Benson Hill (BHIL) Risk Factors

We have incurred losses during our history and do not expect to become profitable in the near future and may never achieve profitability. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire, if at all. As of December 31, 2023, we had U.S. federal net operating loss carryforwards of approximately $357.9 million. Under the Tax Cuts and Jobs Act (the "Tax Act"), as modified by the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), U.S. federal net operating loss carryforwards generated in taxable periods beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such net operating loss carryforwards in taxable years beginning after December 31, 2020, is limited to 80% of taxable income. The extent to which states conform to the Tax Act or the CARES Act varies. In addition, our net operating loss carryforwards are subject to review and possible adjustment by the U.S. Internal Revenue Service, and state tax authorities. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the "Code"), our federal net operating loss carryforwards and other tax attributes may become subject to an annual limitation in the event of certain cumulative changes in our ownership. An "ownership change" pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company's stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Our ability to utilize our net operating loss carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes in connection with the business combination or other transactions. Similar rules may apply under state tax laws. If we earn taxable income, such limitations could result in increased future income tax liability to us and our future cash flows could be adversely affected. We have recorded a valuation allowance related to our net operating loss carryforwards and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.

As a public company, we are required to provide management's attestation on internal control over financial reporting. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that apply to us as a public company. If we are not able to implement and maintain compliance with the additional requirements of Section 404(a) of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") in a timely manner, we may not be able to assess whether our internal control over financial reporting is effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our securities. A material weakness was identified in our internal control over financial reporting within the historical Fresh segment relating to the year ended December 31, 2022 and the quarter ended March 31, 2023. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We did not design or maintain an effective control environment commensurate with our financial reporting requirements. Specifically, we did not design, implement, or test transaction level or IT General Controls at the Fresh segment. These controls specifically related to transactions that originated and were recorded at the Fresh segment level. The historical Fresh segment was fully divested as of June 30, 2023. As a result of the divestiture, this material weakness was remediated as of June 30, 2023. In order to maintain and improve the effectiveness of our internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight. Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an "emerging growth company" as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could adversely affect our business and operating results and could cause a decline in the price of our securities.

We are an early-stage food and feed ag-tech company with a limited operating history that to date has been focused primarily on research and development, software development, conducting field trials and pursuing initial commercialization efforts of our product candidates. Investment in food and feed ag-tech development is highly speculative. It entails substantial upfront research and development investment and, to the extent gene editing technology may be employed, there is significant risk that we will not be able to edit the genes in a particular plant to express a desired trait, or, once edited, we will not be able to replicate that trait across entire crops in order to commercialize the product candidate. Moreover, the regulatory pathway for our product candidates can be uncertain and could add significant additional cost and time to development. Our limited operating history may make it difficult to evaluate our current business and our prospects. We have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in rapidly developing and changing industries, including challenges in forecasting accuracy, determining appropriate investments of our limited resources, gaining market acceptance of the products made using our gene editing and speed breeding platform and through our crop prototyping process, managing a complex regulatory landscape and developing new product candidates. These risks are exacerbated by the additional requirements and associated costs of compliance we face as a publicly traded company. We may also face challenges in scaling our supply chain in a cost-effective manner, as we will rely on contracting with seed production companies, seed distributors, farmers, crushers, millers, refiners, food companies and retailers, and logistics and transportation providers, in order to get our products to market. We may not be able to fully implement or execute on our business strategy or realize, in whole or in part within our expected timeframes, the anticipated benefits of our growth strategies. You should consider our business and prospects in light of the risks and difficulties we face as an early-stage company focused on developing products in the field of food and feed ag-tech. Further, we intend to transition to an asset-light business model with a focused expansion into broadacre animal feed markets, designed to complement our accomplishments in human food ingredients. Under this transition plan, we intend to participate in the animal feed market through an asset-light business model and secure partnership and licensing agreements to scale our product innovations. The risks outlined above are exacerbated by our current plans, which require execution of an accelerated shift in business model, the satisfactory performance of our expanded Liquidity Improvement Plan, and additional long-term liquidity. In addition, as previously announced, we are exploring a broad range of strategic alternatives for our business, which could include joint venture opportunities, partnerships with strategic and financial investors, asset sales, licensing opportunities or other business, merger, or acquisition transactions, which may make evaluation of our business and prospects more challenging and may increase the risk of investment.

Under U.S. GAAP, we review our goodwill and intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Additionally, goodwill and intangible assets are required to be tested for impairment at least annually. The valuation models used to determine the fair value of goodwill or intangible assets are dependent upon various assumptions and reflect management's best estimates. Significant management assumptions, which are critical in this fair value determination, include, without limitation, revenue growth rates, operating margins, weighted average cost of capital, future economic and market conditions, earnings multiples, terminal growth rate, tax rate and future cash flow projections. Any changes to the assumptions and estimates made by management, may cause a change in circumstances indicating that the carrying value of the goodwill and intangible assets may not be recoverable. As of June 30, 2023, we identified an indicator of impairment and determined it was no longer more likely than not that the fair value of our sole reporting unit was in excess of the carrying value. As a result, a quantitative goodwill and separately identifiable intangible asset impairment assessment was performed as of June 30, 2023, and we recorded an impairment of the carrying value of goodwill of $19.2 million, which represented the entire goodwill balance prior to the impairment charge. The impairment charge reflects an ongoing assessment of current market conditions and potential strategic investments to continue commercializing our proprietary products and pursue other strategic investments in the industry. Refer to Note 11-Goodwill and Intangible Assets in this report for further details. In December 2023, the Company recorded a non-cash impairment charge of approximately $18.5 million to reduce the carrying amounts of long-lived assets, which consists of property and equipment, intangible assets, and lease right-of-use assets, of our Creston facility. As part of our transition to an asset-light business model, our Company performed an impairment assessment which indicated the carrying values of our Creston facility asset group is not recoverable. Refer to Note 2-Summary of Significant Accounting Policies in this report for further details. Each quarter, we assess whether events or changes in circumstances have occurred that indicate the carrying value of intangible assets and long-lived asset groups may not be recoverable. If we determine that the carrying value of intangible assets and long-lived asset groups are not recoverable, we will be required to record impairment charges relating to those assets. We are currently executing a transition of our business model which could further result in us being unable to recover all or a portion of the carrying value of our long-lived assets. The amount and timing of any impairment charge would depend on a number of factors including the structure, timing, and scope of any assets disposed in any future transactions. We cannot accurately predict the amount and timing of any impairment of intangible assets or long-lived assets. Any additional impairment charges that we may take in the future could be material to our results of operations and financial position.

Our net losses from continuing operations were $111.2 million for the year ended December 31, 2023, $99.7 million for the year ended December 31, 2022 and $122.2 million for the year ended December 31, 2021. As of December 31, 2023 and December 31, 2022, we had an accumulated deficit of $523.8 million and $408.5 million, respectively. We will need to generate significant revenues to achieve profitability, and we may not be able to achieve and maintain profitability in the near future or at all, which may depress our stock price. Our future success will depend, in part, on our ability to grow revenue by expanding into broadacre animal feed markets through an asset-light business model and secure partnership and licensing agreements to scale our product innovations, licensing of our intellectual property and our ability to market and sell additional products from our pipeline of product candidates. The net losses we incur may fluctuate significantly from year-to-year and quarter-to-quarter, such that a period-to-period comparison of our results of operations may not be a reliable indication of our future performance, and it should not be considered such. We may not be successful in our efforts to increase revenues, successfully commercialize products, generate revenue from partnership and licensing arrangements, or attain and maintain profitable operations. If we are unsuccessful in these efforts, our cash balances and operating cash flow alone will be insufficient to fund our longer-term capital and liquidity needs. To fund our longer-term capital and liquidity needs, we expect we will need to secure additional capital. Our business plan and financing needs are subject to change depending on, among other things, the success of our efforts to grow revenue and our efforts to continue to effectively manage expenses.

We have incurred significant losses since inception, primarily due to investments to enhance our technological capabilities and costs associated with the early-stage commercialization of products. For the three and nine months ended September 30, 2024, we incurred a net loss from continuing operations, net of income taxes of $21.9 million and $66.2 million, respectively, and for the nine months ended September 30, 2024, we had negative cash flows from operating activities of $40.8 million. As of September 30, 2024, we had cash and marketable securities of $14.4 million. Furthermore, as of September 30, 2024, we had an accumulated deficit of $587.7 million and term debt and notes payable of $15.6 million, which are subject to repayment terms and covenants further described in Note 8, Debt in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this report. We expect to generate operating losses and negative operating cash flows for the foreseeable future. As of the date of this report, we estimate that our existing cash and marketable securities of approximately $14.4 million as of September 30, 2024 will last through December 31, 2024, but will not be sufficient to fund our operations or meet our contractual commitments and obligations as they came due in the ordinary course of business for twelve months from the date hereof. Therefore, there is substantial doubt about our ability to continue as a going concern. We will need to raise additional capital to continue our operations and to execute our business plan, which capital may not be available on timely or acceptable terms, or at all. Likewise, as of the date of this report, management estimates that we will comply with our debt covenants through December 31, 2024. However, we have based these estimates of our cash runway and covenant compliance on assumptions that may prove to be incorrect, and we could utilize our available capital resources or fail to comply with certain debt covenants sooner than we expect. We have invested and will continue to invest in technology and human capital and will require substantial funds to bring the current products in our pipeline to market and to grow our business by researching, developing, and protecting products not currently in our product pipeline. Our current available funds are not sufficient for all of these activities and we do not expect that we will be able to fund our longer-term capital and liquidity needs through our current cash balances and operating cash flow alone. To fund our longer-term capital and liquidity needs, we will need to secure additional capital. The amount and timing of our future funding requirements will depend on many factors, including the success of the commercialization of certain of our products, our ability to secure strategic partnerships and licensing agreements and the amount of revenues they produce, our ability to continue to satisfy our financial covenants under our financing facilities, our ability to repay or refinance our indebtedness as it becomes due, and our success at implementing our expanded Liquidity Improvement Plan and other cost-saving measures. We could potentially use our available financial resources sooner than we currently expect. Our failure to raise capital as and when needed could have significant negative consequences for our business, financial condition and results of consolidated operations. We cannot guarantee that we will be able to satisfy our repayment obligations, meet existing financial covenants or obtain new financing on favorable terms, if at all. Our ability to raise funds will depend upon many factors, including conditions in the debt and equity capital markets, as well as investor and lender perception of our creditworthiness and prospects. The potential transaction process relating to the Non-Binding Letter of Intent may increase investor and lender uncertainty about our future and make it more challenging for us to raise capital. If we are unable to raise funds on timely and acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. In the event we are unable to secure additional financing to fund our obligations before the end of the fourth quarter of 2024, or to maintain covenant compliance, we will be required to seek other strategic alternatives, which may include, among others, scaling back or discontinuing certain or all operations to reduce costs, closure of operations, sale of certain of our assets, a sale of the entire company to strategic or financial investors, and/or seeking protection under the U.S. bankruptcy laws. This may seriously harm our business, financial condition and results of operations. If we are not able to continue operations, investors may suffer a complete loss of their investments in our securities.

Since our inception, substantially all of our resources have been dedicated to the development of our core technology and product platforms, including purchases of property, plant and equipment. We believe that we will continue to expend substantial resources for the foreseeable future as we build and enhance our capabilities and commercialize our products. These expenditures are expected to include costs associated with research and development, manufacturing and supply, marketing and selling existing and new products, working capital, costs of acquiring and building out new facilities, costs associated with planting and harvesting, such as the purchase of seeds and growing supplies, and the cost of attracting and retaining key executives and a skilled local labor force. In addition, other anticipated and unanticipated costs may arise, including those arising from the unique nature of our controlled environment agriculture facilities. As of December 31, 2023, we had cash and cash equivalents and marketable securities of $48.7 million, term debt and notes payable of $60.5 million, and an accumulated deficit of $523.8 million. For the year ended December 31, 2023, we incurred a net loss from continuing operations of $111.2 million and had negative cash flows from operating activities of $73.1 million. As described in Note 14-Debt and in Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources, both in this report, there is substantial doubt about our ability to continue as a going concern, as we currently do not have adequate financial resources to meet our forecasted operating costs as they come due in the ordinary course of business for at least twelve months from the filing of this report. Our business prospects are subject to risks, expenses, and uncertainties frequently encountered by emerging growth companies, including access to capital. To date, we have been funded primarily by equity and debt financings, including the issuance of convertible preferred stock, term debt, and revolving debt. Attaining and maintaining profitable operations is also dependent upon future events, including obtaining adequate financing to complete and commercialize our research and development activities, obtaining adequate grower and strategic partner relationships, building our customer base, successfully executing our business and marketing strategy and hiring appropriate personnel. We do not expect that we will be able to fund our longer-term capital and liquidity needs based on our current cash balances and operating cash flow alone. To the extent we continue to incur losses, our liquidity needs could increase. To fund our liquidity needs, we expect we will need to secure additional capital. However, our business plan and financing needs are subject to change depending on, among other things: - the extent and timing of our implementation of our business model shift and expanded Liquidity Improvement Plan;- the number and characteristics of any additional products we develop or acquire to serve new or existing markets;- the scope, progress, results and costs of researching and developing future products or improvements to existing products or manufacturing processes;- the expenses associated with our sales and marketing initiatives;- the costs required to fund domestic and international growth;- any lawsuits commenced against us, whether related to our products or otherwise;- the expenses needed to attract and retain skilled personnel;- the costs associated with being a public company;- the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing intellectual property claims, including litigation costs and the outcome of such litigation; and - the timing, receipt and amount of sales of, or royalties on, any future approved products, if any. We are continuously assessing our business plans and capital structure. In order to fund our longer-term capital and liquidity needs and grow our business, we expect we will need to secure additional capital, which could be debt or equity financing and may lead to dilution of our common stockholders. Although we may seek to obtain additional financing through non-dilutive means, we may be unable to do so. We have and may continue to seek to obtain additional funds through public or private equity or debt financings or other sources, such as strategic collaborations. Furthermore, even if we are successful in obtaining additional financing, we cannot provide any assurance that we will be able to realize the benefits anticipated with any new financing. We also have the ability to sell up to $400 million of additional shares of our common stock, or securities convertible into common stock, to the public through our shelf registration statement, including approximately $100 million through our at-the-market facility. We may use our shelf registration statement (which may include our at-the-market facility), or alternative equity financing, to raise additional capital to supplement our projected cash needs. Any sales under our shelf registration statement are likely to result in dilution to our existing stockholders, and other types of equity financing may also result in dilution to our existing stockholders. Accordingly, additional financings may result in dilution to stockholders, issuance of securities with priority as to liquidation and dividend and other rights more favorable than common stock, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe that we have sufficient funds for current or future operating plans. We cannot guarantee that we will be able to meet existing financial covenants or that new financing will be available to us on favorable terms, or at all. Our failure to raise capital as and when needed may make it more difficult for us to operate our business or implement our growth plans and we may be required to delay, limit, reduce or terminate our manufacturing, research and development activities, growth and expansion plans, establishment of sales and marketing capabilities or other activities that may be necessary to generate revenue and achieve profitability, any of which could have significant negative consequences for our business, financial condition and results of consolidated operations.

On March 27, 2023, our Board committed to the Liquidity Improvement Plan, which together with subsequent cost-saving measures, is intended to improve liquidity by an estimated $65 million to $85 million by the end of 2024. We subsequently expanded our cost-cutting efforts under the Liquidity Improvement Plan. Through the combination of cash on hand, savings driven by our expanded Liquidity Improvement Plan, and net proceeds from our completed and any future asset dispositions,and securing additional financing, we expect to improve our liquidity position. We plan to use this anticipated liquidity runway while we seek to secure partnership and licensing agreements to help us execute our long-term strategy. While we expect the actions associated with the execution of our expanded Liquidity Improvement Plan to be substantially complete by the end of the fourth quarter of 2024, there can be no assurance that such actions or any other cost reduction initiatives will be successfully or timely implemented, or that they will materially and positively impact our ability to achieve our financial objectives, or that they will leave us sufficient liquidity to pursue our plans or remain a going concern. Because the Liquidity Improvement Plan involves restructuring certain parts of our organization, the associated cost reductions could adversely impact productivity, product innovations and sales to an extent we have not anticipated. In addition, divestiture of our processing assets and our exploration of strategic alternatives, could adversely impact our ability to generate revenues. Our ability to complete the actions associated with the execution of our expanded Liquidity Improvement Plan and achieve the anticipated benefits within the expected timeframe is subject to estimates and assumptions, and actual results may vary materially from our expectations, including as a result of factors that are beyond our control. Our efforts to create a more cost-efficient organization and enhance our capital structure to execute on our strategic priorities may not be successful. Even if we successfully execute these actions in a timely manner and they generate the anticipated cost savings, our expanded Liquidity Improvement Plan may have other unforeseeable or unintended consequences that could materially adversely impact our profitability and business, including our research and development initiatives and our ability to commercialize our product candidates. To the extent that we do not achieve the intended benefits of the actions associated with the execution of our expanded Liquidity Improvement Plan or suffer negative consequences as a result of its implementation, our business and results of operations may be materially adversely affected.

On October 31, 2023, we announced plans to improve our financial position and accelerate our transition to an asset-light business model with a focused expansion into broadacre animal feed markets. We cannot provide any assurance that we will be able to manage and execute these plans successfully or in a timely manner, or that, even if we do, we will have sufficient liquidity to pursue our long-term strategy. Our ability to accomplish these plans is subject to significant business, financial, operational, timing, market, and other risks, including necessary participation of third parties. For example, execution of our asset-light business model and our expanded Liquidity Improvement Plan resulted in the divestiture of our processing assets, as a result of which our ability to generate revenue from product sales has been substantially diminished. We must secure new partnership and licensing agreements to generate revenues and scale our product innovations. There is no assurance that we will be able to secure the necessary partnership and licensing agreements to generate revenues or achieve our acreage goals in the coming years. If we are unable to identify and realize new sources of revenue, including from collaborative arrangements, joint operating activities, partnerships and licensing opportunities, our ability to execute our long-term strategy will be harmed. We may not be successful in our efforts to execute our transition to an asset-light business model, generate revenue from partnership and licensing arrangements, or attain and maintain profitable operations. Our ability to successfully manage and execute this transition is subject to a variety of conditions and factors, some of which are beyond our control, including our ability to secure new partnership and licensing agreements. If we are unsuccessful in these efforts, our cash balances and operating cash flow alone will be insufficient to fund our longer-term capital and liquidity needs. If we are unable to successfully manage and execute our transition to an asset-light business model and our expanded Liquidity Improvement Plan, we may not realize the expected benefits of these plans, and our results of operations could be harmed.

Following the divestiture of the Creston and Seymour processing facilities, our ability to generate revenue from product sales has been substantially diminished. As of December 31, 2023, we had cash and marketable securities of $48.7 million from continuing operations, and cash of $0.3 million from discontinued operations. We have had recurring net losses from operations and an accumulated deficit of $524 million as of December 31, 2023. Given our net losses and with only these funds, we will need to seek significant additional funds in the future through equity or debt financings, or strategic alliances with third parties, either alone or in combination, to fund our business plan and to complete our transition to an asset-light operating company. In addition, our transition to an asset-light business model requires that we secure new partnership and licensing agreements to generate revenues and scale our product innovations. There is no assurance that we will be able to secure the necessary partnership and licensing agreements to generate revenues or achieve our acreage goals in the coming years. If we are unable to sufficiently and timely license, sell-to-market or otherwise monetize our intellectual property and food and feed inventory, we may fail to generate enough revenue to continue as a going concern, including making required debt service payments and paying our general and administrative expenses. These divestitures present risks relating to the availability and use of proceeds generated from the divestitures in light of contractual restrictions under the transaction documents. We may also encounter challenges relating to the separation of operations, products, services or personnel, and as a result of any future liabilities we may retain after completing the divestitures. Any difficulties that we face in connection with the divestitures may result in management's attention being diverted from our continuing business operations. Significant time and expenses have been incurred to divest the assets described above, which may adversely affect operations as dispositions have required and may in the future require our continued financial involvement, such as through transition service agreements, guarantees, and indemnities or other current or contingent financial obligations and liabilities.

We have entered into collaboration arrangements with third parties for the development or commercialization of our products, such as our collaboration agreement with ADM, and intend to enter in additional such agreements in the future. To the extent that we decide to enter additional collaboration arrangements, we will face significant competition in seeking appropriate partners, and we will likely have limited control over the amount and timing of resources that any future collaborators dedicate to the development or commercialization of our product candidates. In addition, future collaborators may have significantly greater financial resources than we do and may compete with our business, as ADM does, which could enable such competitors to use our technologies to develop their own products that would compete with our products. Our ability to generate revenue from these arrangements depends in part on our collaborators' abilities to successfully perform the functions assigned to them and our ability to work together. If our collaborations do not result in the successful development and commercialization of products, or if any of our collaborators terminates its agreement with us, we may not receive some of all of any milestone, royalty or other payments provided for under the collaboration agreements. If we do not receive the payments we expect under these agreements, our development of product candidates could be delayed and we may need additional resources to develop our product candidates. In addition, if any collaborator terminates its agreement with us, our revenue generation efforts would be harmed, and we may find it more difficult to attract new collaborators and our reputation among the business and financial communities could be adversely affected. Macroeconomic trends, including those that played a factor in our decision to transition to an asset-light business model, also impact our ability to realize the anticipated benefits of, and to maintain, our collaboration agreements, and could impact our ability to enter into new collaboration agreements. These macroeconomic trends include, without limitation, the emergence of significant market headwinds in the food, aquaculture, and specialty oil markets, and acreage acquisition costs. Moreover, collaboration arrangements are complex and time-consuming to negotiate, document, implement and maintain. To the extent that we seek to enter into additional collaboration agreements, we may not be successful in our efforts to establish and implement such collaboration or other alternative arrangements in a timely manner, on favorable terms, or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable or timely terms, or at all. If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate product revenue.

On August 9, 2023, our Company announced the commencement of a process to explore strategic alternatives, which could include, but not be limited to, a sale of all or parts of our Company, a merger, joint venture, or other transaction. Our Board of Directors ("Board") has not set a timetable for the completion of this review process and there can be no assurance that it will result in any transaction or outcome. Whether the process will result in any additional transactions, will depend on numerous factors, some of which are beyond our control. Such factors include the interest of potential acquirers or strategic partners in a potential transaction, the value potential acquirers or strategic partners attribute to our businesses and their respective prospects, our stock price, market conditions, interest rates and industry trends. Our stock price may be adversely affected if the evaluation does not result in additional transactions or if one or more transactions are agreed to or consummated on terms that investors view as unfavorable to us. Even if one or more additional transactions are completed, there can be no assurance that any such transactions will be successful or have a positive effect on stockholder value. Our Board may also determine that no additional transaction is in the best interest of our stockholders. In addition, our financial results and operations could be adversely affected by the strategic process and by the uncertainty regarding its outcome. The attention of management and our Board could be diverted from our core business operations. We have diverted capital and other resources to the process that otherwise could have been used in our business operations, and we intend to do so. We could incur substantial expenses associated with identifying and evaluating potential strategic alternatives, including those related to employee retention payments, equity compensation, severance pay and legal, accounting and financial advisor fees. In addition, the process could lead us to lose or fail to attract, retain and motivate key employees, and to lose or fail to attract strategic partners, licensees, customers, suppliers or other business partners. Furthermore, it could expose us to litigation. The public announcement of a strategic alternative may also yield a negative impact on our stock price and operating results if prospective or existing counter-parties are reluctant to commit to new or renewal contracts or if existing customers decide to move their business to a competitor. We do not intend to disclose developments or provide updates on the progress or status of the strategic process until our Board deems further disclosure is appropriate or required. Accordingly, speculation regarding any developments related to the review of strategic alternatives and perceived uncertainties related to the future of our Company could cause our stock price to fluctuate significantly.