initial public offering price of $ per share, the mid-point of the price range set forth on the cover page of this prospectus, applying proceeds as set forth in Use of Proceeds and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table illustrates this dilution on a per share basis to new investors:

If the underwriter’s over-allotment option is exercised in full, the as adjustedpro forma net tangible book value per share of our common stock after giving effect to this offering would be $offering.

Our net tangible book value as of September 30, 2019 was $3,384,790 or approximately $6.49 per share which amountof common stock after giving effect to the Reverse Stock Split, based upon 521,520 shares outstanding as of September 30, 2019. Assuming that we sell 1,153,846 Class A Units (and no Class B Units) at an assumed offering price of $6.50 per Class A Unit and after deducting placement agent fees and estimated offering expenses payable by us, our pro forma net tangible book value at September 30, 2019 would have been approximately $9,976,383 or $5.95 per share. This represents an immediate increasedecrease in pro forma net tangible book value of $approximately $0.54 per share to our existing stockholders, and an immediate dilution of pro forma net tangible book value of $0.55 per share to investors purchasing securities in this offering.

Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by purchasers of our Units in this offering and the pro forma net tangible book value per share of our common stock immediately after this offering.

The following table illustrates the per share dilution to existing shareholders andinvestors purchasing shares in the offering:

Each $0.25 increase (decrease) in the assumed public offering price of $6.50 per Class A Unit would result in an immediate dilutionincrease (decrease) in our pro forma net tangible book value of $approximately $0.3 million or approximately $0.23 per share, and would result in an increase (decrease) in the dilution to new investors of approximately $0.09 per share, assuming we sell all 1,153,846 of Class A Units and no sale of any Class B Units in this offering, after deducting the placement agent fees and estimated offering expenses payable by us. An increase of 50,000 in the assumed number of Units sold by us in this offering would result in an increase in our pro forma net tangible book value of approximately $0.3 million and would not change in dilution per share to new investors, assuming that the assumed public offering price remains the same, after deducting the placement agent fees and estimated offering expenses payable by us. A decrease of 50,000 in the assumed number of Units sold by us in this offering would result in a decrease in our pro forma net tangible book value of approximately $0.3 million and would not change in dilution per share to new investors, assuming that the assumed public offering price remains the same and after deducting the placement agent fees and estimated offering expenses payable by us. The as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

The number of shares of our common stock to new investors purchasingbe outstanding upon completion of this offering is based on 521,520 shares of our common stock outstanding as of September 30, 2019, after giving effect to the reverse stock split, assumes that there is no sale of any Class B Units in this offering.

CAPITALIZATION

The following table presents a summary of our cash, cash equivalents, short-term investmentsoffering and capitalization as of June 30, 2013:excludes:

You should read the following table in conjunction with “Use of Proceeds,” “Selected Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and the related notes thereto included in this prospectus.

The table excludes the following as of June 30, 2013:

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and the related notes included elsewhere in this prospectus. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in “Risk Factors.”BUSINESS

Results of OperationsMedical Device Business

Management’s Plans and Basis of Presentation

To date, the Company has in large part relied on equity financing to fund its operations. The Company has experienced recurring losses and negative cash flows from operations, however, at June 30, 2013, the Company’s performance for the first half of the year had improved. Management’s strategic plans include the following:

Despite our plans, the Company expects to continue to incur losses from operations for the near-term and these losses could be significant for the following reasons:

At June 30, 2013, ABI had cash and cash equivalents of $1,553,884,working capital of $1,871,001, stockholders’ equity of $4,703,061 and an accumulated deficit of $80,395,315. The Company believes that its current working capital position will be sufficient to meet its estimated cash needs for at least 12 months following the consummation of this offering. If the Company does not obtain additional capital as needed, the Company would potentially be required to reduce the scope of its research and development activities. The Company is closely monitoring its cash balances, cash needs and expense levels.

Revenue

Six months ended June 30, 2013 and 2012

The Company’s total revenue as of June 30, 2013 was $2,639,085, a 235% increase over the same period in 2012. Product revenue for the six months ended June 30, 2013 was $2,272,418 as compared to $787,194 during the same period in 2012. Licensing revenue during the period was $366,667, compared to $0 during the same period in 2012.

The significant increase of product revenue was largely attributed to the revenue generated through the manufacturing and shipping of CHUBE-branded disposable breath alcohol detectors under the Company’s Supply and Licensing Agreement with Chubeworkx Guernsey Ltd (“Chubeworkx”). The private labeled CHUBE tubes are certified under two international quality standards:

These certifications cleared that way for the CHUBE breathalyzers to be marketed by ABI’s UK based partner, (en)¹⁰ Guernsey Limited” (“(en)10”), in Australia, New Zealand, South Africa, and in and around France. In December 2012, ABI received a purchase order from Chubeworkx to manufacture 3.5 million units of their custom breath alcohol detectors which would be deliverable in 2013. In April 2013, the CompanyOn October 8, 2018, we announced that it receivedfollowing a second order from Chubeworkx for an additional 1.4 million CHUBE-branded, disposable breath alcohol detectors. All of the 4.9 million units ordered CHUBE tubes have been delivered as of June 30, 2013 contributing $1.47 million to ABI’s six months ended June 30, 2013 revenue totals. Under the licensing portion of the agreement which originated in September 2012, the Company granted Chubeworkx an exclusive license to market their private-labeled CHUBE breath alcohol detectors outside of North America in exchange for an upfront license fee of $1,000,000 which has been received in full. In 2012, the Company recognized $27,778 of the license fee as revenue and in the six months ended June 30, 2013, booked an additional $166,667. The remaining $805,555 will be recognized as revenue over the next 29 months. On June 13, 2013, ABI announced that the Company had extended the reach of Chubeworkx’exclusive territory to include North America in return for selling its equity ownership of (en)10 to Chubeworkx for $100,000. In addition, Chubeworkx agreed to purchase 80,000,000 shares of common stock (the "Subscription Shares") in the Company for a total price of $1,600,000 (the "Subscription").

ABI also experienced growth in sales of its PIFA Heparin/PF4 rapid tests, up 2% over the same period last year which was achieved despite a 40% reduction in headcount in the Company’s account executive sales force.

Cost of sales for the period ended June 30, 2013 increased compared to the 2012 period to $1,409,384 from $468,335. This was largely due to an increase in the cost of inventories and temporary staff to support CHUBE product sales.

As a percentage of sales, gross profit margin for six months ended June 30, 2013 was 47% as compared to 40% for the same period in 2012. The improvement was due primarily to the increase in licensing revenue and improved bulk pricing for raw materials from vendors for the materials utilized in the production of the Chubeworkx products.

Year 2012 compared to Year 2011

ABI’s total revenue for the year ended December 31, 2012, totaled $1,522,363, a 15% decrease over the same period in 2011. The decrease in sales was primarily attributed to the Company’s relatively flat PIFA Heparin/PF4 Rapid Assay sales growth and increasing competition from lower-priced, lower-quality products within the Human Resources sector of the United States breathalyzer market. Growth in PIFA revenue was realized in the fourth quarter of 2012 as the Company began to benefit from the change in strategy of its dedicated technical sales account executives moving away from a direct selling model to one that works in tandem with over 300 sales representatives of ABI’s US distribution partners, Cardinal Health (“Cardinal”) and Fisher HealthCare (“Fisher”). In addition, the Company began shipping its PIFA PLUSS PF4 product line extension in late November 2012. The aforementioned domestic distributors, Cardinal and Fisher, accounted for close to $850,000 of the total 2012 sales and individually represented 89% and 12%, and of such sales. The remaining $270,000 in sales was generated from ABI’s direct customers.

Cost of sales for the year ended December 31, 2012 increased by 5% compared to the same period in 2011 to $1,007,951 from $956,620 in 2011. ABI’s gross profit margin was 34% for the year ended 2012 as compared to 46% in 2011. The differential between 2011 and 2012’s cost of sales and gross profit margin is attributed to the costs of repairs and process enhancements made to a variety of machines crucial to the productionreview of the Company’s disposable breathalcohol detectorscommercial and product development strategies, the PIFA and PIFA PLUSS Heparin/PF4 rapid assays, along with the indirect labor costs associated with such activities. The completionBoard of these tasks has improved production performance and efficiency and increased the Company’s overall manufacturing capacity.

General and Administrative Expenses

Six months ended June 30, 2013 and 2012

General and administrative expenses in the six months ended June 30, 2013 totaled $675,689, a 9% decrease as compared to the same period in 2012. The most significant difference is the write-off of a long-term note receivable of $151,569 in accordance with the Chubeworkx licensing agreement, which occurred in June, 2012.

Year 2012 compared to Year 2011

General and administrative expenses in the year ended December 31, 2012, totaled $1,493,707, which was a 53% decrease as compared to $3,188,137 for the year ended 2011. The decrease was due to the fact that in 2011 the Company incurred bad debt expense of $1,650,185 where as in 2012 this expense was only $9,047. In addition, the Company saved $66,200 by phasing out its previously outsourced Investor Relations firm and bringing such tasks in-house.

Sales and Marketing Expenses

Six months ended June 30, 2013 and 2012

Sales and marketing expenses in the six months ended June 30, 2013 totaled $410,008, an 18% increase as compared to the same period in 2012. This increase is related to sales commissions and the payment of royalties on the breathalyzer products.

Year 2012 compared to Year 2011

Sales and marketing expenses in the year ended December 31, 2012, totaled $638,732, which was a 10% decrease as compared to $707,790 for the year ended 2011. The savings was a result of a reduction in the size of the internal sales force, through attrition.

Research and Development

Six months ended June 30, 2013 and 2012

Research and development expenses in the six months ended June 30, 2013 totaled $522,132, which was a 7% increase as compared to the same period in 2012. This increase in cost was primarily due to required repairs and maintenance for the Company’s laboratory equipment.

Year 2012 compared to Year 2011

Research and development expenses in the year ended December 31, 2012 totaled $900,380, which was a 1% increase as compared to the same period in 2011. This increase was due to expanded development of the METRON single-use ketone test for the medically-assisted weight loss and health & wellness industries.

Other Income and Expense

Six months ended June 30, 2013 and 2012

Other income increased for the six months ended June 30, 2013 over the same period in 2012, primarily as a result of income from two notable events. On June 13, 2013, ABI sold its interest in (en)10, the Company’s exclusive CHUBE distributor based in the UK, to Chubeworkx as part of the restructuring of ABI’s License and Supply agreement with Chubeworkx. The income realized from that transaction was $99,710. In addition, the Company recognized $91,286 in other income from the net proceeds gained from ABI’s insurer demutualizing. Other items, including interest, shipping and handling fees and other miscellaneous income amounted to $115,543 as of June 30, 2013 as compated to $22,797 as of June 30, 2012

Year 2012 compared to Year 2011

Other income and expenses for the year ended December 31, 2012, decreased to income of $51,751, compared to an income of $287,481 in 2011. Other items, including interest, shipping and handling fees and other miscellaneous income declined to a total $44,892 as of June 30, 2012 compared to $317,109 as of June 30, 2012. The decline was partially offset by an increase in income due to foreign currency transactions in the Company’s favor.

Income Taxes

During 2012, the Company was approved by the State of New Jersey to sell a portion of its state tax benefits that existed as of December 31, 2011, pursuant to the Technology Tax Certificate Transfer Program. The Company received net proceeds of $167,408 in 2012 (2011: $297,890) as a result of the sale of the tax benefits.

The Company has had recurring tax losses and itDirectors has determined that it is not probable that the Company will be able to utilize its net operating loss carry-forwards and other tax attributes in the future. Accordingly, the Company has not recorded any deferred tax assets as of December 31, 2012 and December 31, 2011.

As of December 31, 2012 and 2011, the Company had Federal net operating loss carry forwards of approximately $46,500,000 and $44,000,000, respectively, expiring through the year ending 31 December 2032. As of December 31, 2012 and 2011, the Company had New Jersey state net operating loss carry forwards of approximately $5,600,000 and $6,100,000, respectively, expiring the year ending 31 December 2019.

The principal components of unrecognized deferred tax assets consisted of the following as of December 31, 2012 and December 31, 2011:

Unrecogonized Deferred Tax Assets

The reconciliation of income taxes using the statutory U.S. income tax rate and the benefit from income taxes for the years ended December 31, 2012 and December 31, 2011 are as follows

Tax Rates & Benefits

Liquidity and Capital Resources

For the year ended December 31, 2012, the Company generated a net loss of $2,557,820. As of December 31, 2012, the Company has an accumulated deficit of $80,194,353 and had cash and cash equivalents totaling $633,022.

Currently, our primary focus is to expand the domestic and international distribution of our PIFA Heparin/PF4 rapid assays and support Chubeworkx international distribution of its CHUBE private-labeled breath alcohol detectors. The Company continues development activities for its PIFA infectious disease single-use assays, METRON, Breath Ketone “Check”, VIVO and Breath PulmoHealth “Check” products, including advancement of the steps required for FDA clearance or CE marking in the EU where necessary.

We expect to continue to incur losses from operations for the near-term and these losses could be significant as we incur product development, clinical and regulatory activities, contract consulting and other product development and commercialization related expenses. We believe that our current working capital position will be sufficient to meet our estimated cash needs for at least 12 months following the consummation of this offering. The Company is pursuing additional financing opportunities; however, there can be no assurance that the Company will be able to obtain sufficient additional financing on terms acceptable to the Company, if at all. We are closely monitoring our cash balances, cash needs and expense levels. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result in the possible inabilitybest interests of the Company to continue asfocus primarily on the commercialization of its Particle Immuno-Filtration Assay (PIFA®) Technology platform. PIFA® technology is a going concern.

We expect that our primary expenditures will be to continue development of PIFA infectious disease single-use assays, METRON, VIVO, Breath Ketone “Check”patented immunoassay method which rapidly and Breath PulmoHealth “Check”accurately detects target antigens or antibodies. It is the technology platform utilized in the Company’s core commercialized products, the PIFA® Heparin/PF4 and enroll patients in clinical trials to support performance claims, generate studies in peer-reviewed journals to support product marketing, and provide data for the FDA 510(k) clearance / CE certifications processes when indicated. We will also continue to support commercialization and marketing activities of in-line products (PIFA Heparin/PIFA® Pluss/PF4 rapid assays, and breath alcohol detectors) in the US and internationally. Based upon our experience, clinical trial and related regulatory expenses can be significant costs. Stepswhich test for an allergic reaction to achieve commercialization of emergingHeparin. These products will be an ongoing and evolving process with expected improvements and possible subsequent generations being evaluated for commercialized and emerging tests. Should we be unable to achieve FDA clearance for products that require such regulatory “approval”, develop performance characteristics for rapid tests that satisfy market needs, or generate sufficient revenue from commercialized products, we would need to rely on other business or product opportunities to generate revenue and costs that we have incurredaccount for the patents may be deemed impaired.

We may consider entering into agreements with ISO-certified contract manufacturers which would allow the Company to meet the regulatory requirements for product sales in large, international markets (e.g. India). We may also consider acquisitions of development technologies or products, if opportunities arise that we believe fit our business strategy and would be appropriate from a capital standpoint.

Capital expenditures, primarily for production, laboratory and facility improvement costs for remainder of the year ending December 31, 2013 are anticipated to total approximately $250,000. As per the Company’s lease agreement, the owner of the facility will be handling thesignificant majority of facility upgrades, and we anticipate financing any production and laboratory capital expenditures through working capital.

The Company may enter into generally short-term consulting and development agreements primarily for testing services and in connection with clinical trials conducted as part of the Company’s development process which may include activities related to the development of technical files for FDA 510(k) clearance submissions. Such commitments at any point in time may be significant but the agreements typically contain cancellation provisions.current revenues.

We lease our manufacturing facility which also contains our administrative offices. Our current lease was executed January 1, 2013 and is effective through December 31, 2019. The Company has leased this property from the current owner since 1997.

DueThrough June 30, 2019, we continued to recent market events that have adversely affected all industries and the economy as a whole, management has placed increased emphasis on monitoring the risks associated with the current environment, particularly the recoverability of current assets, the fair value of assets, and the Company’s liquidity. At this point in time, there has not been a material impactmanufacture BreathScan Alcohol Detectors (based on the Company’s assetsMicro Particle Catalyzed (MPC) Biosensor technology platform) and liquidity. Management will continue to monitor the risks associated with the current environment and their impactTri-Cholesterol products (based on the Company’s results.

Off-Balance Sheet Arrangements

We doRapid Enzymatic Assay (REA™) technology platform). In September 2019, we have determined that it is no longer economically appropriate to offer our Tri- Cholesterol product. Furthermore, we have determined that it is not have any off-balance sheet arrangements.

Operating Activities

ABI’s net cash consumed by operating activities totaled $1,024,584 during the six months ended June 30, 2013. Cash was consumed by the loss of $200,962, less non-operating gains of $190,996 plus a non-cash adjustment of $176,285 for depreciation and amortization of non-current assets. For the six months ended June 30, 2013, decreases in license fees receivables, inventories, and other assets of $608,505 provided cash, primarily relatedeconomically appropriate to routine changes in operating activities. A net increase in trade and other receivables of $1,115,985 consumed cash from operating activities. Additional cash was consumed by operations from a net decrease of approximately $301,431 in deferred revenue and trade and other payables and legal settlements payable.

ABI’s net cash consumed by operating activities was $999,166 during the year ended December 31, 2012. Cash was consumed by the loss of $2,557,820, less non-cash expenses of $561,623 for provisions for bad debt, write-off of notes receivable, establishment of an inventory reserve for obsolescence and depreciation and amortization of non-current assets. For the year ended December 31, 2012, decreases in trade and other receivables, and other assets generated cash of $382,724. There was a $334,178 increase in inventories in the year ended December 31, 2012, primarily due to increases in the production of CHUBE breath alcohol tubes. At year-end 2012, there was also an increase of $948,485 in trade and other payables, legal settlement liabilities, and deferred revenue.

Net cash consumed by operating activities was $2,452, 312 during the year ended December 31, 2011. Cash was consumed by the loss of $3,626,944, less net non-cash expenses of $2,055,109, including provision for bad debt totaling $1,650,185, non-cash share based compensation totaling $27,766, $377,448 for depreciation and amortization of noncurrent assets, and a non-cash increase in the equity position in (en)10 in the amount of $290. For the year ended December 31, 2011, a $479,548 increase in inventories, trade and other receivables, and other assets consumed cash. Additional cash was consumed by operations from a net decrease of $400,929 in trade and other payables.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (US GAAP) requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with revenue recognition, impairment analysis of intangibles and stock-based compensation.

The Company’s financial position, results of operations and cash flows are impacted by the accounting policies the Company has adopted. In order to get a full understandingfurther develop or pursue approval of the Company’s financial statements, one must have a clear understandingPIFA PLUSS Chlamydia Rapid Assay device. As of the accounting policies employed. A summary ofSeptember 30, 2019, the Company’s critical accounting policies follows:

Intangible Assets:  Intangible assets primarily represent legalmarketed products consist only of its PIFA® Heparin/PF4, PIFA PLUSS® PF4 and filing costs associated with obtaining patents on the Company’s new discoveries or acquiring patents for diagnostic technologies or tests that will enhance the Company’s product portfolio. The Company has developed or acquired several diagnostic tests that can detect the presence of various substances in a person’s breath, blood, urine and saliva. Propriety protection for the Company’s products, technology and process is important to its competitive position. To date, the Company has received nine patents from the United States Patent Office (7,896,167, 8,097,171, 7,285,246, 7,837,936, 8,003,061, 8,425,859, 5,565,366, 5,231,035 and 5,827,749). Other patents have been granted through the European patent Convention (EP 0556202), in Germany (69126142.3) and in Japan (2,628,792, 4,885,134 and 4,931,821). Patents are in the national phase of prosecution in many PCT participating countries. Additional proprietary technology consists of numerous different inventions. The Company intends to file additional patent applications, where appropriate, relating to new products, technologies and their use in the U.S., European and Asian markets. Management intends to protect all other intellectual property (e.g. copyrights, trademarks and trade secrets) using all legal remedies available to the Company.

Costs associated with applying for patents are capitalized as patent costs. Once the patents are approved, the respective costs are amortized over a period of twelve to seventeen years on a straight-line basis. Patent pending costs for patents that are not approved are charged to operations the year the patent is rejected.

In addition, patents may be purchased from third parties. The costs of acquiring the patent are capitalized as patent costs if it represents a future economic benefit to the Company. Once a patent is acquired it is amortized over its remaining life. The Company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life using the straight-line method. The Company tests intangible assets with finite lives upon significant changes in the Company’s business environment.

The testing resulted in no patent impairment charges during the six months ended June 30, 2013, as well as for the years ended December 31, 2012 and 2011 respectively.

Long-Lived Assets:

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized net within “other income” in profit or loss.

Revenue Recognition

The Company’s revenue is recognized when products are shipped or delivered to unaffiliated customers. The Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) 605, provides guidance on the application of generally accepted accounting principles to select revenue recognition issues. The Company has concluded that its revenue recognition policy is appropriate and in accordance with FASB ASC 605. Revenue is recognized under sales, license and distribution agreements only after the following criteria are met: (i) there exists adequate evidence of the transactions; (ii) delivery of goods has occurred or services have been rendered; and (iii) the price is not contingent on future activity and (iv) collectability is reasonably assured.

Stock-based Compensation

FASB ASC 718,Share-Based Payment, defines the fair-value-based method of accounting for stock-based employee compensation plans and transactions used by the Company to account for its issuances of equity instruments to record compensation cost for stock-based employee compensation plans at fair value as well as to acquire goods or services from non-employees. Transactions in which the Company issues stock-based compensation to employees, directors and consultants and for goods or services received from non-employees are accounted for based on the fair value of the equity instruments issued. The Company utilizes pricing models in determining the fair values of options and warrants issued as stock-based compensation. The Black–Scholes model is utilized to calculate the fair value of equity instruments.

Recently Issued and Adopted Accounting Pronouncements

The Company has evaluated all recently issued accounting pronouncements and believes such pronouncements do not have a material effect on the Company’s financial statements.

Reclassifications

Certain prior period amounts in the accompanying financial statements have been reclassified to conform to the presentation used in 2012.

Quantitative and Qualitative Disclosure About Market Risk

General

We have limited exposure to market risks from instruments that may impact theBalance Sheets,Statements of Operations, andStatements of Cash Flows. Such exposure is due primarily to changing interest rates.

Interest Rates

The primary objective for our investment activities is to preserve principal while maximizing yields without significantly increasing risk. This is accomplished by investing excess cash in highly liquid debt and equity investments of highly rated entities which are classified as trading securities.

BUSINESS

Overview

Akers Biosciences, Inc. (“ABI,” “we” or the “Company”) develops, manufactures, and supplies rapid, point-of-care screening and testing products designed to bring health-related information directly to the patient or clinician in a time- and cost-efficient manner. ABI believes it has advanced the science of diagnostics through the development of several proprietary platform technologies that provide product development flexibility.BreathScan Alcohol Detectors.

All of ABI’sour rapid, single-use tests are performedin vitro (outside the body) and are designed to enhance patient well-being and reduce total outcome coststhe cost of healthcare. The Company’s current product offerings and pipeline products focus on delivering diagnostic assistance in a wide variety of healthcare fields/specialties, including cardiology/emergency medicine, metabolism/nutrition, neuropsychiatry, oncologydiagnostic rapid manual point-of-care tests for the detection of allergic reactions to Heparin, and infectious diseases / bioagent detection, as well as for on- and off-the-job alcohol safety initiatives.

ABI believesWe believe that low-cost, unit-usesingle-use testing not only saves time and money, but allows for more frequent, near-patient testing which may save lives. We believe that ABI’sour FDA-cleared rapid diagnostic tests that help facilitate targeted diagnoses and real-time treatment. We also believe that ABI'sour rapid diagnostic tests surpass most other current diagnostic products with their flexibility, speed, ease-of-use, readability and low cost and accuracy. In minutes, detection of disease states and medical conditions can be performed on single-patient specimens, without sacrificing accuracy.cost.

We believe the use of rapid tests, which can be performed at the point-of-care when and where the patient is being consulted, can result in immediate diagnostic decisions and subsequent treatment regimens and is an important development in the practice of medicine. Point-of-care testing addresses today’s challenges in the healthcare industry, such as:

•

	●	cost pressures/efficiency of healthcare delivery; and
	●	need for easy to use, accurate at-home tests for individuals to monitor their personal health and wellness

Strategy

• needOur strategy for toolsthe medical device business is to leverage where possible its distributor relationships, while exploring strategies for pharmaceutical companies to monitor side effects of medicines/new agents in development;further reducing its costs.

• need for easy to use, accurate at-home tests for individuals to monitor their personal health and wellness.

• need for affordable mass screening tests for key infectious diseases, cardiac conditions, and metabolic markers; and

• public health needs in developing countries lacking basic health infrastructure.

Market Overview

Worldwide, healthcare professionals use laboratory tests to support their clinical diagnosis and treatment decisions. According to a MarketsandMarkets report,In-Vitro Diagnostic (IVD) Market (Applications, End-users & Types) Trends & Global Forecasts (Major & Emerging Markets – G7, Japan & BRIC) (2011 - 2016), published in January 2012 (the “IVD Market Report”), the use of such tests continues to grow as a result of increased patient awareness, patient self-testing, and increasing baby booming population across the globe. Other major drivers for the growth of thein vitro diagnostic (“IVD”) industry is a rise in the number of diseases like respiratory and hospital-acquired infections and a rise in the chronic diseases such as diabetes, hypertension, cardiovascular diseases, and cancer.both an increasing understanding of the molecular processes underlying many disease states and the opportunity for clinicians to quickly incorporate that targeted information into treatment decisions (e.g. companion testing). According to an article published on in vitro diagnostics by Medical Device and Diagnostic Industry (“MDDI”) online in March 2013, in the past, thein vitro diagnostics industry has focused on developing tests that require significant time, skill, and often costly, specialized equipment. Patient specimens often had to be collected remotely and processed in a central laboratory with test results sent to a physician at a later date. This general protocol is not particularly well-adapted to the practice of medicine in a cost-effective, timely manner. The pressures on public health budgets and falling profits among third party payors such as insurers, necessitates an alternative approach to disease management. Moreover, the implementation of “Obamacare” in the United States mandates that tens of millions of additional people receive cost-effective healthcare. This reality has changed the American healthcare landscape as evidenced by the steady growth of the retail health clinic and urgent care centers market.

According to the IVD Market Report, outside of the United States, socialized medicine and/or a general atmosphere of cost-containment and healthcare efficiency drive the need for diagnostic testing solutions that are fast, affordable, accurate, simple-to-perform and help enable early diagnosis and treatment of medical conditions or provide an assessment of a person’s health status.

ABI designed its products based on single-use assay platforms with straightforward test procedures that can be completed in minutes. In the healthcare setting, the Company’s clinical laboratory products can be utilized near or at the point-of-care and do not require the use of expensive equipment or a highly trained or specialized staff. As a result, an individual’s current health status can immediately be incorporated into diagnostic and treatment decisions, improving the overall efficiency of the healthcare experience in the eyes of the patient, and ultimately the payor. In addition, in the developing world, the portability and ease-of-use of such point-of-care tests can serve to drastically improve the level of disease screening and subsequent patient care. We believe the benefits of our technology platforms are therefore well-suited to the diagnostic demands of third world countries that seek to deliver modern medical diagnosis in the midst of primitive infrastructures. In addition, some of our products have received FDA clearance for over-the-counter use and others that do not fall within the oversight of regulatory authorities have the added benefit of being self-tests that deliver personal health information on-demand. ABI believes that the products that emerge from ABI’s technology platforms address the needs of the evolving healthcare delivery system that is moving patient care closer to or in the home.

In a June 6, 2013 article “Global In Vitro Diagnostics Markets Outpace Pharma Industry Growth”byFrost & Sullivan's estimated the global IVD market was $45 billion, with forecasted revenue expected to reach $64 billion in 2017. While the U.S. and Western Europe are the largest IVD markets, the Asian-Pacific region and Eastern Europe are projected to be the fastest growing by Frost & Sullivan's. The Company’s main presence is in the United States, but recently executed distribution and licensing agreements have initiated ABI’s strategic move to the China and European Union marketplaces.

Strategy

ABI’s strategy is to target carefully chosen, high margin market segments within the diagnostics industry where existing tests do not effectively fulfill clinical requirements, or an emerging, unfulfilled need has been identified. The Company seeks to develop tests for applications based on their ability to compliment a particular treatment, lifestyle or testing regimen that requires a time- and cost-efficient diagnostic alternative or solution. ABI utilizes its existing platform technologies to internally develop its new products as the Company’s proprietary methods.

ABI has established and will continue to pursue distribution relationships with high volume, medical and health & wellness product marketers to maximize its revenue potential, and to be a worldwide competitor in specialized markets within the diagnostics industry.

ABI has developed and continues to develop keycurrently maintain strategic relationships with established companies with well-trained technical sales forces and strong distribution networksthat are in the following key market segments:clinical laboratory market.

The Company plans to target other attractive markets such as aid organizations with purchasing power for rapid infectious disease tests and other biotechnology companies or pharmaceutical manufacturers that may require companion tests to promote patient compliance with a medication regimen or facilitate initial screenings to qualify patients for a particular therapy.

Technology Overview

ABI’s proprietary platform technologies merge scientific innovation with user-friendly formats to deliver cost-effective and time-efficient testing and sample preparation solutions where and when they are needed.

Current Testing Platform Technologies

MPC Biosensor Technology

MicroParticle Catalyzed Biosensor (“MPC Biosensor”) Technology permits the rapid identification of medical conditions through biomarkers in exhaled breath. These products contain microparticles that change color when a subject has a positive test result. The microparticles are coated with recently discovered agents that both decrease the time to result and provide a more defined color change when appropriate. MPC Biosensor-based products are packaged in small, disposable tubes through which test subjects can easily blow for several seconds. In the United States, the MPC Biosensor Technology is protected by two United States patents (7,285,246; 7,837,936), covering all MPC Biosensor products such as CHUBE, Keytones and Pulmohealth Check, with an additional patent pending.

Particle ImmunoFiltration Assay (PIFA®(PIFA^®) Technology

PIFA®PIFA^® technology is an accurate, rapid, immunoassay (a procedure for detecting or measuring specific proteins or other substances through their properties as antigens or antibodies) method based on the selective filtration of dyed microparticles coated with antigen or antibody. The microparticles are combined with a test sample (whole blood serum, urine or saliva)serum) within a self-contained device. If a patient tests positive for the antibody or antigen, a binding event will occur and the dyed microparticles will be trapped by a filter within the device. As a result, the test window will be void of any color. Conversely, if the patient tests negative, the dyed microparticles will flow freely into the test window. ABI’s PIFA®Specific to the PIFA Heparin tests, the Company has two international patents and one US patent granted in force.

MPC Biosensor Technology

MicroParticle Catalyzed Biosensor (“MPC Biosensor”) Technology permits the rapid identification of medical conditions through biomarkers in exhaled breath. MPC Biosensor-based products contain microparticles that change color to indicate a positive test result. The microparticles are coated with agents that both decrease the time to result and exhibit a more defined color change when appropriate. MPC Biosensor-based products are packaged in small, disposable cartridges through which test subjects can easily blow for several seconds.

Current Sample Preparation Technology

Rapid Blood Cell Separation Technology

Our Rapid Blood Cell Separation (“Separator”) Technology, labeled under the brand name seraSTAT^®, further accelerates the rate at which a test result is obtained as the often-required sample preparation step is abbreviated. Conventional methods of blood cell separation are labor-intensive and time-consuming, typically involving blood collection and laboratory personnel, as well as electrically-powered centrifuges and other specialized equipment. The disposable Separator device requires only a small-volume blood sample obtained through a venous blood draw. We have obtained the appropriate US FDA regulatory clearances for seraSTAT^® as a stand-alone device and the technology is currently integrated into PIFA PLUSS PF4 devices. The seraSTAT^®Rapid Blood Cell Separation Technology is currently protected by two United StatesU.S. patents (5,565,366; 5827749) and onethree international Patent (4,931,821) covering all PIFA tests such as Heparin, Malaria and Chlamydia. An additional US patent and one international patent are pending.patents.

SMC Technology

Synthetic Macrocycle Complex (“SMC”) Technology is a colorimetric testing methodology that pairs a proprietary reagent (a substance or mixture for use in chemical analysis or other reactions)Current Product Portfolio with a hand-held, photometric reader that determines the quantitative level of a therapeutic drug in a patient’s blood sample. The technology also permits the use of whole blood samples collected from a simple finger stick, making products that use this technology extremely flexible within the healthcare delivery system.

Rapid Enzymatic Assay

Rapid Enzymatic Assay (“REA”) technology enables the rapid detection of metabolites in blood and urine in assay formats thatWe are easy-to-use and deliver quantitative or semi-quantitative results. Products that employ REA technology are primarily intended for pharmaceutical, nutritional and over-the-counter (OTC) markets. ABI has two United States patents (8,003,061; 8,425,859) for this technology covering our Tri-Cholesterol Test.

minDNA™ Technology

minDNA™ technology facilitates the analysis of DNA, in one minute, by a hand-held photometric reader. A mixture consisting of a patient’s whole blood specimen and a disposable reagent is exposed to the minDNAnalyzer, a digital hand-held reflectance photometer. These assays can be utilized at the point of care setting by non-clinical laboratory personnel using finger stick blood samples, or in the laboratory using EDTA whole blood specimens obtained through venous blood draws. This technology can be applied to the development of rapid white blood cell count and absolute neutrophil count assays that can monitor side effects of certain psychiatric and oncology drugs.

Product Portfolio

ABI is positioned as a provider of rapid diagnostic solutions that encompass the totality of the point-of-care testing process, from sample preparation to immediate test result. In addition, we believe we are a pioneer in disposable breath condensate technology, a testing format that has significant potential given the variety of wellness- and disease-predicting biomarkers present in an exhaled breath sample.solutions.

At present, ABI’sour commercialized and emerging product portfolio incorporate four ofincorporates the Company’s sixthree aforementioned proprietary platform testing and sample preparation technologies: PIFA^®, MPC Biosensor REA and Rapid Blood Cell Separation Technology. Directly below, is a discussion of the products within our current and emerging portfolio will be segmented by platform.

MPC Biosensor Technology

The Company’s MPC Biosensor breath condensate testing platform forms the basis of a number of ABI’s marketed and pipeline products.

The Company’s disposable breath alcohol detectors are available in .02%, .04%, .05%following table sets forth our marketed products, identifies the appropriate “prescription use” or “OTC” designation and .08% blood alcohol concentrations (“BACs”) and provide users with a test result in two minutes. If the crystals in the interior of the device change from yellow to aqua, the userrequired clearance that has tested positive for the specific alcohol level. Should the crystals remain yellow, the result is negative.been obtained.

The Company’s proprietary breath alcohol detection technology is paired with the quantitative precision of an electronic analyzer in the BreathScan^® PRO alcohol detection system. As with all BreathScan®Our marketed and emerging products the test subject exhales into a specially calibrated, BreathScan® PRO detector. The testing coordinator then inserts the used detector into the BreathScan® PRO Digital Analyzer. After two minutes, the Analyzer’s sophisticated optics calculate the subject’s BAC; the detectable range spans from 0.00% to 1.50% BAC. Unlike other electronic breathalyzers, BreathScan® PRO never requires recalibration so it is in “ready” mode at all times. In 2011, the Company received FDA over-the-counter clearance for the system, providing a commercialization path in the US for use by trained professionals, including those in civil and military law enforcement, and the general public; in addition, the CE-Mark was affixed to the alcohol detection system for professional use. Unlike the aforementioned BreathScan® disposable detectors, BreathScan® PRO is required to have a CE-Mark as the system includes an electronic component, namely the digital analyzer. ABI’s distribution relationship with Chubeworkx also is expected to encompass a private-labeled version of BreathScan^® PRO within its global distribution plan.

Other Emerging MPC Platform Products

The Company’s MPC Biosensor technology is being applied to the development of products that serve the nutraceutical and weight loss marketplaces. As a category, these disposable screening tests are exempt from FDA 510(k) premarket clearances. Biomarkers related to various metabolic processes can be measured in breath condensate. As a result, ABI has used its proprietary, easy-to-use platform to design disposable breath tubes that measure ketone (acid) production associated with fat-burning (METRON™) and oxidative stress levels that relate to cellular damage and the development of many preventable diseases (VIVO™). These products are heading towards full commercialization and the Company is currently assessing distribution opportunities with companies specializing in medically-assisted weight loss and/or mass distribution through health-related multilevel marketing organizations.

ABI is continuing its clinical development of the Breath Ketone “Check” disposable breath tube for two clinical indications: (i) the diagnosis of ketoacidosis in diabetics, and (ii) the management of senile dementia and Alzheimer’s disease patients.

Breath Ketone “Check’ is being designed to provide real-time information that allows diabetics to determine if they have a more severe level of ketone (acid) build up in their body that can cause a life-threatening medical emergency called ketoacidosis. The estimated 28.5 million Type I (insulin-dependent) diabetics worldwide are at particular risk for ketoacidosis and require routine monitoring of their ketone levels. To date the medical industry relies on blood- and urine-based ketone testing methods, which are invasive and/or inconvenient. Since breath and blood ketone levels are closely correlated, the Breath Ketone “Check” is designed to offer healthcare professionals and their patients a convenient, accurate method, which can be completed anytime, anywhere, to quickly determine if an individual’s ketone level is approaching a dangerous threshold requiring medical attention. Since this product requires FDA 510(k) clearance, the Company continues to develop its technical file and complete required clinical studies to complete the regulatory submission.

An additional clinical indication for the Breath Ketone “Check” test is as an aid in the management of senile dementia and Alzheimer’s disease. There is no known cure for these neurological conditions, which slowly progress over years to decrease cognitive function. Moreover, the cost to the healthcare system to provide care for these patients is significant. However, recent advances in neuroscience indicate that these diseases can be greatly slowed, and in some cases the progression can stop, if the patient is maintained in a state of ketosis. Ketosis results from a diet low in carbohydrates that promotes the production of ketones in the bloodstream, and is a milder form of ketoacidosis. Because these patients are often confused or unreliable, it is important to ensure that they maintain a state of ketosis to keep the disease in check. This can be accomplished through routine monitoring with Breath Ketone “Check”.

ABI is also putting research and development resources to the development of Breath PulmoHealth “Check” suite of assays. These disposable detectors are being designed to signal the detection of various biomarkers related to pulmonary health, namely asthma, chronic obstructive pulmonary disease (“COPD”) and lung cancer, through convenient, rapid analysis of an individual’s breath sample. ABI has chosen to target this trio of conditions as their impact on global health is staggering:include:

ABI believes these statistics suggest that pulmonary conditions are under-diagnosed and under-treated and will continue to pose a chronic strain on worldwide public health. Currently, diagnostic methods used for the detection of lung-related diseases and illnesses are often costly as specialized medical personnel must facilitate analysis and testing, and radiologic exams or invasive surgical procedures may be required. While ABI does not presume Breath PulmoHealth “Check” products to be replacements for such tests in all markets, it does however have ambitions for the devices to become effective, highly cost-efficient, primary screening tools. Their ease-of-use, portability and non-invasive nature provide healthcare professionals and public health officials with a testing platform that can be deployed in high volume, and even in regions of the developing world. At present, the Company’s primary development efforts are focused on developing the clinical dossier for the asthma product that will facilitate an eventual FDA 510(k) submission.

PIFA^®Technology

PIFA^® Technology

The core products marketed under the PIFA®PIFA^® platform are the PIFA^® Heparin/PF4 Rapid Assay, and the PIFA PLUSS^® PF4, and a variety of rapid Infectious Disease screening tests which target third world markets.PF4.

PIFA^® Heparin/PF4 Rapid Assay and PIFA PLUSS^® PF4 remain the only FDA-cleared rapid manual assays we are aware of that can quickly determinesdetermine if a patient being treated with the blood thinner Heparin may be developing a drug allergy. This clinical syndrome, referred to as Heparin-Induced Thrombocytopenia (HIT)(“HIT”), reverses the Heparin’s intended therapeutic effect and transforms it into a clotting agent. According to “Current Concepts Review: Heparin-Induced Thrombocytpenia”, published by Foot and Ankle International in 2008 (the “HIT Report”), patientsPatients with HIT are at risk of developing limb- and life-threatening complications, so the timely test result provided by ABI’sour Heparin/PF4 devices is paramount to effective clinical decision making. In the US alone, approximately 12 million patients are exposed to Heparin annually and 1% to 5% of those patients receive a HIT diagnosis. The largest at-risk populations are patients undergoing major cardiac or orthopedic surgical procedures. It is estimated that up to 50% of cardiac surgery patients develop HIT-antibodies. Given the size of the aging baby boomer market segment and the prevalence of cardiac disease, surgeries within this category isare expected to increase, as would the potential demand for the Company’s convenient, rapid tests.

TheWe believe the PIFA^® Heparin/PF4 Rapid Assay was fully commercialized in the U.S. in 2008, improvingimproves the standard of care in HIT-testing with its result deliveredby delivering results in less than tenfive minutes after the patient sample has been prepared. Traditional methods required the use of expensive equipment, specialized laboratory personnel and approximately 4 hours of technician time to complete the 20+ assay test procedure in-house,in-house. Clinicians were subjected to a 24-to-72 hour turnaround time if the HIT-antibody determination was outsourced to a reference laboratory. Especially in the latter scenario, the patient information obtained is retrospective in nature as the HIT-antibody result cannot be factored into time-sensitive diagnostic and treatment decisions. In November2012, the

The Company has also introduced PIFA PLUSS^® PF4 to U.S. hospitals to further improve the rate at which healthcare professionals can obtain a HIT-antibody result.

This PIFA^® line extension merges the ease-of-use of the PIFA testing platform withABI’s our recently patented Rapid Blood Cell Separation Technology, marketed under the brand name seraSTAT^®. The marriage of these twotechnologies condenses the sample preparation and analysis procedures as the precise micro-volume of a seraSTAT^®-prepared patient specimen is delivered directly into the PIFA^®cassette for immediate testing. This eliminates an additional one-hour of sample processing time and the need for healthcare personnel to have access to a centrifuge to separate the liquid fraction of blood from the cellular fraction. As a result, HIT-testing can be initiated and completed at or near the point-of-care, especially in emergency and critical care departments where time-efficient diagnostic results can drastically improve patient outcomes.

Other PIFA

Since we believe the appropriate regulatory clearances have been obtained in the United States for these products, we do not plan to fund additional clinical trials to facilitate product marketing domestically. In addition, the current technical file that has been assembled for seraSTAT^® Platform Assaysand PIFA PLUSS PF4^® also is expected to be used to support our CE-marking self-certification process for potential sales in developmentthe EU; the PIFA Heparin/PF4 Rapid Assay is already CE-marked.

AccordingMPC Biosensor Technology

Breath Alcohol Products

BreathScan^®is a single use disposable breath alcohol detector and has 510(k) clearance for Over-the-Counter sales to U.S. consumers; CE certification is not required to market the Center for Disease Controlproduct in the EU because BreathScan^® results are not used to diagnose any medical conditions.