RENOVARO INC

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As a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide the information required by this Item.

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None.

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Risk factors that may affect our business and financial results are discussed within Item 1A. “Risk Factors” of our annual report for the fiscal year ended June 30, 2023, on Form 10-K (“2023 Form 10-K”) filed with the SEC on October 2, 2023.

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The following risk factors are in addition to the risks referenced above. The effects of the events and circumstances described in the following risk factors may heighten the risks contained in the Company’s Annual Report on Form 10-K.

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Risks Related to Renovaro Cube

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Risks Related to Renovaro Cube’s Limited Operating History, Financial Position and Capital Requirements

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Renovaro Cube is an artificial intelligence (“AI”)-driven healthcare technology company operating in a rapidly evolving field and has a limited operating history, which makes it difficult to evaluate Renovaro Cube’s current business and predict Renovaro Cube’s future performance.

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Renovaro Cube is an AI-driven healthcare technology company operating in a rapidly evolving field and, having commenced operations in 2013, has a limited operating history. Renovaro Cube shifted its business from the financial technology (or FinTech) industry to cancer diagnostics only in 2018. Renovaro Cube does not currently have a commercial product for sale. Renovaro Cube has never generated any revenue relating to its cancer diagnostics AI platform. Renovaro Cube’s short operating history as a company makes any assessment of its current business or future success and viability subject to significant uncertainty. Renovaro Cube expects to encounter risks and difficulties, including those frequently experienced by early-stage companies in rapidly evolving fields. If Renovaro Cube does not address these risks and difficulties successfully, its business will suffer.

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Renovaro Cube has a history of net losses and anticipates that it may continue to incur net losses for the foreseeable future.

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Grace Systems (Renovaro Cube’s predecessor) has primarily incurred net losses since its inception in 2013 and has never generated any revenue relating to its cancer diagnostics AI platform. Renovaro Cube anticipates that it may continue to incur primarily net losses in the foreseeable future. Renovaro Cube has invested significant financial resources in research and development activities, including to develop its technology and investigational products and plan for commercial launch of its AI platform. The amount of Renovaro Cube’s future net losses will depend, in part, on the level of Renovaro Cube’s future expenditures and its ability to generate revenue following the commercialization of its AI platform. Moreover, Renovaro Cube’s net losses may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of Renovaro Cube’s results of operations may not be a good indication of Renovaro Cube’s future performance.

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Renovaro Cube expects to continue to incur significant expenses and operating losses for the foreseeable future if, and as, it:

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Renovaro Cube has never generated revenue from its cancer diagnostics AI platform, and does not expect any near-term revenue to offset Renovaro Cube’s ongoing operating expenses, and may never be able to maintain profitability.

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Renovaro Cube’s ability to generate revenue from product sales and maintain profitability in the future depends on its ability to commercialize its products. While Renovaro Cube plans to commercially launch its AI platform in the European Union and United Kingdom in 2024, Renovaro Cube cannot assure you that it will successfully be able to do so as planned, if at all, and Renovaro Cube’s failure to do so would prevent Renovaro Cube from generating revenue. Furthermore, even if Renovaro Cube is able to launch its AI platform or other products in a timely manner, Renovaro Cube may not be able to generate sufficient revenue to offset its costs and maintain profitability. Renovaro Cube’s ability to generate future revenue from product sales depends heavily on its success in:

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Renovaro Cube anticipates incurring substantial costs to commercialize Renovaro Cube’s products. Renovaro Cube’s expenses could increase beyond expectations if it is required by the U.S. Food and Drug Administration (the “FDA”), the European Medicines Agency (the “EMA”), the Medicines and Healthcare products Regulatory Agency (“MHRA”) or other regulatory agencies to delay its launch, narrow or change its intended use or product claims, modify or expand its clinical validation, perform future additional clinical validation, either pre- or post-approval, or conduct clinical trials. Even if Renovaro Cube is able to generate revenue from the sale of any products, Renovaro Cube may not become profitable and may need to obtain additional funding to continue its operations.

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Renovaro Cube will require additional financing in order to start its commercialization efforts and develop additional products.

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To date, Renovaro Cube has financed its operations primarily through the sale of its equity securities and cash flow from consulting services previously provided by Renovaro Cube. Renovaro Cube’s product development and clinical validation activities are expensive, and Renovaro Cube expects to start to spend substantial amounts as it prepares for the launch and commercialization of its AI platform, continues to enhance its AI platform, broadens the applications of its AI platform and develops new products. In addition, obtaining any necessary or desirable regulatory approvals and clearances from the FDA, the MHRA, or the EMA for Renovaro Cube’s products will require substantial additional funding.

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Renovaro Cube will require additional capital for the development of its AI platform and future products. Renovaro Cube’s future capital requirements depend on many additional factors, including:

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Risks Related to Renovaro Cube’s Business Operations, Products and Industry

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Renovaro Cube’s products may not perform as expected, which could materially and adversely affect Renovaro Cube’s business, financial condition, results of operations and growth prospects.

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Renovaro Cube does not currently have a commercial product. Renovaro Cube’s success depends on the market’s confidence that it can provide reliable, high-quality products. Assuming successful launch, Renovaro Cube’s products may not perform as expected. If this were to occur, Renovaro Cube’s business, financial condition, results of operations and growth prospects would suffer.

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Renovaro Cube’s AI platform requires a number of complex and sophisticated biochemical and bioinformatics processes, many of which are highly sensitive to external factors. An operational or technological failure in one of these complex processes or fluctuations in external variables may result in sensitivity and specificity rates that are lower than Renovaro Cube anticipates or that vary between test runs or in a higher than anticipated number of tests that fail to produce consistent results. In addition, Renovaro Cube regularly evaluates and refines its algorithms and other processes under development. These refinements may inadvertently result in unanticipated issues that may reduce Renovaro Cube’s sensitivity and specificity rates or otherwise adversely affect the performance of the tests supported by Renovaro Cube’s AI platform and the results of such tests.

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Further, Renovaro Cube plans to iterate and improve, enhancing product performance, offerings, scalability and/or cost of goods. However, Renovaro Cube may not be successful in transitioning its AI platform to a new or enhanced version or iteration. Product development involves a lengthy and complex process and Renovaro Cube may be unable to commercialize, validate, or improve performance of any of its AI platform or products on a timely basis, or at all. Renovaro Cube’s failure to successfully develop new and/or improved products (including new versions of its existing platform and other products) on a timely basis could have a material adverse effect on Renovaro Cube’s results of operations and business.

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Even if Renovaro Cube commercially launches its AI platform and other products, they may fail to achieve the degree of market acceptance necessary for commercial success.

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The commercial success of Renovaro Cube’s AI platform and other future products will depend upon the degree of market acceptance by consumers, including self-insured employers, integrated health systems, healthcare providers, patients and, over the long-term, third-party payors. The degree of market acceptance of Renovaro Cube’s products will depend on a number of factors, including:

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The failure of Renovaro Cube’s AI platform, once introduced, to be listed in physician guidelines or of any future clinical validation to produce favorable results or to be published in peer-reviewed journals could limit the adoption of its AI platform. In addition, healthcare providers and third-party payors, including Medicare, may rely on physician guidelines issued by industry groups, medical societies and other key organizations, such as the U.S. Preventive Services Task Force, before utilizing or reimbursing the cost of any diagnostic or screening test. Although Renovaro Cube has conducted prior clinical validation of its AI platform, this platform is not yet, and may never be, listed in any such guidelines.

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Further, if Renovaro Cube’s products and the technology underlying them do not receive sufficient favorable exposure in peer-reviewed publications, the rate of physician and market acceptance of Renovaro Cube’s products and positive reimbursement or coverage decisions for Renovaro Cube’s products could be negatively affected. The publication of clinical data in peer-reviewed journals is a crucial step in commercializing and obtaining reimbursement or coverage for Renovaro Cube’s products, and Renovaro Cube’s inability to control when, if ever, results are published may delay or limit Renovaro Cube’s ability to derive sufficient revenues from any of its products that is developed using data from a clinical study.

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Failure to achieve broad market acceptance of Renovaro Cube’s products, once launched, would materially harm Renovaro Cube’s business, financial condition and results of operations.

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Renovaro Cube may be unable to develop and commercialize new products.

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Renovaro Cube continues to expand its research and development efforts to use its proprietary AI platform to develop new products, including in disease areas beyond cancer. The commercialization of any new products will require the completion of certain clinical development activities, regulatory activities and the expenditure of additional cash resources. Renovaro Cube cannot assure you that it can successfully complete the clinical development of any such products.

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Renovaro Cube also cannot assure you that it will be able to reduce its expenditures sufficiently, generate sufficient revenue from products that it successfully commercializes or otherwise mitigate the risks associated with its business to raise enough capital to develop and commercialize new products. In addition, once Renovaro Cube’s development efforts for a product are completed, commercialization efforts, including allocation of resources necessary to comply with applicable laws and regulations, will require significant expenditures. Any failure by Renovaro Cube to develop and commercialize new products could have a material adverse effect on Renovaro Cube’s ability to implement its strategy and grow its business.

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One of the key elements of Renovaro Cube’s strategy is to expand access to its tests by pursuing reimbursement and/or coverage from third-party payors. If Renovaro Cube’s products do not receive adequate coverage or reimbursement from third-party payors, its ability to expand access to its tests beyond its initial sales channels and its overall commercial success will be limited.

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Renovaro Cube anticipates that it will not have broad-based coverage or reimbursement at the initial commercial launch. However, a key element to Renovaro Cube’s strategy is to expand access to its tests by pursuing coverage and/or reimbursement by third-party payors, including government payors. Coverage and reimbursement by third-party payors, including managed care organizations, private health insurers and government healthcare programs, such as Medicare and Medicaid in the United States and similar programs in other countries, for the types of early detection and post-diagnosis service tests that Renovaro Cube provides can be limited and uncertain. Healthcare providers may not order Renovaro Cube’s products unless third-party payors cover or provide adequate reimbursement for a substantial portion of the price of Renovaro Cube’s products. If Renovaro Cube is not able to obtain adequate coverage or an acceptable level of reimbursement for its products from third-party payors, there could be a greater co-insurance or co-payment obligation for any individual for whom a test is ordered. The individual may be forced to pay the entire cost of a test out-of-pocket, which could dissuade physicians from ordering Renovaro Cube’s products and, if ordered, could result in delay in, or decreased likelihood of, Renovaro Cube’s collection of payment. Renovaro Cube believes its revenue and revenue growth will depend on its success in achieving broad coverage and adequate reimbursement for its products from third-party payors.

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Coverage and reimbursement by a third-party payor may depend on a number of factors, including a payor’s determination that a product is appropriate, medically necessary and cost-effective. Each payor will make its own decision as to whether to establish a policy or enter into a contract to cover Renovaro Cube’s products and the amount it will reimburse for such products. Any determination by a payor to cover and the amount it will reimburse for Renovaro Cube’s products would likely be made on an indication-by-indication basis. For example, because Renovaro Cube intends to cover a broad asymptomatic population with its future products which could potentially generate a significant number of false-positive results on an absolute basis, Renovaro Cube may face additional scrutiny in obtaining reimbursement from third-party payors given the additional costs of further diagnostic workup. As a result, obtaining approvals from third-party payors to cover Renovaro Cube’s products and establishing adequate coding recognition and reimbursement levels is an unpredictable, challenging, time-consuming and costly process and Renovaro Cube may never be successful. If third-party payors do not provide adequate coverage or reimbursement for Renovaro Cube’s products, Renovaro Cube’s ability to succeed commercially will be limited.

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Even if Renovaro Cube establishes relationships with payors to provide its products at negotiated rates, such agreements would not obligate any healthcare providers to order its products or guarantee that it would receive reimbursement for its products from these or any other payors at adequate levels. Thus, these payor relationships, or any similar relationships, may not result in acceptable levels of coverage or reimbursement for Renovaro Cube’s products or meaningful increases in the number of billable tests it sells to healthcare providers. Renovaro Cube believes it may take several years to achieve coverage or adequate reimbursement with a majority of third-party payors, including with those payors offering negotiated rates. In addition, Renovaro Cube cannot predict whether, under what circumstances, or at what payment levels payors will cover or reimburse for its products. If Renovaro Cube fails to establish and maintain broad-based coverage or reimbursement for its products, its ability to expand access to its products, generate increased revenue and grow its test volume and customer base will be limited and its overall commercial success will be limited.

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If Renovaro Cube’s products, or the products of its competitors, directly or indirectly result in harm or injury to patients, Renovaro Cube could be subject to significant reputational and liability risks, and its operating results, reputation and business could suffer.

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Renovaro Cube’s success will depend on the market’s confidence that its developed products can provide reliable, high-quality results, once such products are launched. Renovaro Cube believes that patients, physicians and regulators are likely to be particularly sensitive to errors in the use of its products or failure of its products to perform as described, and there can be no guarantee that its products will meet their expectations. Renovaro Cube’s initial product is intended to be used to detect a cancer signal in patients, but its results are not diagnostic. If a cancer signal is detected, the product would be used to localize the origin of the cancer signal. A “cancer signal detected” test result would need to be followed up by appropriate diagnostic methods. Because this product cannot detect all cancer signals, and may not detect signals for all cancer types, a negative test would not rule out the presence of cancer. Additionally, a patient undergoing unnecessary diagnostic tests on the basis of a false-positive result or an erroneous location of cancer signal result could expose Renovaro Cube to significant liability and reputational risks notwithstanding the emotional and mental health effects to which the patient may be exposed. Similarly, a patient who receives a cancer diagnosis shortly following a “no cancer signal detected” test result may create negative publicity about Renovaro Cube’s product, which would discourage adoption. Performance failures could establish a negative perception of Renovaro Cube’s products among physicians, patients and regulators, jeopardize Renovaro Cube’s ability to successfully commercialize its products, impair Renovaro Cube’s ability to obtain regulatory approvals or secure favorable coverage or reimbursement, or otherwise result in reputational harm. In addition, Renovaro Cube may be subject to legal claims arising from any errors in the use, manufacture, design, labelling or performance of its products, including any false-positive or false-negative results.

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In addition, other companies are developing competing cancer detection tests and technologies focused on improving cancer care with cancer detection tests and post-diagnostic products. If any tests marketed or being developed by Renovaro Cube’s competitors that are similar to its products do not perform in accordance with expectations or cause harm or injury to patients, such failure to perform, harm or injury may result in lower confidence in early disease detection and post-diagnosis tests in general, which could potentially adversely affect confidence in Renovaro Cube’s products and result in an adverse impact on its operating results and reputation.

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If Renovaro Cube’s facilities or those of its third-party collaborators become inoperable, Renovaro Cube’s ability to provide its products will be significantly impaired and its business will be harmed.

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Renovaro Cube relies on its third-party collaborators, consultants, contractors, vendors, suppliers and service providers. The facilities of these partners could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, tornadoes, hurricanes, fires, extreme weather conditions, medical epidemics, pandemics, global conflict, war and other natural or man-made disasters or business interruptions. In addition, they may be affected by government shutdowns, changes to applicable laws, regulations and policies, or withdrawn funding. The occurrence of any of these business disruptions could seriously harm their ability to complete their contracted services to Renovaro Cube, which may adversely impact its operations and financial condition.

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Renovaro Cube’s business and results of operations will suffer if it fails to compete effectively.

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The testing and diagnostic products industry is intensely competitive. Renovaro Cube has competitors both in Europe and abroad, including Grail, Inc., Exact Sciences Corporation, Freenome, Inc. and Thrive Earlier Detection Corp., that have stated that they are developing tests designed to detect cancer. Renovaro Cube’s competitors have, or may have, substantially greater financial, technical and other resources, such as larger research and development staff and well-established marketing and sales forces, and they may operate in jurisdictions where lower standards of evidence are required to bring products to market. Renovaro Cube’s competitors may succeed in developing, acquiring, or licensing, on an exclusive basis or otherwise, tests or services that are more effective or less costly than Renovaro Cube’s products. In addition, established medical technology, biotechnology, or pharmaceutical companies may invest heavily to accelerate the discovery and development of tests that could make Renovaro Cube’s products less competitive than Renovaro Cube anticipates.

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Renovaro Cube’s ability to compete successfully will depend largely on its ability to: