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~~SECURITIES~~UNITED ~~AND~~STATES ~~EXCHANGE COMMISSION~~

~~Washington,~~SECURITIES ~~D.C.~~AND ~~20549~~EXCHANGE COMMISSION

~~FORM~~Washington, ~~10-K~~D.C. 20549

FORM

~~(Mark One)~~10-K

~~☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15~~(dMark One) ~~OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~☒ ~~the~~ANNUAL ~~Fiscal~~REPORT ~~Year~~PURSUANT ~~Ended~~TO ~~December~~SECTION ~~31,~~13 ~~2021~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ORFor the Fiscal Year Ended December 31, 2022

~~☐ TRANSITION REPORT PURSUANT TO SECTION 13~~ OR ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~☐ ~~transition~~TRANSITION ~~period~~REPORT ~~from to~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Commission~~For ~~file~~transition ~~number~~period ~~001-40735~~from to

Commission file number

~~Rockley Photonics Holdings Limited~~001-40735

~~(Exact~~Rockley ~~name~~Photonics ofHoldings ~~Registrant~~Limited ~~as specified in its charter)~~

Cayman Islands						98-1644526
(State or other jurisdiction ofincorporation or organization)						(I.R.S. EmployerIdentification Number)

(Exact name of Registrant as specified in its charter)

3rd Floor, 1 Ashley Road


Cayman Islands		98-1644526
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

~~Altrincham~~3rd Floor, ~~Cheshire~~1 Ashley Road

~~WA14 2DT~~Altrincham, ~~United~~Cheshire ~~Kingdom~~

~~+44~~WA14 ~~(0)~~2DT, ~~1865~~United ~~292017~~Kingdom

+44 (~~Address,~~0) ~~including~~1865 ~~zip~~292017 ~~code, and telephone number, including area code, of registrant’s principal executive offices)~~

~~Securities~~(Address, ~~registered~~including ~~pursuant~~zip tocode, ~~Section~~and ~~12(b)~~telephone number, including area code, of ~~the~~registrant’s ~~Act:~~principal executive offices)

Title of each class

Trading Symbol

Name of each exchange on which registered

Ordinary shares, $0.000004026575398 par value per share

RKLY

New York Stock Exchange

Warrants, each whole warrant exercisable for one ordinary share at an exercise price of $11.50 per share

RKLY.WS

New York Stock Exchange

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

~~Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation~~ S-T ~~(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐~~

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a

~~Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a~~ non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in

~~Large accelerated filer ☐ Accelerated filer ☐ Non~~Rule 12b-~~accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒~~2

of the Exchange Act.

IfLarge anaccelerated ~~emerging~~filer ~~growth~~☐ ~~company,~~Accelerated ~~indicate~~filer by☐ ~~check~~Non-accelerated ~~mark~~filer if☒ ~~the~~Smaller ~~Registrant~~reporting ~~has~~company ~~elected~~☒ ~~not~~Emerging togrowth ~~use~~company ~~the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐~~☒

~~Indicate~~If an emerging growth company, indicate by check mark ~~whether~~if the Registrant has ~~filed~~elected anot ~~report~~to onuse ~~and~~the ~~attestation~~extended totransition ~~its~~period ~~management’s~~for ~~assessment~~complying ofwith ~~the~~any ~~effectiveness~~new ofor ~~its~~revised ~~internal~~financial ~~control~~accounting ~~over~~standards ~~financial~~provided ~~reporting~~pursuant ~~under~~to Section ~~404~~ 7(ba) ~~of the Sarbanes-Oxley Act~~ (~~15 U.S.C. 7262~~2)(bB)) byof the ~~registered~~Securities ~~public accounting firm that prepared or issued its audit report~~Act. ☐

Indicate by check mark whether the Registrant ishas filed a ~~shell~~report ~~company~~on ~~(as~~and ~~defined~~attestation into ~~Rule~~its ~~12b-2~~management’s assessment of the ~~Exchange~~effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b):) ~~Yes~~by ☐the Noregistered ☒public accounting firm that prepared or issued its audit report. ☐

~~The~~If ~~aggregate~~securities ~~market~~are ~~value~~registered ofpursuant ~~voting~~to ~~stock~~Section 12(b) ~~held by non-affiliates~~ of the ~~Registrant on August 12~~Act, ~~2021,~~indicate ~~based on the closing price of $15.33 for shares of the Registrant’s ordinary shares as reported~~ by ~~the~~check ~~New~~mark ~~York~~whether ~~Stock Exchange, was approximately $1.2 billion. The Registrant has elected to use August 12, 2021, which was~~ the ~~date~~financial ofstatements ~~its initial listing~~ of ~~ordinary shares, as~~ the ~~calculation~~registrant ~~date~~included ~~because~~in onthe ~~June~~filing ~~30,~~reflect ~~2021 (~~the ~~last~~correction ~~business day~~ of ~~the~~an ~~Registrant’s~~error ~~most~~to ~~recently~~previously ~~completed~~issued ~~second~~financial ~~fiscal quarter), the Registrant was a privately held company~~statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to

~~As of March 3, 2022, there were 128,470,241 shares of the Registrant's ordinary shares, par value $0~~§240.~~000004026575398, issued and outstanding~~10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule

~~DOCUMENTS INCORPORATED BY REFERENCE~~12b-2

of the Exchange Act): Yes ☐ No ☒

The aggregate market value of voting stock held by

~~Portions of the Registrant's definitive Proxy Statement relating to the 2022 Annual Meeting of Stockholders are incorporated herein by references in Part III of this Annual Report on Form 10~~non-~~K to the extent stated herein. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the Registrant's fiscal year ended December 31, 2021.~~affiliates

of the Registrant on January 23, 2023, based on the closing price of $0.19 for shares of the Registrant’s ordinary shares as reported by the New York Stock Exchange, was approximately $26,721,463, prior to the delisting of the Registrant’s ordinary shares from the New York Stock Exchange.

As of March 10, 2023, there were 132,923,224 shares of the Registrant’s ordinary shares, par value $0.000004026575398, issued and outstanding. On or about March 14, 2023, in connection with the Plan of Reorganization (as defined herein), the Registrant’s ordinary shares were cancelled and no ordinary shares are outstanding as of the date of this annual report on Form

210-K.

TABLE OF CONTENTS

	Page	~~Page~~
Cautionary Note Regarding Forward-Looking Statements
EXPLANATORY NOTE		ii
Risk Factor Summary
Cautionary Statement Regarding Forward-Looking Statements		ii
Part I
Risk Factor Summary		iv
Item 1. Business		1
PART I		1
Item 1A. Risk Factors		21
Item 1. Business		1
Item 2. Properties		50
Item 1A. Risk Factors		16
Item 3. Legal Proceedings		50
Item 2. Properties		32
Item 4. Mine Safety Disclosures		50
Item 3. Legal Proceedings		33
Part II
Item 4. Mine Safety Disclosures		33
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		51
PART II		34
Item 6. Selected Financial Data		51
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		34
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		51
Item 6. Selected Financial Data		34
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		65
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation		34
Item 8. Financial Statements and Supplementary Data		66
Item 7A. Quantitative and Qualitative Disclosures about Market Risk		49
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		102
Item 8. Financial Statements and Supplementary Data		50
Item 9A. Controls and Procedures		102
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure		97
Item 9B. Other Information		103
Item 9A. Controls and Procedures		97
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		103
Item 9B. Other Information		97
Part III
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		97
Item 10. Directors, Executive Officers and Corporate Governance		104
PART III		98
Item 11. Executive Compensation		104
Item 10. Directors, Executive Officers and Corporate Governance		98
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		104
Item 11. Executive Compensation		105
Item 13. Certain Relationships and Related Transactions, and Director Independence		104
Item 12. Security Ownership of Certain Beneficial Owners and Management		109
Item 14. Principal Accounting Fees and Services		104
Item 13. Certain Relationships and Related Transactions, and Director Independence		111
Part IV
Item 14. Principal Accounting Fees and Services		112
Item 15. Exhibits, Financial Statement Schedules		105
PART IV		114
Item 16. Form 10–K Summary		106
Item 15. Exhibits and Financial Statement Schedules		114
Signatures		107
Item 16. Form 10-K Summary		115
Signatures		116

4EXPLANATORY NOTE

~~Table~~As previously disclosed, on January 23, 2023, Rockley Photonics Holdings Limited (the “Company”) filed a voluntary petition for relief under chapter 11 of ~~Contents~~title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) to implement a “pre-packaged” plan of reorganization (the “Plan”) in order to facilitate the restructuring of the Company. On January 24, 2023, the Company’s ordinary shares, $0.000004026575398 par value per share, trading symbol “RKLY”, and its public warrants, with each whole warrant then exercisable for one ordinary share at an exercise price of $11.50 per share, trading symbol “RKLY.WS” were suspended from trading on the New York Stock Exchange (the “NYSE”). On February 21, 2023, the Company’s ordinary shares and its public warrants were delisted from the NYSE. Accordingly, the Company does not have any securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”).

5On March 10, 2023, the Bankruptcy Court entered an order (i) approving the adequacy of the Company’s disclosure statement and (ii) confirming the Plan (the “Confirmation Order”), attached hereto as Exhibit 2.1. The Plan became effective on March 14, 2023 (the “Effective Date”). Upon the filing of this Annual Report on Form 10-K, the Company intends to file a Form 15 to suspend its periodic reporting obligations under Sections 12(g) and 15(d) of the Exchange Act.

~~Table~~On or about March 14, 2023, in connection with the Plan, the Registrant’s ordinary shares were cancelled and no ordinary shares are outstanding as of ~~Contents~~the date of this annual report on Form 10-K. Except as provided in the Plan, all other equity, debt, convertible equity, and convertible debt of any kind issued by the Company were cancelled and are no longer outstanding as of the date of this annual report on Form 10-K. It is anticipated that the Company will be dissolved following the closing of the bankruptcy case in accordance with the Plan and Cayman law.

6Unless specifically noted or the context clearly requires otherwise, all information set forth in this annual report on Form 10-K relates to the Company as it existed as of December 31, 2022 and prior to the Company’s bankruptcy filing, and does not, and is not intended and should not be read to, reflect the business, financial condition, and results of operations of the Company after the bankruptcy filing, nor of any other entity, including any entity which may result from the bankruptcy proceedings.

~~Table~~CAUTIONARY ofSTATEMENT ~~Contents~~REGARDING FORWARD-LOOKING STATEMENTS

7This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding Rockley Photonics Holdings Limited’s (the “Company”) future expectations, beliefs, plans, prospects, objectives, and assumptions regarding future events or performance, as well as the Company’s strategies, future operations, financial position, and estimated future financial results and anticipated costs. The words “anticipate,” “believe,” “continue,” “could,” “enable,” “estimate,” “eventual,” “expect,” “future,” “intend,” “may,” “might,” “opportunity,” “outlook,” “plan,” “possible,” “position,” “potential,” “predict,” “project,” “revolutionize,” “seem,” “should,” “trend,” “will,” “would,” and other terms that predict or indicate future events, trends, or expectations, and similar expressions or the negative of such expressions may identify forward-looking statements, but the absence of these words or terms does not mean that a statement is not forward-looking.

~~Table~~The forward-looking statements contained in this Annual Report on Form 10-K are based on information available as of ~~Contents~~the date of this Annual Report on Form 10-K, and current expectations, forecasts, and assumptions, (whether or not identified herein), and involve a number of risks and uncertainties. Accordingly, forward-looking statements in this Annual Report on Form 10-K should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Forward-looking statements in this report include, but are not limited to, statements regarding the following:

~~Cautionary~~• ~~Statement~~Rockley’s ~~Regarding~~bankruptcy ~~Forward-Looking~~proceedings ~~Statements~~and restructuring;

~~This~~• ~~Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding~~ Rockley ~~Photonics Holdings Limited~~’s ~~(the “Company”) future expectations~~strategy, ~~beliefs, plans, prospects, objectives, and assumptions regarding~~ future ~~events or performance, as well as the Company’s strategies, future~~ operations, financial position, ~~and~~ estimated ~~future~~revenue ~~financial results~~ and ~~anticipated costs. The words “anticipate~~losses,” ~~“believe,”~~projected ~~“continue~~costs,” ~~“could,”~~prospects “enable,” “estimate,” “eventual,” “expect,” “future,” “intend,” “may,” “might,” “opportunity,” “outlook,” “plan,” “possible,” “position,” “potential,” “predict,” “project,” “revolutionize,” “seem,” “should,” “trend,” “will,” “would,” and other terms that predict or indicate future events, trends, or expectations, and similar expressions or the negative of such expressions may identify forward-looking statements, but the absence of these words or terms does not mean that a statement is not forward-looking. plans;

~~The~~• ~~forward-looking statements contained in this Annual Report on Form 10-K are based on information available as of~~ the ~~date of this Annual Report on Form 10-K~~implementation, ~~and~~market ~~current expectations~~acceptance, ~~forecasts,~~ and ~~assumptions,~~success ~~(whether or not identified herein), and involve a number~~ of ~~risks and uncertainties. Accordingly, forward-looking statements in this Annual Report on Form 10-K should not be relied upon as representing the Company~~Rockley’s ~~views~~business as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Forward-looking statements in this report include, but are not limited to, statements regarding the following: model;

• ~~Rockley’s~~ ~~ability~~developments toand ~~recognize~~expectations ~~the~~relating ~~anticipated~~to ~~benefits~~Rockley’s ~~of the Business Combination~~competitors, ~~which~~target ~~may be affected by~~markets, ~~among other things, competition~~ and ~~the ability of the combined business to grow and manage growth profitably~~industry;

• Rockley’s ~~financial~~future ~~and~~capital ~~business~~requirements ~~performance~~and ~~following~~sources ~~the Business Combination, including anticipated financial outlook or information~~ and ~~business~~uses ~~metrics~~of cash;

• Rockley’s ~~strategy,~~ability ~~future~~to ~~operations,~~obtain ~~financial~~funding ~~position,~~for ~~estimated~~its ~~revenue~~product ~~and~~development ~~losses~~plans, ~~projected~~execution ~~costs,~~of ~~prospects~~its business strategy, and ~~plans;~~ its operations;

• ~~the~~ ~~implementation~~Rockley’s business, ~~market~~product ~~acceptance~~development plans, and ~~success of Rockley’s business model~~opportunities;

• ~~developments~~ ~~and~~the ~~expectations~~outcome ~~relating~~of toany ~~Rockley’s~~known ~~competitors,~~and ~~target~~unknown ~~markets,~~litigation and ~~industry;~~regulatory proceedings;

• Rockley’s ~~future~~anticipated ~~capital~~financial ~~requirements~~outlook ~~and~~or ~~sources~~information, ~~and~~anticipated ~~uses~~growth ofrate, ~~cash;~~and market opportunities;

• Rockley’s ~~ability~~plans to ~~obtain~~commercialize ~~funding for~~ its ~~product~~products ~~development~~and ~~plans~~services, ~~execution of its business strategy,~~ and ~~its~~anticipated ~~operations;~~timing thereof;

~~• Rockley’s~~ii ~~business, product development plans, and opportunities;~~

• theTable outcome of any known and unknown litigation and regulatory proceedings; Contents

• Rockley’s ~~anticipated~~expectations ~~financial~~as ~~outlook~~to orwhen ~~information~~it may generate sufficient revenue from the sale of its products and services to cover expansion plans, ~~anticipated~~operating ~~growth~~expenses, ~~rate~~working capital, and ~~market~~capital ~~opportunities~~expenditures;

• ~~Rockley’s~~ ~~plans~~the todevelopment ~~commercialize~~status ~~its~~and ~~products~~anticipated ~~and~~timeline ~~services,~~for ~~and~~commercial ~~anticipated~~production ~~timing~~of ~~thereof;~~Rockley’s products;

• Rockley’s ~~expectations~~plans asfor toproducts ~~when~~under itdevelopment ~~may~~and ~~generate~~future ~~sufficient revenue from the sale of its~~ products and ~~services~~anticipated tofeatures ~~cover expansion plans, operating expenses, working capital,~~ and ~~capital~~benefits ~~expenditures~~thereof;

• the ~~development~~ status and ~~anticipated~~expectations ~~timeline~~regarding ~~for~~Rockley’s ~~commercial~~customer ~~production~~and ofstrategic ~~Rockley’s~~partner ~~products;~~relationships, and potential customer and strategic partner relationships;

• ~~Rockley’s~~ ~~plans~~the ~~for~~total ~~products~~addressable ~~under~~markets ~~development~~for ~~and~~Rockley’s ~~future~~ products and ~~anticipated features and benefits thereof~~technology;

• the ~~status~~ability ~~and~~of ~~expectations~~Rockley ~~regarding~~to ~~Rockley’s~~increase ~~customer~~market ~~and~~share ~~strategic~~in ~~partner~~its ~~relationships,~~existing ~~and~~markets ~~potential~~or ~~customer~~any ~~and~~new ~~strategic~~markets ~~partner~~it ~~relationships;~~may enter;

• ~~the~~ ~~total~~Rockley’s ~~addressable~~ability ~~markets~~to ~~for~~obtain ~~Rockley’s~~any required regulatory approvals, including any required Food and Drug Administration (“FDA”) approvals, in connection with its anticipated products and technology;

• ~~the~~ ~~ability of~~ Rockley’s ability to ~~increase~~maintain ~~market~~an ~~share~~effective insystem ~~its~~of ~~existing~~internal ~~markets~~control orover ~~any~~financial ~~new markets it may enter~~reporting;

• Rockley’s ability to ~~obtain~~maintain ~~any required regulatory approvals, including any required Food~~ and ~~Drug~~protect ~~Administration (“FDA”) approvals, in connection with~~ its ~~anticipated~~intellectual ~~products and technology~~property;

• Rockley’s ~~ability~~success toin ~~maintain~~retaining anor ~~effective~~recruiting, ~~system~~or ofchanges ~~internal~~required ~~control~~in, ~~over~~officers, ~~financial~~key ~~reporting~~employees, or directors; the ability of Rockley to manage its growth effectively;

• ~~Rockley’s~~ the ability of Rockley to ~~maintain~~achieve and ~~protect~~maintain ~~its~~profitability ~~intellectual~~in ~~property~~the future; and

8• the impact of the COVID-19 pandemic.

~~Table~~Forward-looking statements are subject to several risks and uncertainties (many of ~~Contents~~which are beyond the Company’s control) or other assumptions that may cause actual results or performance to differ materially from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those discussed below under the headings “Risk Factor Summary” and Item 1.A. “Risk Factors”.

~~• Rockley’s~~iii ~~success in retaining or recruiting, or changes required in, officers, key employees, or directors; the ability of Rockley to manage its growth effectively;~~

• theTable ability of Rockley to achieve and maintain profitability in the future; Contents

~~• Rockley’s~~Risk ~~sale~~Factor ofSummary ~~ordinary shares to Lincoln Park pursuant to the terms of the Purchase Agreement and its ability to register and maintain the registration of the shares issued and issuable thereunder;~~

~~• Rockley’s~~Unless ~~anticipated~~specifically ~~use~~noted ofor the ~~net~~context ~~proceeds~~clearly ~~from~~requires otherwise, all information set forth in this annual report on Form 10-K relates to the ~~potential~~Company ~~sale~~as it existed as of ~~ordinary~~December 31, ~~shares~~2022 and prior to ~~Lincoln~~the ~~Park;~~Company’s bankruptcy proceedings and does not, and is not intended and should not be read to, reflect the business, financial condition, and results of operations of any other entity, including any entity which may result from the bankruptcy proceedings.

• The following risk factor summary should be read together with the ~~impact~~more detailed discussion of risks and uncertainties set forth in the ~~COVID-19~~“Risk ~~pandemic~~Factors” section of this report.

~~Forward-looking~~Risks ~~statements~~Related ~~are subject~~ to ~~several risks and uncertainties (many of which are beyond~~ the Company’s ~~control)~~Business orand ~~other~~Industry; ~~assumptions that may cause actual results or performance to differ materially from those expressed or implied by these forward~~Customer-~~looking~~Related ~~statements.~~Risks ~~These risks and uncertainties include, but are not limited to, the following:~~

• If the Company’s ~~ability~~does tonot ~~achieve~~fully ~~commercial~~develop ~~production~~or ofcommercialize its products and ~~technology~~services, ~~including~~or inif asuch ~~timely~~products and ~~cost-effective~~services ~~manner~~experience significant delays, the Company’s business, financial condition, and results of operation will be materially and adversely affected;

• If the end products into which the Company’s ~~ability~~products toare incorporated are not fully developed and commercialized or do not achieve ~~customer~~widespread ~~design~~market ~~wins~~acceptance, ~~convert~~or ~~memoranda~~if ofsuch ~~understanding~~products ~~and~~experience ~~development~~delays, ~~contracts~~cancellations, ~~into~~or ~~production contracts~~reductions, ~~and~~or ~~achieve~~if ~~customer~~the ~~acceptance~~Company’s ofproducts are not selected for inclusion in its customers’ end products, are not adopted in other industry verticals or use cases, or are not adopted by leading consumer and ~~technology~~medical device companies, the Company’s business will be materially and adversely affected;

•~~risks~~ ~~related~~Changes to ~~purchase~~our ~~orders,~~product ~~including~~offerings ~~the~~(cancellation ~~lack~~ of ~~long-term~~a ~~purchase~~product ~~commitments,~~line ~~the cancellation, reduction, delay,~~ or ~~other~~significant changes in ~~customer purchase orders, and if and to the extent customers seek to enter into licensing arrangements in lieu of purchases;~~requirements)

•~~the~~ The Company’s ~~history~~forecasts ofand ~~losses~~projections ~~and~~are ~~need~~based ~~for~~upon ~~additional~~assumptions, ~~capital~~analyses, and ~~its~~internal ~~ability~~estimates todeveloped ~~access~~by ~~additional~~the ~~financing~~Company’s tomanagement. ~~support~~If ~~its~~these ~~operations~~assumptions, ~~and~~analyses, ~~execute~~or onestimates ~~its~~prove ~~business~~to ~~plan,~~be asincorrect ~~well~~or asinaccurate, the ~~risks~~Company’s ~~associated~~actual ~~with~~operating ~~any~~results ~~future~~may ~~financings~~differ materially from those forecasted or projected;

•~~legal~~ ~~and~~If ~~regulatory~~the ~~risks,~~Company ~~including~~is ~~those~~unable ~~related~~ to manage its ~~products~~growth ~~and~~or ~~technology~~scale its operations, its business and ~~any~~operating ~~threatened~~results orcould ~~actual~~be ~~litigation~~materially and adversely affected;

•~~risks~~ ~~associated~~Market ~~with~~opportunity ~~its~~estimates ~~fabless~~and ~~manufacturing~~growth ~~model~~forecasts are subject to significant uncertainty and ~~dependency~~are based on ~~third-party~~assumptions ~~suppliers~~and estimates (for example on cost, volume, and ASP) that may not prove to be accurate;

•~~the~~ The Company’s ~~reliance~~international onoperations aexpose ~~few~~it ~~significant~~to ~~customers~~operational, ~~for~~financial, ~~a majority of its revenue~~ and ~~its~~regulatory ~~ability~~risks, towhich ~~expand~~could ~~and~~harm ~~diversify~~the ~~its~~Company’s ~~customer base~~business;

• The Company is susceptible to supply shortages, long lead times for components, and supply changes, any of which could disrupt its supply chain and could delay deliveries of its products to customers, which in turn could adversely affect the Company’s business, results of operations, and financial ~~performance~~condition;

• If the ~~impacts~~Company ofis ~~COVID-19~~unable onto ~~the~~sell ~~Company,~~its products to its target customers, including large corporations with substantial negotiating power, or is unable to enter into agreements with customers and suppliers, ~~its~~on ~~target~~satisfactory ~~markets~~terms, its prospects and ~~the~~results ~~economy~~of operations will be adversely affected;

• The Company currently depends on a few large customers for a substantial portion of its revenue. The loss of, or a significant reduction in, orders from the Company’s ~~ability~~customers, or the Company’s failure to ~~successfully~~diversify ~~manage~~its ~~growth~~customer ~~and~~base, could significantly reduce its ~~operations~~revenue asand aadversely ~~public~~impact ~~company~~the Company’s operating results;

•~~fluctuations~~ inBecause the Company’s ~~share~~does ~~price~~not ~~and~~anticipate ~~the~~long-term ~~Company’s~~purchase ~~ability~~commitments towith ~~maintain~~its ~~the~~customers, ~~listing~~orders ofmay ~~its~~be ~~ordinary~~cancelled, ~~shares~~reduced, onor rescheduled with little or no notice, which in turn exposes the ~~New~~Company ~~York~~to ~~Stock~~inventory ~~Exchange~~risk, ~~("NYSE")~~and may cause its business and results of operations to suffer; and

~~•the~~Regulatory, ~~Company’s~~Intellectual ~~ability~~Property, toInfrastructure, ~~anticipate~~Cybersecurity and ~~respond~~Privacy toRisks ~~industry trends and customer requirements;~~

•~~changes~~ inThe ~~the~~ Company’s ~~current~~failure to comply with applicable governmental export and ~~future~~import ~~target~~control ~~markets~~laws and regulations, including those related to the use, distribution, and sale of its products, U.S. Food and Drug Administration clearance or approval requirements, or privacy, data protection, and information security requirements in the jurisdictions in which the Company operates could materially harm its business and operating results;

• The Company may not be able to adequately protect or enforce its intellectual property ~~risks~~rights or prevent unauthorized parties from copying or reverse engineering its products or technology. Further, the Company’s intellectual property applications, including patent applications, may not be approved or granted; and

• A network or data security incident or disruption or performance issues with the Company’s ~~ability~~network toinfrastructure ~~compete~~could ~~successfully;~~harm its brand, reputation, and business, as well as its operating results.

~~•market~~iv ~~opportunity and market demand for, and acceptance of, the Company’s products and technology, as well as the customer products into which the Company’s products and technology are incorporated;~~

•risksTable relatedof to international operations;Contents

~~•risks~~PART ~~related~~I ~~to cybersecurity, privacy, and infrastructure;~~

~~•risks~~Unless ~~related~~specifically noted or the context clearly requires otherwise, all information set forth in this annual report on Form 10-K relates to the Company as it existed as of December 31, 2022 and prior to the Company’s bankruptcy proceedings and does not, and is not intended and should not be read to, reflect the business, financial condition, and ~~accounting~~results ~~matters;~~of operations of any other entity, including any entity which may result from the bankruptcy proceedings.

~~•general~~Item 1. ~~economic,~~Business ~~financial, legal, political, and business conditions and changes in domestic and foreign markets;~~

~~•the~~INFORMATION ~~Company’s~~ABOUT ~~ability~~ROCKLEY ~~to realize the anticipated benefits of the Business Combination (as defined herein) and costs associated with the Business Combination;~~

•The following discussion contains forward-looking statements within the meaning of ~~belief~~the Private Securities Litigation Reform Act of 1995. When used in this section, the terms “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “predict,” “potential,” “plan,” “anticipate,” “seek,” “future,” “strategy,” “likely,” or the negative of these terms, and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any ~~statement~~future ofresults, ~~assumptions~~performance ~~underlying~~or achievements expressed or implied by these or any other forward-looking statements. These risks and uncertainties include, but are not limited to, those risks set forth under “Risk Factors.” Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on current expectations and reflect management’s opinions only as of the ~~foregoing;~~date hereof. These forward-looking statements speak only as of the date of hereof. Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

9Rockley®, RayDriver™, RPFabric™, RPStack™, Topanga™, LightDriver™, SpectraCloud™, SpectraSense™, VitalSpex™, Bioptx™, and clinic-on-the-wrist™ are among the trademarks, registered trademarks, or service marks owned by Rockley.

~~Table~~Company ofOverview ~~Contents~~

•We have developed a comprehensive range of silicon photonics technologies that have both the ~~Company’s~~power ~~ability~~and the flexibility to ~~sell~~support ~~ordinary~~a towide ~~Lincoln~~range ~~Park~~of ~~pursuant~~potential applications. Our silicon-photonics platform will incorporate several key components to ~~the~~support ~~terms~~these ofsolutions, ~~the~~including ~~Purchase~~photonic ~~Agreement~~integrated circuits and ~~its~~associated ~~ability~~modules, sensors, and end-to-end ~~register~~solutions. ~~and~~We ~~maintain~~expect ~~the~~that ~~registration~~our ofimmediate focus over the ~~shares~~next ~~issued~~two years will be on developing and ~~issuable~~commercializing ~~thereunder;~~our products for incorporation in consumer wearables, medical devices, and dedicated solutions for the healthcare market.

~~•the~~The ~~Company~~summation of our technologies and manufacturing expertise is Rockley’s ~~anticipated~~“cohesive ~~use~~end-to-end ofplatform.” ~~the~~Our ~~net~~end-to-end ~~proceeds~~platform ~~from~~encompasses ~~the~~photonic ~~potential~~integrated ~~sale~~circuits of(“PICs”) ~~shares~~in ofsilicon ~~ordinary~~with ~~shares~~integrated toIII-V ~~Lincoln~~devices ~~Park;~~(devices incorporating certain conductor elements that offer superior electronic properties, such as lasers), application-specific electronic integrated circuits (“ASICs”), and photonic and electronic co-packaging, which are all supported by and coupled with biosensing algorithms, AI, cloud analytics, firmware/software, system architecture, and hardware design.

~~•changes~~With ~~adversely~~this ~~affecting~~unique ~~the~~sensing ~~businesses~~platform, orwe ~~markets~~believe inwe ~~which~~can reshape several important markets of the ~~Company~~healthcare issector ~~engaged~~such as consumer wellness, ~~and~~long ~~other~~term ~~factors~~health ~~described~~trend ~~under~~monitoring, ~~the~~patient ~~heading~~monitoring, ~~“Risk~~early ~~Factors”~~disease ~~herein~~detection, nutrition management and inthe ~~other~~treatment ~~documents~~of ~~the~~certain ~~Company~~chronic ~~files~~diseases. ~~with~~Our ~~the~~biosensing ~~Securities~~platform ~~and~~is ~~Exchange~~designed ~~Commission~~to ~~(the~~enable ~~“SEC”~~multiple applications using our non-invasive, continuous, multi-modal biomarker monitoring capabilities. Our target biomarkers for consumer healthcare include lactate, alcohol, glucose (indicator), inhydration, ~~the~~blood ~~future~~pressure, blood oxygen and core body temperature, among others.

10Our end-to-end solutions include hardware with the potential to detect multiple biomarkers, related algorithms, cloud-based analytics and artificial intelligence (“AI”). We have shipped early engineering samples to some of our customers to support research and development efforts.

~~Table~~Our platform has been built upon our silicon photonics technology, which enables highly advanced sensor performance, power, resolution, and formfactor. This technology has the potential to allow monitoring devices, currently the size of ~~Contents~~clinical laboratory machines, to be miniaturized to the size of a wearable device. We believe that this miniaturization capability has the potential to unlock additional applications in consumer electronics and medical devices. Our technology is built on over 260 patents and over nine years of product development.

~~RISK~~We ~~FACTOR~~have ~~SUMMARY~~established a manufacturing ecosystem based upon our wholly-owned, proprietary processes in several areas. We believe that this manufacturing ecosystem will support rapid scalability.

~~The~~As we do not currently have any products in commercial production, our current customer relationships are in the following ~~risk~~stages: ~~factor~~(a) customers ~~summary~~with ~~should~~whom bewe ~~read~~are ~~together~~“engaged,” or in discussions with, regarding potential product features for incorporation into such customer’s end products, or (b) customers with whom we are “contracted,” where we have non-binding MOUs or development and supply agreements. These MOUs and development and supply agreements provide a general framework for our transactions with the ~~more~~customer ~~detailed~~and ~~discussion~~typically ofprovide ~~risks~~that we will develop and ~~uncertainties~~deliver ~~set~~new ~~forth~~products inmeeting the ~~“Risk~~customer’s ~~Factors”~~specifications. ~~section~~There are no binding purchase commitments under our MOUs and supply agreements. We currently anticipate that sales of ~~this~~our ~~report~~products will be primarily made pursuant to standard purchase orders, which orders may be cancelled, reduced, changed, or rescheduled with little or no notice or penalty.

1 ~~Risks Related to the Company’s Business and Industry; Customer-Related Risks~~

•IfTable the Company does not fully develop or commercialize its products and services, or if such products and services experience significant delays, the Company’s business, financial condition, and results of operation will be materially and adversely affected;Contents

~~•The~~Product ~~Company~~Applications ~~has a history of recurring losses~~ and aDevelopment ~~significant~~Status accumulated deficit, which raises substantial doubt about its ability to continue as a “going concern.” The Company expects to incur significant research and development expenses and devote substantial resources to commercializing new products, which could increase its losses and negatively impact its ability to achieve or maintain profitability;

~~•If~~We ~~the~~believe ~~end~~that ~~products~~our ~~into~~innovative ~~which~~and ~~the~~differentiated ~~Company’s~~silicon ~~products~~photonics ~~are~~platform ~~incorporated~~positions ~~are~~us ~~not~~to ~~fully~~make ~~developed~~photonics-based ~~and~~solutions ~~commercialized~~increasingly orpervasive, dowhile ~~not~~unlocking ~~achieve~~previously ~~widespread~~unaddressed ~~market~~applications. ~~acceptance~~Consequently, orwe ifbelieve ~~such~~that ~~products~~the ~~experience~~potential ~~delays,~~applications ~~cancellations,~~for orour ~~reductions,~~technology orwill ifbe wide-ranging. Leveraging the ~~Company’s~~flexibility ~~products~~and ~~are~~power ~~not~~of ~~selected~~our ~~for~~innovative ~~inclusion~~silicon inphotonics ~~its~~platform, ~~customers’~~we ~~end~~believe ~~products,~~that we are ~~not~~positioned ~~adopted~~to inbecome ~~other~~a ~~industry~~leading ~~verticals~~supplier orof ~~use~~end-to-end ~~cases,~~solutions or(including ~~are~~integrated ~~not~~optical ~~adopted~~components, byalgorithms, ~~leading~~data ~~consumer~~analytics, and ~~medical~~AI) ~~device~~for ~~companies~~dynamic, ~~the~~high-growth ~~Company’s~~market ~~business~~sectors, ~~will~~including beconsumer ~~materially~~sensors, medtech and ~~adversely~~healthcare. ~~affected;~~

~~•Changes~~Figure to1: ~~our~~Rockley ~~product~~end-to-end ~~offerings~~sensing ~~(cancellation~~platform ~~of a product line or significant changes in requirements)~~

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~~•The~~To ~~Company’s~~date, ~~forecasts~~we ~~and~~have ~~projections~~been ~~are~~engaged ~~based~~in ~~upon~~developing ~~assumptions,~~customer-specific ~~analyses,~~designs of our silicon photonics chipsets and ~~internal~~modules ~~estimates~~for ~~developed~~incorporation byinto ~~the~~our ~~Company~~consumer electronics customers’s ~~management~~end products. IfWe ~~these~~are ~~assumptions,~~working ~~analyses,~~with orleading ~~estimates~~customers ~~prove~~in the medtech market to bedeliver ~~incorrect~~a orstandalone ~~inaccurate~~wrist-wearable product for targeted use cases. In parallel, ~~the~~we ~~Company’s~~are ~~actual~~shaping ~~operating~~and ~~results~~developing ~~may~~our ~~differ~~own ~~materially~~standard ~~from~~offerings ~~those~~that ~~forecasted~~could orhave ~~projected;~~different shapes and form factors. Currently, we do not have any of our own end products in commercial production.

~~•The~~Figure ~~Company~~2: ~~expects~~Product ~~its~~development ~~results of operations to fluctuate on a quarterly~~ and ~~annual~~commercial ~~basis,~~roadmap ~~which could cause its share price to fluctuate or decline;~~

LOGO

~~•If~~Healthcare: ~~the~~Consumer ~~Company~~Wearables ~~is unable to manage its growth or scale its operations, its business and operating results could be materially and adversely affected;~~

~~•Market~~We ~~opportunity~~believe ~~estimates~~the high-density optical integration capabilities of our platform can personalize healthcare monitoring of multiple biomarkers and ~~growth~~can ~~forecasts~~significantly ~~are~~improve ~~subject~~how toindividuals ~~significant~~track ~~uncertainty~~and monitor their health and ~~are~~well-being. Our VitalSpex™ biomarker sensing platform will address the consumer wearable market. Further, as part of our product offering, we believe that our cloud-based onanalytics ~~assumptions~~and AI platform will offer further insight by leveraging data collected through our unique and ~~estimates~~broad (sensing platform and will provide meaningful and actionable insights to end users. Our plans for ~~example~~the onVitalSpex™ ~~cost~~biomarker sensing platform include a Baseline module and a Pro module, ~~volume~~each of which will have a wide array of current and potential applications, as shown in the figure below. Depending on the needs of each customer and ~~ASP)~~market ~~that~~trends, ~~may~~multiple ~~not~~generations ~~prove~~of toproducts could be ~~accurate;~~built on each of these platforms addressing different set of biomarkers, form factors, performance specifications, and potential use cases.

~~•The~~2 ~~Company’s international operations expose it to operational, financial, and regulatory risks, which could harm the Company’s business;~~

•TheTable Company is susceptible to supply shortages, long lead times for components, and supply changes, any of which could disrupt its supply chain and could delay deliveries of its products to customers, which in turn could adversely affect the Company’s business, results of operations, and financial condition;Contents

~~•If~~Figure ~~the~~3: ~~Company~~Targeted isbiomarker ~~unable~~sensing tocapabilities sell its products to its target customers, including large corporations with substantial negotiating power, or is unable to enter into agreements with customers and suppliers on satisfactory terms, its prospects and results of operations will be adversely affected;

LOGO

~~•The~~These ~~Company~~products ~~currently~~are ~~depends~~intended onto aaddress ~~few~~the ~~large~~needs ~~customers~~of ~~for~~the aconsumer ~~substantial~~market ~~portion~~and ofwill ~~its~~provide ~~revenue.~~information ~~The~~about ~~loss~~general ofhealth and wellness. (i.e., orthey ado ~~significant~~not ~~reduction~~require ~~in,~~regulatory ~~orders~~approval ~~from~~for ~~the~~offered ~~Company’s~~applications ~~customers~~and end uses.) As we move forward, orwe ~~the~~intend ~~Company’s~~to ~~failure~~monitor and comply with regulations to ~~diversify~~the ~~its~~extent ~~customer~~they ~~base~~become applicable to us, ~~could~~including ~~significantly~~any ~~reduce~~requirements ~~its~~for ~~revenue~~clearance by the U.S. Food and ~~adversely~~Drug ~~impact~~Administration ~~the~~(FDA) ~~Company’s~~and/or ~~operating~~other ~~results;~~regulatory bodies.

~~•Because~~Healthcare: ~~the~~Medical ~~Company~~Devices does not anticipate long-term purchase commitments with its customers, orders may be cancelled, reduced, or rescheduled with little or no notice, which in turn exposes the Company to inventory risk, and may cause its business and results of operations to suffer; and

~~•The~~Our ~~Company’s~~Bioptx™ ~~business~~healthcare ~~depends~~sensing ~~substantially~~platform onwill address the ~~efforts~~medical ofand ~~its~~professional ~~executive~~healthcare ~~officers,~~market. ~~including~~We ~~its~~plan ~~Chief~~to ~~Executive~~incorporate ~~Officer~~our ~~and~~biomarker ~~founder~~sensing technology into existing devices (such as medical patches, Drwearable bands, and other monitoring devices) to provide additional biomarker sensing capabilities not currently available to consumers. ~~Andrew~~Also, ~~Rickman~~as part of the Bioptx product offering, we intend to deliver a complete standalone finished product with targeted use cases for healthcare and health monitoring.

11We believe that these product offerings will enhance point-of-care and remote monitoring and will have the potential to ultimately transform and disrupt the delivery of patient monitoring and healthcare. In the medical device space, we currently anticipate that we will develop two types of devices: an advisory device that will not need regulatory clearance and a clinical device that will need regulatory clearance from the FDA or other regulatory bodies.

~~Table~~These ofproducts ~~Contents~~are still under development. Even though there can be no assurance that these product development efforts will succeed or that, even if developed, these products will be approved by regulators or achieve widespread market acceptance, we believe that there are significant market opportunities in addition to our consumer wearables applications.

~~Regulatory,~~Data ~~Intellectual~~Communications: ~~Property,~~Transceiver ~~Infrastructure,~~Chipsets ~~Cybersecurity~~ and ~~Privacy~~Co-Packaged ~~Risks~~Optics

~~•The~~Data ~~Company’s~~centers, ~~failure~~which toare ~~comply~~the ~~with~~nerve ~~applicable~~centers ~~governmental~~of ~~export~~the ~~and~~digital ~~import~~economy, ~~control~~require ~~laws~~interconnected ~~and~~communications ~~regulations,~~for ~~including~~which ~~those~~we ~~related~~believe toour ~~the~~datacom ~~use~~chipset technology offers several advantages. Business, ~~distribution~~entertainment, vital medical research, and ~~sale~~other aspects of ~~its~~daily ~~products~~life are in many ways connected to hyperscale data centers, Uwhich in turn rely on cost-effective, power-efficient optical communication links.S. ~~Food~~Whether ~~and~~incorporated ~~Drug~~in ~~Administration~~pluggable ~~clearance~~optical transceiver modules or ~~approval~~in ~~requirements~~co-packaged optics, orwe ~~privacy,~~believe hyperscale data ~~protection~~centers will benefit from the unique advantages that our silicon photonics platform has to offer. Furthermore, we believe our go-to-market approach of partnering with Transceiver manufacturers and ~~information~~Switch/Networking ~~security~~equipment ~~requirements~~OEM companies has economic benefits over participating directly in this margin-sensitive market. By selling/licensing our assets/technology, we offer the ~~jurisdictions~~third party the opportunity to create an economically compelling solution without any margin stacking while Rockley can keep expenses low/minimal and benefit from upfront/ongoing fees. Note that given Jiangsu Hengtong Optic-Electric Co., Ltd. (a shareholder in ~~which~~our joint venture partner) was placed on the ~~Company~~“Entity ~~operates~~List” ~~could~~by ~~materially~~the ~~harm~~U.S. ~~its~~Bureau ~~business~~of Industry and ~~operating~~Security ~~results;~~(BIS) of the U.S. Department of Commerce in December 2021, we have widened our potential partner network significantly and are evaluating various options for this business.

~~•The~~Other ~~Company~~Applications may not be able to adequately protect or enforce its intellectual property rights or prevent unauthorized parties from copying or reverse engineering its products or technology. Further, the Company’s intellectual property applications, including patent applications, may not be approved or granted; and

•AWe ~~network~~believe orthat ~~data~~our ~~security~~silicon ~~incident~~photonic orplatform ~~disruption~~is orsuited ~~performance~~for ~~issues~~delivering ~~with~~ the ~~Company’s~~sensing ~~network~~capabilities ~~infrastructure~~needed ~~could~~for ~~harm~~machine ~~its~~perception ~~brand~~and interrogation at depth, ~~reputation~~which has become increasingly necessary in industrial automation, robotic vision (including surgical applications), safety, and ~~business~~other autonomous applications. Finely tuned light, delivered through a PIC via a free-space aperture or fiber optic interconnect with accompanying detection receiver capabilities, enables substantially better capabilities than previously available technology, such as frequency modulated continuous wave (“FMCW”) LiDAR for automotive safety solutions, as well as ~~its~~future ~~operating~~autonomous ~~results~~vehicle offerings. Our team has extensive experience in the design of PICs for use in the LiDAR domain, and we have prototyped the key components of the system and demonstrated their superior performance. Although we believe the inflection point for LiDAR and the automotive market may be approaching, we plan to leverage our core technology readiness and economies of scale from our consumer business to position ourselves for this potential market opportunity.

~~Risks~~3 ~~Related to Financial and Accounting Matters~~

•TheTable Company’sof failure to raise additional capital or generate the significant capital necessary to expand its operations could reduce its ability to compete and could harm its business; andContents

~~•In~~Market ~~preparing~~Opportunity the Company’s consolidated financial statements, the Company makes good faith estimates and judgments that may change or turn out to be erroneous, which could adversely affect the Company’s operating results.

~~Risks~~Health ~~Related to Being a Public Company, our Ordinary Shares,~~ and ~~General~~Wellness ~~Risks~~

~~•The~~There ~~requirements~~is ofgrowing ~~being~~demand afor ~~public~~miniaturized, ~~company~~wearable ~~may~~solutions ~~strain~~that ~~the~~offer ~~Company~~an affordable way to provide key insights into a person’s ~~resources~~health and well-being, ~~divert~~outside ~~management’s~~the ~~attention~~clinical environment. Delivering relevant insights will require non-invasive, continuous, real-time sensing and ~~affect~~measurement ~~its~~of ~~ability~~multiple biomarkers, coupled with advanced analytics to ~~attract~~interpret the data. We believe that this demand is driven and ~~retain~~will ~~qualified~~continue ~~board~~to ~~members;~~be driven by two major market and secular trends:

•~~Our~~ ~~share~~Consumer ~~price~~health ~~may~~and bewell-being ~~volatile~~awareness. While there is an existing market for athletes in training and ~~sales~~for highly active and health-conscious users, there has been an increasing global consumer focus on preventative healthcare, with users desiring greater control and visibility over their own health and well-being. In parallel, amid the proliferation of ~~substantial~~wearable ~~volumes~~technologies with emerging health monitoring capabilities, there is greater demand for more sophisticated and comprehensive sensing technology that can measure and track a broad range of ~~our~~conditions ~~ordinary~~and ~~shares~~biomarkers. ~~into~~Generating ~~the~~a ~~public~~holistic ~~market~~view orof the ~~perception~~human ~~that~~body ~~such~~through ~~sales~~access ~~may~~to ~~occur~~multiple ~~could~~biomarkers ~~cause~~will ~~our~~enable ~~share~~a ~~price~~more sophisticated ability to ~~decline,~~monitor ~~including~~and ~~substantially;~~track general trends of changing health conditions. This has the potential to help physicians identify health conditions and possible disease states earlier and allow for more affordable prevention measures and effective patient treatment, perhaps long before requiring aggressive disease management. More recently, COVID-19 has had a profound impact on the way consumers perceive their need for “at-home” monitoring solutions.

•~~The~~ ~~global~~Treatment ~~COVID~~of chronic conditions and disease care. With increased life expectancies, a growing number of chronic conditions and diseases has placed a strain on healthcare systems. Furthermore, non-19invasive ~~pandemic~~monitoring ~~could~~solutions ~~harm~~for ~~the~~chronic ~~Company~~conditions have historically been costly and available only in a medical facility. With our potential for delivering individual non-invasive wearable monitoring solutions, we believe that we have a great opportunity to impact patients’s ~~business~~compliance with healthcare guidance and ~~results~~subsequent efficient treatment of ~~operations~~patients, which will lead to better quality of life and drastic reductions in the overall cost of healthcare. Non-invasive, continuous monitoring also has the potential to detect and possibly prevent chronic conditions and diseases at a much earlier stage, resulting in reduced overall healthcare cost.

12We believe that existing monitoring and sensing technologies are not capable of delivering on the needs of consumers and healthcare professionals. Meeting these needs require solutions that provide access to a broad range of biomarkers non-invasively; that can be miniaturized and operate with power low enough to be integrated into consumer wearables, medical patches, and other compact form factors; and that can scale cost effectively to high volumes. We believe that our silicon photonics-based platform is poised to serve at the confluence of the above two market and secular trends.

~~Table~~Beyond these opportunities, we believe there may be significant potential for us in the field of ~~Contents~~genomics. As the field of genomics grows, as shown in the development of personalized medicines and treatment, the value and effectiveness are enhanced when genomic information is combined and processed along with continuous biomarker monitoring for the users. We believe this emerging field could play to the strengths of our platform and potentially represents a high-value growth opportunity for the future.

~~PART~~Data ICommunications

~~Item~~Datacenter 1operators continue to build and upgrade their datacenter infrastructure to meet the continuing growth in public, private, and hybrid cloud capacity.~~Business~~ As these datacenters rely heavily on fiber optics to interconnect compute, storage, accelerators and other resources, this trend is reflected with substantial growth in demand in the high-speed Ethernet optics. The market segment that we are primarily targeting comprises 400Gb/s and 800Gb/s. We believe our silicon photonics platform is well positioned to address this market with highly integrated Si PICs and class leading III-V technology to implement the optical functionality required for such transceiver modules. We believe that our platform will provide a substantial cost advantage over conventional discrete-optics-based solutions, as well as over competing integrated photonics solutions due to our platform’s inherent benefits.

~~INFORMATION~~Competitive ~~ABOUT~~Advantages ~~ROCKLEY~~

~~The~~We following discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this section, the terms “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “predict,” “potential,” “plan,” “anticipate,” “seek,” “future,” “strategy,” “likely,” or the negative of these terms, and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our ~~actual~~silicon ~~results,~~photonics ~~performance~~solutions ~~or achievements to be materially different from any future results, performance or achievements expressed or implied by these or any other forward-looking statements. These risks~~ and ~~uncertainties~~technology ~~include,~~offer but are not limited to, those risks set forth under “Risk Factors.” Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on current expectations and reflect management’s opinions only as of the ~~date~~following ~~hereof.~~key ~~These~~healthcare ~~forward-looking~~monitoring ~~statements~~benefits: speak only as of the date of hereof. Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

~~Rockley®,~~• ~~RayDriver™,~~Superior ~~RPFabric™,~~sensing ~~RPStack™~~performance. Our silicon photonics-based spectrometer chip provides up to one million times higher resolution, ~~Topanga™~~approximately one thousand times higher accuracy, ~~LightDriver™~~and approximately one hundred times broader spectral range than existing LED-based solutions, ~~SpectraCloud™~~based on product analysis undertaken by Rockley comparing the Rockley silicon photonics-based spectrometer chip to existing LED-based solutions. We believe that our unique silicon photonics technology and the entire product ecosystem we are developing will make our end-to-end offerings in the health and wellness domain difficult to replicate. Current optical-based sensing solutions rely on LED-based sensing (PPG signals for SpO2, ~~SpectraSense™~~heart rate, ~~VitalSpex™~~heart rate variability, ~~Bioptx™~~breath rate, and ~~clinic-on-~~blood pressure). However, there are many biomarkers present in the~~-wrist™~~ body (such as in blood or interstitial fluid) that are ~~among~~not detectable in the ~~trademarks~~visible LED range. We believe that our silicon photonics technology delivers several ingredients that will be required to bring a powerful and meaningful product into the healthcare market: the accuracy and width of our wavelength span in the infrared spectrum, ~~registered~~the ~~trademarks~~capability of our silicon photonics solutions to integrate many wavelengths, orand ~~service~~the ~~marks~~high ~~owned~~signal-to-noise ratio (“SNR”) generated by ~~Rockley~~our chips.

~~Company~~4 ~~Overview~~

WeTable have developed a comprehensive range of silicon photonics technologies that have both the power and the flexibility to support a wide range of potential applications. Our silicon-phonics platform will incorporate several key components to support these solutions, including photonic integrated circuits and associated modules, sensors, and end-to-end solutions. We expect that our immediate focus over the next two years will be on developing and commercializing our products for incorporation in consumer wearables, medical devices, and dedicated solutions for the healthcare market. As testament to the relevance of our product development, we have captured the attention of several consumer electronics companies and, as of the date of this Annual Report on Form 10-K, we have non-binding memoranda of understanding (“MOUs”) or development and supply agreements with entities that collectively account for over 60% market share of wearable devices, including six of the top 10 consumer wearables companies. These agreements will help shape our development of our consumer and medical device capabilities. Contents

~~The~~Figure ~~summation~~4: ofEnabling ~~our~~a ~~technologies~~new ~~and~~class ~~manufacturing~~of ~~expertise~~sensor is Rockley’s “cohesive end-to-end platform.” Our end-to-end platform encompasses photonic integrated circuits (“PICs”) in silicon with integrated III-V devices (devices incorporating certain conductor elements that offer superior electronic properties, such as lasers), application-specific electronic integrated circuits (“ASICs”), and photonic and electronic co-packaging, which are all supported by ~~and~~combining ~~coupled~~visible ~~with~~light ~~biosensing algorithms, AI, cloud analytics, firmware/software, system architecture,~~ and ~~hardware~~infrared ~~design.~~

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~~With~~• ~~this~~Flexible ~~unique~~platform ~~sensing~~architecture. We have designed our platform, wefrom ~~believe~~the weground ~~can~~up ~~reshape~~and, ~~several~~leveraging ~~important~~our ~~markets~~team’s ofextensive ~~the~~experience, ~~healthcare~~have ~~sector~~developed ~~such~~a ~~as consumer~~highly ~~wellness,~~flexible ~~long~~platform ~~term~~architecture. ~~health~~As ~~trend~~a ~~monitoring~~result, ~~patient~~we ~~monitoring,~~believe ~~early~~our ~~disease~~innovative ~~detection,~~platform ~~nutrition~~architecture ~~management~~will ~~and~~allow ~~the~~us ~~treatment~~to ofeasily ~~certain~~configure ~~chronic~~core ~~diseases. Our~~building ~~biosensing~~blocks ~~platform~~to ~~will~~produce ~~enable~~a ~~multiple~~wide ~~applications~~range ~~using~~of ~~our~~functional ~~non-invasive,~~components ~~continuous,~~and ~~multi~~modules for high-~~modal~~volume ~~biomarker~~applications ~~monitoring~~across ~~capabilities.~~a broad range of market sectors.

~~Our~~• ~~end-to-end~~Differentiated ~~solutions~~biomarker ~~include~~sensing ~~hardware~~algorithms ~~with~~and ~~the~~analytics. ~~potential~~Our tobiomarker ~~detect~~detection ~~multiple~~algorithms ~~biomarkers,~~are ~~related~~optimized ~~algorithms,~~for ~~and~~our ~~cloud-based~~unique ~~analytics~~ and ~~artificial~~optimized ~~intelligence~~hardware ~~(“AI”)~~technology platform. We ~~have~~believe ~~shipped~~that ~~early~~the ~~engineering~~data ~~samples~~analytics toand ~~some~~biomarker processing capabilities of our ~~customers~~AI / cloud offering will further expand our ability to ~~support~~offer ~~research~~additional ~~and~~insights ~~development~~into ~~efforts~~a person’s health.

~~Our~~• ~~platform~~Deep ~~has~~understanding ~~been~~of ~~built~~market ~~upon~~opportunity and customer priorities. We are developing many applications and systems with our silicon photonics ~~technology,~~solutions ~~which~~that ~~enables~~are ~~highly~~driven ~~advanced~~by ~~sensor~~industry ~~performance,~~leaders ~~power~~in the consumer sensors, ~~resolution~~healthcare, and ~~formfactor.~~data ~~This~~communications ~~technology~~markets. ~~has~~Through ~~the~~our ~~potential~~established torelationships ~~allow~~with ~~monitoring~~industry ~~devices~~leaders, ~~currently~~we ~~the~~have ~~size~~consistently ofdemonstrated ~~clinical~~our ~~laboratory~~ability ~~machines,~~ to beaddress ~~miniaturized~~their totechnological ~~the~~challenges. ~~size~~As of a ~~wearable~~result, ~~device.~~we Wehave ~~believe~~signed ~~that~~memoranda ~~this~~of ~~miniaturization~~understanding ~~capability~~and ~~has~~have ~~the~~contracted ~~potential~~with toseveral ~~unlock~~industry ~~additional~~leaders ~~applications~~ in wearable consumer ~~electronics~~technology to establish product specifications and ~~medical~~desirable ~~devices~~features. ~~Our~~We ~~technology~~believe iswe ~~built~~are onwell-positioned ~~over~~to ~~190~~develop ~~patents,~~high-volume ~~over~~optical ~~eight~~sensing ~~years~~modules ofand ~~product~~algorithms ~~development,~~for ~~and~~their ~~over~~emerging ~~approximately~~architectures. ~~$450~~We ~~million~~have inongoing, ~~total~~collaborative ~~funding~~discussions aswith ofconsumer ~~the~~wearables, ~~date~~healthcare, ofand ~~this~~communication ~~Annual~~companies ~~Report~~and onoriginal ~~Form~~equipment ~~10-K,~~manufacturers ~~through~~(“OEM”) ~~the~~and ~~issuance~~module ofand ~~convertible~~component ~~loan~~vendors ~~notes~~to ~~and~~address ~~ordinary~~their ~~shares~~next-generation product offering to end users.

~~Our~~• ~~target~~Fabless, ~~biomarkers~~scalable ~~for~~business ~~consumer~~model ~~healthcare~~with ~~include~~manufacturing ~~lactate,~~process ~~alcohol,~~expertise ~~glucose~~and ~~(indicator),~~ownership. ~~hydration,~~We ~~blood~~plan ~~pressure~~to operate in a fabless business model by using third-party foundries to manufacture and test our products. We believe that outsourcing our product manufacturing and test processes and procedures simplifies our operations, ~~blood~~significantly ~~oxygen~~reduces capital commitments, and ~~core~~provides ~~body~~greater ~~temperature,~~flexibility ~~among~~to ~~others~~respond to new market opportunities and scale with our customer demand. ~~Our~~We ~~lasers~~also believe this approach will ~~deliver~~allow anus ~~extremely~~to ~~high~~invest ~~level~~and offocus ~~performance,~~our resources on proprietary process development and sales and marketing efforts.

1• Highly differentiated manufacturing process. Our manufacturing processes in several key areas (PICs, III-V actives, Integration) are unique and well-suited to meeting our customers’ economic and performance needs for their applications. In particular, we believe our silicon PIC process on multi-micron thick Silicon-On-Insulator (“SOI”) is a key differentiator. Our manufacturing processes utilize standard semiconductor manufacturing equipment but are optimized for photonics performance through incorporating innovative features to facilitate easier integration and packaging.

~~Table~~• Extensive intellectual property portfolio. We believe our extensive intellectual property provides us with a significant competitive advantage. Our know-how is based on over 30 years of ~~Contents~~leadership in the development and commercialization of silicon photonics, and we have established strong and deep technical foundations and expertise for high-volume product delivery that would be difficult for a competitor to replicate.

~~supporting~~• upEstablished ~~to 1,000,000 times higher resolution, 1,000 times higher accuracy,~~ and ~~100~~committed ~~times~~foundry ~~broader~~partner ~~range~~network. inWe ~~wavelengths~~have ~~than~~built ~~existing~~a ~~LED~~high-volume ~~offerings~~foundry innetwork ~~wearable~~comprised ~~solutions~~of ~~(based~~strategic onpartners ~~product~~who ~~analysis~~share ~~undertaken~~our bygrowth ~~Rockley~~vision, ~~comparing~~and ~~the~~our ~~Rockley~~engineering ~~silicon~~team ~~photonics-based~~continues ~~spectrometer chip~~ to ~~existing~~work ~~solutions). With this performance, we believe that Rockley’s platform will be able~~ to ~~address~~push ~~existing~~new ~~applications~~boundaries in ~~consumer~~photonic ~~wearable~~component ~~and~~manufacturing ~~medical devices with significantly higher resolution, accuracy, and range~~processes.

WeOur ~~have~~high-performance ~~established~~optical asensing ~~manufacturing~~products ~~ecosystem~~and ~~based~~technology ~~upon~~with broad biomarker detection capabilities, combined with the power of our ~~wholly-owned~~algorithms and AI platform, ~~proprietary~~enable ~~processes~~us to target unmet needs and challenges in ~~several~~the ~~areas~~health and wellness markets. We ~~believe~~have ~~that~~ongoing ~~this~~formal ~~manufacturing~~and ~~ecosystem~~informal ~~will~~collaborative ~~support~~discussions ~~rapid~~with ~~scalability~~industry and technology leaders in consumer sensor, ~~providing~~healthcare, usand data communications companies, with original equipment manufacturer (“OEMs”), and with module and component vendors concerning the design of architectures and products to address existing and next-generation applications. Based on these interactions, we believe that we are one of a ~~significant~~limited ~~competitive~~number ~~advantage~~of suppliers to these companies for the type of products we plan to sell, and in some cases, we may be the sole supplier for certain applications.

As5 we do not currently have any products in commercial production, our current customer relationships are in the following stages: (a) customers with whom we are “engaged,” or in discussions with, regarding potential product features for incorporation into such customer’s end products, or (b) customers with whom we are “contracted,” where we have non-binding MOUs or development and supply agreements. These MOUs and development and supply agreements provide a general framework for our transactions with the customer and typically provide that we will develop and deliver new products meeting the customer’s specifications. There are no binding purchase commitments under our MOUs and supply agreements. We currently anticipate that sales of our products will be primarily made pursuant to standard purchase orders, which orders may be cancelled, reduced, changed, or rescheduled with little or no notice or penalty. Our ability to grow our business will depend on our ability to attract and retain customers with whom we are engaged in discussions only and successfully transition such customers to contracted customers with whom we have MOUs or development and supply agreements, and to otherwise attract new customers.

OurTable vision is to address many pressing healthcare concerns using our technology, and we believe that there exists a large market opportunity for our platform. We estimate that the total addressable market (“TAM”) for the consumer wearables, mobile device, and medical device markets is projected to be over $48 billion by 2025, based on data sourced from IDC, as the universe of healthcare and consumer wearable devices incorporating additional sensing capabilities emerges. Our products are being designed for utilization in: (a) medical devices, including blood pressure, body temperature, blood glucose, and alcohol monitoring devices, pulse oximetry, and near infra-red (“NIR”) spectrometers, with an aggregate forecasted TAM of $15.1 billion by 2025, according to the Yole Report, and mobile cardiac telemetry/general patient monitoring patch devices, with an aggregate forecasted TAM of $2.7 billion by 2025, according to the IDtechEx Report; and (b) consumer wearables and mobile devices, including smartwatches, smart earbuds, fitness bands, and mobile phones, which, based on our internal estimates, are expected to have a TAM of $2.7 billion, $3.0 billion, $1.5 billion, and $23.5 billion, respectively, or an aggregate TAM of $30.7 billion, by 2025. We estimated our TAM in the consumer wearables and mobile device sectors by multiplying third-party forecasted total volumes in 2025 for the devices for which our products are being designed, by our currently anticipated and estimated average selling prices for these products. The volume estimate for smartwatches was based on the benchmarked figure forecasted by annual volume for smartwatches for 2022 according to the TrendForce Report. The volume estimate for smart earbuds was based a 20% volume CAGR between 2020-2025, with 2020 annual shipments estimated at 230 million units, according to the TrendForce Report. According to the Yole Report, fitness bands were forecasted to reach 89 million units by 2025. The volume estimates for smartphones were based on multiple third-party forecasted volumes for mobile phones, multiplied by the average selling price.Contents

~~Product~~Our ~~Applications~~Strategy ~~and Development Status~~

WeOur ~~believe~~strategy ~~that~~is ~~our~~to ~~innovative~~become ~~and~~the ~~differentiated~~leading ~~silicon~~global ~~photonics~~provider ~~platform~~of ~~positions~~sensing usproducts tothat ~~make~~incorporate ~~photonics-based~~integrated ~~solutions~~optical ~~increasingly~~modules ~~pervasive,~~with ~~while~~supporting ~~unlocking~~electronics, ~~previously~~software, ~~unaddressed~~application ~~applications. Consequently~~algorithms, weand ~~believe~~cloud-based ~~that~~AI ~~the~~platforms ~~potential applications~~ for ~~our technology will be wide~~high-~~ranging.~~volume ~~Leveraging the flexibility~~ and ~~power~~high-margin ofapplications ~~our~~in ~~innovative~~dynamic ~~silicon~~high-growth ~~photonics~~market ~~platform,~~sectors weand ~~believe~~for ~~that~~use-case wespecific ~~are~~opportunities ~~positioned~~with ~~to become~~ a ~~leading~~focus ~~supplier~~on ofmedtech ~~end-to-end solutions (including integrated optical components, algorithms, data analytics,~~ and ~~AI)~~healthcare. ~~for~~Key ~~dynamic,~~elements ~~high-growth~~of ~~market~~our ~~sectors,~~strategy ~~including~~include: ~~consumer sensors, medtech and healthcare.~~

2• Extend our silicon photonics leadership. We intend, through continuous platform engineering and advanced research and development, to continue driving innovation in the silicon photonics market and to improve the performance of our current solutions across a variety of key metrics, including size, power, and signal quality. Such innovation will be a key to opening new market opportunities.

~~Table~~• ofIdentify ~~Contents~~and promote new and emerging applications for our technologies. We are actively engaged with our science and technology partners to explore new potential markets and applications for our technology. We intend to continue to collaborate with our partners to understand the challenges in their end-product roadmaps and to demonstrate how our technologies can help them design and enable innovative solutions.

~~Figure~~• 1:Develop ~~Rockley~~our ~~end~~product portfolio. Beginning with our first target products in the consumer and medtech domains and for on-tothe-~~end~~wrist ~~sensing~~applications, we intend to develop and broaden our product portfolio by continuing to invest in research and development so we can expand our platform capabilities as well as enhance our existing product roadmap. We are actively conducting research and development on other form factors and domains. We believe our differentiated technology will play an important role in delivering products for remote patient monitoring needs and for other niche markets such as diet and weight management, women’s health, and early detection and monitoring of chronic diseases such as diabetes.

To• ~~date,~~Continue weforming ~~have~~strategic ~~been~~partnerships ~~engaged~~ in ~~developing~~products ~~customer-specific designs of our silicon photonics chipsets~~ and ~~modules~~applications: ~~for~~Working ~~incorporation~~with ~~into~~ our ~~consumer~~partners, ~~electronics~~we ~~customers’~~have ~~end~~developed ~~products.~~many Wepotential ~~are working with leading customers in the medtech market to deliver a standalone wrist-wearable~~ product ~~for~~application ~~targeted~~opportunities ~~use~~with ~~cases. In parallel, we are shaping and developing~~ our ~~own~~unique ~~standard~~technology ~~offerings~~ that ~~could~~can ~~have~~be ~~different~~researched ~~shapes~~ and ~~form~~unlocked ~~factors. Currently, we do not have any of our own end products~~ in ~~commercial~~the ~~production~~future. WeOur ~~have~~partners ~~started~~operate ~~delivering samples to strategic customers, and we intend to deliver final samples and begin production of these products~~ in ~~the~~various ~~second~~domains ~~half~~such ofas ~~2022.~~hardware ~~During 2022~~development, ~~our~~algorithm ~~aim~~development, ~~is to build a collaboration model for our~~ AI~~/analytics cloud platform before proceeding to a commercial launch of a subscription platform~~, ~~planned~~and ~~for~~clinical ~~the first half of 2023~~research.

~~Figure~~• 2:Continue ~~Product~~to ~~development~~attract and ~~commercial~~acquire ~~roadmap~~new customers. We intend to expand our customer base beyond our 17 existing customers in consumer electronics and medtech by focusing on direct dialogue with large strategic accounts, as well as by partnering with large distributors and resellers, when necessary. We believe this multi-track strategy will allow us to provide differentiated solutions to a broad array of customers.

~~Healthcare:~~• ~~Consumer~~Sustain ~~Wearables~~margin through expansion of our products into higher-end markets. We intend to use our technological expertise to deliver higher value and high product margins. In addition, we intend to continue to reduce our costs through operational improvements and supply-chain management initiatives.

We believe the high-density optical integration capabilities of our platform can personalize healthcare monitoring of multiple biomarkers and can significantly improve how individuals track and monitor their health and well-being. Our ~~VitalSpex™~~Technology ~~biomarker~~Platform ~~sensing platform will address the consumer wearable market. Further, as part of our product offering, we believe that our cloud-based analytics~~ and AIProduct ~~platform~~Offerings will offer further insight by leveraging data collected through our unique and broad sensing platform and will provide meaningful and actionable insights to end users. Our plans for the VitalSpex™ biomarker sensing platform include a Baseline module and a Pro module, each of which will have a wide array of current and potential applications, as shown in the figure below. Depending on the needs of each customer and market trends, multiple generations of products could be built on each of these platforms addressing different set of biomarkers, form factors, performance specifications, and potential use cases.

3Our solutions leverage our developed knowledge of silicon photonics, application science, and our innovative platform architecture to address high-volume applications in the consumer sensors, medtech and healthcare. We believe our leadership position in developing silicon photonics-based sensing solutions is a result of the following core strengths:

~~Table~~• We have developed a unique and proprietary silicon photonics platform technology that addresses a broad set of ~~Contents~~requirements in the healthcare and wellness industries.

~~Figure~~• 3:Our ~~Targeted~~custom ~~biomarker~~multi-micron-waveguide ~~sensing~~photonics-optimized ~~capabilities~~process with integrated III-V semiconductor actives brings multiple competitive advantages in terms of performance and manufacturability, offering lower waveguide losses, higher waveguide power handling, polarization independence, ubiquitous integration of III-V actives in their native known-good-die form, ultra-broad-band performance, and lower sensitivity to manufacturing variations while enabling compact circuitry with high integration densities.

~~These~~6 products are intended to address the needs of the consumer market and will provide information about general health and wellness. (i.e., they do not require regulatory approval for offered applications and end uses.) As we move forward, we intend to monitor and comply with regulations to the extent they become applicable to us, including any requirements for clearance by the U.S. Food and Drug Administration (FDA) and/or other regulatory bodies.

Healthcare:Table Medicalof DevicesContents

~~Our~~Figure ~~Bioptx™~~5: ~~healthcare~~Rockley ~~sensing~~spectrophotometer ~~platform~~chip ~~will address the medical and professional healthcare market. We plan to incorporate our biomarker sensing technology into existing devices (such as medical patches~~solution, ~~wearable bands, and other monitoring devices) to provide additional biomarker sensing capabilities not currently available to consumers. Also,~~ as ~~part~~compared ~~of the Bioptx product offering, we intend~~ to ~~deliver~~conventional aLED- ~~complete standalone finished product with targeted use cases for healthcare~~ and ~~health~~spectrometer-based ~~monitoring.~~solutions

LOGO

WeAdditional ~~believe~~key ~~that~~points ~~these~~concerning ~~product offerings will enhance point-of-care and remote monitoring and will have~~ the ~~potential~~photonics totechnology ~~ultimately~~include ~~transform and disrupt~~ the ~~delivery of patient monitoring and healthcare. In the medical device space, we currently anticipate that we will develop two types of devices~~following: ~~an advisory device that will not need regulatory clearance and a clinical device that will need regulatory clearance from the FDA or other regulatory bodies.~~

~~These~~• ~~products~~The ~~are~~optical-loss-per-unit ~~still~~distance ~~under~~is ~~development.~~much ~~Even~~lower ~~though~~than ~~there~~for ~~can~~other betechnologies, noenabling ~~assurance~~lower-power ~~that~~solutions ~~these product development efforts will succeed~~ and/or ~~that,~~larger-scale ~~even if developed~~PICs, ~~these~~which ~~products~~enables ~~will~~a behigh ~~approved~~signal-to-noise byratio ~~regulators~~and orhence ~~achieve~~high-fidelity ~~widespread~~signal ~~market~~detection ~~acceptance,~~and wehelps ~~believe~~reduce ~~that~~overall ~~there~~power ~~are significant market opportunities in addition to our consumer wearables applications.~~consumption;

4• The platform provides broadband performance and is suitable for the visible, short-wave, and mid-infrared bands. This is a key enabler for sensing applications that other platforms cannot serve. Broadband optical performance also enables sensing a large optical spectrum to cover a wide range of measurands;

~~Table~~• The platform is well suited to power-efficient integration of ~~Contents~~III-V waveguide devices such as lasers and modulators that also have a multi-micron mode size. Low-loss coupling from III-V to Si waveguide drives down power consumption for long battery life;

~~Data~~• ~~Communications:~~A ~~Transceiver~~larger ~~Chipsets~~waveguide is much less sensitive to manufacturing variations that can affect its shape and ~~Co-Packaged~~hence ~~Optics~~its refractive index, thereby achieving much better center wavelength registration than small waveguides enabling accurate wavelength filters. The large waveguides also offer a much higher optical power handling capability than small waveguides;

~~Data~~• centers, which are the nerve centers of the digital economy, require interconnected communications for which we believe our datacom chipset technology offers several advantages. Business, entertainment, vital medical research, and other aspects of daily life are in many ways connected to hyperscale data centers, which in turn rely on cost-effective, power-efficient optical communication links. Whether incorporated in pluggable optical transceiver modules or in co-packaged optics, we believe hyperscale data centers will benefit from the unique advantages that our silicon photonics platform has to offer. Furthermore, we believe our go-to-market approach of partnering with Transceiver manufacturers and Switch/Networking equipment OEM companies has economic benefits over participating directly in this margin-sensitive market. By selling/licensing our assets/technology, we offer the third party the opportunity to create an economically compelling solution without any margin stacking while Rockley’s ~~can~~waveguides ~~keep~~exhibit ~~expenses~~ low~~/minimal~~ ~~and~~dispersion ~~benefit from upfront/ongoing fees. Note that given Jiangsu Hengtong Optic-Electric Co., Ltd.~~ (alow ~~shareholder~~signal ~~in our joint venture partner~~distortion) ~~was~~and ~~placed~~low onpolarization ~~the~~dependent ~~“Entity~~loss ~~List” by the U.S. Bureau of Industry and Security~~ (~~BIS)~~simplifying ofreceiver ~~the~~architectures ~~U.S. Department of Commerce~~ in ~~December 2021, we have widened our potential partner network significantly and are evaluating various options for this business.~~particular);

~~Other~~• ~~Applications~~Strong optical confinement enables tight packing of waveguides and sharp waveguide bends, thereby yielding dense layout capability and compact PICs. Compact PIC layouts result in small chip sizes to fit within consumer device form factors and reduce product cost;

We• ~~believe~~Accurate ~~that~~wavelength ~~our~~targeting ~~silicon~~enables ~~photonic~~using ~~platform~~many is suited for delivering the sensing capabilities needed for machine perception and interrogation at depth, which has become increasingly necessary in industrial automation, robotic vision (including surgical applications), safety, and other autonomous applications. Finely tuned light, delivered through a PIC via a freefinely-~~space~~spaced ~~aperture~~wavelengths or fiber optic interconnect with accompanying detection receiver capabilities, enables substantially better capabilities than previously available technology, such as frequency modulated continuous wave (“FMCW”) LiDAR for ~~automotive~~accurate safety solutions, as well as future autonomous vehicle offerings. Our team has extensive experience in the design of PICs for use in the LiDAR domain, and we have prototyped the key components of the system and demonstrated their superior performance. Although we believe the inflection point for LiDAR and the automotive market may be approaching, we plan to leverage our core technology readiness and economies of scale from our consumer business to position ourselves for this potential market opportunity.detection;

~~Market~~• ~~Opportunity~~Known-good-die integration of active elements improved yields, which leads to cost-effective solutions.

~~Health~~The ~~and~~following ~~Wellness~~are the key components of our end-to-end (full-stack) platform model:

~~There~~• isPhotonic ~~growing~~integrated ~~demand~~circuits ~~for~~in ~~miniaturized,~~silicon ~~wearable~~with ~~solutions~~integrated ~~that~~III-V: ~~offer~~The andesign ~~affordable way to provide key insights into a person’s health~~ and ~~well~~large-~~being,~~scale ~~outside~~manufacturing ~~the~~of ~~clinical~~silicon ~~environment.~~photonic ~~Delivering~~PICs ~~relevant~~and ~~insights~~integration ~~will~~of ~~require~~active ~~non~~“III-~~invasive,~~V” ~~continuous,~~elements ~~real-time~~onto ~~sensing~~these ~~and~~PICs ~~measurement~~are ofthe ~~multiple~~foundational ~~biomarkers,~~competencies ~~coupled~~of ~~with advanced analytics to interpret the data~~Rockley. WeThese ~~believe~~PICs ~~that~~are ~~this~~manufactured ~~demand~~using isour ~~driven~~proprietary and ~~will~~highly ~~continue~~differentiated toprocess beflow ~~driven~~deployed byat ~~two~~our ~~major~~foundry ~~market and secular trends:~~partners;

•~~Consumer~~ ~~health and well~~Application-~~being~~specific ~~awareness.~~integrated ~~While~~circuits ~~there~~(“ASICs”): isThe andesign ~~existing~~of ~~market~~electronic ~~for~~ICs ~~athletes~~to incomplement ~~training~~our ~~and~~PICs ~~for highly active~~ and ~~health-conscious~~facilitate ~~users, there has been an increasing global consumer focus on preventative healthcare, with users desiring greater control and visibility over~~ their ~~own~~integration ~~health~~into ~~and~~a ~~well~~specific end-~~being.~~product ~~In parallel, amid the proliferation of wearable technologies with emerging health monitoring capabilities, there~~ is ~~greater demand for more sophisticated and comprehensive sensing technology that can measure and track a broad range of conditions and biomarkers. Generating a holistic view of~~ the ~~human~~second ~~body~~key ~~through~~component ~~access to multiple biomarkers will enable a more sophisticated ability to monitor and track general trends~~ of ~~changing~~our ~~health~~platform ~~conditions~~offering. ~~This~~The ~~has~~ICs ~~the~~are ~~potential~~designed toin ~~help~~volume ~~physicians~~complementary ~~identify~~metal-oxide-semiconductor ~~health~~(“CMOS”) ~~conditions~~or ~~and~~bipolar ~~possible~~CMOS ~~disease~~(“BiCMOS”) ~~states~~technology ~~earlier~~nodes ~~and~~using ~~allow~~standard ~~for~~design ~~more~~flows ~~affordable prevention measures~~ and ~~effective~~are ~~patient~~manufactured ~~treatment,~~at ~~perhaps long before requiring aggressive disease management. More recently, COVID~~volume-19scale ~~has had a profound impact on the way consumers perceive their need for “at-home” monitoring solutions.~~foundries;

•~~Treatment~~ ofPhotonic ~~chronic~~& ~~conditions~~electronic ~~and~~co-packaging: ~~disease~~The ~~care.~~next ~~With~~layer ~~increased~~of ~~life~~the ~~expectancies,~~stack aconjoins ~~growing~~photonic ~~number of chronic conditions~~ and ~~diseases~~electronic ~~has~~ICs ~~placed~~into aopto-electronic ~~strain~~engines onthrough ~~healthcare~~advanced ~~systems.~~co-packaging ~~Furthermore~~technologies, ~~non-invasive~~including ~~monitoring~~2.5D ~~solutions for chronic conditions have historically been costly~~ and ~~available~~3D ~~only in a medical facility~~integration. ~~With~~Such ~~our~~dense ~~potential~~integration ~~for~~is ~~delivering~~key ~~individual non-invasive wearable monitoring solutions, we believe that we have a great opportunity to impact patients’ compliance with healthcare guidance~~ and ~~subsequent~~enables ~~efficient~~us ~~treatment of patients, which will lead~~ to ~~better~~achieve ~~quality~~the ofenergy ~~life~~efficiency and ~~drastic~~physical ~~reductions~~size inrequirements ~~the~~for ~~overall~~our ~~cost~~core ofuse ~~healthcare~~cases. ~~Non-invasive,~~We ~~continuous~~partner ~~monitoring~~with ~~also~~specialized ~~has~~packaging ~~the~~houses ~~potential~~ to ~~detect~~provide ~~and~~the ~~possibly~~capacity ~~prevent~~required ~~chronic~~for ~~conditions~~serving ~~and~~consumer ~~diseases at a much earlier stage, resulting in reduced overall healthcare cost.~~markets;

We• ~~believe~~System ~~that~~architecture ~~existing~~& ~~monitoring~~hardware ~~and~~design: ~~sensing~~We ~~technologies~~have ~~are~~built ~~not~~deep ~~capable~~expertise ofin ~~delivering~~architecting onphotonic ~~the~~systems ~~needs~~for ofsensing ~~consumers~~solutions ~~and~~in healthcare ~~professionals.~~and ~~Meeting~~wellness, ~~these~~machine ~~needs~~vision, ~~require~~and ~~solutions~~data ~~that~~communications. ~~provide~~This ~~access~~enables us to ago ~~broad~~beyond ~~range~~making ofchips ~~biomarkers~~and ~~non-invasively;~~allows ~~that~~us ~~can~~to bedeliver ~~miniaturized~~higher ~~and~~value-add ~~operate~~photonic ~~with~~subsystems, ~~power~~modules, ~~low~~and ~~enough~~chipsets tothat befit ~~integrated~~seamlessly into ~~consumer~~our ~~wearables,~~end-product ~~medical~~partners’ designs;

~~patches,~~• ~~and~~Firmware/software: ~~other~~Any ~~compact~~system ~~form~~requires ~~factors;~~some degree of firmware and ~~that~~software ~~can~~to ~~scale~~operate ~~cost~~and ~~effectively~~inter-operate, toand ~~high~~our ~~volumes~~photonic systems are no exception. We ~~believe~~have ~~that~~in-house ~~our~~expertise ~~silicon~~to ~~photonics-based~~develop ~~platform~~the isnecessary ~~poised~~firmware and software to ~~serve~~complement atour ~~the~~hardware ~~confluence~~offerings ofand ~~the~~facilitate ~~above~~system ~~two~~integration, ~~market~~testing, and ~~secular~~monitoring ~~trends.~~by our customers; and

~~Beyond~~• ~~these~~Sensing ~~opportunities~~algorithms, weAI, ~~believe~~and ~~there~~cloud ~~may~~analytics: beAt ~~significant potential for us in~~ the ~~field~~highest level of ~~genomics. As~~ the ~~field~~stack, ofwe ~~genomics~~develop ~~grows~~algorithms, asAI ~~shown in the development of personalized medicines and treatment~~models, ~~the value~~ and ~~effectiveness~~cloud-based ~~are~~infrastructure ~~enhanced~~to ~~when~~gain ~~genomic~~deeper ~~information~~insights isinto ~~combined~~health and ~~processed~~wellness ~~along~~trends ~~with~~from ~~continuous biomarker monitoring for~~ the ~~users.~~volume Weof ~~believe~~sensor ~~this~~data ~~emerging~~collected ~~field~~by ~~could play to the strengths of~~ our ~~platform~~wearable ~~and potentially represents a high-value growth opportunity for the future~~modules.

~~Data~~Figure ~~Communications~~6: Rockley cloud analytics and AI

LOGO

Datacenter operators continue to build and upgrade their datacenter infrastructure to meet the continuing growth in public, private, and hybrid cloud capacity. As these datacenters rely heavily on fiber optics to interconnect compute, storage, accelerators and other resources, this trend is reflected with substantial growth in demand in the high-speed Ethernet optics. LightCounting forecasts that the market for Ethernet optics will grow from approximately $3.0 billion in 2018 to approximately over $8.0 billion in 2026. The market segment that we are primarily targeting comprises 400Gb/s and 800Gb/s modules and their addressable market are expected at a CAGR of approximately 35%, according to LightCounting’s forecasts. We believe ~~our silicon photonics platform is well positioned to address this market with highly integrated Si PICs and class leading III-V technology to implement~~ the ~~optical~~key ~~functionality~~benefits ~~required for such transceiver modules. We believe~~ that our ~~platform~~solutions ~~will~~can provide ~~a substantial cost advantage over conventional discrete-optics-based solutions, as well as over competing integrated photonics solutions due~~ to our ~~platform’s~~customers ~~inherent~~are ~~benefits.~~as follows:

~~Competitive~~• ~~Advantages~~Broad set of biomarkers with data analytics. Leveraging our unique integrated solution, we enable the detection and monitoring of multiple biomarkers. Analyzing the underlying spectral data with our growing base of machine learning and AI models has the potential to provide further insights into a person’s health;

• Low power and small footprint. In each of the markets that we expect to serve, the power budget of the overall system is a key consideration. Power consumption greatly impacts system operation cost, footprint, and cooling requirements and is increasingly becoming a point of focus for our current customers and for other market participants that we are targeting as future customers. We believe that our silicon photonics solutions ~~and~~enable ~~technology~~our ~~offer~~customers ~~the~~to ~~following~~implement ~~key~~system ~~healthcare~~architectures ~~monitoring~~that ~~benefits:~~reduce Weoverall ~~believe~~system ~~that~~power weconsumption. ~~have~~Moreover, 7in ~~sources~~many of ~~advantage~~our ~~over~~applications, ~~our~~we ~~competitors~~are inable ~~meeting~~to ~~these~~design ~~healthcare~~and ~~needs:~~deliver semiconductors that have a smaller footprint and therefore reduce the overall system size; and

•~~Superior~~ ~~sensing~~Faster ~~performance.~~time ~~Our silicon photonics-based spectrometer chip provides up~~ to one million times higher resolution, approximately one thousand times higher accuracy, and approximately one hundred times broader spectral range than existing LED-based solutions, based on product analysis undertaken by Rockley comparing the Rockley silicon photonics-based spectrometer chip to existing LED-based solutionsmarket. WeTo ~~believe~~meet ~~that~~ our ~~unique~~customers’ ~~silicon photonics technology and the entire product ecosystem we are developing will make our end~~time-to-~~end~~market ~~offerings in the health and wellness domain difficult to replicate. Current optical-based sensing solutions rely on LED-based sensing (PPG signals for SpO2~~requirements, ~~heart~~we ~~rate,~~work ~~heart~~closely ~~rate~~with ~~variability,~~them ~~breath~~early ~~rate, and blood pressure). However, there are many biomarkers present~~ in ~~the~~their ~~body~~design ~~(such~~cycles asand ~~in blood or interstitial fluid) that~~ are ~~not~~actively ~~detectable~~involved in ~~the~~their ~~visible~~development ~~LED range~~processes. WeOur ~~believe~~hardware, that our silicon photonics technology delivers several ingredients that will be required to bring a powerful and meaningful product into the healthcare market: the accuracy and width of our wavelength span in the infrared spectrumalgorithm, ~~the~~data ~~capability of our silicon photonics solutions to integrate many wavelengths~~analytics, and ~~the~~AI ~~high~~roadmaps ~~signal-to-noise~~provide ~~ratio~~flexibility ~~(“SNR”)~~in ~~generated~~meeting by our ~~chips~~customers’ schedules.

6Rockley’s Silicon Photonics Toolbox Elements

~~Table~~Rockley’s proprietary silicon photonics platform covers a unique end-to-end solution, including generation of ~~Contents~~the light, manipulation of the light (modulation, multiplexing), radiation out of the module, and collection and processing of the returned light. The following provides an overview of the key components of our platform:

~~Figure~~• 4Lasers: ~~Enabling~~Our alasers ~~new~~offer ~~class~~precise ofwavelength ~~sensor~~control byand ~~combining~~robust ~~visible~~power ~~light~~efficiency. ~~and~~The ~~infrared~~waveguide platform allows efficient wafer-scale integration of laser-devices through a flip-chip process;

•~~Flexible~~ ~~platform~~Modulators ~~architecture.~~and detectors: We have ~~designed~~developed ~~our~~optical ~~platform~~modulators ~~from the ground up~~ and, ~~leveraging~~detectors ~~our~~that ~~team’s~~are ~~extensive experience~~ultra-compact, ~~have~~power-efficient ~~developed~~and ~~a highly flexible platform architecture. As a result~~high-speed, wecapable ~~believe our innovative platform architecture will allow us to easily configure core building blocks to produce a wide range~~ of ~~functional~~handling ~~components and modules for~~ high~~-volume~~ ~~applications~~data ~~across~~rates and a broad range of ~~market sectors.~~wavelengths;

•~~Differentiated~~ ~~biomarker~~Combiners ~~sensing algorithms~~ and ~~analytics.~~splitters: Our ~~biomarker~~platform ~~detection~~is ~~algorithms~~capable ~~are~~of ~~optimized~~wavelength ~~for~~division ~~our~~multiplexing ~~unique~~(“WDM”) and ~~optimized~~demultiplexing, ~~hardware~~enabling ~~technology~~in ~~platform.~~excess ~~We believe that the data analytics and biomarker processing capabilities~~ of ~~our~~100 AIwavelengths /on ~~cloud offering will further expand our ability to offer additional insights into~~ a ~~person’s~~single ~~health.~~optical path;

•~~Deep~~ ~~understanding~~Fiber ofoptic ~~market~~coupling: ~~opportunity~~Our ~~and~~PIC ~~customer~~contains ~~priorities.~~on-chip Weembedded ~~are~~interfaces ~~developing~~to ~~many applications and systems with our silicon photonics solutions that are driven by industry leaders in~~ the ~~consumer~~optical ~~sensors, healthcare, and data communications markets~~fibers. ~~Through~~These ~~our~~interfaces ~~established~~allow ~~relationships~~the ~~with~~fiber ~~industry leaders, we have consistently demonstrated our ability~~ to ~~address~~be ~~their~~passively ~~technological~~attached ~~challenges.~~directly ~~As a result, we have signed memoranda of understanding and have contracted with several industry leaders in wearable consumer technology~~ to ~~establish~~the ~~product~~PIC ~~specifications~~without ~~and~~external ~~desirable~~light ~~features.~~coupling We believe we are well-positioned to develop high-volume optical sensing modules and algorithms for their emerging architectures. We have ongoing, collaborative discussions with consumer wearables, healthcare, and communication companies and original equipment manufacturers (“OEM”) and module and component vendors to address their next-generation product offering to end users.elements;

•~~Fabless,~~ ~~scalable business model with manufacturing process expertise and ownership. We plan to operate in a fabless business model by using third~~Free-~~party~~space ~~foundries~~optics: toOur ~~manufacture~~platform ~~and~~allows ~~test~~for ~~our~~efficient ~~products.~~light Wecoupling ~~believe~~from ~~that~~free ~~outsourcing~~space ~~our~~into ~~product manufacturing~~ and ~~test~~out ~~processes~~of ~~and~~the ~~procedures~~photonics ~~simplifies our operations~~circuits, ~~significantly~~with ~~reduces~~either ~~capital~~edge ~~commitments,~~or ~~and~~perpendicular ~~provides greater flexibility to respond to new market opportunities and scale with our customer demand~~coupling. WeThis ~~also~~feature ~~believe~~enables ~~this~~a ~~approach~~broad ~~will~~range ~~allow~~of ussensing ~~to invest and focus our resources on proprietary process development and sales and marketing efforts.~~applications;

•~~Highly~~ ~~differentiated~~Photonic ~~manufacturing~~integrated ~~process.~~circuits: Our ~~manufacturing~~development ~~processes~~platform inenables ~~several~~integration ~~key~~of ~~areas~~light ~~(PICs~~sources, ~~III-V~~active ~~actives~~devices, ~~Integration)~~passive ~~are~~devices, ~~unique~~ and ~~well-suited~~optical tocoupling ~~meeting~~elements ~~our~~into ~~customers’~~a ~~economic~~single ~~and~~compact ~~performance needs for their applications. In particular, we believe our~~ silicon PIC process on multi-micron thick Silicon-On-Insulator (“SOI”) is a key differentiator. Our manufacturing processes utilize standard semiconductor manufacturing equipment but are optimized for photonics performance through incorporating innovative features to facilitate easier integration and packaging.chip;

~~•Extensive~~8 intellectual property portfolio. We believe our extensive intellectual property provides us with a significant competitive advantage. Our know-how is based on over 30 years of leadership in the development and commercialization of silicon photonics, and we have established strong and deep technical foundations and expertise for high-volume product delivery that would be difficult for a competitor to replicate.

•EstablishedTable and committed foundry partner network. We have built a high-volume foundry network comprised of strategic partners who share our growth vision, and our engineering team continues to work to push new boundaries in photonic component manufacturing processes.Contents

7• Wafer-scale processing: Our silicon photonics platform enables high throughput wafer-scale processing of monolithic and multi-die structures for chip-on-wafer integration;

~~Table~~• ofInterface ~~Contents~~electronics: We have in-house design expertise for custom analog circuitry to translate high-speed data streams into signals that actuate the PICs (drivers) and receive signals from them (amplifiers). This is complemented by our digital design capability for device control, signal processing, and interfaces to our customers systems; and

~~Our~~• ~~high-performance~~Packaged ~~optical~~assembly: ~~sensing~~The ~~products~~assembly ~~and technology with broad biomarker detection capabilities, combined with the power~~ of ~~our~~electrical ~~algorithms and AI platform~~ASICs, ~~enable us to target unmet needs and challenges in the health and wellness markets. We have ongoing formal and informal collaborative discussions with industry and technology leaders in consumer sensor~~PICs, ~~healthcare,~~ and ~~data~~fiber ~~communications~~optics ~~companies, with original equipment manufacturer~~ (~~“OEMs”~~if needed), ~~and~~into ~~with~~a ~~module and component vendors concerning the design of architectures and products to address existing and next-generation applications. Based on these interactions~~single, wehighly ~~believe~~integrated ~~that~~product werequires ~~are one of~~ a ~~limited~~test ~~number of suppliers to these companies for the type of products we plan to sell,~~ and inmanufacturing ~~some~~flow ~~cases,~~that weenables ~~may~~high-volume ~~be the sole supplier for certain applications~~scale.

~~Our~~Further ~~Strategy~~application-based expertise is focused on the following:

~~Our~~• ~~strategy~~Tissue isoptics todesign: ~~become~~Our ~~the leading global provider of~~ sensing module products ~~that~~will ~~incorporate~~include ~~integrated~~probe ~~optical modules with supporting electronics, software, application algorithms,~~ and ~~cloud-based~~hardware AIdesign ~~platforms~~to ~~for~~optimize ~~high-volume~~sensing ~~and~~through ~~high-margin~~the ~~applications in dynamic high-growth market sectors and for use-case specific opportunities with a focus on medtech and healthcare. Key elements of our strategy include:~~skin;

•~~Extend~~ ~~our~~Biomarker ~~silicon~~application: ~~photonics~~Our ~~leadership.~~sensing Wealgorithms ~~intend,~~are ~~through~~being ~~continuous~~developed ~~platform~~through ~~engineering~~various ~~and~~levels ~~advanced~~of ~~research~~validation ~~and development,~~ to ~~continue~~provide ~~driving innovation in~~ state-of-the-art ~~silicon~~sensing ~~photonics~~capabilities, ~~market~~from ~~and~~proof ~~to improve the performance~~ of ~~our~~concept ~~current~~in ~~solutions~~the ~~across~~lab ato ~~variety~~clinical ofvalidation ~~key~~in ~~metrics,~~human ~~including~~studies; ~~size, power,~~ and ~~signal quality. Such innovation will be a key to opening new market opportunities.~~

•~~Identify~~ ~~and~~Applied ~~promote~~data ~~new~~science: ~~and~~Our ~~emerging~~AI ~~applications for our technologies. We are actively engaged with our science~~ and ~~technology~~cloud ~~partners~~analytics towill ~~explore~~aggregate, ~~new~~analyze, ~~potential markets~~ and ~~applications~~assess ~~for~~spectral ~~our~~data ~~technology.~~from ~~We intend to continue to collaborate with~~ our ~~partners~~sensing toproducts ~~understand the challenges in their end-product roadmaps and~~ to ~~demonstrate~~extract ~~how~~additional ~~our~~insights ~~technologies can help them design~~ and ~~enable~~algorithm ~~innovative solutions~~improvements.

~~•Develop~~Current ~~our~~Product ~~product~~Offerings portfolio. Beginning with our first target products in the consumer and medtech domains and for on-the-wrist applications, we intend to develop and broaden our product portfolio by continuing to invest in research and development so we can expand our platform capabilities as well as enhance our existing product roadmap. We are actively conducting research and development on other form factors and domains. We believe our differentiated technology will play an important role in delivering products for remote patient monitoring needs and for other niche markets such as diet and weight management, women’s health, and early detection and monitoring of chronic diseases such as diabetes.

~~•Continue~~We ~~forming strategic partnerships in products and applications: Working with our partners, we~~ have developed ~~many~~two ~~potential~~separate product ~~application~~offerings ~~opportunities~~to ~~with~~address our ~~unique~~target ~~technology~~markets: ~~that~~(i) VitalSpex ~~can~~(consume bedomain); ~~researched~~ and ~~unlocked~~(ii) Bioptx in(healthcare ~~the future. Our partners operate in various domains such as hardware development, algorithm development, AI,~~ and ~~clinical research~~medtech).

~~•Continue~~In torespect ~~attract~~of ~~and~~the ~~acquire~~VitalSpex ~~new~~biomarker ~~customers.~~sensing Weplatform: intend to expand our customer base beyond our 17 existing customers in consumer electronics and medtech by focusing on direct dialogue with large strategic accounts, as well as by partnering with large distributors and resellers, when necessary. We believe this multi-track strategy will allow us to provide differentiated solutions to a broad array of customers.

•~~Sustain~~ ~~margin~~We ~~through~~will ~~expansion~~target ofapplications ~~our~~in ~~products~~the ~~into~~consumer ~~higher-end~~health ~~markets.~~and Wewellness ~~intend~~industry toand ~~use~~expect ~~our~~strong ~~technological~~customer ~~expertise~~engagement toin ~~deliver~~the ~~higher~~consumer ~~value~~electronics and ~~high~~wearables ~~product margins~~market. InThe ~~addition,~~VitalSpex weplatform ~~intend~~represents toa ~~continue~~breakthrough tothat ~~reduce~~will ~~our~~empower ~~costs~~consumer ~~through~~electronic ~~operational~~devices, ~~improvements~~primarily personal wearables, smartphones and ~~supply-chain~~homecare ~~management~~devices, ~~initiatives.~~with the capacity for new powerful healthcare and wellness monitoring;

~~Our~~• ~~Technology~~The ~~Platform~~VitalSpex line will include a range of hardware and ~~Product~~software ~~Offerings~~solutions that enable non-invasive, continuous, and real-time monitoring of multiple biomarkers, from modules and chipsets that can be integrated into a wearable form factor to cloud analytics and artificial intelligence (AI);

~~Our~~• ~~solutions~~The ~~leverage~~VitalSpex ~~our~~line ~~developed~~will ~~knowledge~~include a Baseline module, which will target the measurement of ~~silicon~~core ~~photonics~~body temperature, ~~application~~body, ~~science~~hydration, ~~and~~blood ~~our~~pressure, ~~innovative~~and ~~platform~~more, ~~architecture~~and toa ~~address~~Pro ~~high-volume~~module, ~~applications~~which inwill add the ~~consumer~~measurement ~~sensors~~of alcohol, ~~medtech~~lactate, and ~~healthcare~~glucose trends. WeOur ~~believe~~first ~~our~~health ~~leadership~~monitoring ~~position~~product inoffering ~~developing~~is ~~silicon~~expected ~~photonics-based~~to ~~sensing~~launch ~~solutions~~in isthe asecond ~~result~~half of ~~the~~2022; ~~following core strengths:~~and

•We ~~have~~The ~~developed~~VitalSpex aBaseline ~~unique~~ and Pro modules will each combine existing LED-based optical sensing with Rockley’s proprietary ~~silicon~~infrared ~~photonics~~optical ~~platform~~sensing ~~technology~~to expand the range of biomarkers that ~~addresses~~wearable adevices ~~broad~~can ~~set~~measure. ofOur ~~requirements~~VitalSpex inmodules will include the ~~healthcare~~hardware and ~~wellness~~software ~~industries~~capabilities to collect information available and relevant to the target biomarkers.

•~~Our~~ ~~custom~~We ~~multi-micron-waveguide~~also ~~photonics-optimized~~plan ~~process~~to ~~with~~offer ~~integrated~~additional ~~III~~cloud-Vbased ~~semiconductor~~subscription ~~actives~~services ~~brings~~that ~~multiple~~enhance ~~competitive~~the ~~advantages~~capabilities ~~in terms~~ of ~~performance~~the ~~and~~VitalSpex manufacturability, offering lower waveguide losses, higher waveguide power handling, polarization independence, ubiquitous integration of III-V actives in their native known-good-die form, ultra-broad-band performance, and lower sensitivity to manufacturing variations while enabling compact circuitry with high integration densitiesplatform.

8In respect of the Bioptx healthcare sensing platform:

~~Table~~• The Bioptx platform will target medical institutions, such as hospitals, research clinics, pharmaceutical companies, medical device manufacturers, and other healthcare providers, offering them the ability to monitor the general health and wellness of ~~Contents~~individuals. The measurement capabilities of the Bioptx platform the potential to transform healthcare by providing real-time insights into a variety of health conditions and by enabling early detection of multiple disease states;

• ~~Figure~~The 5:Bioptx ~~Rockley~~platform ~~spectrophotometer~~will ~~chip~~include ~~solution~~a range of hardware and software solutions that enable non-invasive, as ~~compared~~continuous, and real-time monitoring of multiple biomarkers, from a stand-alone wearable wristband to cloud analytics and artificial intelligence (AI);

~~conventional~~• ~~LED-~~The Bioptx platform will include Baseline products (for core body temperature, body, hydration, blood pressure, and ~~spectrometer-based~~more) ~~solutions~~and Pro products (which will add the measurement of alcohol, lactate, and glucose trends). Our first health monitoring product offering is expected to ship in the second half of 2022;

~~Additional~~• ~~key~~We ~~points~~also ~~concerning~~plan ~~the~~to ~~photonics~~offer ~~technology~~additional ~~include~~cloud-based subscription services that enhance the ~~following:~~capabilities of the Bioptx platform;

• The ~~optical-loss-per-unit~~intended ~~distance~~markets isfor ~~much~~Bioptx ~~lower~~products, ~~than~~including ~~for~~our ~~other technologies~~wristband, ~~enabling~~are ~~lower-power~~markets ~~solutions~~in ~~and/or~~the ~~larger-scale~~medical ~~PICs,~~professional ~~which~~healthcare ~~enables~~domain a(i.e., ~~high~~not ~~signal-to-noise~~consumer) ~~ratio~~that ~~and~~require ~~hence~~an ~~high-fidelity~~optimized ~~signal~~and ~~detection~~dedicated ~~and~~solution ~~helps~~for ~~reduce~~health ~~overall~~monitoring. ~~power~~tracking, ~~consumption~~and detection; and

•~~The~~ ~~platform~~We ~~provides~~expect ~~broadband~~that ~~performance~~our ~~and~~customers iswill ~~suitable~~initially ~~for~~use the ~~visible,~~Bioptx ~~short-wave,~~platform ~~and~~to ~~mid-infrared~~monitor ~~bands~~the general wellness of individuals under care or in studies. ~~This~~After isproducts ain ~~key~~the ~~enabler~~Bioptx ~~for~~line ~~sensing~~receive ~~applications~~approval ~~that~~from the FDA or other ~~platforms~~regulatory ~~cannot~~bodies, ~~serve.~~we ~~Broadband~~anticipate ~~optical~~that ~~performance~~customers ~~also~~will ~~enables~~expand ~~sensing~~product ause ~~large~~into ~~optical~~preventive ~~spectrum~~and todiagnostic ~~cover~~care, asuch ~~wide~~as ~~range~~remote ofpatient ~~measurands;~~monitoring and diagnosis.

~~•The~~9 platform is well suited to power-efficient integration of III-V waveguide devices such as lasers and modulators that also have a multi-micron mode size. Low-loss coupling from III-V to Si waveguide drives down power consumption for long battery life;

•ATable largerof waveguide is much less sensitive to manufacturing variations that can affect its shape and hence its refractive index, thereby achieving much better center wavelength registration than small waveguides enabling accurate wavelength filters. The large waveguides also offer a much higher optical power handling capability than small waveguides;Contents

~~•Rockley's~~Future ~~waveguides~~Product ~~exhibit~~Capabilities ~~low dispersion (low signal distortion) and low polarization dependent loss (simplifying receiver architectures in particular);~~

~~•Strong~~We ~~optical~~plan ~~confinement~~to ~~enables~~incorporate ~~tight~~our ~~packing~~biomarker sensing technology into a range of ~~waveguides~~existing devices, such as patches, wearable bands, and ~~sharp~~other ~~waveguide~~monitoring ~~bends~~devices, ~~thereby~~to ~~yielding~~provide ~~dense~~additional ~~layout~~biomarker ~~capability~~measurement capabilities not currently available. We continuously research, evaluate, and ~~compact~~prioritize ~~PICs~~the addition of new biomarkers into our product offerings, with the objective of providing more valuable information and improving health insights. ~~Compact~~Our ~~PIC~~broad ~~layouts~~range ~~result~~of inaddressable ~~small~~biomarkers ~~chip~~are ~~sizes~~at various stage of validation and demonstration, from proven science to ~~fit~~miniaturization. ~~within~~The ~~consumer~~chart ~~device~~below ~~form~~illustrates ~~factors~~a ~~and~~few ~~reduce~~examples ~~product~~of ~~cost;~~biomarkers for which we have validated their addressability using its IR wavelengths.

~~•Accurate~~Figure ~~wavelength~~7: ~~targeting~~Lab ~~enables~~validation ~~using~~of ~~many~~Rockley’s ~~finely-spaced~~sensing ~~wavelengths~~technology ~~for accurate detection;~~

LOGO

~~•Known-good-die~~These ~~integration~~biomarkers ofalong ~~active~~a ~~elements~~few ~~improved~~others ~~yields~~we are investigating are key in early detection, ~~which~~prevention, ~~leads~~and tomonitoring ~~cost-effective~~of ~~solutions.~~major chronic illnesses, as illustrated in the table below:

~~The~~Figure ~~following~~8: ~~are~~Disease ~~the~~detection ~~key~~and ~~components~~management potential of ~~our~~Rockley’s ~~end-to-end~~biomarker ~~(full-stack)~~sensing platform ~~model:~~

LOGO

~~•Photonic~~These ~~integrated~~products ~~circuits~~are instill ~~silicon~~under ~~with~~development, ~~integrated III-V: The design~~ and ~~large-scale~~there ~~manufacturing~~can ofbe ~~silicon~~no ~~photonic~~assurance ~~PICs~~that ~~and integration of active “III-V” elements onto~~ these ~~PICs~~product ~~are~~development ~~the~~efforts ~~foundational~~will ~~competencies~~succeed ofor ~~Rockley.~~that, ~~These~~even ~~PICs~~if ~~are~~developed, ~~manufactured~~that ~~using~~these ~~our~~products ~~proprietary~~will ~~and~~achieve ~~highly~~widespread ~~differentiated~~market ~~process~~acceptance. ~~flow deployed at our foundry partners;~~

~~•Application-specific~~10 integrated circuits (“ASICs”): The design of electronic ICs to complement our PICs and facilitate their integration into a specific end-product is the second key component of our platform offering. The ICs are designed in

9Table of Contents

~~Table~~Customers ~~of Contents~~

Our customers’ design cycle from initial engagement to volume ~~complementary~~shipment ~~metal-oxide-semiconductor~~typically ~~(“CMOS”)~~ranges from three to five years, with product life cycles of two years or ~~bipolar~~more. ~~CMOS~~For ~~(“BiCMOS”)~~many ~~technology~~of ~~nodes~~our ~~using~~products, ~~standard~~which ~~design~~are ~~flows~~technically complex, we must engage early with our customers’ technical staff. To ensure an adequate level of early engagement, our sales, marketing, and development engineers must work closely with our customers and channel partners to understand, identify, and propose solutions to meet their systems’ challenges. We work closely with our customers to anticipate end customer market needs. In some cases, we work with ecosystem partners to better understand market trends and new requirements that are ~~manufactured~~being atplaced ~~volume-scale~~on ~~foundries;~~our end customers.

~~•Photonic~~We &believe ~~electronic~~that ~~co-packaging:~~our ~~The~~existing ~~next~~commercial ~~layer~~relationships ofwith ~~the~~leading ~~stack~~consumer ~~conjoins photonic~~ and ~~electronic~~medtech ~~ICs~~customers ~~into~~validate ~~opto-electronic~~our ~~engines~~unique ~~through~~technology ~~advanced~~and ~~co-packaging~~the ~~technologies,~~business ~~including~~opportunity ~~2.5D~~at ~~and 3D integration~~hand. ~~Such~~Our ~~dense~~near-term ~~integration~~commercial focus is ~~key~~on ~~and~~a ~~enables~~robust uspipeline toin ~~achieve~~consumer ~~the~~devices, ~~energy~~medical ~~efficiency~~devices, and ~~physical~~life ~~size~~sciences ~~requirements for our core use cases~~companies. ~~We partner with specialized packaging houses to provide the capacity required for serving consumer markets;~~

~~•System~~To ~~architecture~~date, &we ~~hardware design: We~~ have ~~built~~generated ~~deep~~revenue ~~expertise~~primarily infrom ~~architecting~~non-recurring ~~photonic~~engineering ~~systems~~(“NRE”) ~~for sensing solutions in healthcare~~ and ~~wellness,~~development ~~machine~~services ~~vision,~~for ~~and data communications. This enables us to go beyond making chips and allows us to deliver higher value~~customer-~~add~~specific ~~photonic~~designs ~~subsystems,~~of ~~modules,~~silicon ~~and~~photonics chipsets ~~that~~for ~~fit~~incorporation ~~seamlessly~~ into ~~our~~customers’ end~~-product~~ ~~partners’~~products. ~~designs;~~

~~•Firmware/software:~~We ~~Any~~work ~~system~~closely ~~requires~~with ~~some~~our ~~degree~~end ofcustomers ~~firmware~~throughout ~~and~~their ~~software~~design tocycles ~~operate~~ and ~~inter~~will develop long-~~operate,~~term ~~and~~relationships as our ~~photonic~~differentiated ~~systems~~technology ~~are~~becomes noembedded ~~exception~~into their products. WeFor example, we currently hold a development and supply agreement with one customer since 2017 and have ~~in-house~~successfully ~~expertise~~designed and delivered critical sample chips to ~~develop~~them. ~~the~~As ~~necessary~~a ~~firmware~~result, ~~and~~we ~~software~~believe we are well-positioned to ~~complement~~be ~~our~~designed ~~hardware~~into ~~offerings~~their product roadmaps and ~~facilitate~~develop ~~system~~next-generation ~~integration~~solutions for their future products. Because many of our target customers or their OEMs are located in North America and Asia Pacific, ~~testing~~we anticipate that a majority of our future revenue will come from sales in these regions. Although a large percentage of our sales are made to customers in North America, we believe that a significant number of the systems and ~~monitoring~~devices designed by ~~our~~these customers; ~~and~~will incorporate our semiconductor products which are then sold to end-users globally. We expect that once our modules are commercially available, we will enter into standard supply agreements with each of these parties.

~~•Sensing~~Manufacturing algorithms, AI, and cloud analytics: At the highest level of the stack, we develop algorithms, AI models, and cloud-based infrastructure to gain deeper insights into health and wellness trends from the volume of sensor data collected by our wearable modules.

~~Figure~~Our 6:Proprietary ~~Rockley~~Production ~~cloud~~and ~~analytics~~Manufacturing ~~and~~Ecosystem AI

We ~~believe~~have built, and plan to continue to develop, a global manufacturing ecosystem designed with the ability to scale in a rapid and efficient manner. Several key ~~benefits~~areas ~~that~~within this manufacturing ecosystem run on our ~~solutions~~proprietary ~~can~~process ~~provide~~and manufacturing technologies and are protected by our intellectual property portfolio. We possess end-to-end control over design, manufacturing and packaging processes, algorithms, and software. Our disciplined and systematic documentation and protection of critical know-how, trade secrets, and proprietary information further underpins our ~~customers~~manufacturing ecosystem. To the best of our knowledge, there are asno ~~follows:~~ other turnkey options with the components and technologies needed to put together our sensing product. In addition to the intellectual property arrangements, we also have commercial exclusivity agreements with some of the key manufacturing ecosystem partners to prevent replication of this capability.

~~•Broad~~In ~~set~~addition ofto ~~biomarkers~~providing ~~with~~what ~~data~~we ~~analytics.~~believe ~~Leveraging~~to ~~our~~be ~~unique~~unmatched ~~integrated~~capabilities ~~solution~~at the product level, weour ~~enable~~platform and the ~~detection~~associated technology have been designed from bottom up to consider the relative ease and ~~monitoring~~cost of ~~multiple~~manufacturing ~~biomarkers~~and scaling. ~~Analyzing~~Elements ~~the~~like ~~underlying~~waveguide ~~spectral~~dimensions ~~data~~for ~~with~~ease ~~our~~of ~~growing~~wafer ~~base~~fabrication ofand ~~machine~~high ~~learning~~yields, robust and AIposition ~~models~~tolerant ~~has~~coupling strategies for III-V integration, wafer scale back-end activities for III-V manufacturing, and all known good die integration at the ~~potential~~module are integral to ~~provide~~the ~~further~~product ~~insights~~and ~~into~~the aprocess ~~person’s~~technology. ~~health;~~These elements are covered by the intellectual property which we have licensed to partners in our manufacturing ecosystem.

~~•Low~~Manufacturing ~~power~~Model ~~and~~Overview small footprint. In each of the markets that we expect to serve, the power budget of the overall system is a key consideration. Power consumption greatly impacts system operation cost, footprint, and cooling requirements and is increasingly becoming a point of focus for our current customers and for other market participants that we are targeting as future customers. We believe that our silicon photonics solutions enable our customers to implement system architectures that reduce overall system power consumption. Moreover, in many of our applications, we are able to design and deliver semiconductors that have a smaller footprint and therefore reduce the overall system size; and

~~•Faster~~We ~~time~~plan to ~~market.~~operate Toa ~~meet~~fabless ~~our~~business ~~customers’~~model ~~time~~and use third-party foundries and Outsource Assembly & Test (OSAT) contractors to~~-market~~ ~~requirements~~produce our products. In several key areas, weour ~~work~~third-party ~~closely~~partners ~~with~~operate ~~them~~a ~~early~~proprietary inprocess ~~their~~wholly ~~design~~owned ~~cycles~~by us and ~~are~~protected ~~actively~~by ~~involved~~our inintellectual ~~their~~property ~~development processes~~portfolio. ~~Our~~This ~~hardware~~outsourced manufacturing approach allows us to focus our resources on the design, ~~algorithm~~sale, ~~data~~and ~~analytics~~marketing of our products. In addition, we believe that outsourcing many of our manufacturing and AIassembly ~~roadmaps~~activities ~~provide~~provides us with the flexibility inneeded ~~meeting~~to respond to new market opportunities and scale for customer demand, simplifies our ~~customers’~~operations, ~~schedules~~and significantly reduces our capital commitments.

10We believe our fabless model will allow us to scale in a capex efficient manner. We have contracted with global tier-1 foundries, including Skywater (“SW”) for silicon PICs and wafer-scale III-V device integration and testing. This US based foundry is qualified for health, consumer and defense applications and has the capacity to meet our production needs. Our high-volume III-V semiconductor foundry is consumer and telecom qualified, supports very high volumes, and runs fully automated processes at one of the largest wafer scale in III-V manufacturing globally. Finally, our global IC foundry supplier handles the manufacturing of the electronic integrated circuits for our sensing modules. The foundry is used by most major consumer OEMs and is qualified for the ultra-high volume process node that we have chosen.

~~Table~~• ofRaw ~~Contents~~Materials and Wafer Supply: The starting raw materials (SOI wafers) for our silicon photonics have been customized by world leading silicon providers for the Rockley proprietary specification. For the active III-V components, we have arrangements in place with the world’s leading epitaxial wafer supplier. We also have volume ready suppliers for commercial off-the shelf-components (“COTS”) that go into the visible sensing and the overall module.

~~Rockley’s~~11 ~~Silicon Photonics Toolbox Elements~~

Rockley’sTable proprietary silicon photonics platform covers a unique end-to-end solution, including generation of the light, manipulation of the light (modulation, multiplexing), radiation out of the module, and collection and processing of the returned light. The following provides an overview of the key components of our platform:Contents

•~~Lasers~~ Wafer Fabrication: Our ~~lasers~~SOI ~~offer~~wafers ~~precise~~are ~~wavelength~~converted ~~control~~into ~~and~~fully ~~robust~~processed ~~power~~silicon ~~efficiency~~photonics PIC wafers at Skywater. The ~~waveguide~~process ~~platform~~used ~~allows~~by ~~efficient~~SW ~~wafer-scale~~is ~~integration~~wholly ofowned ~~laser-devices~~by ~~through~~Rockley aand ~~flip-chip~~licensed for use by SW only in Rockley products. The process; design kit (“PDK”) for this process is developed and maintained by us and constitutes our intellectual property.

~~•Modulators~~For ~~and~~the ~~detectors:~~III-V Weactive ~~have~~components, ~~developed~~epitaxial ~~optical~~materials ~~modulators~~are ~~and~~processed ~~detectors~~into ~~that~~finished ~~are~~wafers ~~ultra~~at a world leading dedicated III-~~compact~~V foundry making detectors, ~~power-efficient~~lasers and ~~high~~LEDs using state-~~speed,~~of-the-art ~~capable~~wafer-scale levels of ~~handling~~automation. ~~high~~We ~~data~~have ~~rates~~adapted ~~and~~the abase ~~broad~~process ~~range~~technology from this foundry to incorporate the previously discussed elements that allow for ease of ~~wavelengths;~~integration into our platform and ease of manufacturing. These elements are exclusively for use in Rockley products.

~~•Combiners~~Finally, for ASIC manufacturing, we use a standard process node and ~~splitters:~~PDK ~~Our~~provided ~~platform~~to us by Taiwan Semiconductor Manufacturing Company, Limited. While the manufacturing process is ~~capable~~widely ofused ~~wavelength~~in ~~division~~high ~~multiplexing~~volume (~~“WDM”)~~good ~~and~~for ~~demultiplexing~~product economics), ~~enabling~~the indesign ~~excess~~know-how ofbelongs ~~100~~to ~~wavelengths~~Rockley. onThe acustom ~~single~~ASIC ~~optical~~matches ~~path;~~our silicon photonics platform optimally for low noise, low power and high level of integration.

•~~Fiber~~ ~~optic~~Chipset ~~coupling~~and module integration: ~~Our~~The ~~PIC~~chipset ~~contains~~integration onof the III-~~chip~~V ~~embedded~~active ~~interfaces~~components tointo the ~~optical~~silicon ~~fibers~~PICs is done at wafer scale and using passive alignment techniques that are uniquely enabled in our platform. ~~These~~Furthermore, ~~interfaces~~we ~~allow~~have ensured that the ~~fiber~~III-V tocomponents beare ~~passively~~in ~~attached~~arrays ~~directly~~of todevices (reduces amount of alignment and integration activities) and on pretested known good die (“KGD”) which ensures very high compounded yields. The process intellectual property (“IP”) is developed and owned by Rockley and the ~~PIC~~integration ~~without~~is ~~external~~currently ~~light~~done ~~coupling~~in ~~elements;~~the UK at pilot production volumes, with plans to outsource higher volume in the future.

~~•Free-space~~We ~~optics:~~have ~~Our~~development ~~platform~~and ~~allows~~supply ~~for~~agreements ~~efficient~~in ~~light~~place ~~coupling~~with ~~from~~our ~~free~~key ~~space~~suppliers. ~~into~~These agreements cover the development program, economic framework, IP licenses, exclusivity terms and ~~out~~other ofmatters. Although we have commenced long-term supply agreement discussions in parallel with the ~~photonics~~detailed ~~circuits~~manufacturing ramp discussions, we do not currently have any long-term supply agreements in place and transact business with ~~either~~our ~~edge~~third-party orsuppliers ~~perpendicular~~on ~~coupling~~a purchase-order basis with no minimum supply obligations on their part. ~~This~~We ~~feature~~have ~~enables~~designed aour ~~broad~~manufacturing ~~range~~partner network to be resilient by having multiple sources of ~~sensing~~supply ~~applications;~~for several key processes/components and we have plans for the appropriate inventory and stocking strategies to mitigate risks to our ramp plans.

~~•Photonic~~Commitment ~~integrated~~to ~~circuits:~~Quality ~~Our development platform enables integration of light sources, active devices, passive devices, and optical coupling elements into a single compact silicon chip;~~

~~•Wafer-scale~~We ~~processing:~~are ~~Our~~committed to excellence by creating class-leading silicon photonics-based ~~platform~~products ~~enables~~and ~~high~~services. ~~throughput~~We ~~wafer-scale~~intend ~~processing~~to ofmeet ~~monolithic~~or ~~and~~exceed ~~multi-die~~our ~~structures~~global ~~for~~customer ~~chip-on-wafer~~expectations ~~integration;~~by executing the following:

•~~Interface~~ ~~electronics:~~Creating ~~We have in~~long-house design expertise for custom analog circuitry to translate high-speed data streams into signals that actuate the PICs (drivers) and receive signals from them (amplifiers). This is complemented by our digital design capability for device controllasting, ~~signal processing~~trusting, and ~~interfaces~~mutually tobeneficial ~~our~~relationships with customers ~~systems;~~ and partners;

•~~Packaged~~ ~~assembly:~~Establishing ~~The~~a ~~assembly~~full understanding of ~~electrical~~our ~~ASICs,~~customers’ ~~PICs,~~requirements and ~~fiber~~ensuring ~~optics~~our ~~(if~~products ~~needed) into a single, highly integrated product requires a test~~ and ~~manufacturing~~services ~~flow~~meet ~~that~~their ~~enables high-volume scale.~~expectations;

~~Further~~• ~~application-based~~Building ~~expertise~~a isteam ~~focused~~of onhighly ~~the~~trained, ~~following:~~empowered, and accountable employees;

•~~Tissue~~ ~~optics~~Innovating ~~design:~~in ~~Our~~the ~~sensing~~creation ~~module~~of ~~products~~technology ~~will~~that ~~include~~drives ~~probe~~our products and ~~hardware design to optimize sensing through the skin~~services;

•~~Biomarker~~ ~~application:~~Improving ~~Our~~the ~~sensing~~effectiveness ~~algorithms~~and ~~are~~efficiency ~~being~~of ~~developed~~our ~~through~~quality ~~various~~management ~~levels~~system ofthrough ~~validation~~review ~~to provide state-~~of~~-the-art~~ ~~sensing~~results, ~~capabilities~~learning, ~~from~~and ~~proof~~enhancement ofon ~~concept~~a incontinual ~~the lab to clinical validation in human studies; and~~basis

~~•Applied~~We ~~data~~achieved ~~science~~ISO 9001:2015 certification in January 2022. We subject our third-party manufacturing contractors to rigorous qualification requirements to meet the high quality and reliability standards required of our products. We carefully qualify each of our partners and their processes. Our AIengineers work closely with our foundries (we even have teams embedded at partners sites in some critical areas) and ~~cloud~~other ~~analytics~~contractors ~~will~~to ~~aggregate~~perfect the in-house processes, ~~analyze~~increase yield, lower manufacturing costs, and ~~assess~~improve ~~spectral~~product ~~data~~quality. ~~from~~See ~~our~~“Risk ~~sensing~~Factors – Risks ~~products~~Related to ~~extract~~Rockley’s ~~additional~~Business ~~insights~~and Industry” for a discussion of risks related to the semiconductor industry and ~~algorithm~~Rockley’s ~~improvements~~manufacturing processes and foundry relationships.

~~Current~~Research ~~Product~~and ~~Offerings~~Development

We ~~have~~believe that our future success depends on our ability to develop new products for both existing and new markets, development enhancements to our products once developed ~~two~~or ~~separate~~if ~~product~~and ~~offerings~~when commercially launched, to ~~address~~stay ahead of our ~~target~~competition by being leaders in extending the boundaries of our technologies. As a result, a significant amount of our operating expenses has been allocated towards next-generation platform development. Our research and development efforts are focused primarily on extending the functionality and addressable markets: ~~(i)~~of ~~VitalSpex~~our ~~(consume~~integrated ~~domain);~~photonics platform, as well as continually increasing its performance, efficiency, and ~~(ii)~~volume ~~Bioptx~~manufacturing ~~(healthcare~~competitiveness. We have assembled a core team of experienced engineers and ~~medtech)~~systems designers with an extremely broad range of skill sets across different disciplines who conduct research and development activities in the United States and various European locations, and we are supported by partnerships with leading research institutions and consumer electronics and medical devices companies. As of December 31, 2022, we had 230 employees globally with over 80% of our workforce focused on research, product development, and engineering.

InCompetition ~~respect of the VitalSpex biomarker sensing platform:~~

~~•We~~The ~~will~~global ~~target~~optical ~~applications~~components inand ~~the~~full-stack ~~consumer~~solution ~~health~~market ~~and~~in ~~wellness~~general, ~~industry~~ and ~~expect~~the ~~strong~~consumer ~~customer~~sensor, ~~engagement~~healthcare, inand ~~the~~data ~~consumer~~communications ~~electronics~~markets ~~and~~in ~~wearables~~particular ~~market~~are highly competitive. ~~The~~We ~~VitalSpex~~expect ~~platform~~competition ~~represents~~to aincrease ~~breakthrough~~and ~~that~~intensify ~~will~~as ~~empower~~additional ~~consumer~~companies ~~electronic~~enter ~~devices,~~our ~~primarily~~target ~~personal~~markets. ~~wearables,~~Our ~~smartphones~~competitors ~~and~~range ~~homecare~~from ~~devices~~large, ~~with~~international ~~the~~companies ~~capacity~~offering ~~for~~a ~~new~~wide ~~powerful~~range ~~healthcare~~of services and ~~wellness monitoring;~~

~~•The~~12 VitalSpex line will include a range of hardware and software solutions that enable non-invasive, continuous, and real-time monitoring of multiple biomarkers, from modules and chipsets that can be integrated into a wearable form factor to cloud analytics and artificial intelligence (AI);

•TheTable VitalSpex line will include a Baseline module, which will target the measurement of core body temperature, body, hydration, blood pressure, and more, and a Pro module, which will add the measurement of alcohol, lactate, and glucose trends. Our first health monitoring product offering is expected to launch in the second half of 2022; andContents

11 optical components, such as LEDs, lasers, detectors, or PICs, to smaller companies specializing in narrow vertical markets. We expect competition in our target markets to increase in the future as existing competitors improve or expand their product offerings and as new competitors enter these markets. However, we believe that we are currently the only provider with the capability to integrate the technologies, features, and performance required by customers in our target markets. We believe that our unique silicon-photonic-based platform and the entire product ecosystem that we have developed around it will make our end-to-end offerings in the health and wellness domain difficult to replicate and provide us with a significant competitive moat. We believe this will be particularly true as we incorporate our AI and cloud-based offerings, currently under development.

~~Table~~Intellectual ofProperty ~~Contents~~

~~•The~~We ~~VitalSpex~~rely ~~Baseline~~on ~~and~~a ~~Pro~~combination ~~modules~~of ~~will~~intellectual ~~each~~property ~~combine~~rights, ~~existing~~including ~~LED-based~~patents, ~~optical~~trade ~~sensing~~secrets, ~~with~~copyrights ~~Rockley’s~~and ~~proprietary~~trademarks, ~~infrared~~and ~~optical~~contractual ~~sensing~~protections, to ~~expand~~protect ~~the~~our ~~range~~core technology and intellectual property. As of ~~biomarkers~~December 31, ~~that~~2022, ~~wearable~~we ~~devices~~had ~~can~~262 ~~measure~~issued patents and 310 other patent applications pending worldwide. ~~Our~~The ~~VitalSpex~~114 ~~modules~~issued ~~will~~and ~~include~~allowed patents in the ~~hardware~~United States expire in the years beginning in 2022 through 2040. Many of our issued patents and ~~software~~pending ~~capabilities~~patent applications relate to ~~collect~~sensors ~~information~~and ~~available~~sensor chips, and ~~relevant~~we tohave ~~the~~extensive ~~target~~geographic ~~biomarkers~~coverage over numerous relevant technology domains.

~~•We~~In addition to our own intellectual property, we also ~~plan~~use tothird-party ~~offer~~licensors ~~additional~~for ~~cloud~~certain technologies embedded in our silicon photonics solutions. These are typically non-~~based~~exclusive ~~subscription~~contracts ~~services~~provided under paid-up licenses. These licenses are generally perpetual or automatically renewed for as long as we continue to pay any maintenance fees that ~~enhance~~may ~~the~~be ~~capabilities~~due. To date, maintenance fees have not constituted a significant portion of ~~the~~our ~~VitalSpex~~annual ~~platform~~capital expenditures. We have entered into a number of licensing arrangements pursuant to which we license third-party technologies. We do not believe our business is dependent to any significant degree on any individual third-party license.

InWe ~~respect~~generally control access to and use of our confidential information and trade secrets through the ~~Bioptx~~use ~~healthcare~~of ~~sensing~~internal ~~platform:~~and external controls, including contractual protections with employees, contractors, and customers. We rely in part on the laws of the United States and international laws to protect our work. All employees and consultants are required to execute confidentiality agreements in connection with their employment and consulting relationships with us. We also require them to agree to disclose and assign to us all inventions conceived or made in connection with the employment or consulting relationship. However, we cannot guarantee that we have entered into such agreements with every such party, and we may not have adequate remedies in case of a breach of any such agreements. Our trade secrets could be disclosed to our competitors or others may independently develop substantially equivalent technologies or otherwise gain access to our trade secrets. Trade secrets can be difficult to protect and some courts inside and outside of the United States are less willing or unwilling to protect trade secrets.

~~•The~~Government ~~Bioptx~~Regulation platform will target medical institutions, such as hospitals, research clinics, pharmaceutical companies, medical device manufacturers, and other healthcare providers, offering them the ability to monitor the general health and wellness of individuals. The measurement capabilities of the Bioptx platform the potential to transform healthcare by providing real-time insights into a variety of health conditions and by enabling early detection of multiple disease states;

~~•The Bioptx platform will include a range of hardware and software solutions that enable non~~Healthcare-~~invasive,~~Related ~~continuous,~~Regulation ~~and real-time monitoring of multiple biomarkers, from a stand-alone wearable wristband to cloud analytics and artificial intelligence (AI);~~

~~•The~~Our ~~Bioptx~~solutions ~~platform~~may ~~will~~be ~~include~~incorporated ~~Baseline~~into ~~products~~multi-application, ~~(for~~health-related ~~core~~sensing, ~~body~~and ~~temperature,~~monitoring ~~body~~applications, ~~hydration~~including healthcare consumer wearables. Accordingly, ~~blood~~the ~~pressure~~end products into which our solutions are incorporated may be subject to FDA and similar or related regulations, and ~~more)~~demand for these end products or future regulated products could be adversely affected if such end products do not comply with applicable requirements. Although our target market is consumer wellness rather than medical, we intend to monitor and ~~Pro~~comply with regulations to the extent they become applicable to us, including any requirements for FDA clearance. Certain healthcare-related products ~~(which~~may ~~will~~be ~~add~~regulated by the ~~measurement~~FDA and corresponding state regulatory agencies in the United States and separate governmental authorities outside of ~~alcohol~~the United States. In the United States, ~~lactate~~the medical device industry is regulated by governmental authorities, principally the FDA and ~~glucose~~corresponding ~~trends)~~state regulatory agencies. ~~Our~~Before ~~first~~a ~~health~~new ~~monitoring~~regulated product ~~offering~~or isa ~~expected~~significant modification to ~~ship~~an existing medical device may be marketed or sold in the ~~second~~United ~~half~~States, it must comply with FDA Quality Management System regulations, and must obtain regulatory clearance or approval from the FDA, unless an exemption from pre-market review applies. In addition, certain future software functionality, whether standalone or embedded in existing or future devices, may be regulated as a medical device and require pre-market review and clearance or approval by the FDA. The process of ~~2022;~~obtaining regulatory clearances or approvals to market a medical device can be costly and time consuming, and our end customers may not be able to obtain these clearances or approvals on a timely basis, or at all, for future products. Any delay in, or failure to receive or maintain, clearance or approval for any medical device products under development could prevent us from generating revenue from our solutions incorporated into these products.

~~•We~~Medical devices are also ~~plan~~subject to ~~offer~~numerous ~~additional~~ongoing ~~cloud-based~~compliance ~~subscription~~requirements ~~services~~under the regulations of the FDA and corresponding state regulatory agencies, which can be costly and time consuming. For example, under FDA regulations medical device manufacturers are required to, among other things: (i) establish a quality management system to help ensure that ~~enhance~~their products consistently meet applicable requirements and specifications; (ii) establish and maintain procedures for receiving, reviewing, and evaluating complaints; (iii) establish and maintain a corrective and preventive action procedure; (iv) report certain device-related adverse events and product problems to the ~~capabilities~~FDA; and (v) report to the FDA the removal or correction of a distributed product. If our solutions are incorporated into any medical device products of our end customers and these customers experience any product problems requiring reporting to the ~~Bioptx~~FDA ~~platform;~~or otherwise fail to comply with applicable FDA regulations or the regulations of corresponding state regulatory agencies, it could harm our ability to sell our solutions. In addition, if our end customers in the healthcare market are subject to enforcement actions such as fines, civil penalties, injunctions, recalls of products, delays in the introduction of products into the market, and refusal of the FDA or other regulators to grant future clearances or approvals, it could harm our reputation, business, operating results, and financial condition. In addition, in the United States, the FDA has taken the position that device manufacturers are prohibited from promoting their products other than for the uses and indications set forth in the approved product labeling, and any failure to comply could subject our end customers to significant civil or criminal exposure, administrative obligations and costs, and/or other potential penalties from, and/or agreements with, the federal government.

~~•The~~13 intended markets for Bioptx products, including our wristband, are markets in the medical professional healthcare domain (i.e., not consumer) that require an optimized and dedicated solution for health monitoring. tracking, and detection; and

•WeTable expect that our customers will initially use the Bioptx platform to monitor the general wellness of individuals under care or in studies. After products in the Bioptx line receive approval from the FDA or other regulatory bodies, we anticipate that customers will expand product use into preventive and diagnostic care, such as remote patient monitoring and diagnosis.Contents

12Government regulations outside the United States have, and may continue to, become increasingly stringent and common. In the European Union, for example, the European Union Medical Device Regulation was published in 2017 and, when it entered into full force in 2020, included significant additional pre-market and post-market requirements. Penalties for regulatory non-compliance could be severe, including fines and revocation or suspension of a company’s business license, mandatory price reductions, and criminal sanctions. Future laws and regulations may have a material adverse effect on our end customers in the healthcare market, which in turn may negatively impact our ability to sell our solutions and otherwise harm our business and financial results.

~~Table~~Export ofRegulation ~~Contents~~

~~Future~~Our ~~Product~~business ~~Capabilities~~activities are also subject to various restrictions under U.S. export and similar laws and regulations, as well as various economic and trade sanctions administered by the U.S. Treasury Department’s Office of Foreign Assets Control. Further, various countries regulate the import of certain technology and have enacted or could enact laws that could limit our ability to provide customers with our products in those countries.

We ~~plan~~are toalso ~~incorporate~~subject ~~our~~to ~~biomarker~~various ~~sensing~~domestic ~~technology~~and ~~into~~international aanti-corruption ~~range of existing devices~~laws, such as ~~patches,~~the ~~wearable~~U.S. ~~bands,~~Foreign ~~and~~Corrupt ~~other~~Practices ~~monitoring~~Act ~~devices,~~and tothe ~~provide~~U.K. ~~additional~~Bribery ~~biomarker~~Act, ~~measurement~~as ~~capabilities~~well ~~not~~as ~~currently~~other ~~available.~~similar Weanti-bribery ~~continuously~~and ~~research,~~anti-kickback ~~evaluate,~~laws and ~~prioritize~~regulations. ~~the~~These ~~addition~~laws ofand ~~new~~regulations ~~biomarkers~~generally ~~into~~prohibit ~~our~~companies, ~~product~~their ~~offerings~~employees, ~~with~~and ~~the~~their ~~objective~~intermediaries offrom authorizing, offering, providing, ~~more~~and/or ~~valuable~~accepting ~~information~~improper ~~and~~payments ~~improving~~or ~~health~~other ~~insights.~~benefits ~~Our~~for ~~broad~~improper ~~range~~purposes. ofAlthough ~~addressable~~we ~~biomarkers~~take ~~are~~precautions atto ~~various~~prevent ~~stage~~violations of ~~validation~~these ~~and demonstration~~laws, ~~from~~our ~~proven~~exposure ~~science~~for toviolating ~~miniaturization.~~these ~~The~~laws ~~chart~~increases ~~below~~as ~~illustrates~~our ainternational ~~few~~presence ~~examples~~expands ofand ~~biomarkers~~as ~~for which~~ we ~~have~~increase ~~validated~~sales ~~their~~and ~~addressability~~operations ~~using~~in ~~its~~foreign ~~IR wavelengths~~jurisdictions.

New ~~Figure~~legislation 7:or ~~Lab~~regulation, ~~validation~~the application of ~~Rockley’s~~laws ~~sensing~~from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to technology in the wearables industry generally could result in significant additional compliance costs and responsibilities for our business.

~~These~~Privacy ~~biomarkers along a few others we are investigating are key in early detection, prevention, and monitoring of major chronic illnesses, as illustrated in the table below:~~

13We are or may become subject to a variety of laws and regulations in the United States and abroad regarding privacy, data protection, and data security. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws.

~~Table~~In particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of ~~Contents~~personal data. Such laws and regulations often have changes in scope, may be subject to differing interpretations, and may be inconsistent among different jurisdictions. For example, the General Data Protection Regulation (the “GDPR”), which became effective in May 2018, includes operational requirements for companies that receive or process personal data of residents of the European Union that are broader and more stringent than those previously in place in the European Union. The GDPR includes significant penalties for non-compliance, including fines of up to €20 million or 4% of total worldwide revenue. Additionally, in June 2018, California enacted the California Consumer Privacy Act (the “CCPA”), which became effective in January 2020. The CCPA requires covered companies to provide California consumers with new disclosures and expands the rights afforded consumers regarding their data. Fines for noncompliance may be up to $7,500 per violation. We cannot currently estimate the potential impact of the CCPA on our business or operations.

Additionally, ~~Figure~~we 8:rely ~~Disease~~on ~~detection~~various legal mechanisms for transferring certain personal data outside of the European Economic Area, or EEA, including the EU-U.S. Privacy Shield Framework, or Privacy Shield, and ~~management~~EU ~~potential~~Standard Contractual Clauses, or SCCs. If we fail or are perceived to fail to meet the Privacy Shield principles or our obligations under the SCCs, or if any of ~~Rockley’s~~these ~~biomarker~~legal ~~sensing~~mechanisms ~~platform~~for transferring data from the EEA are invalidated by European courts or otherwise become defunct, European Union data protection authorities or the U.S. Federal Trade Commission, or FTC, could bring enforcement actions seeking to prohibit or suspend our data transfers or alleging unfair or deceptive practices. In such cases, we could be required to make potentially expensive changes to our information technology infrastructure and business operations, and we could face legal liability, fines, negative publicity, and resulting loss of business.

~~These~~Certain ~~products~~health-related ~~are~~laws ~~still~~and ~~under~~regulations ~~development~~such as the Health Insurance Portability and Accountability Act of 1996, or HIPAA, and ~~there~~the ~~can~~Health beInformation noTechnology ~~assurance~~for ~~that~~Economic ~~these~~and ~~product~~Clinical ~~development~~Health ~~efforts~~Act, ~~will~~or ~~succeed~~HITECH, may also have an impact on our business. If we are unable to comply with the applicable privacy and security requirements under HIPAA, HITECH, or PCI DSS, or we fail to comply with BAAs that we enter into with covered entities, ~~even~~we ifcould ~~developed~~be subject to claims, ~~that~~legal ~~these~~liabilities, ~~products~~penalties, ~~will~~fines, ~~achieve~~and ~~widespread~~negative ~~market~~publicity, ~~acceptance~~which could harm our operating results.

~~Customers~~Governments are continuing to focus on privacy and data security, and it is possible that new privacy or data security laws will be passed, or existing laws will be amended in a way that is material to our business. Any significant change to applicable laws, regulations, or industry practices regarding our users’ data could require us to modify our services and features, possibly in a material manner, and may limit our ability to develop new products, services, and features. Although we have made efforts to design our policies, procedures, and systems to comply with the current requirements of applicable state, federal, and foreign laws, changes to applicable laws and regulations in this area could subject us to additional regulation and oversight, any of which could significantly increase our operating costs.

~~Our~~We ~~customers’~~strive ~~design cycle from initial engagement~~ to ~~volume~~comply ~~shipment~~with ~~typically~~all ~~ranges~~applicable ~~from~~laws, ~~three~~policies, tolegal ~~five years~~obligations, ~~with~~and ~~product~~industry ~~life~~codes ~~cycles~~ of ~~two~~conduct ~~years~~relating orto ~~more. For many of our products~~privacy, ~~which~~data ~~are technically complex~~security, weand ~~must~~data ~~engage early with our customers’ technical staff~~protection. ToThe ~~ensure~~costs ~~an adequate level~~ of ~~early~~compliance ~~engagement~~with, ~~our sales, marketing,~~ and ~~development~~other ~~engineers~~burdens ~~must~~imposed ~~work~~by, ~~closely~~the ~~with~~GDPR, ~~our customers and channel partners to understand~~CCPA, ~~identify~~HIPAA, and ~~propose~~similar ~~solutions~~laws tomay ~~meet~~limit ~~their~~the ~~systems’~~use ~~challenges.~~and Weadoption ~~work~~of ~~closely with~~ our ~~customers~~products toand ~~anticipate end customer market needs. In some cases~~services, weand/or ~~work~~require ~~with~~us ~~ecosystem partners~~ to ~~better~~incur ~~understand~~substantial ~~market~~compliance ~~trends~~costs, ~~and~~which ~~new~~could ~~requirements~~have ~~that are being placed on our end customers.~~

We14 believe that our existing commercial relationships with leading consumer and medtech customers validate our unique technology and the business opportunity at hand. Our near-term commercial focus is on a robust pipeline in consumer devices, medical devices, and life sciences companies. We have a sales funnel of over 100 potential customer targets, of which we have started discussions with 54 and entered into contracts with 17. The customers with which we are contracted represent more than 60% of wearable global volumes, six of the top ten wearables companies, and two of the top ten medtech companies. Although our near-term focus through 2024 is on our consumer wearables and medtech strategy, we believe that other markets also represent upside potential.

ToTable date, we have generated revenue primarily from non-recurring engineering (“NRE”) and development services for customer-specific designs of silicon photonics chipsets for incorporation into customers’ end products. Our two largest customers collectively accounted for 82% and 100% of our revenue in 2021 and 2020, respectively. We anticipate that revenue attributable to these customers will fluctuate from period to period, although we expect to remain dependent on these customers for a significant portion of our revenue for the foreseeable future. See “Risk Factors – Customer-Related Risks.” Our current projections anticipate that we will achieve increased revenue beginning in 2023, assuming commercial adoption of our products by consumer device manufacturers in the wearable space.Contents

We an ~~work~~adverse ~~closely~~impact ~~with~~on our ~~end~~business. ~~customers~~In ~~throughout~~addition, ~~their~~given ~~design~~that ~~cycles~~the ~~and~~scope, ~~will~~interpretation, ~~develop~~and ~~long-term~~application ~~relationships~~of asthese ~~our~~laws ~~differentiated~~and ~~technology~~regulations ~~becomes~~are ~~embedded~~often ~~into~~uncertain ~~their~~and ~~products.~~may ~~For~~be ~~example~~conflicting, weit ~~currently~~is ~~hold~~possible athat ~~development~~these obligations may be interpreted and ~~supply~~applied ~~agreement~~in ~~with~~a ~~one~~manner ~~customer~~that ~~since~~is ~~2017~~inconsistent ~~and~~from ~~have~~one ~~successfully~~jurisdiction ~~designed~~to another and ~~delivered~~may ~~critical~~conflict ~~sample~~with ~~chips~~other torules ~~them~~or our practices. AsAny afailure ~~result~~or perceived failure by us, weour ~~believe~~end wecustomers, ~~are~~or ~~well~~third-~~positioned~~party service-providers to becomply ~~designed~~with ~~into~~our ~~their~~privacy ~~product~~or ~~roadmaps~~security ~~and~~policies ~~develop~~or ~~next~~privacy-~~generation~~related ~~solutions~~legal ~~for~~obligations, the ~~their~~failure ~~future~~or ~~products.~~perceived ~~Because~~failure ~~many~~by of our ~~target~~end customers orto ~~their~~comply ~~OEMs~~with ~~are~~their ~~located~~privacy inpolicies ~~North~~or ~~America~~privacy-related ~~and~~legal ~~Asia Pacific~~obligations, weor ~~anticipate~~any ~~that~~compromise ~~a majority~~ of ~~our~~security ~~future~~that ~~revenue~~results ~~will~~in ~~come~~the ~~from~~unauthorized ~~sales~~release inor ~~these~~transfer ~~regions.~~of ~~Although~~personal adata, ~~large~~may ~~percentage~~result ofin ~~our~~governmental ~~sales~~enforcement ~~are~~actions, ~~made~~litigation, todamages, ~~customers~~penalties, inand ~~North~~negative ~~America~~publicity, weand ~~believe~~could ~~that~~also ahave ~~significant~~an ~~number~~adverse ofeffect ~~the~~on ~~systems~~our brand and ~~devices~~operating ~~designed~~results. ~~by these~~

14Cybersecurity

~~Table~~We have designed and implemented and continue to maintain a security program consisting of ~~Contents~~policies, procedures, and technology intended to maintain the privacy, security and integrity of our information, systems, and networks. Among other things, the program includes controls designed to limit and monitor access to authorized systems, networks, and data, prevent inappropriate access or modification, and monitor for threats or vulnerability.

~~customers~~Employees ~~will~~and ~~incorporate~~Human ~~our~~Capital ~~semiconductor~~Resources ~~products which are then sold to end-users globally. We expect that once our modules are commercially available, we will enter into standard supply agreements with each of these parties.~~

~~Manufacturing~~Our workforce represents a highly regarded team of silicon photonics and measurement science experts under the same organization. A significant number of our employees have advanced degrees, including a large percentage holding PhDs. As of December 31, 2022, we had 230 employees, a large percentage of whom are in technical roles, including engineering.

~~Our~~• ~~Proprietary~~The ~~Production~~quality of our employees is well recognized in the industry and ~~Manufacturing~~has ~~Ecosystem~~a strong and positive impact on our ability to develop and capitalize on our strategic operating model and business plan;

We• ~~have~~Our ~~built,~~leadership ~~and~~team ~~plan~~is torecognized ~~continue~~for toworld-leading ~~develop,~~expertise ~~a global manufacturing ecosystem designed with the ability to scale~~ in asilicon ~~rapid~~photonics design and ~~efficient manner. Several key areas within this manufacturing ecosystem run on our proprietary~~ process, ~~and~~microelectronics ~~manufacturing technologies and are protected by our intellectual property portfolio. We possess end-to-end control over~~ design, ~~manufacturing~~packaging and ~~packaging processes~~test, ~~algorithms,~~software and ~~software.~~algorithms ~~Our~~including ~~disciplined~~cloud and ~~systematic documentation and protection of critical know-how~~AI, ~~trade secrets,~~ and ~~proprietary~~applications ~~information~~in ~~further~~data ~~underpins~~communications ~~our manufacturing ecosystem. To the best of our knowledge, there are no other turnkey options with the components~~ and ~~technologies~~medical ~~needed to put together our~~ sensing; product. In addition to the intellectual property arrangements, we also have commercial exclusivity agreements with some of the key manufacturing ecosystem partners to prevent replication of this capability.and

In• ~~addition~~We tohave ~~providing~~strong ~~what~~relationship wewith ~~believe to be unmatched capabilities at the product level,~~ our ~~platform~~employees and ~~the associated technology~~ have ~~been~~never ~~designed~~experienced ~~from~~a ~~bottom~~work ~~up to consider the relative ease and cost of manufacturing and scaling~~stoppage. Elements like waveguide dimensions for ease of wafer fabrication and high yields, robust and position tolerant coupling strategies for III-V integration, wafer scale back-end activities for III-V manufacturing, and all known good die integration at the module are integral to the product and the process technology. These elements are covered by the intellectual property which we have licensed to partners in our manufacturing ecosystem.

~~Manufacturing~~Despite ~~Model~~the ~~Overview~~significant challenges facing the world economy in light of the COVID-19 pandemic, we have remained focused on our business plan and priorities. We intend to continue to focus on:

We• ~~plan~~Protecting tothe ~~operate a fabless business model and use third~~well-~~party~~being foundries and Outsource Assembly & Test (OSAT) contractors to produce our products. In several key areas, our third-party partners operate a proprietary process wholly owned by us and protected by our intellectual property portfolio. This outsourced manufacturing approach allows us to focus our resources on the design, sale, and marketing of our ~~products.~~employees ~~In addition, we believe that outsourcing many of our manufacturing~~ and ~~assembly~~keeping ~~activities~~them ~~provides~~healthy ~~us with the flexibility needed to respond to new market opportunities~~ and ~~scale for customer demand, simplifies our operations, and significantly reduces our capital commitments.~~engaged;

We• ~~believe~~Making our ~~fabless~~physical ~~model~~workplaces ~~will~~safe ~~allow us to scale in a capex efficient manner. We have contracted with global tier-1 foundries, including Skywater (“SW”) for silicon PICs~~ and wafer-scale III-V device integration and testing. This US based foundry is qualified for health, consumer and defense applications and has the capacity to meet our production needs. Our high-volume III-V semiconductor foundry is consumer and telecom qualified, supports very high volumes, and runs fully automated processes at one of the largest wafer scale in III-V manufacturing globally. Finally, our global IC foundry supplier handles the manufacturing of the electronic integrated circuits for our sensing modules. The foundry is used by most major consumer OEMs and is qualified for the ultra-high volume process node that we have chosen.compliant;

•~~Raw~~ ~~Materials~~Building ~~and~~out ~~Wafer~~efficient ~~Supply:~~global ~~The~~human ~~starting~~resource ~~raw~~information ~~materials~~systems (SOI wafers) for our silicon photonics have been customized by world leading silicon providers for the Rockley proprietary specification. For the active III-V components, we have arrangements in place with the world’s leading epitaxial wafer supplier. We also have volume ready suppliers for commercial off-the shelf-components (“COTS”) that go into the visible sensing and ~~the overall module.~~processes;

•~~Wafer~~ ~~Fabrication:~~Recruiting ~~Our SOI wafers are converted into fully processed silicon photonics PIC wafers at Skywater. The process used by SW is wholly owned by Rockley~~ and ~~licensed~~staff ~~for~~retention ~~use by SW only in Rockley products. The process design kit (“PDK”)~~ for ~~this~~critical ~~process~~skills ~~is developed~~ and ~~maintained by us and constitutes our intellectual property.~~competencies;

~~For~~• ~~the~~Investing ~~III-V~~in ~~active components, epitaxial materials are processed into finished wafers at a world leading dedicated III-V foundry making detectors, lasers and LEDs using state-of-~~the~~-art~~ ~~wafer-scale~~development ~~levels~~ of ~~automation.~~current ~~We have adapted the base process technology from this foundry to incorporate the previously discussed elements that allow for ease of integration into our platform~~ and ~~ease~~future ofleadership; ~~manufacturing. These elements are exclusively for use in Rockley products.~~and

~~Finally,~~• ~~for~~Creating ~~ASIC~~sustainable ~~manufacturing~~operations, wewhile ~~use~~building aresilience, ~~standard~~efficiency ~~process node~~ and ~~PDK~~flexibility ~~provided~~into ~~to us by Taiwan Semiconductor Manufacturing Company~~everything, ~~Limited.~~from ~~While~~strategy ~~the~~to ~~manufacturing~~work ~~process is widely used in high volume (good for product economics), the~~ design ~~know-how belongs to Rockley~~. ~~The custom ASIC matches our silicon photonics platform optimally for low noise, low power and high level of integration.~~

15Facilities

~~Table~~Our headquarters are currently located in the United Kingdom. We have premises in Pasadena, California under multiple leases for approximately 18,000 square feet, with most leases for these premises expiring around June 2023. The premises in Pasadena are predominantly used for engineering, finance, and general administration services. We lease a property in San Jose, California of ~~Contents~~approximately 4,600 square feet under a lease expiring in 2024, which is predominantly used for sales and marketing, finance, and general administration services. In Irvine, California we accommodate our sensor application facility and additional office space under multiple leases for approximately 12,000 square feet, all expiring in July 2027. We believe that our current facilities are sufficient to support our operations and growth plans and that additional space, if needed, will be available on commercially reasonably terms.

~~•Chipset~~Website ~~and~~Access module integration: The chipset integration of the III-V active components into the silicon PICs is done at wafer scale and using passive alignment techniques that are uniquely enabled in our platform. Furthermore, we have ensured that the III-V components are in arrays of devices (reduces amount of alignment and integration activities) and on pretested known good die (“KGD”) which ensures very high compounded yields. The process intellectual property (“IP”) is developed and owned by Rockley and the integration is currently done in the UK at pilot production volumes, with plans to ~~outsource~~Company’s ~~higher~~Reports ~~volume in the future.~~

~~The~~Our ~~integration~~website ofaddress ~~the~~is ~~overall~~www.rockleyphotonics.com. ~~module~~Our isAnnual inReport on Form 10-~~line~~K, ~~with~~Quarterly ~~assemblies~~Reports ~~used~~on ~~for~~Form ~~wearables~~10-Q, ~~and~~Current ~~mobile~~Reports ~~devices~~on Form 8-K, and ~~there~~amendments ~~are~~to ~~many~~those ~~global~~reports ~~suppliers~~filed ~~with~~or ~~this~~furnished ~~capability.~~pursuant Weto ~~have~~Section 13(a) ~~engaged~~or ~~with~~15(d) ~~leading~~of ~~suppliers~~the ~~that~~Securities ~~serve~~Exchange ~~Tier-1~~Act ~~consumers~~of in1934, ~~this~~as ~~space~~amended ~~and~~(the ~~expect~~“Exchange toAct”), ~~finalize~~are ~~these~~available ~~arrangements~~free ~~for~~of ~~assembly~~charge ~~within~~through ~~2022~~our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.

WeDisclosure ~~have~~Information development and supply agreements in place with our key suppliers. These agreements cover the development program, economic framework, IP licenses, exclusivity terms and other matters. Although we have commenced long-term supply agreement discussions in parallel with the detailed manufacturing ramp discussions, we do not currently have any long-term supply agreements in place and transact business with our third-party suppliers on a purchase-order basis with no minimum supply obligations on their part. We have designed our manufacturing partner network to be resilient by having multiple sources of supply for several key processes/components and we have plans for the appropriate inventory and stocking strategies to mitigate risks to our ramp plans.

~~Commitment~~In compliance with disclosure obligations under Regulation FD, we announce material information to ~~Quality~~the public through a variety of means, including filings with the Securities and Exchange Commission, press releases, company blog posts, public conference calls and webcasts, as well as our investor relations website.

We15 ~~are committed to excellence by creating class-leading silicon photonics-based products and services. We intend to meet or exceed our global customer expectations by executing the following:~~

•CreatingTable long-lasting,of trusting, and mutually beneficial relationships with customers and partners;Contents

~~•Establishing~~Item 1A. aRisk ~~full~~Factors ~~understanding of our customers’ requirements and ensuring our products and services meet their expectations;~~

~~•Building~~Unless aspecifically ~~team~~noted or the context clearly requires otherwise, all information set forth in this annual report on Form 10-K relates to the Company as it existed as of ~~highly~~December 31, ~~trained~~2022 and prior to the Company’s bankruptcy proceedings and does not, ~~empowered~~and is not intended and should not be read to, reflect the business, financial condition, and ~~accountable~~results ~~employees;~~of operations of any other entity, including any entity which may result from the bankruptcy proceedings.

~~•Innovating~~As used in the ~~creation~~risks ofdescribed ~~technology~~in ~~that~~this ~~drives~~subsection, references to “the Company,” “Rockley,” “we,” “us,” and “our,” are ~~products~~intended to refer to the business and ~~services;~~operations of Rockley, unless the context clearly indicates otherwise.

~~•Improving~~Rockley ~~the~~may ~~effectiveness~~be ~~and~~unable ~~efficiency~~to ofsuccessfully ~~our~~implement ~~quality~~the ~~management~~Plan ~~system~~of ~~through~~Reorganization ~~review~~and ofcould ~~results,~~therefore ~~learning,~~be ~~and~~required ~~enhancement~~to oncease aoperations. ~~continual basis~~

WeOn ~~achieved~~March 10, ~~ISO~~2023, ~~9001:2015~~Rockley ~~certification in~~filed ~~January~~a ~~2022.~~voluntary Wepetition ~~subject~~for ~~our~~relief ~~third-party~~under ~~manufacturing~~chapter ~~contractors~~11 toof ~~rigorous~~title ~~qualification~~11 ~~requirements~~of tothe ~~meet~~United States Code in the ~~high~~Bankruptcy ~~quality~~Court ~~and~~to ~~reliability~~implement ~~standards~~the ~~required~~“Plan of ~~our~~Reorganization” ~~products~~in order to facilitate its restructuring. WeOn ~~carefully~~March 10, ~~qualify~~2023, ~~each~~the ofBankruptcy ~~our~~Court ~~partners~~entered ~~and~~its ~~their~~Order ~~processes.~~approving ~~Our~~the ~~engineers~~Plan ~~work~~of ~~closely~~Reorganization. ~~with~~Rockley’s ~~our~~ordinary ~~foundries~~shares ~~(we~~and ~~even~~public warrants have ~~teams~~been ~~embedded~~delisted atfrom ~~partners~~the ~~sites~~New inYork ~~some~~Stock ~~critical~~Exchange ~~areas)~~ and ~~other~~Rockley ~~contractors~~intends to ~~perfect~~file ~~the~~to ~~in-house~~deregister ~~processes,~~as ~~increase~~a ~~yield,~~public ~~lower~~company ~~manufacturing~~shortly ~~costs,~~after ~~and~~the ~~improve~~filing ~~product~~of ~~quality~~this Form 10-K. ~~See~~Rockley ~~“Risk~~may ~~Factors – Risks~~be ~~Related~~unable to ~~Rockley’s~~successfully ~~Business~~implement ~~and~~the ~~Industry”~~Plan ~~for~~of aReorganization ~~discussion~~and ofrestructuring ~~risks~~and ~~related~~could therefore fail to ~~the~~emerge ~~semiconductor~~from ~~industry~~bankruptcy, ~~and~~in which case it would cease operations as an independent company or otherwise. The risk factors described below relate to Rockley’s ~~manufacturing~~business ~~processes~~assuming ~~and~~it ~~foundry~~is ~~relationships~~able to continue its business operations.

~~Research~~Risks Related to Rockley’s Business and ~~Development~~Industry; Customer-Related Risks

WeRockley ~~believe~~has ~~that~~incurred ~~our~~net ~~future~~losses ~~success~~since ~~depends~~inception ~~on our ability to develop new products for both existing~~ and ~~new~~expects ~~markets, development enhancements~~ to ~~our~~continue ~~products once developed or if and when commercially launched,~~ to ~~stay~~incur ~~ahead~~losses offor ~~our competition by being leaders in extending~~ the ~~boundaries~~foreseeable ~~of our technologies~~future. AsIf aRockley ~~result,~~does anot ~~significant~~fully ~~amount~~develop ofor ~~our~~commercialize ~~operating~~its ~~expenses~~products ~~has been allocated towards next-generation platform development. Our research~~ and ~~development~~services, ~~efforts~~including ~~are~~its ~~focused~~silicon ~~primarily on extending the functionality and addressable markets of our integrated~~ photonics ~~platform~~chipsets, asor ~~well~~if assuch ~~continually~~products ~~increasing its performance, efficiency,~~ and ~~volume~~services ~~manufacturing~~experience ~~competitiveness.~~significant Wedelays, ~~have~~Rockley’s ~~assembled~~business, afinancial ~~core~~condition, ~~team of experienced engineers~~ and ~~systems~~results ~~designers with an extremely broad range~~ of ~~skill~~operation ~~sets~~will ~~across~~be ~~different~~materially ~~disciplines who conduct research~~ and ~~development~~adversely ~~activities~~affected ~~in the United States~~ and ~~various~~Rockley ~~European~~may ~~locations,~~never ~~and~~achieve weor ~~are~~sustain ~~supported by partnerships with leading research institutions and consumer electronics and medical devices companies~~profitability. ~~As of December 31, 2021, we had 302 employees globally with over 75% of our workforce focused on research, product development, and engineering.~~

~~Competition~~Rockley has to date generated revenue primarily from non-recurring engineering (“NRE”) and development services for customer-specific designs of silicon photonics chipsets for incorporation into its customers’ end products. Rockley has incurred net losses since inception and believes that it will continue to incur operating and net losses for the foreseeable future, including for a period of time after commercialization, if any, of its silicon photonics chipsets. Even if Rockley is able to successfully develop and sell its products, there can be no guarantee that it will do so within its anticipated timeframe or that its products will be commercially successful. Rockley’s potential future profitability is dependent upon the successful development, commercial introduction, and acceptance of its products and services, including its silicon photonics chipsets for the consumer wearables market and its module applications with biomarker detection capabilities for advanced health metrics. Because Rockley will incur costs to develop and commercialize its products and services, including its chipsets and module applications, before it receives any significant revenue from any sales of such products or services, Rockley’s losses in future periods may continue. Rockley may never achieve or sustain profitability.

~~The~~Rockley ~~global~~may ~~optical~~become ~~components~~subject ~~and~~to ~~full-stack~~restrictive ~~solution~~debt ~~market~~covenants inthat ~~general,~~may ~~and~~limit ~~the~~its ~~consumer~~ability ~~sensor,~~to ~~healthcare,~~finance ~~and~~its ~~data~~future ~~communications~~operations ~~markets~~and incapital ~~particular~~needs ~~are~~and ~~highly~~to ~~competitive.~~pursue Webusiness ~~expect~~opportunities ~~competition to increase~~ and ~~intensify~~activities. ~~as additional~~

16Rockley’s financing agreements prior to the bankruptcy proceedings contained restrictive covenants, including a requirement to maintain at least $35 million cash on hand, that limit its ability to take certain actions. While these financing arrangements were extinguished in connection with the bankruptcy proceedings, Rockley may in the future need to enter into financing arrangements with similar restrictive covenants. These restrictions may limit Rockley’s ability to operate its businesses and may prohibit or limit its activity to enhance its operations or take advantage of potential business opportunities as they arise. All of these limitations are subject to significant exceptions and qualifications. These covenants could limit Rockley’s ability to finance its future operations and capital needs and its ability to pursue business opportunities and activities that may be in its interest. If Rockley breaches any such covenants it may be in default under its indebtedness, which may then become immediately due and payable. Rockley may not have, or be able to obtain, sufficient funds to make these accelerated payments. Rockley’s ability to comply with the provisions of its financing arrangements may be affected by changes in economic or business conditions or other events beyond its control.

~~Table~~If the end products into which Rockley’s products are incorporated are not fully developed and commercialized or do not achieve widespread market acceptance, or if such products experience delays, cancellations, or reductions, Rockley’s business, financial condition, and results of ~~Contents~~operations will be materially and adversely affected.

~~companies~~Rockley’s ~~enter~~success ~~our~~in ~~target~~developing ~~markets.~~and ~~Our~~commercializing ~~competitors~~its ~~range~~products ~~from~~depends in large, ~~international~~part ~~companies~~on ~~offering~~its acustomers’ ~~wide~~success ~~range~~in ~~of services and optical components~~developing, ~~such as LEDs~~commercializing, ~~lasers,~~and ~~detectors,~~achieving orwidespread ~~PICs,~~market toacceptance ~~smaller~~of ~~companies~~their ~~specializing~~end inproducts ~~narrow~~that ~~vertical~~incorporate ~~markets~~Rockley’s products. WeRockley’s ~~expect~~customers ~~competition~~may inbe ~~our~~unable ~~target markets~~ to ~~increase~~fully indevelop ~~the~~and ~~future~~commercialize, asor ~~existing~~achieve ~~competitors~~widespread ~~improve~~market oracceptance ~~expand~~of, their ~~product~~end ~~offerings~~products ~~and~~that asincorporate ~~new~~Rockley’s ~~competitors enter these markets~~products. ~~However~~Further, wethese ~~believe~~customers ~~that~~may wenot ~~are~~continue ~~currently~~to ~~the~~incorporate ~~only~~Rockley’s ~~provider~~products ~~with~~into ~~the~~their ~~capability~~end toproducts ~~integrate~~either in the ~~technologies,~~short ~~features,~~or ~~and~~long ~~performance~~term. ~~required~~If bysuch customers’ inend ~~our~~products ~~target~~are ~~markets.~~not Wefully ~~believe~~developed ~~that~~and ~~our~~commercialized, ~~unique~~fail ~~silicon-photonic-based~~to ~~platform~~achieve ~~and~~or ~~the~~maintain ~~entire~~widespread ~~product~~market ~~ecosystem~~acceptance, ~~that~~experience wedelays, ~~have~~or ~~developed~~if ~~around~~Rockley’s itcustomers ~~will~~otherwise ~~make~~choose ~~our~~not ~~end-to-end~~incorporate ~~offerings~~Rockley’s inproducts ~~the~~into ~~health~~their ~~and~~end ~~wellness~~products, ~~domain~~Rockley’s ~~difficult~~business, tofinancial ~~replicate~~condition, and ~~provide~~results usof ~~with~~operations ~~a significant competitive moat. We believe this~~ will be ~~particularly~~materially ~~true as we incorporate our AI~~ and ~~cloud-based~~adversely ~~offerings, currently under development~~affected.

~~Intellectual~~16 ~~Property~~

WeTable rely on a combination of intellectual property rights, including patents, trade secrets, copyrights and trademarks, and contractual protections, to protect our core technology and intellectual property. As of December 31, 2021, we had 182 issued patents and 298 other patent applications pending worldwide. The 101 issued and allowed patents in the United States expire in the years beginning in 2022 through 2040. Many of our issued patents and pending patent applications relate to sensors and sensor chips, and we have extensive geographic coverage over numerous relevant technology domains.Contents

InIf ~~addition~~Rockley’s toproducts ~~our~~are ~~own~~not ~~intellectual~~selected ~~property, we also use third-party licensors~~ for ~~certain~~inclusion ~~technologies embedded~~ in ~~our~~its ~~silicon~~customers’ ~~photonics~~end ~~solutions.~~products, ~~These~~including ~~are~~products ~~typically~~for ~~non-exclusive~~the ~~contracts~~consumer ~~provided~~health ~~under~~and ~~paid-up~~wellness ~~licenses.~~market, ~~These licenses are generally perpetual~~ or ~~automatically~~adopted ~~renewed~~in ~~for~~other asindustry ~~long~~verticals asor weuse ~~continue~~cases toor ~~pay~~are ~~any~~not ~~maintenance~~adopted ~~fees~~by ~~that~~leading ~~may~~consumer beand ~~due.~~medical Todevice ~~date~~companies, ~~maintenance~~life ~~fees~~sciences ~~have~~companies, ~~not~~or ~~constituted~~their arespective ~~significant~~suppliers, ~~portion~~Rockley’s ~~of our annual capital expenditures. We have entered into a number of licensing arrangements pursuant to which we license third-party technologies. We do not believe our~~ business iswill ~~dependent~~be tomaterially ~~any~~and ~~significant~~adversely ~~degree on any individual third-party license~~affected.

WeRockley ~~generally~~is ~~control~~currently ~~access~~developing toproducts ~~and~~for use ofin ~~our~~its ~~confidential~~customers’ ~~information~~end ~~and~~products, ~~trade~~which ~~secrets~~are ~~through~~in ~~the~~varying ~~use~~stages of ~~internal~~development. ~~and~~Many ~~external~~of ~~controls~~these products, including ~~contractual~~products ~~protections~~for ~~with~~consumer ~~employees~~device, ~~contractors~~medical device, and ~~customers.~~life Wesciences ~~rely~~companies, inrequire ~~part~~extensive ontesting ~~the~~or ~~laws~~qualification processes, which involve testing of Rockley’s products in the ~~United~~customers’ ~~States~~end products and ~~international~~systems, ~~laws~~as towell ~~protect~~as ~~our~~testing ~~work~~for reliability. ~~All~~These ~~employees~~qualification ~~and~~processes ~~consultants~~may ~~are~~continue ~~required~~for toseveral ~~execute~~months ~~confidentiality~~or ~~agreements~~longer. inHowever, ~~connection~~qualification ~~with~~of ~~their~~any ~~employment~~of ~~and~~Rockley’s ~~consulting~~products ~~relationships~~by ~~with~~a ~~us.~~customer Wedoes ~~also~~not ~~require~~assure ~~them~~any tosales ~~agree~~of such product by Rockley to ~~disclose~~that customer. Even after successful qualification and ~~assign~~sales toby usRockley ~~all~~of ~~inventions~~a ~~conceived~~product orto ~~made~~a customer, a subsequent revision in ~~connection~~Rockley’s ~~with~~third-party ~~the~~contractors’ ~~employment~~manufacturing process or ~~consulting~~Rockley’s ~~relationship.~~selection ~~However~~of a new supplier may require a new qualification process with Rockley’s customers, wewhich ~~cannot~~may ~~guarantee~~result ~~that~~in wedelays ~~have~~in ~~entered~~the ~~into~~sale of such ~~agreements~~product ~~with~~and ~~every~~could ~~such~~also ~~party~~result in Rockley holding excess or obsolete inventory. After Rockley’s products are qualified, ~~and~~it wecan ~~may~~take ~~not~~several ~~have~~months ~~adequate~~before ~~remedies~~the incustomer ~~case~~commences production of aend ~~breach~~products ofthat ~~any~~incorporate ~~such~~Rockley’s ~~agreements~~products. ~~Our~~Rockley ~~trade~~spends ~~secrets~~significant ~~could~~time beand ~~disclosed~~resources to ~~our~~have ~~competitors~~its orproducts ~~others~~selected ~~may~~for ~~independently~~incorporation ~~develop~~into ~~substantially~~these ~~equivalent~~end ~~technologies~~products, orwhich ~~otherwise~~is ~~gain~~known ~~access~~as toa ~~our~~“design ~~trade secrets~~win.” ~~Trade~~If ~~secrets~~Rockley ~~can~~fails beto ~~difficult~~win toa ~~protect~~significant ~~and~~number ~~some~~of ~~courts~~design ~~inside~~wins ~~and~~in ~~outside~~its oftarget ~~the~~markets, ~~United~~its ~~States~~business, ~~are~~results ~~less~~of ~~willing~~operations, orand ~~unwilling~~financial tocondition ~~protect~~will ~~trade~~be ~~secrets~~materially and adversely affected.

~~Government~~Rockley’s ~~Regulation~~limited operating history makes it difficult to evaluate its future prospects and the risks and challenges which may impact its business.

~~Healthcare-Related~~Rockley ~~Regulation~~was founded in 2013, completed development of its advanced sensing platform in 2019, launched its healthcare module offering in 2020, and has not yet fully developed and commercialized any of its products. This relatively limited operating history makes it difficult to evaluate Rockley’s future prospects and the risks and challenges it may encounter. The risks and challenges which may impact Rockley’s future prospects and business include, but are not limited to, its ability to:

~~Our~~• ~~solutions~~successfully ~~may~~commercialize beits ~~incorporated into multi-application, health-related sensing, and monitoring applications, including healthcare consumer wearables. Accordingly, the end~~ products ~~into which our solutions are incorporated may be subject to FDA~~ and ~~similar or related regulations~~services, and demand for these end products or future regulated products could be adversely affected if such end products do not comply with applicable requirements. Although our target market is consumer wellness rather than medical, we intend to monitor and comply with regulations to the extent they become applicable to us, including ~~any~~its ~~requirements~~silicon ~~for~~photonics FDA clearance. Certain healthcare-related products may be regulated by the FDA and corresponding state regulatory agencies in the United States and separate governmental authorities outside of the United States. In the United Stateschipsets, ~~the~~module ~~medical device industry is regulated by governmental authorities~~applications, ~~principally the FDA~~ and ~~corresponding~~analytics ~~state~~subscription regulatory agencies. Before a new regulated product or a significant modification to an existing medical device may be marketed or sold in the United States, it must comply with FDA Quality Management System regulations, and must obtain regulatory clearance or approval from the FDA, unless an exemption from pre-market review applies. In addition, certain future software functionality, whether standalone or embedded in existing or future devices, may be regulated as a medical device and require pre-market review and clearance or approval by the FDA. The process of obtaining regulatory clearances or approvals to market a medical device can be costly and time consuming, and our end customers may not be able to obtain these clearances or approvals on a timely basis, or at all, for future products. Any delay in, or failure to receive or maintain, clearance or approval for any medical device products under development could prevent us from generating revenue from our solutions incorporated into these products.service;

~~Medical~~• ~~devices~~develop ~~are~~innovative ~~also~~applications ~~subject~~for toits ~~numerous~~silicon ~~ongoing~~photonics ~~compliance requirements under the regulations of the FDA~~ and ~~corresponding~~sensing ~~state regulatory agencies, which can be costly and time consuming. For example, under FDA regulations medical~~ technology;

17• expand its sales and marketing activities and distribution channels;

~~Table~~• ofimprove ~~Contents~~its operational, financial, and management information systems;

~~device~~• ~~manufacturers are required to~~attract, among other things: (i) establish a quality management system to help ensure that their products consistently meet applicable requirements and specifications; (ii) establish and maintain procedures for receivinghire, ~~reviewing~~integrate, and ~~evaluating~~retain ~~complaints;~~qualified ~~(iii) establish~~talent ~~and maintain a corrective and preventive action procedure; (iv) report certain device-related adverse events and product problems~~ to ~~the~~support ~~FDA; and (v) report to~~ the ~~FDA~~growth ~~the removal or correction~~ of aits distributed product. If our solutions are incorporated into any medical device products of our end customers and these customers experience any product problems requiring reporting to the FDA or otherwise fail to comply with applicable FDA regulations or the regulations of corresponding state regulatory agencies, it could harm our ability to sell our solutions. In addition, if our end customers in the healthcare market are subject to enforcement actions such as fines, civil penalties, injunctions, recalls of products, delays in the introduction of products into the market, and refusal of the FDA or other regulators to grant future clearances or approvals, it could harm our reputation, business, operating results, and financial condition. In addition, in the United States, the FDA has taken the position that device manufacturers are prohibited from promoting their products other than for the uses and indications set forth in the approved product labeling, and any failure to comply could subject our end customers to significant civil or criminal exposure, administrative obligations and costs, and/or other potential penalties from, and/or agreements with, the federal government.;

~~Government~~• ~~regulations~~protect ~~outside~~its ~~the~~intellectual ~~United~~property States have, and may continue to, become increasingly stringent and common. In the European Union, for example, the European Union Medical Device Regulation was published in 2017 and, when it entered into full force in 2020, included significant additional pre-market and post-market requirements. Penalties for regulatory non-compliance could be severe, including fines and revocation or suspension of a company’s business license, mandatory price reductions, and criminal sanctions. Future laws and regulations may have a material adverse effect on our end customers in the healthcare market, which in turn may negatively impact our ability to sell our solutions and otherwise harm our business and financial results.portfolio;

~~Export~~• ~~Regulation~~comply with existing and new or modified laws and regulations applicable to its business;

~~Our~~• ~~business~~manage ~~activities~~capital ~~are~~expenditures ~~also~~for ~~subject~~its tocurrent ~~various restrictions under U.S. export~~ and ~~similar~~future ~~laws and regulations~~products, as well as ~~various~~its ~~economic~~supply ~~and~~chain ~~trade sanctions administered by the U.S. Treasury Department’s Office of Foreign Assets Control. Further, various countries regulate the import of certain technology~~ and ~~have~~supplier ~~enacted or could enact laws that could limit our ability to provide customers with our products in those countries.~~relationships;

We• ~~are~~anticipate ~~also~~and ~~subject~~respond to ~~various~~macroeconomic ~~domestic~~changes and ~~international~~changes ~~anti-corruption~~in ~~laws, such as~~ the ~~U.S.~~markets Foreign Corrupt Practices Act and the U.K. Bribery Act, as well as other similar anti-bribery and anti-kickback laws and regulations. These laws and regulations generally prohibit companies, their employees, and their intermediaries from authorizing, offering, providing, and/or accepting improper payments or other benefits for improper purposes. Although we take precautions to prevent violations of these laws, our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in ~~foreign~~which ~~jurisdictions.~~it operates;

~~New~~• ~~legislation~~effectively ormanage ~~regulation,~~its ~~the~~growth ~~application~~and ~~of laws from jurisdictions whose laws do not currently apply to our~~ business operations, orincluding the ~~application~~impacts of ~~existing laws and regulations to technology in~~ the ~~wearables~~COVID-19 ~~industry~~pandemic ~~generally~~on ~~could~~its ~~result~~business; ~~in significant additional compliance costs~~ and ~~responsibilities for our business.~~

~~Privacy~~• hire, integrate, and retain qualified talent to support the growth of its business.

WeIf ~~are~~Rockley orfails ~~may~~to ~~become~~successfully ~~subject~~manage tothe arisks ~~variety~~and ofdifficulties ~~laws~~that it faces, its business, financial condition, and ~~regulations~~results inof ~~the~~operations ~~United~~could ~~States~~be materially and ~~abroad~~adversely ~~regarding~~affected. ~~privacy~~Further, ~~data~~because ~~protection,~~Rockley has a limited operating history and ~~data~~has ~~security~~not yet commercialized its products, it is difficult to accurately assess its future prospects or financial performance. ~~These~~Rockley ~~laws~~has encountered in the past, and ~~regulations~~will ~~are~~encounter ~~continuously~~in ~~evolving~~the future, risks and ~~developing~~uncertainties frequently experienced by growing companies with limited operating histories in rapidly changing industries. ~~The~~If ~~scope~~Rockley’s assumptions regarding these risks and ~~interpretation~~uncertainties, ofwhich ~~the~~it ~~laws~~uses ~~that~~to plan and operate its business, are incorrect or ~~may~~change, beor ~~applicable~~if toit usdoes ~~are~~not ~~often~~address ~~uncertain~~these risks successfully, its results of operations could differ materially from its expectations and ~~may~~its bebusiness, ~~conflicting~~financial condition, ~~particularly~~and ~~with~~results ~~respect~~of tooperations ~~foreign~~could ~~laws~~be materially and adversely affected.

InThe ~~particular,~~strategic ~~there~~initiatives ~~are~~Rockley ~~numerous~~may ~~U.S.~~undertake ~~federal,~~in ~~state, and local laws and regulations and foreign laws and regulations regarding privacy and~~ the ~~collection,~~future ~~sharing, use, processing, disclosure, and protection of personal data. Such laws and regulations often have changes in scope,~~ may be subject to differing interpretations, and may be inconsistent among different jurisdictions. For example, the General Data Protection Regulation (the “GDPR”), which became effective in May 2018, includes operational requirements for companies that receive or process personal data of residents of the European Union that are broader and more ~~stringent~~costly than ~~those~~currently ~~previously~~anticipated inand ~~place~~Rockley inmay ~~the~~not ~~European~~generate ~~Union.~~sufficient ~~The~~revenue ~~GDPR includes significant penalties for non-compliance, including fines of up~~ to ~~€20 million~~offset orthe 4%costs of ~~total~~these ~~worldwide revenue. Additionally~~initiatives, ~~in June 2018, California enacted the California Consumer Privacy Act (the “CCPA”),~~ which ~~became effective~~ in ~~January~~turn ~~2020.~~would ~~The~~negatively ~~CCPA~~impact ~~requires~~Rockley’s ~~covered~~ability ~~companies~~ to ~~provide~~achieve ~~California consumers with new disclosures~~ and ~~expands~~maintain ~~the rights afforded consumers regarding their data~~profitability. ~~Fines for noncompliance may be up to $7,500 per violation. We cannot currently estimate the potential impact of the CCPA on our business or operations.~~

18Rockley may in the future invest in initiatives designed to grow its business, including:

~~Table~~• ofpartnering ~~Contents~~with customers and potential customers to develop and commercialize Rockley’s products;

~~Additionally,~~• weinvesting ~~rely~~in onresearch ~~various legal mechanisms for transferring certain personal data outside of the European Economic Area, or EEA, including the EU-U.S. Privacy Shield Framework, or Privacy Shield,~~ and EU Standard Contractual Clauses, or SCCs. If we fail or are perceived to fail to meet the Privacy Shield principles or our obligations under the SCCs, or if any of these legal mechanisms for transferring data from the EEA are invalidated by European courts or otherwise become defunct, European Union data protection authorities or the U.S. Federal Trade Commission, or FTC, could bring enforcement actions seeking to prohibit or suspend our data transfers or alleging unfair or deceptive practices. In such cases, we could be required to make potentially expensive changes to our information technology infrastructure and business operations, and we could face legal liability, fines, negative publicity, and resulting loss of business.development;

~~Certain~~17 health-related laws and regulations such as the Health Insurance Portability and Accountability Act of 1996, or HIPAA, and the Health Information Technology for Economic and Clinical Health Act, or HITECH, may also have an impact on our business. If we are unable to comply with the applicable privacy and security requirements under HIPAA, HITECH, or PCI DSS, or we fail to comply with BAAs that we enter into with covered entities, we could be subject to claims, legal liabilities, penalties, fines, and negative publicity, which could harm our operating results.

GovernmentsTable are continuing to focus on privacy and data security, and it is possible that new privacy or data security laws will be passed, or existing laws will be amended in a way that is material to our business. Any significant change to applicable laws, regulations, or industry practices regarding our users’ data could require us to modify our services and features, possibly in a material manner, and may limit our ability to develop new products, services, and features. Although we have made efforts to design our policies, procedures, and systems to comply with the current requirements of applicable state, federal, and foreign laws, changes to applicable laws and regulations in this area could subject us to additional regulation and oversight, any of which could significantly increase our operating costs.Contents

We• ~~strive~~investing to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data security, and data protection. The costs of compliance with, and other burdens imposed by, the GDPR, CCPA, HIPAA, and similar laws may limit the use and adoption of our products and services, and/or require us to incur substantial compliance costs, which could have an adverse impact on our business. In addition, given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be conflicting, it is possible that these obligations may be interpreted and applied in aits ~~manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us~~workforce, ~~our~~including ~~end~~its ~~customers,~~engineering or third-party service-providers to comply with our privacy or security policies or privacy-related legal obligations, the failure or perceived failure by our end customers to comply with their privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personal data, may result in governmental enforcement actions, litigation, damages, penalties, and negative publicity, and could also have an adverse effect on our brand and operating results.talent;

~~Cybersecurity~~• expanding its sales, marketing, and distribution efforts;

We• ~~have~~investing ~~designed~~in ~~and~~new ~~implemented~~applications and ~~continue~~markets to maintain a security program consisting of policies, procedures, and technology intended to maintain the privacy, security and integrity of our information, systems, and networks. Among other things, the program includes controls designed to limit and monitor access to authorized systems, networks, and data, prevent inappropriate access or modification, and monitor for ~~threats~~its orproducts; ~~vulnerability.~~and

~~Employees~~• ~~and~~partnering ~~Human~~with ~~Capital~~third-parties ~~Resources~~to develop manufacturing processes.

~~Our~~These ~~workforce~~initiatives ~~represents~~may abe ~~highly~~more ~~regarded~~costly ~~team~~than anticipated and Rockley may not generate sufficient revenue to offset the costs of ~~silicon~~these ~~photonics~~initiatives. Certain of Rockley’s market opportunities, such as healthcare monitoring devices incorporating sensing capabilities for disease detection and ~~measurement~~management, ~~science~~are ~~experts~~at ~~under~~an ~~the~~early ~~same~~stage ~~organization~~of development, and it may be years before these end markets generate demand for Rockley’s products at scale, if at all. ARockley’s ~~significant~~revenue may be adversely affected for a number of ~~our~~reasons, ~~employees~~including ~~have~~the ~~advanced~~rate ~~degrees~~and degree of development or market acceptance of new technology that competes with its products, ~~including~~failure aof ~~large~~Rockley’s ~~percentage~~customers ~~holding~~to ~~PhDs.~~develop Asand commercialize their end products that incorporate Rockley’s products, Rockley’s inability to effectively manage production of ~~December 31~~its products to scale, ~~2021~~Rockley’s inability to enter new markets or help its customers adopt Rockley’s products for new applications, weand ~~had~~Rockley’s ~~302~~failure ~~employees~~to attract new customers or expand orders from existing customers. Further, ait ~~large~~is ~~percentage~~difficult to predict the size and growth rate of ~~whom~~Rockley’s ~~are~~target markets, customer demand for its products, commercialization timelines, developments in ~~technical~~silicon ~~roles~~photonics technology, ~~including~~the ~~engineering~~entry of competitive products, or the success of existing competitive products and services. If Rockley’s revenue does not grow over the short or long term, its ability to achieve and maintain profitability will be adversely affected, and the value of its business may significantly decrease.

~~•The~~Rockley ~~quality~~expects ofits ~~our~~results ~~employees~~of isoperations ~~well recognized in the industry and has a strong and positive impact on our ability~~ to ~~develop~~fluctuate ~~and capitalize~~ on ~~our~~a ~~strategic~~quarterly ~~operating model~~ and ~~business~~annual ~~plan;~~basis.

~~•Our~~Rockley’s ~~leadership~~revenue ~~team~~and isoperating ~~recognized~~results have fluctuated in the past and may vary significantly in the future. Historical comparisons of its operating results may not be relevant, or indicative of future results. In particular, because Rockley’s revenue to date has been generated from NRE and development services for ~~world~~customer-~~leading~~specific ~~expertise~~designs inof silicon photonics ~~design~~chipsets ~~and~~for ~~process,~~testing ~~microelectronics~~in ~~design~~the customers’ end products, ~~packaging~~revenue in any given quarter or period can fluctuate based on the timing and ~~test~~success of its customers’ development projects. Accordingly, ~~software~~the ~~and~~results ~~algorithms~~of ~~including~~any ~~cloud~~one quarter should not be relied upon as an indication of future performance. Rockley’s quarterly and AIannual financial results may fluctuate as a result of a variety of factors, ~~and~~many ~~applications~~of inwhich ~~data~~are ~~communications~~outside ~~and~~of ~~medical~~its ~~sensing;~~control and may not fully reflect the underlying performance of Rockley’s business.

~~•We~~Rockley’s ~~have~~target ~~strong~~customer ~~relationship~~and ~~with~~product ~~our~~markets ~~employees~~may not grow or develop as Rockley currently expects, and ~~have~~if ~~never~~Rockley ~~experienced~~fails ato ~~work~~penetrate ~~stoppage~~new markets and scale successfully within those markets, Rockley’s revenue and financial condition would be harmed.

~~Despite~~Rockley’s target markets include the ~~significant~~consumer ~~challenges~~wearables, ~~facing~~mobile ~~the~~device, ~~world~~and ~~economy~~medical device markets. Any deterioration in ~~light~~Rockley’s target customer or product markets or reduction in capital spending to support these markets could lead to a reduction in demand for Rockley’s products, which would adversely affect its revenue and results of ~~the~~operations. ~~COVID-19~~Further, ~~pandemic~~if Rockley’s target customer markets do not grow or develop in ways that Rockley currently expects, wedemand ~~have~~for ~~remained~~Rockley’s ~~focused~~products onmay ~~our~~not materialize as expected, which would also negatively impact its business, ~~plan~~financial condition, and ~~priorities~~results of operations. WeRockley ~~intend~~may be unable to ~~continue~~predict the timing or development of trends in its target markets with any accuracy. If Rockley fails to ~~focus~~accurately ~~on:~~predict market requirements or market demand for these solutions, Rockley’s business may suffer.

~~•Protecting~~Rockley’s future revenue growth, if any, will depend in part on Rockley’s ability to penetrate Rockley’s current target markets, and to enter emerging markets, such as the ~~well-being~~market for consumer healthcare monitoring devices and predictive analytics. Meeting the technical requirements and securing design wins in any of ~~our~~these ~~employees~~new markets will require a substantial investment of Rockley’s time and ~~keeping~~resources. ~~them~~Rockley ~~healthy~~may not secure design wins from these or other new markets, or achieve meaningful revenue from sales in these markets. If any of these markets do not develop as Rockley currently anticipates or if Rockley is unable to penetrate and ~~engaged;~~scale them successfully, it may adversely affect Rockley’s ability to grow its business.

19Rockley’s target markets are characterized by rapid technological change, which requires Rockley to continue to develop new products and technology innovations and could adversely affect market adoption of its products.

~~Table~~Rapid technological changes in the markets for sensing technology, including the consumer wearables, mobile device, and medical device markets, could adversely affect adoption of ~~Contents~~Rockley’s products, either generally or for particular applications. Rockley’s future success will depend upon its ability to develop and introduce a variety of new capabilities and innovations to its products, as well as introduce new products, to address the changing needs of its target markets. Delays in delivering new products that meet customers’ requirements could damage Rockley’s relationships with its customers and lead them to seek alternative sources of supply. Further, the introduction of new products by Rockley’s competitors, the delay or cancellation of any of Rockley’s customers’ end products into which Rockley’s products are designed, the market acceptance of products based on new or alternative technologies, or the emergence of new industry standards could render Rockley’s existing or future products uncompetitive, obsolete, and/or otherwise unmarketable.

~~•Making~~In ~~our~~addition, ~~physical~~Rockley’s ~~workplaces~~success ~~safe~~to date has been based on the delivery of prototypes and ~~compliant;~~services to research and development programs in which customers are investing substantial capital to develop new products. Delays in introducing products and innovations, the failure to choose correctly among technical alternatives, or the failure to offer innovative products at competitive

~~•Building~~18 ~~out efficient global human resource information systems and processes;~~

•RecruitingTable andof staff retention for critical skills and competencies;Contents

~~•Investing~~ prices inmay ~~the~~cause ~~development~~existing ofand ~~current~~potential customers to purchase Rockley’s competitors’ products or turn to alternative sensing technology. If Rockley is unable to successfully develop products that meet changing customer or market requirements on a timely basis or that remain competitive with technological alternatives, its products may fail to achieve commercial adoption, its revenue will decline, it may experience operating losses, and ~~future~~its ~~leadership;~~business and prospects will be adversely affected.

~~•Creating~~Rockley ~~sustainable~~may ~~operations,~~be ~~while~~unable ~~building~~to ~~resilience,~~make ~~efficiency~~the ~~and~~substantial ~~flexibility~~investments ~~into~~that ~~everything,~~are ~~from~~required ~~strategy~~ to ~~work~~remain ~~design~~competitive.

~~Facilities~~The silicon photonics industry requires substantial and continuous investment in research and development in order to bring to market new and enhanced solutions. Rockley expects its research and development expenditures to increase in the future as part of its strategy to increase demand for Rockley’s solutions in Rockley’s current target markets and to expand into additional markets. Rockley may not have sufficient resources to maintain the level of investment in research and development required to remain competitive. In addition, Rockley cannot assure you that the technologies that are the focus of its research and development expenditures will become commercially successful or generate any revenue.

~~Our~~If ~~headquarters~~Rockley ~~are~~fails currently located in the United Kingdom. We have premises in Pasadena, California under multiple leases for approximately 18,000 square feet, with most leases for these premises expiring around June 2023. The premises in Pasadena are predominantly used for engineering, finance, and general administration services. We lease a property in San Jose, California of approximately 4,600 square feet under a lease expiring in 2024, which is predominantly used for sales and marketing, finance, and general administration services. To support headcount growth over the past year, we continue to ~~explore~~compete ~~options and timing for improving and expanding our facilities. In the United States~~effectively, weit ~~recently~~may ~~expanded~~lose ~~our~~or ~~premises~~fail ~~in Irvine, California~~ to ~~accommodate~~gain ~~our~~market ~~sensor application facility and additional office space and have under multiple leases for approximately 12~~share,~~000~~ ~~square~~which ~~feet,~~could ~~all~~negatively ~~expiring~~impact inRockley’s ~~July~~operating ~~2027.~~results In the United Kingdom, we have a lease on our lab facilities in Wales for approximately 1,733 square feet due to expire in 2024. We also recently entered into a facilities access agreement for new premises at the Tyndall Institute in Cork, Ireland for a new laboratory and ~~office~~Rockley’s ~~space of approximately 600 square feet~~business. ~~We believe that our current facilities are sufficient to support our operations and growth plans and that additional space, if needed, will be available on commercially reasonably terms.~~

~~Website~~The ~~Access~~global optical components market in general, and the consumer sensor, healthcare, and data communications markets in particular, are highly competitive. Rockley expects competition to ~~Company~~increase and intensify as additional companies enter Rockley’s ~~Reports~~target markets. Increased competition could result in price pressure, reduced gross margins, and difficulty achieving market penetration, any of which could harm Rockley’s business, financial condition, and results of operations. Rockley’s competitors range from large, international companies offering a wide range of services and optical components, such as LEDs, lasers, detectors, or photonic integrated circuit (“PICs”), to smaller companies specializing in narrow market verticals. Rockley expects competition in its target markets to increase in the future as existing competitors improve or expand their product offerings and as new competitors enter these markets. Rockley’s ability to compete successfully depends, in part, on factors that are outside of its control, including industry and general economic trends. Rockley’s competitors may also establish cooperative relationships among themselves or with third parties or may acquire companies that provide similar products to Rockley’s. As a result, new competitors or alliances may emerge that could capture significant market share. Any of these factors, alone or in combination with others, could harm Rockley’s business, financial condition, and results of operations and result in a loss of market share and an increase in pricing pressure.

~~Our~~Rockley’s ~~website~~international ~~address~~operations isexpose ~~www.rockleyphotonics.com.~~it ~~Our~~to ~~Annual~~operational, ~~Report on Form 10-K~~financial, ~~Quarterly~~and ~~Reports~~regulatory ~~on Form 10-Q~~risks, ~~Current~~including ~~Reports~~possible onunfavorable ~~Form 8-K~~regulatory, ~~and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934~~political, ~~as amended (the “Exchange Act”)~~tax, ~~are~~and ~~available~~labor ~~free of charge through our website as soon as reasonably practicable after they are electronically filed with~~conditions, orwhich ~~furnished~~could ~~to,~~harm ~~the~~Rockley’s ~~SEC~~business.

~~Disclosure~~Rockley’s ~~Information~~international operations are subject to a number of other risks, including:

In• ~~compliance~~foreign ~~with~~currency ~~disclosure obligations under Regulation FD~~fluctuations, wewhich ~~announce~~could ~~material~~result ~~information~~in toincreased ~~the~~operating ~~public~~expenses ~~through a variety of means, including filings with the Securities~~ and ~~Exchange~~reduced ~~Commission, press releases, company blog posts, public conference calls and webcasts, as well as our investor relations website.~~revenue;

20• political and economic instability, international terrorism, and anti-American or British sentiment, particularly in emerging markets;

~~Table~~• disadvantages of ~~Contents~~competing against companies from countries that are not subject to U.S. and U.K. laws and regulations, including the Foreign Corrupt Practices Act, Office of Foreign Assets Control regulations, and U.S. anti-money laundering regulations, as well as exposure of Rockley’s foreign operations to liability under these regulatory regimes;

~~Item~~• ~~1A.Risk~~preference ~~Factors~~for locally branded products, and laws and business practices favoring local competition;

~~Shareholders~~• ~~should~~potential ~~carefully~~consequences ~~consider the following risk factors, together with all~~ of ~~the other information included in this Annual Report on Form 10-K~~, ~~including the financial statements~~ and ~~notes~~uncertainty torelated ~~the financial statements included herein, before they decide whether~~ to ~~vote or instruct their vote to be cast to approve the proposals described in this Annual Report on Form 10-K. If any of the following risks occur~~, ~~or if Rockley fail to manage these risks and uncertainties successfully, it may have a material adverse effect on~~ the business, results of operations, or financial condition of Rockley. Further, if any of the following risks or events occur, it could have a material adverse effect on the trading price of the ordinary shares of Rockley. If any of the risks or events described below occur, shareholders may lose all or part of their investment. The risks and uncertainties described in this “~~Risk Factors~~Brexit” ~~section~~process ~~or elsewhere~~ in ~~this Annual Report on Form 10-K may also be incorrect or may change and should be read together with~~ the ~~financial~~United ~~statements~~Kingdom, ~~and~~which ~~notes~~could tolead ~~the financial statements included herein. Additional risks and uncertainties presently unknown~~ to ~~Rockley~~additional ~~may~~expense ~~also have a material~~ and ~~adverse~~complexity ~~impact~~in ondoing ~~the~~business ~~company.~~there;

As• ~~used~~less ineffective ~~the~~protection ~~risks described in this subsection, references to “the Company,” “Rockley,” “we,” “us,” and “our,” are intended to refer to the business and operations~~ of ~~Rockley,~~intellectual ~~unless the context clearly indicates otherwise.~~property;

~~Risks~~• ~~Related~~stringent toregulation of the end products incorporating Rockley’s ~~Business~~products and ~~Industry;~~stringent ~~Customer-Related~~consumer ~~Risks~~protection and product compliance regulations, including but not limited to General Data Protection Regulation in the European Union, European competition law, the Restriction of Hazardous Substances Directive, the Waste Electrical and Electronic Equipment Directive, and the European Ecodesign Directive that are costly to comply with and may vary from country to country;

~~Rockley~~• ~~has~~difficulties ~~incurred net losses since inception~~ and ~~expects~~costs to continue to incur losses for the foreseeable future. If Rockley does not fully develop or commercialize its products and services, including its silicon photonics chipsets, or if such products and services experience significant delays, Rockley’s business, financial condition, and results of ~~operation~~staffing ~~will be materially~~ and ~~adversely~~managing ~~affected~~foreign ~~and Rockley may never achieve or sustain profitability.~~operations;

~~Rockley~~• ~~has~~foreign to date generated revenue primarily from non-recurring engineering (“NRE”) and development services for customer-specific designs of silicon photonics chipsets for incorporation into its customers’ end products. Rockley incurred a net loss of $168.0 million and $80.3 million for the years ended December 31taxes, 2021and 2020, respectively. For the years ended December 31, 2021 and 2020, Rockley had an accumulated deficit of $400.9 million and $232.9 million, respectively. Rockley believes that it will continue to incur operating and net losses for the foreseeable future, including ~~for~~withholding ~~a period~~ of ~~time~~payroll ~~after commercialization of its silicon photonics chipsets, which is not currently expected to begin until the second half of 2022~~taxes; ~~provided that any such commercialization may occur later than the second half of 2022 or not at all. Even if Rockley is able to successfully develop~~ and sell its products, there can be no guarantee that it will do so within its anticipated timeframe or that its products will be commercially successful. Rockley’s potential future profitability is dependent upon the successful development, commercial introduction, and acceptance of its products and services, including its silicon photonics chipsets for the consumer wearables market and its module applications with biomarker detection capabilities for advanced health metrics. Because Rockley will incur costs to develop and commercialize its products and services, including its chipsets and module applications, before it receives any significant revenue from any sales of such products or services, Rockley’s losses in future periods may continue. Rockley may never achieve or sustain profitability.

~~Rockley~~• ~~expects~~the toU.S. ~~continue~~government’s toand ~~incur~~U.K. ~~operating~~government’s ~~losses~~restrictions ~~for~~on ~~the~~certain ~~foreseeable~~technology ~~future~~transfer asto ~~it:~~certain countries of concern.

~~•continues~~For toexample, ~~invest~~Rockley inhas ~~its~~significant ~~technology~~international ~~and~~operations ~~its~~that ~~silicon~~are ~~photonics~~denominated ~~chipsets~~in foreign currencies, primarily the British Pound and ~~modules~~Euro, assubjecting ~~well~~us asto foreign currency exchange risk that may adversely impact our financial results. The occurrence of any of these risks could negatively affect Rockley’s international business and consequently its ~~cloud-based~~business, ~~analytics~~operating ~~subscription~~results, ~~service;~~and financial condition.

~~•continues~~19 ~~to develop innovative solutions and applications for its technology;~~

•commercializesTable itsof silicon photonics solutions;Contents

~~•continues~~The average selling prices of Rockley’s products could decrease rapidly over the life of the product, which may negatively affect Rockley’s revenue and margins. In addition, the selling prices Rockley is able to ~~invest~~ultimately charge in ~~its~~the ~~sales~~future ~~and~~for ~~marketing~~the ~~activities~~products ~~and~~it ~~distribution~~is ~~channels;~~currently developing or commercializing may be less than what Rockley currently anticipates, which may cause Rockley’s actual operating results to differ materially from its expectations.

~~•invests~~The prices that Rockley is able to ultimately charge in the future for the products it is currently developing or commercializing may experience declines for a variety of reasons, many of which are outside of Rockley’s control. In order to sell products that have a falling average unit selling price and ~~improves~~maintain ~~its~~margins ~~operational~~at the same time, ~~financial~~Rockley will need to continually reduce product and manufacturing costs. To manage manufacturing costs, Rockley must engineer the most cost-effective design for its products and ~~management~~collaborate ~~information~~with ~~systems;~~its manufacturing counterparties to reduce manufacturing costs. Rockley also needs to continually introduce new products with higher sales prices and gross margin in order to maintain its overall gross margin. If Rockley is unable to manage the cost of older products or successfully introduce new products with higher gross margin, its revenue and overall gross margin would likely decline. In addition, the selling prices Rockley is able to ultimately charge in the future for the products it is currently developing or commercializing may be less than what Rockley currently projects, which may cause Rockley’s actual operating results to differ materially from its estimates.

~~•increases~~Rockley’s ~~its~~gross ~~headcount;~~margins may fluctuate due to a variety of factors, which could negatively impact Rockley’s results of operations and Rockley’s financial condition.

~~•expands~~Rockley’s ~~its~~gross ~~intellectual~~margins ~~property~~may ~~portfolio;~~fluctuate due to a number of factors, including customer and product mix, market acceptance of Rockley’s new products, yield, wafer pricing, packaging and testing costs, competitive pricing dynamics, the impact of the COVID-19 pandemic, and geographic and market pricing strategies. To the extent Rockley may offer certain customers favorable prices, it would decrease Rockley’s average selling prices and likely impact gross margins. Further, Rockley may in the future offer pricing incentives to Rockley’s customers on earlier generations of products that inherently have a higher cost structure, which would negatively affect Rockley’s gross margins. In addition, in the event Rockley’s customers, including Rockley’s larger customers, exert more pressure with respect to pricing and other terms, it could put downward pressure on Rockley’s margins.

~~•enhances~~Because ~~internal~~Rockley ~~functions~~does not operate its own manufacturing, ~~systems~~assembly, ~~and~~or ~~infrastructure~~testing facilities, it may not be able to ~~support~~reduce its ~~anticipated~~costs ~~transition~~as rapidly as companies that operate their own facilities, and Rockley’s costs may even increase, which could further reduce Rockley’s gross margins. Rockley relies primarily on obtaining yield improvements and volume-based cost reductions to drive cost reductions. To the extent that such cost reductions do not occur at a ~~public~~sufficient ~~company~~level and in a timely manner, Rockley’s business, financial condition, and results of operations could be adversely affected and may vary from Rockley’s estimates.

In addition, Rockley ~~has~~may ain ~~history~~the future maintain an inventory of ~~recurring~~Rockley’s ~~losses~~products at various stages of production and ~~negative~~in ~~cash~~finished ~~flows~~goods ~~from~~inventory. ~~operations,~~Rockley ~~and~~will ahold ~~significant~~these ~~accumulated~~inventories ~~deficit~~in anticipation of customer orders. If those customer orders do not materialize in a timely manner, ~~which~~Rockley ~~raises~~may ~~substantial~~have ~~doubt~~excess ~~about~~or ~~its~~obsolete ~~ability~~inventory which Rockley would have to ~~continue~~reserve asor awrite-down, ~~“going~~and ~~concern~~Rockley’s gross margins would be adversely affected.”

~~Since~~Because ~~inception,~~some ~~Rockley~~of ~~has~~the ~~financed~~raw materials and key components in its ~~operations~~products ~~primarily~~come ~~through~~from ~~the~~limited ~~issuance~~or ~~and~~single ~~sale~~source ofsuppliers, ~~convertible~~Rockley ~~loan~~is ~~notes~~susceptible to supply shortages, ~~ordinary~~long ~~shares~~lead times for components, and ~~revenue~~supply ~~received~~changes, ~~from~~including ~~agreed-upon~~as ~~projects.~~a Asresult of ~~December 31~~industry consolidation, ~~2021~~any of which could disrupt its supply chain and could delay deliveries of its products to customers, which could adversely affect Rockley’s ~~cash~~business, results of operations, and ~~cash~~financial condition.

21Some of the components used in the manufacturing of Rockley’s products are sourced from third-party suppliers. To date, Rockley has produced its products in relatively limited quantities for use in products. Rockley does not have extensive experience in managing its supply chain to manufacture and deliver its products at scale. Some of the key components used to manufacture Rockley’s products come from limited or single source suppliers. Rockley is therefore subject to the risk of shortages and long lead times in the supply of these components and the risk that its suppliers discontinue or modify components used in its products. Rockley has a global supply chain and the COVID-19 pandemic and other health epidemics and outbreaks may adversely affect its ability to source components in a timely or cost effective manner from its third-party suppliers due to, among other things, work stoppages or interruptions. For example, Rockley relies on third-party foundries to manufacture its silicon photonic integrated circuits and for wafer scale integration. Any disruptions to those foundries could materially and adversely affect Rockley’s ability to manufacture its products. In addition, the lead times associated with certain components are lengthy and preclude rapid changes in quantities and delivery schedules. Rockley has in the past experienced and may in the future experience component shortages and price fluctuations of certain key components and materials, and the predictability of the availability and pricing of these components may be limited. In the event of a component shortage, supply interruption or material pricing change from suppliers of these components, Rockley may not be able to develop alternate sources in a timely manner or at all in the case of sole or limited sources. These risks may be exacerbated if any of Rockley’s suppliers were to cease operations or be acquired by a third party. If this were to occur, Rockley may need to re-qualify the supplier and/or otherwise confirm that such an event would not cause concerns with Rockley’s end customers or otherwise negatively impact Rockley’s relationships with its end customers. Developing alternate sources of supply for these components may be time-consuming, difficult, and costly and Rockley may not be able to source these components on terms that are acceptable to it, or at all, which may undermine Rockley’s ability to meet its requirements or to fill customer orders in a timely manner. Any interruption or delay in the supply of any of these parts or components, or the inability to obtain these parts or

~~Table~~20 ~~of Contents~~

equivalentsTable balance was $36.8 million and it had an accumulated deficit of $400.9 million. Due to Rockley’s history of recurring losses from operations, negative cash flows from operations, and a significant accumulated deficit, its management concluded that there is substantial doubt about Rockley’s ability to continue as a going concern. There have been no adjustments to the accompanying financial statements of Rockley to reflect this uncertainty. Rockley’s ability to continue as a going concern is dependent upon it becoming profitable in the future or obtaining the necessary capital to meet its obligations. Rockley’s determination of substantial doubt about its ability to continue as a going concern could materially limit its ability to raise additional funds through the issuance of equity securities, debt financing or otherwise. There can be no assurance that any such issuance of equity securities, debt financing or other means of financing will be available in the future, or the terms of any such financing will be acceptable to Rockley. Further, there can be no assurance that Rockley will ever become profitable or continue as a going concern.Contents

components from alternate sources at acceptable prices and within a reasonable amount of time, would adversely affect Rockley’s ability to meet its scheduled product deliveries to its customers. This could adversely affect Rockley’s relationships with its customers and channel partners and could cause delays in shipment of its products and adversely affect its operating results. In addition, increased component costs could result in lower gross margins. Even where Rockley is ~~subject~~able to ~~restrictive~~pass ~~debt~~increased ~~covenants~~component ~~that~~costs along to its customers, there may ~~limit~~be a lapse of time before it is able to do so such that Rockley must absorb the increased cost. If Rockley is unable to buy these components in quantities sufficient to meet its ~~ability~~requirements on a timely basis, it will not be able to ~~finance~~deliver products to its ~~future~~customers. ~~operations~~This ~~and~~in ~~capital~~turn ~~needs~~could materially and toadversely ~~pursue~~affect Rockley’s business, ~~opportunities~~financial condition, and ~~activities~~results of operations.

Rockley’s existing financing agreements contain restrictive covenants, including a requirement to maintain at least $35 million cash on hand, that limit its ability to take certain actions. These restrictions may limit Rockley’s ability to operate its businesses and may prohibit or limit its activity to enhance its operations or take advantage of potential business opportunities as they arise. All of these limitations are subject to significant exceptions and qualifications. These covenants could limit Rockley’s ability to finance its future operations and capital needs and its ability to pursue business opportunities and activities that may be in its interest. If ~~Rockley~~the ~~breaches~~foundries ~~any~~with ~~of these covenants it may be in default under its indebtedness,~~ which ~~may~~Rockley ~~then~~contracts ~~become~~do ~~immediately~~not ~~due~~achieve ~~and~~satisfactory ~~payable.~~yields ~~Rockley may not have,~~ or ~~be able to obtain~~quality, ~~sufficient funds to make these accelerated payments.~~ Rockley’s ~~ability~~reputation toand ~~comply~~customer ~~with~~relationships ~~the~~could ~~provisions of its financing arrangements may~~ be ~~affected by changes in economic or business conditions or other events beyond its control~~harmed.

IfRockley ~~the~~depends ~~end~~on ~~products~~satisfactory ~~into~~wafer ~~which~~foundry manufacturing capacity, wafer prices, and production yields, as well as timely wafer delivery, to meet customer demand and enable it to maintain gross margins. The fabrication of Rockley’s products ~~are~~is ~~incorporated~~a ~~are~~complex ~~not~~and ~~fully~~technically ~~developed~~demanding ~~and~~process. ~~commercialized~~Minor ordeviations doin ~~not~~the ~~achieve~~manufacturing ~~widespread~~process ~~market~~can ~~acceptance~~cause substantial decreases in yields and, orin ifsome ~~such~~cases, ~~products~~cause production to be suspended. Rockley’s foundry vendors may experience ~~delays~~manufacturing defects and reduced manufacturing yields from time to time. Further, ~~cancellations~~any new foundry vendors Rockley employs, whether due to industry consolidation, customer requirements, or ~~reductions~~otherwise, may present additional and unexpected manufacturing challenges that could require significant management time and focus. Changes in manufacturing processes or the inadvertent use of defective or contaminated materials by the foundries that Rockley employs could result in lower than anticipated production yields or unacceptable performance of Rockley’s ~~business~~products. Many of these problems are difficult to detect at an early stage of the manufacturing process and may be time-consuming and expensive to correct. Poor production yields from the foundries that Rockley employs, ~~financial~~or ~~condition~~defects, integration issues, or other performance problems in Rockley’s products could significantly harm Rockley’s customer relationships and financial results, ofand ~~operations~~give ~~will~~rise to financial or other damages to Rockley’s customers. Any product liability claim brought against Rockley, even if unsuccessful, would likely be ~~materially~~time-consuming and ~~adversely~~costly ~~affected~~to defend.

~~Rockley’s~~Manufacturing ~~success~~yields infor ~~developing~~new ~~and~~products ~~commercializing~~initially ~~its~~tend ~~products~~to ~~depends~~be inlower ~~large~~as ~~part~~Rockley oncompletes ~~its~~product ~~customers’~~development ~~success~~and incommence ~~developing,~~volume ~~commercializing~~manufacturing, and ~~achieving~~typically ~~widespread~~increase ~~market~~as ~~acceptance~~Rockley ofbrings ~~their~~the ~~end~~product ~~products~~to ~~that~~full ~~incorporate Rockley’s products~~production. While Rockley’s ~~customers~~business ~~may~~model beincludes ~~unable~~this toassumption ~~fully~~of ~~develop~~improving ~~and~~manufacturing ~~commercialize,~~yields orits ~~achieve~~assumptions ~~widespread~~may ~~market~~be ~~acceptance~~incorrect ofand, ~~their~~as ~~end~~a ~~products~~result, ~~that~~material ~~incorporate~~variances ~~Rockley’s~~between ~~products.~~projected ~~Further,~~and ~~these~~actual ~~customers~~manufacturing ~~may~~yields ~~not~~will ~~continue~~have toa ~~incorporate~~direct effect on Rockley’s ~~products~~gross ~~into~~margin ~~their~~and ~~end products either in the short or long term~~profitability. IfThe ~~such~~difficulty ~~customers’~~of ~~end~~accurately ~~products~~forecasting ~~are~~manufacturing ~~not~~yields ~~fully developed~~ and ~~commercialized,~~maintaining ~~fail~~cost tocompetitiveness ~~achieve~~through orimproving ~~maintain~~manufacturing ~~widespread~~yields ~~market~~will ~~acceptance,~~continue ~~experience~~to ~~delays,~~be ormagnified ifby ~~Rockley’s~~the ~~customers~~increasing ~~otherwise~~process ~~choose~~complexity ~~not incorporate Rockley’s products into their end products, Rockley’s business, financial condition, and results~~ of ~~operations~~manufacturing ~~will~~silicon bephotonics ~~materially and adversely affected~~products.

IfRaw ~~Rockley’s~~material ~~products~~price ~~are~~fluctuations ~~not~~can ~~selected~~increase ~~for~~the ~~inclusion~~cost inof ~~its customers~~Rockley’s ~~end~~ products, ~~including~~impact ~~products~~Rockley’s ~~for~~ability ~~the~~to ~~consumer~~meet ~~health~~customer ~~and wellness market~~commitments, ~~or adopted in other industry verticals or use cases or are not adopted by leading consumer~~ and ~~medical~~may ~~device~~adversely ~~companies,~~affect ~~life~~its ~~sciences~~results ~~companies,~~of ~~or their respective suppliers, Rockley’s business will be materially and adversely affected~~operations.

~~Rockley~~The iscost ~~currently~~of ~~developing~~raw ~~products~~materials ~~for~~is ~~use~~a inkey ~~its~~element ~~customers’ end products, which are~~ in ~~varying~~the ~~stages~~cost of ~~development. Many of these products, including products for consumer device, medical device, and life sciences companies, require extensive testing or qualification processes, which involve testing of~~ Rockley’s products. ~~in the customers~~Rockley’s ~~end~~inability ~~products~~to ~~and~~offset ~~systems,~~material asprice ~~well~~inflation asthrough ~~testing~~increased ~~for~~prices ~~reliability.~~to ~~These~~customers, ~~qualification~~suppliers, ~~processes~~productivity ~~may~~actions, ~~continue for several months~~ or ~~longer.~~through ~~However,~~commodity ~~qualification~~hedges ofcould ~~any~~adversely ofaffect Rockley’s ~~products~~results byof aoperations. ~~customer~~Many ~~does~~major ~~not~~components, ~~assure any sales of such~~ product byequipment ~~Rockley~~items, ~~to that customer. Even after successful qualification~~ and ~~sales~~raw bymaterials ~~Rockley~~are ofprocured aor ~~product~~subcontracted toon a ~~customer,~~single aor ~~subsequent revision in Rockley’s third~~sole-~~party~~source ~~contractors’~~basis. ~~manufacturing~~Although ~~process or~~ Rockley’s ~~selection~~maintains of a ~~new~~qualification ~~supplier~~and ~~may~~performance ~~require~~surveillance ~~a new qualification~~ process ~~with~~and Rockley’s ~~customers,~~believes ~~which~~that ~~may~~sources ~~result~~of insupply ~~delays~~for inraw ~~the~~materials ~~sale of such product~~ and ~~could~~components ~~also result in Rockley holding excess or obsolete inventory. After Rockley’s products~~ are ~~qualified~~generally adequate, it ~~can~~is ~~take~~difficult ~~several~~to ~~months~~predict ~~before~~what ~~the~~effects ~~customer~~shortages ~~commences~~or ~~production~~price ofincreases ~~end~~may ~~products~~have ~~that~~in ~~incorporate~~the future. Rockley’s ~~products.~~inability ~~Rockley~~to ~~spends~~fill ~~significant~~its ~~time~~supply ~~and~~needs ~~resources~~would tojeopardize ~~have~~ its ~~products~~ability ~~selected~~to ~~for~~fulfill ~~incorporation~~its ~~into~~contractual ~~these end products~~obligations, which iscould, ~~known~~in asturn, aresult ~~“design win.” If Rockley fails to win a significant number of design wins~~ in ~~its~~reduced ~~target markets~~revenue, ~~its~~contract ~~business,~~penalties ~~results~~or ~~of operations~~terminations, and ~~financial~~damage ~~condition~~to ~~will~~Rockley’s becustomer ~~materially and adversely affected~~relationships.

~~Rockley~~Furthermore, isincreases ~~targeting~~in the ~~deployment~~price of ~~its~~wafers, ~~products~~testing costs, and commodities, which may result in ~~the~~increased ~~consumer~~production ~~health~~costs, ~~and~~mainly ~~wellness~~assembly and ~~medical~~packaging ~~device~~costs, ~~sectors~~may result in a decrease in Rockley’s gross margins. Moreover, Rockley’s suppliers may pass the increase in raw materials and ~~any~~commodity ~~estimates~~costs onto it which would further reduce the gross margin of Rockley’s ~~future~~products. ~~results~~In ~~contained~~addition, inas ~~this~~Rockley ~~Annual~~is ~~Report~~a onfabless ~~Form~~company, ~~10-K~~global ~~assume~~market ~~that~~trends such as a shortage of capacity to fulfill Rockley’s ~~will~~fabrication ~~successfully~~needs also may increase Rockley’s raw material costs and thus decrease its gross margin.

22Rockley is subject to the cyclical nature of the semiconductor industry.

~~Table~~The semiconductor industry is highly cyclical and is characterized by constant and rapid technological change, rapid product obsolescence, price erosion, evolving standards, short product life cycles, industry consolidation, and wide fluctuations in product supply and demand. The industry experienced significant downturns during past global recessions. These downturns have been characterized by diminished product demand, production overcapacity, high inventory levels, and accelerated erosion of ~~Contents~~average selling prices. While these downturns have not directly impacted Rockley’s business to date, any prolonged or significant downturn in the semiconductor industry could adversely affect Rockley’s business and reduce demand for Rockley’s products. Any future downturns in the semiconductor industry could also harm Rockley’s business, financial condition, and results of operations. Furthermore, any significant upturn in the semiconductor industry could result in increased competition for access to third-party foundry and assembly capacity. Rockley is dependent on the availability of this capacity to manufacture and assemble Rockley’s products and Rockley can provide no assurance that adequate capacity will be available to it in the future.

~~commercialize~~21 its products and achieve significant market penetration in these sectors. As a result, if Rockley’s products are not selected for inclusion by consumer device and medical device companies or life sciences companies, or their suppliers, Rockley’s actual results may differ materially from its estimates included in this Annual Report on Form 10-K and Rockley’s business would be materially and adversely affected.

Rockley’sTable limitedof operating history makes it difficult to evaluate its future prospects and the risks and challenges which may impact its business.Contents

If Rockley ~~was~~or ~~founded in 2013, completed development of~~ its ~~advanced~~suppliers ~~sensing~~do ~~platform~~not inmaintain ~~2019,~~sufficient ~~launched~~inventory ~~its~~or ~~healthcare~~if ~~module~~they ~~offering~~do ~~in 2020, and has~~ not ~~yet~~adequately ~~fully~~manage ~~developed~~their ~~and~~respective ~~commercialized~~inventory, ~~any~~Rockley ofcould ~~its~~lose ~~products.~~sales ~~This~~or ~~relatively~~incur ~~limited~~higher ~~operating~~inventory-related ~~history~~expenses, ~~makes~~which itcould ~~difficult~~negatively toaffect ~~evaluate~~ Rockley’s ~~future~~operating ~~prospects and the risks and challenges it may encounter~~results. ~~The risks and challenges which may impact Rockley’s future prospects and business include, but are not limited to, its ability to:~~

~~•successfully~~To ~~commercialize~~ensure adequate inventory supply, Rockley and its suppliers must forecast inventory needs and expenses, place orders sufficiently in advance with their respective suppliers and manufacturing counterparties, and manufacture products based on its estimates of future demand for particular products. Changes in customer purchasing patterns may affect Rockley’s ability to forecast its future operating results, including revenue, gross margins, cash flows, and ~~services~~profitability. Rockley’s ability to accurately forecast demand for its products could be affected by many factors, including the growth rate, if any, in Rockley’s target markets or the market adoption of the end products into which Rockley’s products are incorporated, the emergence of new markets, an increase or decrease in customer demand for Rockley’s products or for products and services of its ~~silicon~~competitors, ~~photonics~~product ~~chipsets~~introductions by competitors, ~~module~~the ~~applications~~COVID-19 pandemic, other health epidemics and ~~analytics~~outbreaks, ~~subscription~~and ~~service;~~any associated work stoppages or interruptions, unanticipated changes in general market conditions, and the weakening of economic conditions or consumer confidence in future economic conditions. If Rockley’s products are commercialized in markets that are quickly growing, including the consumer wearables, mobile device, and medical device markets, Rockley may face challenges acquiring adequate supplies to manufacture its products and/or Rockley and its manufacturing counterparties may not be able to manufacture its products at a rate necessary to satisfy the levels of demand, which would negatively affect Rockley’s revenue. This risk may be exacerbated by the fact that Rockley may not carry or be able to obtain for its manufacturers a significant amount of inventory to satisfy short-term demand increases. If it fails to accurately forecast customer demand, Rockley may experience excess inventory levels or a shortage of products available for sale.

~~•develop~~Inventory ~~innovative~~levels ~~applications~~in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would adversely affect Rockley’s financial results, including its gross margin, and have a negative effect on its brand. Conversely, if Rockley underestimates customer demand for its ~~silicon~~products, ~~photonics~~Rockley, or its manufacturing counterparties, may not be able to deliver products to meet its requirements, and ~~sensing~~this ~~technology;~~could result in damage to Rockley’s brand and customer relationships and adversely affect its revenue and operating results.

~~•expand~~If ~~its~~Rockley’s ~~sales~~products ~~and~~do ~~marketing~~not ~~activities~~conform to, or are not compatible with, existing or emerging industry standards, demand for Rockley’s products may decrease, which in turn would harm Rockley’s business and ~~distribution~~operating ~~channels;~~results.

~~•improve~~Rockley’s ability to compete in the future will depend on its ~~operational~~ability to identify and ensure compliance with evolving industry standards in its target markets, as well as in the silicon photonics and sensing technology industry generally. The emergence of new industry standards could render Rockley’s products incompatible with products developed by third-party suppliers or make it difficult for Rockley’s products to meet the requirements of certain device manufacturers and their suppliers. If Rockley’s customers or Rockley’s third-party suppliers adopt new or competing industry standards with which Rockley’s solutions are not compatible, or if industry groups fail to adopt standards with which Rockley’s products are compatible, Rockley’s products would become less desirable to its current or prospective customers. As a result, Rockley’s sales would suffer and it could be required to make significant expenditures to develop new products. Although Rockley designs its products to be compliant with applicable industry standards, proprietary enhancements may not in the future result in conformance with existing industry standards under all circumstances. If Rockley’s products do not conform to, or are not compatible with, existing or emerging standards, it would harm its business, financial condition, and ~~management~~results ~~information~~of ~~systems;~~operations.

~~•attract,~~Rockley ~~hire,~~may ~~integrate,~~be ~~and~~subject ~~retain~~to ~~qualified~~warranty ~~talent~~or toproduct ~~support~~liability ~~the~~claims, ~~growth~~which ofcould ~~its~~result ~~business. This~~in ~~includes~~unexpected ~~increasing~~expenses ~~headcount~~and toloss ~~appropriately~~of ~~staff~~market toshare. ~~projected growth;~~

~~•protect~~Rockley may be subject to warranty or product liability claims. These claims may require Rockley to make significant expenditures to defend those claims, replace Rockley’s solutions, refund payments, or pay damage awards. Rockley has not yet commercialized its ~~intellectual~~products. ~~property~~Accordingly, ~~portfolio;~~the operation of Rockley’s products and technology has not been validated over longer periods. If a customer’s end product fails in use, the customer may incur significant monetary damages, including a product recall or associated replacement expenses as well as lost revenue. The customer may claim that a defect in Rockley’s product caused the product failure and assert a claim against Rockley to recover monetary damages. The cost of defending these claims and satisfying any arbitration award or judgment with respect to these claims would result in unexpected expenses, which could be substantial, and could harm Rockley’s business, financial condition, and results of operations. Although Rockley carries product liability insurance, this insurance is subject to significant deductibles and may not adequately cover Rockley’s costs arising from defects in its products or otherwise.

~~•enhance~~The ~~internal,~~complexity ~~systems~~of Rockley’s products and its anticipated future product and service offerings could result in unforeseen delays or expenses from undetected defects, ~~functions~~errors, ~~and~~or ~~infrastructure~~reliability toissues ~~support~~in hardware or software that could reduce the market adoption of its ~~anticipated~~new ~~transition~~products, todamage aits ~~public~~reputation ~~company;~~with current or prospective customers, and adversely affect its operating costs.

~~•comply~~Rockley’s ~~with~~current ~~existing~~and future products and ~~new~~service offerings are or ~~modified~~are ~~laws~~expected to be highly technical and ~~regulations~~very ~~applicable~~complex and require high standards to manufacture or distribute and have in the past and will likely in the future experience defects, errors, or reliability issues at various stages of development. Rockley may be unable to timely release new products, product updates, manufacture existing products, correct problems that have arisen, or correct such problems to its ~~business;~~customers’ satisfaction. Additionally, undetected errors, defects, or security vulnerabilities, especially as new products or updates are introduced or as new versions are released, could result in inaccurate data to the end users of products incorporating Rockley’s products. Any of the foregoing could negatively impact Rockley’s ability to commercialize a product or service offering, result in litigation against Rockley, and damage

~~•manage~~22 ~~capital expenditures for its current and future products, as well as its supply chain and supplier relationships;~~

•anticipateTable andof respond to macroeconomic changes and changes in the markets in which it operates;Contents

~~•effectively~~ Rockley’s ~~manage~~credibility. ~~its~~These ~~growth~~risks ~~and~~may ~~business~~be ~~operations,~~heightened ~~including~~in the ~~impacts~~medical device industry, one of Rockley’s target markets, where the ~~COVID-19~~end user may act in reliance upon inaccurate data as a result of errors or defects, or where there may be a privacy or data breach of an end user’s personal health information. Some errors or defects in Rockley’s products and service offerings may only be discovered after they have been tested, commercialized, and deployed by customers. In these cases, Rockley may incur significant additional development costs and product recall, repair, or replacement costs. These problems may also result in claims, including class ~~pandemic on~~actions, against Rockley by its ~~business;~~customers or others. Rockley’s reputation or brand may be damaged as a result of these problems and customers may be reluctant to buy its products, which could adversely affect its ability to retain existing customers and attract new customers and could adversely affect its financial results.

~~•hire~~In addition to product liability claims, ~~integrate~~Rockley could face material legal claims for breach of contract, fraud, tort, or breach of warranty as a result of these problems. Defending a lawsuit, regardless of its merit, could be costly and ~~retain~~may ~~qualified~~divert ~~talent~~management’s toattention ~~support~~and adversely affect the ~~growth~~market’s perception of Rockley and its products. In addition, Rockley’s business liability insurance coverage could prove inadequate with respect to a claim and future coverage may be unavailable on acceptable terms or at all. These product-related issues could result in claims against Rockley and its business could be adversely affected.

If Rockley ~~fails~~currently expects to ~~successfully~~recognize ~~manage~~subscription ~~the~~revenue ~~risks~~from ~~and~~its ~~difficulties~~future ~~that~~cloud-based itanalytics ~~faces,~~subscription ~~including~~offering ~~those~~ratably ~~associated~~over ~~with~~ the ~~challenges~~term ~~listed above and those described elsewhere in this “Risk Factors Related to Rockley” section, its business, financial condition, and results~~ of ~~operations~~these ~~could~~subscriptions ~~be materially~~ and ~~adversely affected. Further~~, ~~because~~to ~~Rockley has~~ a ~~limited~~lesser ~~operating history and has not yet commercialized its products~~extent, itperpetual islicenses ~~difficult~~ratably toover ~~accurately~~an ~~assess~~expected ~~its~~period ~~future~~of ~~prospects~~benefit ~~or financial performance. Rockley has encountered in the past~~and, ~~and~~as ~~will~~a ~~encounter in the future~~result, ~~risks~~downturns ~~and uncertainties frequently experienced by growing companies with limited operating histories~~ in ~~rapidly~~sales ~~changing~~may ~~industries. If Rockley’s assumptions regarding these risks and uncertainties, which it uses to plan and operate its business, are incorrect or change, or if it does~~ not ~~address~~be ~~these~~immediately ~~risks~~reflected ~~successfully,~~in its ~~results~~operating ~~of operations could differ materially from its expectations and its business, financial condition, and~~ results ~~of operations could be materially and adversely affected~~.

If Rockley’s ~~estimates~~is ~~and~~able ~~expectations~~to commercially launch its cloud-based analytics subscription service, which is currently expected to occur as early as 2023, it expects to recognize revenue ratably over the terms of its ~~financial~~subscriptions ~~performance~~with ~~are~~customers. ~~based~~As ~~upon~~a ~~assumptions~~result, ~~analyses~~a substantial portion of the revenue that it will report in each period will be derived from the recognition of deferred revenue relating to agreements entered into during previous periods. Consequently, ~~and~~a ~~internal~~decline ~~estimates~~in ~~developed~~new bysales ~~Rockley’s~~or ~~management~~renewals in any one period may not be immediately reflected in its revenue results for that period. IfThis ~~these~~decline, ~~assumptions~~however, ~~analyses~~will negatively affect its revenue in future periods. Accordingly, orthe ~~estimates~~effect ~~prove~~of tosignificant downturns in sales and market acceptance of its subscription service and potential changes in the rate of renewals may not be ~~incorrect~~fully orreflected ~~inaccurate,~~in its results of operations until future periods. This will also make it difficult for Rockley’s ~~actual~~to ~~operating~~rapidly ~~results~~increase ~~may~~revenue ~~differ~~growth ~~materially~~through ~~from~~additional sales in any ~~such~~period, ~~estimates~~as revenue from new customers generally will be recognized over the term of the applicable agreement. Rockley may be unable to commercially launch its subscription service offering in a timely manner or at all and ~~expectations~~such subscription offering may not achieve widespread customer adoption.

If Rockley’s ~~estimates and expectations as to its~~ future ~~financial~~platform ~~performance~~offerings ~~included~~do innot ~~this~~interoperate ~~Annual~~with ~~Report~~its oncustomers’ ~~Form~~network ~~10-K are subject to uncertainty~~ and ~~are~~security ~~based~~infrastructure ~~on assumptions, analyses, and internal estimates developed by Rockley’s management, all~~ or ~~some~~with ofthird-party ~~which may not prove to be correct or accurate. If these assumptions~~products, ~~analyses~~websites, or ~~estimates prove to be incorrect or inaccurate~~services, ~~Rockley’s~~it ~~actual~~would ~~operating~~negatively ~~results~~impact ~~may~~its ~~differ~~business ~~materially~~and ~~from any such estimates or expectations. We have in the past experienced actual~~ results ~~which varied from our estimates. These assumptions, analyses, or estimates are subject to risks and uncertainties, some~~ of ~~which are outside of Rockley’s control~~operations. These risks and uncertainties include, but are not limited to, risks discussed elsewhere in this “Risk Factors Related to Rockley” section and in this Annual Report on Form 10-K, as well as those discussed below:

23Rockley’s cloud-based analytics subscription offering, which is under development and is currently expected to be commercially launched as early as 2023, is expected to allow for the deployment of Rockley’s technology through a cloud-based software-as-a-service model. As a result, it must interoperate with Rockley’s customers’ existing network and security infrastructure. The components of Rockley’s customers’ infrastructure have different specifications, rapidly evolve, utilize multiple protocol standards, include multiple versions and generations of products, and may be highly customized. Rockley must be able to interoperate and provide its software service to customers with highly complex and customized networks, which requires careful planning and execution between its customers, its customer support teams, and its channel partners. Further, whenever there are new or updated elements of the customers’ infrastructure or new industry standards or protocols, Rockley may have to update or enhance its cloud platform to continue to provide service to customers. Rockley’s competitors or other vendors may refuse to work with Rockley to allow their products to interoperate with Rockley’s, which could make it difficult for Rockley’s cloud-based analytics subscription service to function properly in customer networks that include these third-party products.

~~Table~~Rockley may not deliver or maintain interoperability quickly or cost-effectively, or at all. If Rockley fails to maintain compatibility of ~~Contents~~its cloud-based analytics subscription service with its customers’ network and security infrastructures, its customers may not be able to fully utilize the service, and Rockley may, among other consequences, fail to achieve widespread customer adoption of this subscription service and experience reduced demand for its products and services, which would materially harm its business, operating results, and financial condition.

~~•Revenue-related~~Rockley ~~assumptions:~~licenses technology from third parties, and its inability to maintain those licenses could harm its business.

~~◦Customer~~Rockley ~~contracts~~incorporates technology that it licenses from third parties, including software, into its software subscriptions. Rockley cannot be certain that its licensors are not infringing the intellectual property rights of third parties or that its licensors have sufficient rights to the licensed intellectual property in all jurisdictions in which Rockley may sell its software subscriptions. In addition, some licenses may be non-exclusive, and ~~design~~therefore ~~wins:~~its competitors may have access to the same technology licensed to Rockley. Some of Rockley’s ~~existing~~license ~~memoranda~~agreements may be terminated for convenience by the licensors. Rockley may also be subject to additional fees or be required to obtain new licenses if any of ~~understanding~~its ~~(“MOUs”)~~licensors allege that Rockley has not properly paid for such licenses or that it has improperly used the technologies under such licenses, and ~~development~~such ~~contracts~~licenses may not ~~ultimately~~be ~~convert~~available ~~into~~on ~~production~~terms ~~contracts~~acceptable to Rockley or at all. InIf ~~addition~~Rockley is unable to continue to license any of this technology because of intellectual property infringement claims brought by third parties against its licensors or against it, or claims against Rockley ~~may~~by beits licensors, or if Rockley is unable to ~~secure~~continue ~~design~~its ~~wins~~license ~~from~~agreements ~~additional~~or ~~customers~~enter ininto anew ~~timely~~licenses ~~manner;~~on commercially reasonable terms, its ability to develop and sell software

~~◦Form~~23 of customer arrangement: It is possible that instead of entering into agreements with customers for the purchase of a significant amount of Rockley’s products, Rockley may be required to enter into license arrangements with certain customers, any of which would have a significant impact on the revenue Rockley expects to achieve;

◦TimingTable of launch and delivery: Rockley or Rockley’s customers may encounter delays in the launch or delivery of Rockley’s product or the customer’s end product incorporating Rockley’s product, including due to a customer’s decision to delay the launch of a product, Rockley’s ability to deliver its product in a timely manner to a customer, which in turn may result in the customer canceling a contract, technical challenges, or customer-related delays in its development program;Contents

~~◦Pricing~~ subscriptions ~~and~~containing ~~volume~~such ~~fluctuation:~~technology ~~Rockley~~would ~~may~~be ~~experience~~severely ~~pricing~~limited, and ~~volume~~its ~~fluctuations~~business ~~due~~could be harmed. Additionally, if Rockley is unable to ~~price~~license ~~negotiations~~necessary technology from third parties, ~~lower~~it ~~than~~may ~~anticipated~~be ~~unit~~forced ~~volumes~~to acquire or develop alternative technology, ~~delays~~which it may be unable to do in ~~volume~~a ~~ramp~~commercially feasible manner or at all, ~~decreases~~and inRockley ~~average~~may ~~selling~~be ~~prices~~required ~~due~~to use alternative technology of lower quality or performance standards. This would limit and delay its ability to ~~competition~~offer new or competitive software subscriptions and increase its costs of production. As a result, Rockley’s margins, market ~~dynamics~~share, orand ~~other~~operating ~~factors;~~results could be significantly harmed.

~~◦Timing~~Portions ~~and execution~~ of ~~customer agreements:~~ Rockley’s ~~may~~cloud-based ~~face~~analytics ~~difficulties~~subscription inoffering ~~meeting~~utilize ~~customer~~open ~~milestones~~source ~~in a timely manner or achieving required technical specifications. In addition~~software, ~~Rockley~~and ~~may~~any ~~experience~~failure ~~execution~~to ~~delays~~comply ~~under its NRE programs, including~~ with ~~its~~the ~~largest~~terms ~~customer,~~of ~~due~~one ~~to resource constraints~~ or ~~customer~~more ~~delay. Further, to the extent Rockley were to enter into licensing arrangements in lieu~~ of athese ~~product~~open ~~sale~~source ~~with~~licenses acould ~~customer,~~negatively ~~including~~affect its ~~largest~~business. ~~customer, it could have a significant negative impact on Rockley’s anticipated revenue; and~~

~~◦Commercialization~~Rockley’s ofcloud-based analytics subscription offering contains software made available by third parties under so-called “open source” licenses. From time to time, there have been claims against companies that distribute or use open source software in their products and services:, asserting that such open source software infringes the claimants’ intellectual property rights. Rockley ~~must~~could ~~successfully~~be ~~commercialize~~subject ~~its~~to ~~products~~suits by parties claiming that what Rockley believes to be licensed open source software infringes their intellectual property rights. Use and ~~services,~~distribution ~~including~~of ~~its~~open ~~silicon~~source ~~photonics~~software ~~chipsets~~may entail greater risks than use of third-party commercial software, ~~module~~as ~~applications~~open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. In addition, certain open source licenses require that source code for software programs that are subject to the license be made available to the public and ~~analytics~~that ~~subscription~~any ~~service~~modifications or derivative works to such open source software continue to be licensed under the same terms. Further, certain open source licenses also include a provision that if Rockley enforces any patents against the software programs that are subject to the license, it will lose the license to such software. If Rockley were to fail to comply with the terms of such open source software licenses, such failures could result in costly litigation, lead to negative public relations, or require that it quickly find replacement software which may be difficult to accomplish in a timely manner.

~~•Production~~Although ~~cost~~Rockley monitors its use of open source software in an effort both to comply with the terms of the applicable open source licenses and to avoid subjecting its software to conditions it does not intend, the terms of many open source licenses have not been interpreted by U.S. or international courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on its ability to commercialize its product or operate its business. By the terms of certain open source licenses, Rockley could be required to release the source code of its software and to make its proprietary software available under open source licenses, if Rockley combines or distributes its software with open source software in a certain manner. In the event that portions of its software are determined to be subject to an open source license, Rockley could be required to publicly release the affected portions of its source code, re-~~related~~engineer ~~assumptions:~~all, or a portion of, that software or otherwise be limited in the licensing of its software, each of which could reduce or eliminate the value of its product. Many of the risks associated with usage of open source software cannot be eliminated, and could negatively affect its business, results of operations, and financial condition.

~~◦Production~~Customer-Related ~~volume~~Risks and ramp: Rockley has in the past, and may in the future experience delays in contract execution, lower than expected manufacturing yields, manufacturing delays, and technical challenges, including if and when Rockley commences commercial production of its products, any of which could negatively impact forecasted production volume and ramp;

~~◦Production~~Rockley ~~cost:~~currently ~~Rockley~~has, ~~may~~and beintends to target, customers and suppliers that are large corporations with substantial negotiating power, exacting product, quality, and warranty standards, and potentially competitive internal solutions. If Rockley is unable to ~~secure~~sell ~~the~~its ~~volume~~products ~~pricing~~to these customers or ~~yield~~is ~~cost~~unable ~~levels~~to ~~underlying~~enter ~~its~~into ~~assumptions~~agreements with customers and ~~indirect~~suppliers ~~materials~~on satisfactory terms, its prospects and ~~production~~results ~~overhead~~of ~~costs~~operations ~~may~~will ~~exceed~~be ~~forecasted~~adversely ~~amounts;~~affected. ~~and~~

~~◦Inventory~~Many ~~and~~of ~~obsolescence:~~ Rockley’s ~~quality,~~customers ~~warranty~~and suppliers, ~~return~~and ~~merchandise~~potential ~~authorization~~customers, are large corporations with substantial negotiating power relative to it and, ~~inventory~~in ~~obsolescence~~some instances, may ~~exceed~~have ~~forecasted~~internal ~~amounts.~~solutions that are competitive to Rockley’s ~~may~~products. Many of these large corporations that are customers or potential customers also ~~experience~~have ~~product~~significant ~~recalls~~development resources, which ~~are~~may ~~not~~allow ~~included~~them to acquire or develop independently, or in partnership with others, competitive technologies. Meeting the technical requirements and securing design wins with any of these companies will require a substantial investment of Rockley’s ~~assumptions.~~time ~~Further,~~and resources. Rockley ~~may~~cannot ~~incur~~assure ~~greater~~you ~~than~~that ~~expected~~its ~~costs~~products inor ~~connection~~technology ~~with~~will secure design wins from these or other companies or that it will generate meaningful revenue from the sales of its ~~NRE~~products ~~programs~~to these key customers and potential customers. If Rockley’s products are not selected by these large corporations or if these corporations develop or acquire competitive technology, it will have an adverse effect on Rockley’s business.

~~•Operating expenses and cash utilization-related assumptions:~~ Rockley’s ~~cash~~currently ~~utilization~~depends ~~may~~on ~~exceed~~a ~~currently~~few ~~anticipated~~large ~~rates~~customers ~~due~~for to a ~~variety~~substantial portion of ~~factors,~~its ~~including~~revenue. ~~lower~~The ~~than~~loss ~~expected revenue~~of, ~~revenue~~or ~~delays,~~a ~~higher~~significant ~~than~~reduction ~~anticipated production and manufacturing costs~~in, ~~operating~~orders ~~expenses,~~from ~~and~~Rockley’s ~~capital expenditures~~customers, ~~lower~~including ~~than~~its ~~anticipated~~largest ~~average selling prices~~customer, ~~greater~~could ~~than~~significantly ~~anticipated~~reduce ~~cash~~its ~~needs~~revenue ~~for internal resources~~ and ~~organic~~adversely ~~growth,~~impact ~~and~~Rockley’s ~~potential~~operating ~~strategic investments and acquisitions not currently anticipated~~results.

Rockley's ~~estimates~~believes ~~and~~that ~~expectations~~its ~~may~~operating ~~also~~results befor ~~based~~the inforeseeable ~~part~~future onwill incontinue ~~this~~to ~~Annual~~depend ~~Report~~to ona ~~Form~~significant ~~10-K~~extent ~~the~~on ~~expected~~revenue ~~size~~attributable ~~and~~to ~~growth~~a offew ~~the~~large ~~markets~~customers. inRevenue ~~which~~attributable to Rockley’s ~~operates~~largest orcustomer ~~intends~~accounted tofor ~~enter,~~the ~~including~~majority ~~the~~of ~~consumer~~its ~~wearables,~~revenue ~~mobile~~in ~~device,~~2022 and ~~medical~~2021, ~~device markets~~respectively. ~~Such~~Rockley ~~markets~~anticipates ~~may~~revenue ~~not~~attributable ~~develop~~to orthis ~~grow~~customer will fluctuate from period to period, oralthough ~~may~~it ~~develop~~expects ~~and~~to ~~grow~~remain atdependent aon ~~lower~~this ~~rate~~customer ~~than~~for ~~expected,~~a ~~and~~significant ~~even~~portion ifof ~~these~~its ~~markets~~revenue ~~experience~~for the ~~forecasted~~foreseeable ~~growth~~future. Rockley ~~described~~has ina ~~this~~master ~~Annual~~supply ~~Report~~and ondevelopment ~~Form~~agreement ~~10-K~~with this customer, which provides a general framework for Rockley’s ~~may~~transactions ~~not~~with ~~grow~~it. ~~its~~This ~~business~~agreement atcontinues ~~similar~~until ~~rates,~~either orparty atterminates ~~all~~for material breach. ~~Accordingly,~~Under ~~the~~this ~~forecasts~~agreement, ~~and~~Rockley ~~estimates~~has ofagreed ~~market~~to ~~size~~develop and ~~growth~~deliver ~~described~~new inproducts to this ~~Annual~~customer ~~Report~~at onits ~~Form~~request, ~~10-K~~provided ~~should~~it ~~not~~also bemeets ~~taken~~Rockley’s asbusiness apurposes, ~~guarantee~~and orhas ~~other~~agreed ~~indication~~to ofindemnify ~~Rockley’s~~it ~~future~~for ~~growth~~intellectual property infringement or ~~results~~any ofinjury ~~operations.~~or Indamages ~~addition,~~caused ~~these~~by ~~forecasts~~Rockley’s ~~may~~products. beThis ~~materially~~customer ~~and~~does ~~adversely~~not ~~affected~~have byany aminimum ~~number~~or ofbinding ~~factors~~purchase ~~outside~~obligations ofto Rockley’s ~~control,~~under ~~including,~~this ~~but~~agreement ~~limited~~and could elect to, ~~factors~~discontinue ~~associated~~or reduce making purchases from Rockley with ~~the~~little ~~ongoing~~or ~~COVID-19 pandemic~~no notice.

~~The~~In ~~strategic~~addition, ~~initiatives~~customers may seek to enter into licensing arrangements in lieu of product purchases, which could negatively impact Rockley’s ~~has~~revenue, ~~undertaken~~and, to a lesser extent, Rockley’s gross margins. If Rockley’s customers were to choose to work with other manufacturers or ~~may~~its ~~undertake~~relationships with its customers is disrupted for any reason, it could have a significant negative impact on Rockley’s business. Any reduction in ~~the~~sales ~~future~~attributable ~~may~~to beRockley’s ~~more~~larger ~~costly~~customers ~~than~~would ~~currently~~have ~~anticipated~~a significant and disproportionate impact on Rockley’s business, financial condition, and results of operations. Rockley’s customers, or the distributors through which it sells to these customers, may ~~not~~choose ~~generate~~to ~~sufficient~~use ~~revenue~~products in addition to ~~offset~~Rockley’s, ~~the~~use ~~costs~~a different product altogether, or develop an in-house solution. Any of these ~~initiatives~~events could significantly harm its business, ~~which~~financial incondition, ~~turn~~and ~~would~~results ~~negatively~~of ~~impact~~operations. In addition, if Rockley’s ~~ability~~distributors’ relationships with Rockley’s end customers, including its larger end customers, are disrupted for inability to ~~achieve~~deliver sufficient products or for any other reason, it could have a significant negative impact on Rockley’s business, financial condition, and ~~maintain~~results ~~profitability~~of operations.

Rockley ~~continues~~is todependent ~~invest~~ in ~~initiatives~~part ~~designed~~upon toits ~~grow~~relationships ~~its~~and ~~business~~alliances with industry participants to generate revenue, ~~including:~~which involves risks and uncertainties.

~~•partnering~~Rockley ~~with~~has, ~~customers~~and in the future may, acquire interests in joint ventures, which may subject Rockley to risk because, among other things, Rockley cannot exercise sole decision-making power and its partners may have different economic interests than Rockley has. There are additional risks involved in joint venture transactions. For example, as a co-investor in a joint venture, Rockley may not be in a position to exercise sole decision-making authority relating to the joint venture or other entity. As a result, the operations of any joint venture are subject to the risk that third parties may make business, financial, or management decisions with which Rockley does not agree, or the management of the joint venture may take risks or otherwise act in a manner that does not serve Rockley’s interests. Further, there may be a potential risk of ~~customers~~impasse in some business decisions because Rockley may not be in a position to ~~develop~~exercise ~~and~~sole ~~commercialize~~decision-making authority. In such situations, it is possible that Rockley may not be able to exit the relationship because it may not have the funds necessary to complete a buy-out of the other partner or it may be difficult to locate a third-party purchaser for its interest. Because Rockley may not have the ability to exercise control over such operations, it may not be able to realize some or all of the benefits that it believes will be created from its involvement. In addition, there is the potential that a joint venture partner may become bankrupt or have divergent, conflicting, or inconsistent economic or business interests from Rockley. This could result in, among other things, exposing Rockley to liabilities of the joint venture in excess of its proportionate share of these liabilities. If any of the foregoing were to occur, Rockley’s ~~products;~~business, financial condition, and results of operations could suffer.

~~•investing~~If inRockley ~~research~~is unable to expand or further diversify its customer base, its business, financial condition, and ~~development;~~results of operations could suffer.

~~•investing~~Rockley currently expects the composition of its largest customers to vary over time, and that revenue attributable to its largest customers in any given period may decline over time. Rockley’s relationships with existing customers may deter potential customers who compete with these customers from buying Rockley’s products. If Rockley is unable to expand or further diversify its ~~workforce~~customer base, ~~including~~it could harm its ~~engineering~~business, ~~talent;~~financial condition, and results of operations.

~~•expanding~~Rockley does not currently have any products in commercial production. Accordingly, Rockley views its ~~sales~~current customer relationships in the following stages: (a) customers with whom it is “engaged”, ~~marketing~~or in discussions with, regarding potential product features for incorporation into such customer’s end products or (b) customers with whom it is “contracted” where Rockley has non-binding MOUs or development and ~~distribution~~supply ~~efforts;~~agreements. These non-binding MOUs and development and supply agreements provide a general framework for Rockley’s transactions with the customer and typically provide that Rockley will develop and deliver new products meeting the customer’s specifications. These agreements do not contain any minimum or binding purchase obligations. If Rockley is unable to transition customers with whom it is engaged in discussions to contracted customers or if Rockley fails to otherwise attract new customers, it would negatively impact Rockley’s ability to grow its business and gain market share, which in turn would harm Rockley’s financial condition and results of operations.

~~•investing~~Because Rockley does not anticipate long-term purchase commitments with its customers, orders may be cancelled, reduced, or rescheduled with little or no notice, which in ~~new~~turn ~~applications~~exposes Rockley to inventory risk, and ~~markets~~may ~~for~~cause its ~~products;~~business and results of operations to suffer.

~~•partnering~~Rockley anticipates that its products will be sold directly to customers as well as through distributors and resellers, with, ~~third~~in certain cases, no long-~~parties~~ term or minimum purchase commitments from them or their end customers. Rockley expects that sales of its products will be primarily made pursuant to ~~develop~~standard ~~manufacturing~~purchase ~~processes;~~orders, which orders may be cancelled, reduced, changed, or rescheduled with little or no notice or penalty. Cancellations of orders could result in the loss of anticipated sales without allowing Rockley sufficient time to reduce its inventory and operating expenses. In addition, changes in forecasts or the timing of orders from its customers expose Rockley to the risks of inventory shortages or excess inventory. As a result, Rockley’s revenue and operating results could fluctuate materially and could be materially and disproportionately impacted by purchasing decisions of Rockley’s customers, including Rockley’s larger customers. In the future, Rockley’s customers or its distributors or their end customers may decide to purchase fewer units than expected, may alter their purchasing patterns at any time with limited or no notice, or may decide not to continue to purchase Rockley’s products at all, any of which could cause Rockley’s revenue to decline materially and materially harm Rockley’s business, financial condition, and results of operations.

~~•investing~~25 ~~in legal, accounting, and other administrative and internal functions necessary to support its operations as a public company.~~

TheseTable initiatives may be more costly than anticipated and Rockley may not generate sufficient revenue to offset the costs of these initiatives. Certain of Rockley’s market opportunities, such as healthcare monitoring devices incorporating sensing capabilities for disease detection and management, are at an early stage of development, and it may be years before these end markets generate demand for Rockley’s products at scale, if at all. Rockley’s revenue may be adversely affected for a number of reasons, including the rate and degree of development or market acceptance of new technology that competes with its products, failure of Rockley’s customers to develop and commercialize their end products that incorporate Rockley’s products, Rockley’s inability to effectively manage production of its products to scale, Rockley’s inability to enter new markets or help its customers adopt Rockley’s products for new applications, and Rockley’s failure to attract new customers or expand orders from existing customers. Further, it is difficult to predict the size and growth rate of Rockley’s target markets, customer demand for its products, commercialization timelines, developments in silicon photonics technology, the entry of competitive products, or the success of existing competitive products and services. As a result, Rockley does not expect to achieve profitability until 2023 at the earliest. If Rockley’s revenue does not grow over the short or long term, its ability to achieve and maintain profitability will be adversely affected, and the value of its business may significantly decrease.Contents

~~Rockley~~Cancellations ~~expects~~of, ~~its~~reductions ~~results~~in, or rescheduling of ~~operations~~customer toorders ~~fluctuate~~could onalso aresult ~~quarterly~~in the loss of anticipated sales without allowing Rockley sufficient time to reduce its inventory and ~~annual~~operating ~~basis~~expenses, ~~which~~as ~~could~~a ~~cause~~substantial portion of Rockley’s expenses are fixed at least in the ~~stock~~short ~~price~~term. In addition, changes in forecasts or the timing of orders expose Rockley to ~~fluctuate~~the risks of inventory shortages or ~~decline~~excess inventory. Any of the foregoing events could materially and adversely affect Rockley’s business, financial condition, and results of operations.

If Rockley’s ~~revenue~~is ~~and~~unable ~~operating~~to ~~results~~establish ~~have fluctuated in the past~~ and ~~may~~maintain ~~vary~~confidence ~~significantly~~ in ~~the future. Historical comparisons of~~ its ~~operating results may not be relevant, or indicative of future results. In particular, because Rockley’s revenue to date has been generated from NRE and development services for customer~~long-~~specific~~term ~~designs~~business ofprospects ~~silicon~~among ~~photonics chipsets for testing in the~~ customers’ ~~end~~and ~~products,~~analysts ~~revenue~~and inwithin ~~any~~its ~~given~~industry ~~quarter~~ or ~~period~~is ~~can~~subject ~~fluctuate~~to ~~based~~negative ~~on the timing and success of its customers’ development projects. Accordingly~~publicity, ~~the~~then ~~results of any one quarter should not be relied upon as an indication of future performance.~~ Rockley’s ~~quarterly and annual~~ financial ~~results~~condition, ~~may~~operating ~~fluctuate as a result of a variety of factors~~results, ~~many of which are outside of its control and may not fully reflect the underlying performance of Rockley’s~~ business. ~~These fluctuations could adversely affect Rockley’s ability to meet its expectations or those of securities analysts~~prospects, ~~ratings agencies, or investors. If Rockley does not meet these expectations for any reporting period, the value of its business~~ and ~~its~~access ~~securities,~~to ~~could~~capital ~~decline significantly. Factors that~~ may ~~cause~~suffer ~~these~~materially. ~~quarterly and annual fluctuations include, but are not limited to, those listed below:~~

~~•the~~Rockley ~~timing~~has not yet fully developed or commercialized its products or services and ~~magnitude~~the successful commercialization of ~~NRE~~Rockley’s ~~services~~products ~~revenue~~depends in ~~any~~part ~~quarter;~~on Rockley’s customers and potential customers committing to use Rockley’s products in their own products. Customers may be less likely to purchase Rockley’s products if they are not convinced that Rockley’s business will succeed or that its service and support and other operations will continue in the long term. Similarly, suppliers and other third parties will be less likely to invest time and resources in developing business relationships with Rockley if they are not convinced that Rockley’s business will succeed. If Rockley is unable to establish and maintain confidence in its long-term business prospects among customers, suppliers, analysts, ratings agencies, and within its industry or is subject to negative publicity, then Rockley’s financial condition, operating results, business prospects, and access to capital may suffer materially.

~~•the~~Rockley’s ~~timing~~investments in educating its customers and ~~magnitude~~potential customers about the advantages of ~~operating~~Rockley’s ~~expenses~~silicon ~~incurred,~~photonics ~~including~~and ~~research~~sensing technology and ~~development~~its ~~expenses;~~applications will require significant financial and talent resources and may not result in sales of Rockley’s products.

•Educating Rockley’s ~~ability~~prospective customers, and to ~~meet~~a ~~product~~lesser ~~development~~extent, ~~roadmaps~~its existing customers, about Rockley’s silicon photonics and ~~timelines~~sensing technology and its applications in health monitoring devices, ~~which~~its advantages over competitive technologies, and the potential application of Rockley’s products in ~~turn~~different industries and use cases is an integral part of Rockley’s strategy to expand into additional markets. Rockley’s efforts to educate potential customers and the market generally will require significant financial and talent resources. These educational efforts may not be ~~impacted~~successful byand ~~resource~~Rockley ~~constraints~~may ~~and~~not ~~must~~offset ~~meet~~the ~~certain~~costs ~~technical~~of ~~standards;~~such efforts with revenue from the new customers. If Rockley is unable to acquire new customers to offset these expenses, its financial condition will be adversely affected.

~~•the~~Legal ~~timing~~ and ~~degree~~Regulatory ofRisks ~~success~~Related ofto ~~commercialization of~~ Rockley’s ~~products;~~Business

•Rockley’s ~~ability~~is subject to ~~attract~~governmental export and ~~retain~~import ~~customers~~control laws and ~~successfully~~regulations. ~~transition~~Rockley’s ~~customers~~failure to comply with ~~which~~these itlaws isand ~~engaged~~regulations incould ~~discussions~~have toan ~~contracted~~adverse ~~customers~~effect on its business, prospects, financial condition, and toresults ~~attract~~of ~~new~~operations. ~~customers;~~

~~•changes~~Certain of Rockley’s products and services are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. U.S. export control laws and regulations and economic sanctions prohibit the shipment of certain products and services to U.S. embargoed or sanctioned countries, governments and persons. In addition, complying with export control and sanctions regulations for a particular sale may be time-consuming and result in ~~terms~~the delay or loss of ~~customer~~sales ~~agreements;~~opportunities. Exports of Rockley’s products and technology must be made in compliance with these laws and regulations. If Rockley fails to comply with these laws and regulations, Rockley and certain of its employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges, fines, which may be imposed on Rockley and responsible employees or managers, and, in extreme cases, the incarceration of responsible employees or managers.

25Changes to trade policy, tariffs, and import/export regulations may have a material adverse effect on Rockley’s business, financial condition, and results of operations.

~~Table~~Changes in global political, regulatory, and economic conditions, or in laws and policies governing foreign trade, manufacturing, development, and investment in the territories or countries where Rockley may purchase its components, sell its products, or conduct its business, could adversely affect Rockley’s business. The United States has in the past instituted or proposed changes in trade policies that included the negotiation or termination of ~~Contents~~trade agreements, the imposition of higher tariffs on imports into the United States, economic sanctions on individuals, corporations, or countries, and other government regulations affecting trade between the United States and other countries where Rockley conducts its business. For instance, effective December 17, 2021, the U.S. Bureau of Industry and Security (“BIS”) of the U.S. Department of Commerce placed Hengtong and certain of its affiliates on the BIS “Entity List,” meaning that the U.S. Export Administration Regulations prohibit companies from providing products and

~~•the~~26 ~~ability of Rockley’s customers to commercialize and achieve widespread market adoption of products incorporating Rockley’s products;~~

•theTable timing and magnitude of orders and shipments of Rockley’s products in any quarter;Contents

• technologies to organizations on the ~~mix~~“Entity List” without prior authorization. In response to this decision, the Company terminated a planned technical sale to the JV. A number of ~~product~~other ~~sales~~nations ~~and~~have ~~licensing~~proposed ~~arrangements~~or instituted similar measures directed at trade with the United States in ~~lieu~~response. As a result of ~~product~~these ~~sales;~~developments or any future similar developments, there may be greater restrictions and economic disincentives on international trade and economic cooperation that could adversely affect Rockley’s business. It may be time-consuming and expensive for Rockley to alter its business operations to adapt to or comply with any such changes, and any failure to do so could have a material adverse effect on its business, financial condition, and results of operations.

~~•the~~Rockley ~~actual~~may ~~timing~~become ~~and~~involved ~~magnitude~~in oflegal ~~sales~~and ~~returns~~regulatory proceedings and ~~warranty~~commercial ~~claims~~or ofcontractual ~~Rockley’s~~disputes, ~~products~~which incould ~~any~~have ~~quarter~~an ~~may~~adverse ~~differ~~effect ~~from~~on ~~estimate;~~its profitability and financial position.

•Rockley may be, from time to time, involved in litigation, regulatory proceedings, and commercial or contractual disputes that may be significant. These matters may include, without limitation, disputes with Rockley’s ~~ability~~suppliers toand ~~develop~~customers, ~~introduce~~intellectual property claims, ~~commercialize~~shareholder litigation, ~~manufacture~~government investigations, class action lawsuits, personal injury claims, environmental issues, customs and ~~ship~~value-added tax disputes, and employment and tax issues. In addition, Rockley could face in the future a ~~timely~~variety ~~manner~~of ~~products~~labor and employment claims against it, which could include but is not limited to general discrimination, wage and hour, privacy, ERISA, or disability claims. In such matters, government agencies or private parties may seek to recover from Rockley indeterminate amounts in penalties or monetary damages (including, in some cases, treble or punitive damages) or seek to limit Rockley’s operations in some way. These types of lawsuits could require significant management time and attention or could involve substantial legal liability, adverse regulatory outcomes, and/or substantial expenses to defend. Often these cases raise complex factual and legal issues and create risks and uncertainties. No assurances can be given that ~~meet~~any ~~customer~~proceedings ~~requirements;~~and claims will not have a material adverse impact on Rockley’s operating results and financial position or that its established reserves or its available insurance will mitigate this impact.

~~•disruptions~~Rockley is subject to, and must remain in ~~Rockley’s~~compliance ~~sales~~with, ~~channels~~numerous orlaws ~~termination~~and governmental regulations across various jurisdictions concerning the use, distribution, and sale of its ~~relationships~~products. Some of Rockley’s customers also require that it comply with ~~key~~their ~~channel~~own ~~partners;~~unique requirements relating to these matters.

~~•customer~~Rockley ~~demand~~sells products that contain electronic components, and ~~product~~such ~~life~~components ~~cycles;~~may contain materials that are subject to government regulation in locations where Rockley sells its products. For example, certain regulations limit the use of lead in electronic components. Since Rockley operates on a global basis, compliance with regulations is a complex process which requires continual monitoring of regulations and an ongoing compliance process to ensure that Rockley and its suppliers are in compliance with existing regulations in each market where it operates. If there is an unanticipated new regulation that significantly impacts Rockley’s use and sourcing of various components or requires more expensive components, that regulation could materially and adversely affect its business, results of operations, and financial condition. Rockley’s products may also be used in healthcare monitoring and other medical devices, which are subject to additional regulation. If Rockley fails to adhere to these new regulations or fails to continually monitor the updates, it may be subject to litigation, loss of customers, or negative publicity and its business, results of operations, and financial condition will be adversely affected.

•Rockley may in the ~~receipt,~~future ~~reduction,~~become orsubject ~~cancellation~~to ofadditional regulations, orincluding Food ~~changes~~and inDrug Administration (the ~~forecasts~~“FDA”) clearance or ~~timing of~~approval, ~~orders~~for byhealth ~~customers;~~monitoring products in which Rockley’s products are incorporated. Achieving and maintaining compliance and approval under applicable regulations may be difficult to achieve.

~~•fluctuations~~Rockley’s products may be incorporated into end products in the ~~levels~~health ofmonitoring ~~inventories~~sector, ~~held~~including byproducts ~~distributors~~which collect clinical data. Accordingly, it is possible that certain of Rockley’s products, or the end ~~customers~~products which incorporate Rockley’s products will be subject to current and future regulation by the FDA, as well as by other federal, state, and local agencies. As Rockley’s target market is consumer wellness rather than medical, Rockley currently anticipates that FDA clearance will be unnecessary for its products targeting the consumer wearables market; however, Rockley intends to monitor and comply with regulations to the extent they become applicable to Rockley.

~~•the~~Manufacturers ~~gain~~of ormedical ~~loss~~devices are required to comply with applicable laws and regulations governing development, testing, manufacturing, labeling, marketing, and distribution of ~~significant~~medical ~~customers~~devices. Devices are generally subject to varying levels of regulatory control, ~~including~~based ~~Rockley’s~~on ~~largest~~the ~~customer;~~risk level of the device. Governmental regulations specific to medical devices are wide-ranging and govern, among other things:

•~~fluctuations~~ inproduct ~~sales~~design, bydevelopment, ~~customers~~and ~~who incorporate Rockley’s products into their end products~~manufacture;

•~~cyclicality,~~ ~~seasonality~~laboratory, pre-clinical and ~~the~~clinical ~~competitive~~testing, ~~landscape~~labeling, inpackaging, ~~Rockley’s~~storage, ~~target~~and ~~markets~~distribution;

•~~fluctuations~~ inpremarketing ~~manufacturing~~clearance ~~yields~~or approval;

•~~changes~~ ~~in pricing, product cost, product volume, and product mix~~record-keeping;

•~~sales~~ ofproduct ~~subscriptions to Rockley’s cloud-based analytics subscription service~~marketing, ifpromotion and ~~when commercially launched~~advertising, ~~and in the future~~sales, ~~the rate of renewal of subscriptions by existing customers, the extent the use of subscription offerings~~ and ~~related~~distribution; ~~services is expanded under such subscriptions,~~ and ~~timing and magnitude of any such subscriptions which are not renewed;~~

•~~the~~ ~~mix~~post-marketing ofsurveillance, ~~customers~~including ~~licensing~~reporting ~~the~~of ~~service~~deaths onor aserious ~~subscription~~injuries ~~basis~~and asrecalls ~~compared~~and tocorrection aand ~~perpetual license;~~removals.

~~•the~~27 ~~size, timing, and terms of its subscription agreements with new customers;~~

•supplyTable chain disruptions, delays, shortages, and capacity limitations as a result of the COVID-19 pandemic or other reasons;Contents

•Rockley or its customers may not be able to obtain the ~~impact~~necessary ~~and~~clearances ~~duration~~or ofapprovals for their products or may be unduly delayed in doing so, which could harm Rockley’s business. Furthermore, even if Rockley is granted regulatory clearances or approvals, they may include significant limitations on the ~~global~~permitted ~~COVID-19 pandemic;~~uses for the product, which may limit the market potential for the product. Delays in obtaining clearance or approval could increase Rockley’s costs and harm Rockley’s revenue and growth.

~~•the~~Additionally, ~~timing~~Rockley’s ~~and~~products ~~rate~~may ofbe ~~broader~~subject ~~market~~to ~~adoption~~regulation ofby ~~consumer~~similar agencies in other states and ~~medical~~foreign ~~devices~~countries. ~~utilizing~~While Rockley’s ~~products~~believes orthat ~~technology~~it ~~across~~has ~~the~~complied ~~consumer~~with ~~wearables~~all applicable laws and regulations, ~~mobile~~continued ~~device~~compliance with such laws or regulations, including any new laws or regulations, might impose additional costs on Rockley which could adversely affect its financial performance and ~~medical~~results ~~device~~of ~~sectors;~~operations.

~~•changes~~Rockley inis ~~the~~subject ~~competitive~~to ~~landscape~~various inenvironmental ~~Rockley’s~~laws ~~target~~and ~~markets,~~regulations ~~including~~that ~~industry~~could ~~consolidation,~~impose ~~regulatory~~substantial ~~developments,~~costs ~~and~~upon ~~new~~Rockley. ~~market entrants;~~

•Concerns over environmental pollution and climate change have produced significant legislative and regulatory efforts on a global basis, and Rockley believes this will continue both in scope and in the number of countries participating. In addition, as climate change issues become more prevalent, foreign, federal, state, and local governments and Rockley’s ~~ability~~customers have been responding to these issues. The increased focus on environmental sustainability may result in new regulations and customer requirements, or changes in current regulations and customer requirements, which could materially and adversely impact Rockley’s business, results of operations, and financial condition. If Rockley is unable to effectively manage real or perceived issues, including concerns about environmental impacts or similar matters, sentiments toward Rockley or its ~~third-party~~products ~~suppliers~~could be negatively impacted, and ~~manufacturing~~its ~~partners;~~business, results of operations, or financial condition could suffer.

~~•changes~~Rockley’s inoperations are and will be subject to foreign, federal, state, and local environmental laws and regulations, and such laws and regulations could directly increase the ~~source~~cost of energy, which may have an effect on the way Rockley manufactures products or utilizes energy to produce its products. In addition, any new regulations or laws in the environmental area might increase the cost of raw materials or key components Rockley uses in its products. Environmental regulations require Rockley to reduce product energy usage, monitor and ~~availability~~exclude an expanding list of ~~materials~~restricted substances, and ~~components~~to ~~incorporated~~participate in required recovery and recycling of its products. Environmental and health and safety laws and regulations can be complex, and Rockley has limited experience complying with them. Capital and operating expenses needed to comply with environmental laws and regulations can be significant, and violations may result in substantial fines and penalties, third-party damages, suspension of production, or a cessation of Rockley’s ~~products;~~operations.

~~•adverse~~The ~~litigation,~~costs ~~judgments,~~of ~~settlements~~complying with environmental laws and regulations and any claims concerning noncompliance, or ~~other~~liability ~~litigation-related costs~~with respect to contamination in the future, could have a material adverse effect on Rockley’s financial condition or ~~claims~~operating ~~that~~results. Rockley may ~~give~~face ~~rise~~unexpected delays in obtaining the required permits and approvals in connection with its planned production facilities that could require significant time and financial resources and delay its ability to ~~such~~operate ~~costs;~~these facilities, which would adversely impact Rockley’s business, prospects, financial condition, and operating results.

~~•general~~Rockley ~~economic,~~is ~~industry,~~subject to U.S. and ~~market~~foreign ~~conditions,~~anti-corruption ~~including~~and ~~trade~~anti-money ~~disputes;~~laundering laws and regulations. Rockley can face criminal liability and other serious consequences for violations, which can harm its business.

•Rockley’s ~~estimates~~is subject to the U.S. Foreign Corrupt Practices Act of ~~potential~~1977, oras ~~future~~amended, ~~market~~the ~~growth~~U.S. domestic bribery statute contained in ~~this~~18 ~~Annual~~U.S.C. ~~Report~~§ on201, ~~From~~the ~~10-~~U.S. Travel Act, the USA PATRIOT Act, the U.K. ~~may~~Bribery ~~not~~Act of 2010, and possibly other anti-bribery and anti-money laundering laws in countries in which Rockley conducts activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors, and other collaborators from authorizing, promising, offering, or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. Rockley can be ~~accurate~~held liable for the corrupt or other illegal activities of its employees, agents, contractors, and other collaborators, even if Rockley does not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences.

~~Rockley~~Failures, ~~expects~~or toperceived ~~incur~~failures, ~~significant~~to ~~research~~comply ~~and~~with ~~development~~privacy, ~~expenses~~data protection, and ~~devote~~information ~~substantial~~security ~~resources~~requirements toin ~~commercializing~~the ~~new~~variety ~~products,~~of jurisdictions in which ~~could~~Rockley ~~increase~~operates may adversely impact its ~~losses~~business, and ~~negatively~~such ~~impact~~legal ~~its~~requirements ~~ability~~are toevolving, ~~achieve~~uncertain, and may require improvements in, or ~~maintain~~changes ~~profitability~~to, Rockley’s policies and operations.

Rockley’s current and potential future ~~growth~~operations ~~depends~~and onsales ~~developing~~are subject to laws and ~~commercializing~~regulations ~~its~~addressing ~~products~~privacy and the collection, ~~achieving~~use, ~~widespread~~storage, ~~market~~disclosure, ~~adoption~~transfer, and protection of ~~its~~a ~~products~~variety of types of data. For example, ~~adapting~~the ~~existing~~European ~~products~~Commission tohas ~~new~~adopted ~~applications~~the General Data Protection Regulation and ~~customer~~California recently enacted the California Consumer Privacy Act of 2018, both of which provide for potentially material penalties for non-compliance. These regimes may, among other things, impose data security requirements, disclosure requirements, and ~~introducing~~restrictions ~~new~~on ~~products~~data tocollection, ~~address~~uses, ~~changing~~and ~~customer~~sharing that may impact Rockley’s operations and ~~market~~the ~~demands~~development of its business. Rockley ~~plans~~has limited access to ~~incur~~collect, ~~substantial~~store, ~~research~~process, or share certain information collected by its products, and ~~development~~Rockley’s ~~expenses~~products asmay ~~part~~evolve to collect additional information. Therefore, the full impact of these privacy regimes on Rockley’s business is rapidly evolving across jurisdictions and remains uncertain at this time.

2628

Rockley may also be affected by cyber-attacks and other means of ~~its~~gaining ~~efforts~~unauthorized access to ~~design,~~its ~~develop~~products, ~~manufacture~~systems, and ~~commercialize~~data. ~~new~~For ~~products~~instance, ~~and~~cyber ~~enhance~~criminals ~~existing~~or ~~products.~~insiders ~~Rockley’s~~may ~~research~~target ~~and~~Rockley ~~development~~or ~~expenditures~~third ~~could~~parties ~~increase~~with ~~its~~which ~~losses~~it ~~and~~has ~~adversely~~business ~~affect~~relationships ~~its~~to ~~results~~obtain ofdata, ~~operations~~or in ~~the~~a ~~future.~~manner ~~Further,~~that disrupts Rockley’s ~~research~~operations ~~and~~or ~~development~~compromises ~~efforts~~its ~~may~~products ~~not~~or bethe ~~successful~~systems orinto ~~result~~which inits ~~additional~~products ~~revenue~~are integrated. ~~This~~Due into ~~turn~~the ~~would~~political ~~negatively~~uncertainty ~~impact~~involving ~~Rockley’s~~Russia ~~ability~~and toUkraine, ~~achieve~~there is an increased likelihood that escalation of tensions could result in cyber-attacks that could either directly or ~~maintain~~indirectly ~~profitability~~impact our operations.

If Rockley is ~~unable~~assessing the continually evolving privacy and data security regimes and measures it believes are appropriate in response. Since these data security regimes are evolving, uncertain, and complex, especially for a global business like Rockley, Rockley may need to ~~manage~~update or enhance its ~~growth~~compliance measures and these updates or ~~expansion~~enhancements ofmay ~~operations~~require implementation costs. In addition, ~~including~~Rockley may not be able to monitor and react to all developments in a ~~cost-efficient~~timely manner. The compliance measures Rockley does adopt may prove ineffective. Any failure, ~~its~~or ~~business~~perceived failure, ~~operations~~by Rockley to comply with current and future regulatory or customer-driven privacy, data protection, and ~~financial~~information ~~condition~~security requirements, asor ~~well~~to asprevent or mitigate security breaches, cyber-attacks, or improper access to, use of, or disclosure of data, or any security issues or cyber-attacks affecting Rockley, could result in significant liability, costs (including the costs of mitigation and recovery), and a material loss of revenue resulting from the adverse impact on its reputation and brand, loss of proprietary information and data, disruption to its business and relationships, and diminished ability to ~~scale~~retain ~~its~~or ~~operations~~attract customers and business partners. Such events may result in governmental enforcement actions and prosecutions, private litigation, fines, and penalties or adverse publicity, and could because ~~materially~~customers and ~~adversely~~business ~~affected~~partners to lose trust in Rockley, which could have an adverse effect on its reputation and business.

Further, in the event Rockley’s ~~ability~~products, or the end products into which Rockley’s products are incorporated, involve the collection of personal medical or clinical data, Rockley would be subject to ~~effectively~~additional ~~manage~~privacy ~~its~~regulations. ~~anticipated~~For ~~growth~~example, the Health Insurance Portability and ~~expansion~~Accountability Act of ~~operations~~1996 ~~and~~(“HIPAA”) ~~manage~~regulations ~~its~~apply ~~transition~~U.S. tonational ~~operating~~standards asfor asome ~~public~~types ~~company~~of ~~will~~electronic ~~also~~health ~~require~~information ittransactions and the data elements used in those transactions to ~~enhance~~ensure ~~its~~the ~~operational~~integrity, ~~financial~~security, and ~~management~~confidentiality ~~controls~~of health information and ~~infrastructure,~~standards ~~human~~to ~~resources~~protect ~~policies~~the privacy of individually identifiable health information businesses receive, ~~and~~maintain ~~reporting~~or ~~systems~~transmit. ~~These~~The ~~enhancements~~Health ~~and~~Information ~~improvements~~Technology ~~will~~for ~~require~~Economic ~~significant~~and Clinical Health ~~capital~~Act ~~expenditures,~~of ~~investments~~2009 in(“HITECH ~~additional~~Act”) ~~headcount~~expanded ~~and~~the ~~other~~scope ~~operating~~of ~~expenditures,~~ the privacy and ~~allocation~~security ofrequirements ~~valuable~~under ~~management~~HIPAA and ~~employee~~increased ~~resources~~penalties for violations. ~~Rockley’s~~In ~~future~~addition, ~~financial~~the ~~performance~~HITECH ~~and~~Act ~~ability~~enacted federal breach notification rules requiring notification to ~~execute~~affected onindividuals ~~its~~and ~~business~~the ~~plan~~Department ~~will~~of ~~depend,~~Health and Human Services (and in ~~part~~some cases, onrelevant ~~its~~media ~~ability~~outlets) towhenever ~~effectively~~a ~~manage~~breach ~~any~~of ~~future~~protected ~~growth~~health ~~and~~information ~~expansion~~occurs. Rockley’s ~~may~~failure beto ~~unable~~maintain toconfidentiality ~~effectively~~of ~~manage~~sensitive ~~any~~protected ~~future~~health ~~growth~~information or ~~expansion~~other personal information in anaccordance ~~efficient~~with orthe ~~timely~~applicable ~~manner.~~regulatory ~~Further,~~requirements ~~Rockley~~could ~~may~~damage ~~not~~its bereputation ~~able~~and expose Rockley to ~~implement~~claims, ~~improvements~~fines, inand anpenalties. ~~efficient~~Rockley’s orbusiness, ~~timely~~operating ~~manner~~results, and ~~may~~financial ~~discover~~condition ~~deficiencies~~could inalso ~~existing~~be ~~controls,~~negatively ~~programs,~~impacted ~~systems,~~by ~~and~~a ~~procedures,~~violation ~~which~~of ~~could~~the ~~have~~HIPAA anprivacy ~~adverse~~or ~~effect~~security onrules ~~its~~or ~~business,~~any ~~reputation,~~other ~~and~~applicable ~~financial~~privacy ~~results~~or data security law.

~~Market~~Many ~~opportunity~~U.S. ~~estimates~~states and ~~growth~~international ~~forecasts~~jurisdictions ~~included~~ in ~~this~~which ~~Annual~~Rockley ~~Report~~operates onalso ~~Form~~have ~~10-K~~laws ~~are~~and ~~subject~~regulations tothat ~~significant~~protect ~~uncertainty~~the privacy and ~~are~~security ~~based~~of onconfidential, ~~assumptions~~protected health information, or other personal information and ~~estimates~~have ~~that~~similar ~~may~~or ~~not~~even ~~prove~~more protection than U.S. federal regulations. Furthermore, state data breach notification laws continue to beexpand ~~accurate~~the type of protected health information and other personal information they encompass, and in many cases are more burdensome than the HIPAA/HITECH breach reporting requirements.

~~The~~Risks ~~forecasts~~Related ~~and estimates in this Annual Report on Form 10-K relating~~ to the expected size and growth of the markets for consumer wearables, mobile devices, and medical devices may prove to be inaccurate. Even if these markets experience the forecasted growth described in this Annual Report on Form 10-K, Rockley ~~may not grow its business at similar rates, or at all. Rockley~~’s ~~future~~Intellectual ~~growth~~Property is subject to many factors, including market adoption of its products, which is subject to many risks and uncertainties. Accordingly, the forecasts and estimates of market size and growth described in this Annual Report on Form 10-K, including Rockley’s estimates that the consumer wearables, mobile device, and medical devices markets will represent, in the aggregate, an approximately over $48 billion of total addressable market for healthcare monitoring devices incorporating additional sensing capabilities by 2025, should not be taken as indicative of Rockley’s future growth. In addition, these forecasts may be materially and adversely affected as a result of the COVID-19 pandemic.

IfDespite the actions Rockley is ~~unable~~taking to ~~accurately~~defend ~~forecast~~and ~~long-term~~protect ~~end-customer~~its ~~adoption~~intellectual ~~rates~~property, ~~and~~Rockley ~~demand~~may ~~for~~not be able to adequately protect or enforce its intellectual property rights or prevent unauthorized parties from copying or reverse engineering its products or technology. Rockley’s ~~products,~~efforts itto ~~could~~protect ~~materially~~ and ~~adversely~~enforce ~~affect~~ its ~~current~~intellectual property rights and ~~future~~prevent ~~financial~~third ~~results~~parties offrom ~~operations~~violating its rights may be costly.

~~Rockley~~The issuccess ~~pursuing opportunities in markets that are undergoing rapid changes, including technological and regulatory changes, and it is difficult to predict the timing and size~~ of the opportunities. For example, consumer health and wellness applications and healthcare monitoring devices require complex technology. Because these products may incorporate technology from other companies, commercialization of these products could be delayed or impaired on account of certain technological components of Rockley or others not being ready to be deployed. Although Rockley currently has MOUs or development and supply agreements with various consumer and medical device companies, these companies may not be able to commercialize products incorporating Rockley’s products ~~immediately,~~and orits atbusiness ~~all.~~depend ~~Regulatory~~in ~~developments,~~part ~~many~~on ~~of which are outside of~~ Rockley’s ~~control, could also cause delays or otherwise impair commercial adoption of these products. Rockley’s future financial performance will depend on its~~ ability to ~~make~~obtain ~~timely~~patents ~~investments~~and inother ~~the~~intellectual ~~correct~~property ~~market~~rights ~~opportunities.~~and ~~Given~~maintain ~~the~~adequate ~~evolving~~legal ~~nature~~protection ~~of the markets in which Rockley operates in, it is difficult to predict customer demand or adoption rates~~ for its products orin the ~~future~~United States ~~growth~~and ofother ~~the~~international ~~markets in which it operates~~jurisdictions. ~~As a result,~~ Rockley's ~~estimates~~relies ~~included in this Annual Report~~ on ~~Form~~a ~~10-K~~combination ~~may~~of ~~not~~patent, ~~necessarily~~trademark, ~~reflect various estimates~~ and ~~assumptions~~trade ~~that~~secret ~~may not prove accurate and any such estimates could differ materially from actual results due to the risks included in this “Risk Factors Related to Rockley” section~~laws, ~~among~~as ~~others.~~well Ifas ~~demand~~confidentiality ~~does~~procedures ~~not~~and ~~develop~~contractual ~~or if Rockley cannot accurately forecast customer demand~~restrictions, ~~the~~to ~~size~~establish ofand ~~its~~protect ~~markets, inventory requirements, or~~ its ~~future~~proprietary ~~financial results~~rights, ~~its~~all ~~business, results~~ of ~~operations,~~which ~~and~~provide ~~financial~~only ~~condition~~limited ~~will be adversely affected~~protection.

Rockley’s ~~target~~cannot ~~customer~~assure you that any patents will be issued with respect to its currently pending patent applications or that any trademarks will be registered with respect to its currently pending applications in a manner that gives Rockley adequate defensive protection or competitive advantages, if at all, or that any patents issued to Rockley or any trademarks registered by it will not be challenged, invalidated, or circumvented. Rockley may file for patents and ~~product~~trademarks ~~markets~~in the United States and in certain international jurisdictions, but such protections may not ~~grow~~be available in all countries in which it operates or ~~develop~~in aswhich Rockley ~~currently~~seeks ~~expects~~to enforce its intellectual property rights, ~~and~~or ifmay ~~Rockley~~be ~~fails~~difficult to ~~penetrate~~enforce ~~new~~in ~~markets~~practice. ~~and~~For ~~scale~~example, ~~successfully~~the ~~within~~legal ~~those~~environment ~~markets~~relating to intellectual property protection in certain emerging market countries where Rockley may operate in the future is relatively weaker, often making it difficult to create and enforce such rights. Rockley’s ~~revenue~~currently registered trademarks and ~~financial~~any ~~condition~~patents ~~would~~and trademarks that may be ~~harmed~~issued or registered, as applicable, in the future with respect to pending or future applications may not provide sufficiently broad protection or may not prove to be enforceable in actions against alleged infringers. Rockley cannot be certain that the steps it has taken will prevent unauthorized use of its technology or the reverse engineering of its technology. Moreover, others may independently develop technologies that are competitive to Rockley or infringe Rockley’s intellectual property.

~~Rockley’s~~29 target markets include the consumer wearables, mobile device, and medical device markets. Any deterioration in Rockley’s target customer or product markets or reduction in capital spending to support these markets could lead to a reduction in demand for Rockley’s products, which would adversely affect its revenue and results of operations. Further, if

27Table of Contents

~~Table~~Protecting against the unauthorized use of ~~Contents~~Rockley’s intellectual property, products, and other proprietary rights is expensive and difficult, particularly internationally. Unauthorized parties may attempt to copy or reverse engineer Rockley’s sensing technology or certain aspects of Rockley’s products or manufacturing processes that it considers proprietary. Litigation may be necessary in the future to enforce or defend Rockley’s intellectual property rights, to prevent unauthorized parties from copying or reverse engineering its products, or technology to determine the validity and scope of the proprietary rights of others or to block the importation of infringing products into the United States.

~~Rockley’s~~Any ~~target~~such ~~customer~~litigation, ~~markets~~whether doinitiated ~~not~~by ~~grow~~Rockley or ~~develop~~a inthird ~~ways~~party, ~~that~~could ~~Rockley~~result ~~currently~~in ~~expects,~~substantial ~~demand~~costs ~~for~~and ~~Rockley’s~~diversion ~~products~~of ~~may~~management ~~not~~resources, ~~materialize~~either asof ~~expected,~~ which ~~would~~could ~~also~~adversely ~~negatively~~affect ~~impact~~Rockley’s ~~its~~ business, ~~financial~~operating ~~condition~~results, and ~~results~~financial ~~of operations~~condition. ~~Rockley~~Even ~~may~~if beit ~~unable~~obtains tofavorable ~~predict~~outcomes ~~the~~in ~~timing~~litigation, orRockley ~~development~~may ofnot ~~trends~~be inable ~~its~~to ~~target~~obtain ~~markets~~adequate ~~with~~remedies, ~~any~~especially ~~accuracy.~~in Ifthe ~~Rockley~~context ~~fails~~of tounauthorized ~~accurately~~parties ~~predict~~copying ~~market requirements~~ or ~~market~~reverse ~~demand~~engineering ~~for~~its ~~these~~products ~~solutions,~~or ~~Rockley’s business may suffer~~technology.

Further, many of Rockley’s ~~future~~current ~~revenue~~and ~~growth,~~potential ifcompetitors ~~any,~~have ~~will~~the ~~depend~~ability into ~~part~~dedicate onsubstantially ~~Rockley’s~~greater ~~ability~~resources to ~~penetrate~~defending ~~Rockley’s~~intellectual ~~current~~property ~~target~~infringement ~~markets,~~claims and to ~~enter~~enforcing ~~emerging~~their ~~markets,~~intellectual ~~such~~property asrights ~~the~~than ~~market~~Rockley ~~for~~has. ~~consumer~~Attempts ~~healthcare~~to ~~monitoring~~enforce ~~devices~~its ~~and~~rights ~~predictive~~against ~~analytics.~~third ~~Meeting~~parties ~~the~~could ~~technical~~also ~~requirements~~provoke ~~and~~these ~~securing~~third ~~design~~parties ~~wins~~to inassert ~~any~~their ofown ~~these~~intellectual ~~new~~property ~~markets~~or ~~will~~other ~~require~~rights against Rockley or result in a ~~substantial~~holding ~~investment~~that invalidates or narrows the scope of Rockley’s ~~time~~rights, ~~and~~in ~~resources~~whole or in part. ~~Rockley~~Effective patent, trademark, service mark, copyright, and trade secret protection may not ~~secure~~be ~~design~~available ~~wins~~in ~~from~~every ~~these~~country orin ~~other~~which ~~new~~Rockley’s ~~markets,~~products orare ~~achieve~~available ~~meaningful~~and ~~revenue~~competitors ~~from~~based ~~sales~~in other countries may sell infringing products in ~~these~~one or more markets. IfFailure ~~any~~to ofadequately ~~these~~protect ~~markets~~Rockley’s dointellectual ~~not~~property ~~develop~~rights ascould result in Rockley’s ~~currently~~competitors ~~anticipates~~offering orsimilar ifproducts, ~~Rockley~~potentially isresulting ~~unable~~in tothe ~~penetrate~~loss of some of Rockley’s competitive advantage and ~~scale~~a ~~them~~decrease ~~successfully~~in its revenue, itwhich ~~may~~would adversely affect Rockley’s ~~ability~~business, tooperating ~~grow~~results, ~~its~~financial ~~business~~condition, and prospects.

Third-party claims that Rockley’s ~~target~~is ~~markets~~infringing ~~are~~intellectual ~~characterized~~property, bywhether ~~rapid~~successful ~~technological~~or ~~change~~not, ~~which~~could ~~requires~~subject Rockley to ~~continue~~costly toand ~~develop~~time-consuming ~~new~~litigation ~~products~~or ~~and~~expensive ~~technology~~licenses, ~~innovations~~ and ~~could~~its ~~adversely~~business ~~affect~~could ~~market~~be ~~adoption~~adversely ~~of its products~~affected.

~~Rapid~~Although ~~technological~~Rockley ~~changes~~has inapplied ~~the markets~~ for ~~sensing~~patents ~~technology,~~related ~~including~~to ~~the~~its ~~consumer~~products ~~wearables,~~and ~~mobile device~~technology, ~~and~~a ~~medical~~number ~~device~~of ~~markets,~~companies ~~could~~hold ~~adversely~~patents ~~affect~~covering ~~adoption~~aspects of ~~Rockley’s~~sensing ~~products,~~and ~~either~~photonic ~~generally~~chip ortechnologies. ~~for~~In ~~particular~~addition ~~applications.~~to ~~Rockley’s~~these ~~future~~patents, ~~success~~participants ~~will~~in ~~depend~~this ~~upon~~industry ~~its~~typically ~~ability~~also toprotect ~~develop~~their ~~and~~technology, ~~introduce~~especially aembedded ~~variety~~software, ofthrough ~~new~~copyrights ~~capabilities~~ and ~~innovations~~trade tosecrets. ~~its~~As ~~products~~a result, asthere ~~well~~is asfrequent ~~introduce~~litigation ~~new~~based ~~products,~~on toallegations ~~address~~of ~~the~~infringement, ~~changing~~misappropriation, ~~needs~~or other violations of ~~its~~intellectual ~~target~~property ~~markets~~rights. ~~Delays~~Rockley may in ~~delivering~~the ~~new~~future ~~products~~receive ~~that~~inquiries ~~meet~~from ~~customers’~~other ~~requirements~~intellectual ~~could~~property ~~damage~~holders ~~Rockley’s~~and ~~relationships~~may ~~with~~become ~~its~~subject ~~customers~~to ~~and~~claims ~~lead~~that ~~them~~it toinfringes ~~seek~~their ~~alternative~~intellectual ~~sources~~property ofrights, ~~supply.~~particularly ~~Further,~~as Rockley expands its presence in the ~~introduction~~market, ofexpands to new ~~products~~use bycases, ~~Rockley’s~~and ~~competitors,~~faces ~~the~~increasing ~~delay~~competition. orIn ~~cancellation~~addition, ofparties ~~any~~may ofclaim ~~Rockley’s~~that ~~customers’~~the ~~end~~names ~~products~~and ~~into~~branding ~~which~~of Rockley’s products ~~are~~infringe ~~designed,~~their ~~the~~trademark ~~market~~rights ~~acceptance~~in ofcertain ~~products~~countries ~~based~~or onterritories. ~~new~~If orsuch ~~alternative~~a ~~technologies,~~claim orwere ~~the~~to ~~emergence~~prevail, ofRockley ~~new~~may ~~industry~~have ~~standards~~to ~~could~~change ~~render~~the ~~Rockley’s~~names ~~existing~~and orbranding ~~future~~of its products ~~uncompetitive,~~in ~~obsolete,~~the affected territories and~~/or~~ ~~otherwise~~it ~~unmarketable~~could incur other costs.

InRockley ~~addition,~~currently ~~Rockley’s~~has ~~success~~a number of agreements in effect pursuant to ~~date~~which it has ~~been~~agreed ~~based~~to ondefend, ~~the~~indemnify, ~~delivery~~and ofhold ~~prototypes~~harmless ~~and~~its ~~services~~customers, tosuppliers, ~~research~~and channel partners and ~~development~~other ~~programs~~counterparties infrom ~~which~~damages ~~customers~~and ~~are~~costs ~~investing~~which ~~substantial~~may ~~capital~~arise tofrom ~~develop~~the ~~new~~infringement by Rockley’s products of third-party patents or other intellectual property rights. ~~Delays~~The scope of these indemnity obligations varies, and, in ~~introducing~~some ~~products~~instances, include indemnification for damages and ~~innovations~~expenses, ~~the~~including ~~failure~~attorneys’ tofees. ~~choose~~Rockley’s ~~correctly~~insurance ~~among~~may ~~technical~~not ~~alternatives,~~cover orall ~~the~~intellectual ~~failure~~property toinfringement ~~offer~~claims. ~~innovative~~A claim that its products atinfringe ~~competitive~~a ~~prices~~third ~~may~~party’s ~~cause~~intellectual ~~existing~~property ~~and~~rights, ~~potential~~even ~~customers~~if tountrue, ~~purchase~~could adversely affect Rockley’s ~~competitors’~~relationships with its customers, may deter future customers from purchasing its products, orand ~~turn~~could expose Rockley to ~~alternative~~costly ~~sensing~~litigation ~~technology~~and settlement expenses. IfEven if Rockley is ~~unable~~not toa ~~successfully~~party ~~develop~~to ~~products~~any ~~that~~litigation ~~meet~~between ~~changing~~a customer orand ~~market~~a ~~requirements~~third onparty arelating ~~timely~~to ~~basis~~infringement orby ~~that~~its ~~remain~~products, ~~competitive~~an ~~with~~adverse ~~technological~~outcome ~~alternatives,~~in any such litigation could make it more difficult for Rockley to defend its products ~~may~~against ~~fail~~intellectual toproperty ~~achieve~~infringement ~~commercial~~claims ~~adoption,~~in ~~its~~any ~~revenue~~subsequent ~~will~~litigation ~~decline,~~in which it ~~may~~is ~~experience~~a ~~operating~~named ~~losses,~~party. ~~and~~Any ~~its~~of ~~business~~these ~~and~~results ~~prospects~~could ~~will~~adversely beaffect ~~adversely~~Rockley’s ~~affected~~brand and operating results.

Rockley may in the future need to initiate infringement claims or litigation to try to protect its intellectual property rights. In addition to litigation where Rockley is a plaintiff, Rockley’s defense of intellectual property rights claims brought against it or its customers, suppliers, and channel partners, with or without merit, could be ~~unable~~time-consuming, expensive to ~~make~~litigate ~~the~~or settle, divert management resources and attention, and force Rockley to acquire intellectual property rights and licenses, which may involve substantial ~~investments~~royalty or other payments and may not be available on acceptable terms or at all. Further, a party making such a claim, if successful, could secure a judgment that ~~are~~requires ~~required~~Rockley to ~~remain~~pay ~~competitive~~substantial damages or obtain an injunction and also Rockley may lose the opportunity to license its technology to others or to collect royalty payments. An adverse determination also could invalidate or narrow Rockley’s intellectual property rights and adversely affect its ability to offer its products to its customers and may require that Rockley procure or develop substitute products that do not infringe, which could require significant effort and expense. Any of these events could adversely affect Rockley’s business, reputation, operating results, financial condition, and prospects.

~~The~~30 silicon photonics industry requires substantial and continuous investment in research and development in order to bring to market new and enhanced solutions. Rockley expects its research and development expenditures to increase in the future as part of its strategy to increase demand for Rockley’s solutions in Rockley’s current target markets and to expand into additional markets. Rockley may not have sufficient resources to maintain the level of investment in research and development required to remain competitive. In addition, Rockley cannot assure you that the technologies that are the focus of its research and development expenditures will become commercially successful or generate any revenue.

IfTable Rockleyof fails to compete effectively, it may lose or fail to gain market share, which could negatively impact Rockley’s operating results and Rockley’s business.Contents

~~The~~Rockley’s ~~global~~intellectual ~~optical~~property ~~components market in general~~applications, ~~and~~including ~~the~~patent ~~consumer sensor~~applications, ~~healthcare,~~may ~~and~~not ~~data~~be ~~communications~~approved ~~markets~~or ingranted ~~particular,~~or ~~are~~may ~~highly~~take ~~competitive.~~longer ~~Rockley~~than ~~expects~~expected ~~competition~~ to ~~increase and intensify as additional companies enter Rockley’s target markets. Increased competition could~~ result in ~~price~~approval ~~pressure,~~or ~~reduced gross margins~~grant, ~~and~~which ~~difficulty~~may ~~achieving~~have ~~market~~a ~~penetration,~~material ~~any~~adverse ofeffect ~~which~~on ~~could harm~~ Rockley’s ~~business,~~ability ~~financial~~to ~~condition,~~prevent ~~and~~others ~~results of operations. Rockley’s competitors range~~ from ~~large,~~commercially ~~international~~exploiting ~~companies~~products ~~offering~~similar ~~a wide range of services and optical components, such as LEDs, lasers, detectors, or photonic integrated circuit (“PICs”),~~ to ~~smaller companies specializing in narrow market verticals. Some of~~ Rockley’s ~~key competitors across various verticals include: ams AG, Analog Devices, Inc~~., Broadcom Inc., DexCom, Inc. GlobalFoundries Inc., Intel Corporation, Lightwave Logic, Inc. Lumentum Holdings Inc. (“Lumentum”), Masimo Corporation, Osram Licht AG, and Tower Semiconductor Ltd. Rockley expects competition in its target markets to increase in the future as existing competitors improve or expand their product offerings and as new competitors enter these markets.

28Rockley cannot be certain that it is the first inventor of the subject matter to which it has filed a particular patent application, or if it is the first party to file such a patent application. If another party has filed a patent application to the same subject matter as Rockley has, Rockley may not be entitled to the protection sought by the patent application. Rockley also cannot be certain whether the claims included in a patent application will ultimately be allowed in the applicable issued patent or the timing of any approval or grant of a patent application. Further, the scope of protection of issued patent claims is often difficult to determine. As a result, Rockley cannot be certain that the patent applications that it files will issue, or that its issued patents will afford protection against competitors with similar technology. In addition, Rockley’s competitors may design around Rockley’s registered or issued intellectual property, which may adversely affect Rockley’s business, prospects, financial condition, and operating results.

~~Table~~In ofaddition ~~Contents~~to patented technology, Rockley relies on its unpatented proprietary technology, trade secrets, designs, experiences, workflows, data, processes, software, and know-how.

Rockley’s ~~ability~~relies on proprietary information (such as trade secrets, designs, experiences, workflows, data, know-how, and confidential information) to ~~compete~~protect ~~successfully~~intellectual ~~depends~~property that may not be patentable or subject to copyright, intrademark, ~~part~~trade dress, onor ~~factors~~service mark protection, or that ~~are~~Rockley ~~outside~~believes is best protected by means that do not require public disclosure. Rockley generally seeks to protect this proprietary information by entering into confidentiality agreements, or consulting, services, or employment agreements that contain non-disclosure and non-use provisions with its employees, consultants, contractors, and third parties. However, these agreements may be breached or may otherwise fail to prevent disclosure, third-party infringement, or misappropriation of its ~~control~~proprietary information, ~~including~~may ~~industry~~be limited as to their term, and ~~general~~may ~~economic~~not ~~trends~~provide an adequate remedy in the event of unauthorized disclosure or use of proprietary information. Rockley has limited control over the protection of trade secrets used by its current or future manufacturing counterparties and suppliers and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, Rockley’s ~~ability~~proprietary information may otherwise become known or be independently developed by its competitors or other third parties. To the extent that its employees, consultants, contractors, advisors, and other third parties use intellectual property owned by others in their work for Rockley, disputes may arise as to ~~compete~~the ~~successfully~~rights ~~will~~in ~~depend~~related onor aresulting ~~number~~know-how and inventions. Costly and time-consuming litigation could be necessary to enforce and determine the scope of ~~factors~~Rockley’s proprietary rights, ~~including~~and failure to obtain or maintain protection for its ~~ability~~proprietary information could adversely affect its competitive business position. Furthermore, laws regarding trade secret rights in certain markets where Rockley operates may afford little or no protection to: its trade secrets.

~~•define,~~Rockley ~~design,~~also relies on physical and ~~regularly~~electronic ~~introduce~~security ~~new~~measures ~~products~~to protect its proprietary information, but it cannot provide assurance that ~~anticipate~~these ~~the~~security ~~functionality~~measures ~~and~~will ~~integration~~not ~~needs~~be ofbreached or provide adequate protection for its property. There is a risk that third parties may obtain and improperly utilize Rockley’s ~~customers’~~proprietary ~~next-generation~~information ~~products~~to its competitive disadvantage. Rockley may not be able to detect or prevent the unauthorized use of such information or take appropriate and ~~applications;~~timely steps to enforce its intellectual property rights.

~~•build~~Rockley ~~strong~~may ~~and~~be ~~long-lasting~~subject ~~relationships~~to ~~with~~damages ~~Rockley~~resulting from claims that it or its current or former employees have wrongfully used or disclosed alleged trade secrets of its current or former employees’s ~~customers~~former ~~and~~employers. ~~other~~Rockley ~~industry~~may ~~participants;~~be subject to damages if its current or former employees wrongfully use or disclose Rockley’s trade secrets.

~~•cost-effectively~~Rockley ~~develop~~may ~~and~~be subject to claims that it or its current or former employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of a current or former employee’s former employers. Litigation may be necessary to defend against these claims. If Rockley fails to defend against such claims, in addition to paying monetary damages, it may lose valuable intellectual property rights or talent. A loss of key talent or their work product could hamper or prevent Rockley’s ability to commercialize its products, which ~~compete~~could ~~favorably~~severely ~~with~~harm ~~competitors’~~its ~~products;~~business. Even if Rockley is successful in defending against these claims, litigation could result in substantial costs and demand on management resources.

~~•achieve~~Risks ~~design~~Related ~~wins;~~to Infrastructure, Cybersecurity and Privacy

~~•accurately~~A ~~estimate~~network ~~the~~or ~~effectiveness~~data ~~and~~security ~~success~~incident ofmay allow unauthorized access to Rockley’s ~~customers’~~network ~~end~~or ~~products~~data, ~~incorporating~~harm ~~Rockley’s~~its ~~products~~reputation, increate ~~their~~additional ~~competitive~~liability, ~~end~~and ~~markets;~~adversely impact its financial results.

~~•expand~~Rockley and its ~~research~~third-party service providers may face security threats and ~~development~~attacks ~~capabilities~~from a variety of sources. In addition to ~~provide~~traditional ~~innovative~~computer ~~solutions~~“hackers,” malicious code (such as viruses and ~~maintain~~worms), phishing attempts, employee theft or misuse, and denial of service attacks, sophisticated nation-state and nation-state supported actors engage in attacks (including advanced persistent threat intrusions) and increase the risks to Rockley’s ~~product~~internal ~~roadmap;~~networks and customer facing environments and the information they store and process. These risks may increase due to COVID-19. A breach in Rockley’s data or an attack against its service availability, or that of its third-party service providers, could impact Rockley’s networks, creating system disruptions or slowdowns and exploiting security vulnerabilities of Rockley’s products, and the information stored on Rockley’s networks or those of its third-party service providers could be accessed, publicly disclosed, altered, lost, or stolen, which could subject Rockley to liability and cause it financial harm.

~~•strengthen~~31 ~~its sales and marketing efforts, brand awareness and reputation;~~

•deliverTable productsof in volume on a timely basis at competitive prices;Contents

~~•withstand~~Unauthorized access by a third party to Rockley’s internal network, any actual or perceived breach of network security in its systems or networks, or any other actual or perceived data security incident Rockley or its third-party service providers suffer, could result in damage to its reputation, negative publicity, loss of channel partners, end-customers and sales, loss of competitive advantages over its competitors, increased costs to remedy any problems and otherwise respond to any incident, regulatory investigations and enforcement actions, costly litigation, and other liability. In addition, Rockley may incur significant ~~price~~costs ~~competition;~~to investigate and remediate any security breaches and other security incidents. Rockley’s data, corporate systems, third-party systems, and security measures may be breached due to the actions of outside parties, employee error, malfeasance, a combination of these, or otherwise, and, as a result, an unauthorized party may obtain access to its data. For example, in late 2020, Rockley was subject to phishing attacks, one involving a spoofed email whereby certain vendor account information was charged and payment was made to a fraudulent account and a second closely timed incident where a “forwarding” rule was applied to the spoofed email’s recipient. While no personal data was accessed and the issue was addressed, the incident resulted in a net loss of approximately $66,345, which loss has been accounted for in Rockley’s 2020 financial statements (which amount has been offset by a payout under our cybersecurity insurance policy in March 2021). While Rockley maintains cybersecurity insurance, such insurance may be insufficient to cover all liabilities incurred by these incidents, and any incidents may result in loss or increased costs of its cybersecurity insurance. Any of these negative outcomes could adversely impact the market perception of, and investor confidence in, Rockley.

~~•build~~Any ~~and~~disruption ~~expand~~or ~~international~~performance ~~operations~~issues inwith aRockley’s ~~cost-effective~~network ~~manner;~~infrastructure could harm its brand, reputation, and business.

~~•obtain~~Rockley has experienced, ~~maintain~~and may in the future experience, ~~protect~~disruptions, outages, and ~~enforce~~other performance problems due to a variety of factors, including infrastructure changes, human or software errors, capacity constraints, and fraud. Any disruptions or other performance problems with Rockley’s ~~intellectual~~products ~~property~~or ~~rights;~~reliability or security of Rockley’s systems could harm its reputation, brand, and Rockley’s business and operating results. In addition, Rockley must continually improve its computer network and infrastructure to avoid service interruptions or slower system performance. Rockley will need to devote additional resources to improving its platform architecture and its infrastructure. Any failure or delays in Rockley’s computer systems could cause service interruptions or slower system performance. These performance issues could harm Rockley’s business operations and financial condition.

~~•defend~~Rockley ~~potential~~relies ~~patent~~on ~~infringement~~third ~~claims~~parties ~~arising~~to ~~from~~maintain ~~third~~and ~~parties;~~operate certain elements of its network infrastructure.

~~•promote~~Rockley relies on third parties to operate and ~~support~~maintain certain elements of its network infrastructure. Interruptions in Rockley’s ~~customers’~~systems ~~incorporation~~or the third-party systems on which it relies, whether due to system failures, computer viruses, physical or electronic break-ins, or other factors, could affect the security or availability of Rockley’s ~~products~~network ~~into~~infrastructure and website. Rockley’s existing data center facilities and third-party hosting providers have no obligations to renew their ~~end~~agreements ~~products;~~with Rockley on commercially reasonable terms or at all, and certain of the agreements governing these relationships may be terminated by either party at any time, with no or limited notice. If any of these arrangements with third parties are terminated, Rockley could experience interruptions, as well as downtime, delays, and additional expenses in arranging alternative cloud infrastructure services. Rockley may incur significant liability from those customers and from third parties with respect to any breach of security affecting third parties’ infrastructure.

~~•attract,~~General ~~hire,~~Risks ~~and retain high-level talent, including Rockley’s management team and engineers.~~

~~Rockley’s~~The ~~competitors~~recurrence ~~may also establish cooperative relationships among themselves~~ or ~~with~~continued ~~third~~effects ~~parties~~of ora ~~may~~global ~~acquire~~economic ~~companies~~downturn ~~that~~as ~~provide similar products to Rockley’s. As~~ a result, ~~new~~of ~~competitors~~the orCOVID-19 ~~alliances~~pandemic, ~~may~~political ~~emerge that could capture significant market share. Any of these factors~~instability, ~~alone~~and orgeopolitical inconflicts ~~combination~~could ~~with~~have ~~others,~~an ~~could~~adverse ~~harm~~effect on Rockley’s business, ~~financial condition,~~ and ~~results~~operating ~~of operations and result in a loss of market share and an increase in pricing pressure~~results.

Rockley ~~may~~operates ~~pursue~~globally ~~strategic~~and ~~investments~~as ora ~~acquisitions~~result inits business and revenue are impacted by global macroeconomic conditions. The multinational efforts to contain the ~~future~~spread of COVID-19 had a significant adverse effect on the global macroeconomic environment. IfIn ~~Rockley~~addition, ~~fails~~the instability in the global credit markets, uncertainties regarding the effects of Brexit, uncertainties related to ~~successfully~~the ~~select~~timing of the lifting of governmental restrictions to mitigate the spread of COVID-19, ~~execute~~uncertainties related to changes in public policies such as domestic and international regulations, taxes, or ~~integrate~~international ~~its~~trade ~~acquisitions~~agreements, ~~then~~international ~~its~~trade ~~business~~disputes, ~~results~~government ofshutdowns, ~~operations~~geopolitical turmoil such as the conflict between Russian and Ukraine, and ~~financial~~other ~~condition~~disruptions ~~could~~to beglobal ~~materially~~and regional economies and ~~adversely~~markets ~~affected~~could continue to add uncertainty to global economic conditions. These adverse conditions could result in longer sales, development, and ~~the~~production ~~stock~~cycles, slower adoption of new technologies, and increased price competition. As a result, any continued or further uncertainty, weakness, or deterioration in global macroeconomic and market conditions may cause Rockley’s customers to modify spending priorities or delay purchasing decisions, and result in lengthened sales, development, and production cycles, any of which could ~~decline~~harm its business and operating results.

~~From~~Item ~~time to time, Rockley may pursue investments or acquisitions to add new products and technologies, acquire talent, gain new sales channels, or enter into new markets or sales territories~~2. InProperties addition to possible shareholder approval, Rockley may need approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which could result in increased delay and costs. Furthermore, acquisitions and the subsequent integration of new assets, businesses, key talent, customers, vendors, and suppliers require significant attention from Rockley’s management and could result in a diversion of resources from Rockley’s existing business, which in turn could have an adverse effect on Rockley’s operations. Acquired assets or businesses may not generate the financial results Rockley expects. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets, and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.

~~Failure~~As toat ~~successfully identify~~December 31, ~~complete~~2022, ~~manage,~~we ~~and~~held ~~integrate~~interest ~~acquisitions~~in ~~could~~9 ~~materially~~properties. ~~and~~All ~~adversely~~of ~~affect~~our ~~its~~facilities ~~business~~are located on real estate that is leased from third parties. Our properties consisted of (1) 6 office and/or lab properties, ~~financial~~(2) two ~~condition~~corporate apartment properties, and ~~results~~(3) one ofclinical ~~operations~~trials ~~and~~property. ~~could~~Our ~~cause~~headquarters ~~Rockley's~~are ~~stock~~currently ~~price~~located toin ~~decline~~the United Kingdom.

2932

~~Rockley’s~~In ~~international~~the ~~operations~~US, ~~expose~~we ithave topremises ~~operational~~in Pasadena, ~~financial~~California, ~~and~~US ~~regulatory~~under ~~risks~~multiple leases for approximately 18,000 ~~including~~square ~~possible~~feet. ~~unfavorable~~The ~~regulatory~~majority of the premises in Pasadena leased expire in June 2023 and are predominantly used for engineering and finance and general administration services. We also lease spaces in Irvine, ~~political~~California for approximately 12,800 ~~tax~~square feet under multiple leases all expiring in 2027, predominantly used for engineering and ~~labor~~general ~~conditions~~administration services; we lease a property in San Jose, California for approximately 4,600 square feet under a lease expiring in 2024, which ~~could~~is ~~harm~~predominantly ~~Rockley’s~~used ~~business~~for finance and general administration services; we lease separate small office spaces in Irvine, California and Bloomington, Minnesota and; we also lease two corporate apartments in Pasadena, California.

~~Rockley~~In isthe ~~committed~~United toKingdom, ~~growing~~we ~~its~~operate ~~international~~our ~~sales,~~administrative and ~~while~~support itfunctions ~~has~~out ~~committed~~of ~~resources~~small toleased ~~expanding~~office ~~its~~spaces ~~international~~in ~~operations~~Wiltshire, UK and ~~sales channels~~Oxford, ~~these efforts may not be successful~~UK. ~~International operations are subject to a number of other risks, including:~~

~~•foreign~~Item ~~currency~~3. ~~fluctuations,~~Legal ~~which~~Proceedings ~~could result in increased operating expenses and reduced revenue;~~

~~•political~~We are from time to time subject to various claims, lawsuits and ~~economic~~other ~~instability~~legal and administrative proceedings arising in the ordinary course of business. Some of these claims, ~~international~~lawsuits ~~terrorism~~and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and ~~anti~~could result in damages, fines, penalties, non-~~American~~monetary sanctions or ~~British sentiment~~relief. However, ~~particularly~~we do not consider any such claims, lawsuits or proceedings that are currently pending, individually or in ~~emerging~~the ~~markets;~~aggregate, to be material to our business or likely to result in a material adverse effect on our future operating results, financial condition or cash flows.

~~•disadvantages~~Item ~~of competing against companies from countries that are not subject to U~~4.S. ~~and~~Mine ~~U.K.~~Safety ~~laws~~Disclosures and regulations, including the Foreign Corrupt Practices Act, Office of Foreign Assets Control regulations, and U.S. anti-money laundering regulations, as well as exposure of Rockley’s foreign operations to liability under these regulatory regimes;

~~•preference~~Not ~~for~~applicable. ~~locally branded products, and laws and business practices favoring local competition;~~

~~•potential~~33 ~~consequences of, and uncertainty related to, the “Brexit” process in the United Kingdom, which could lead to additional expense and complexity in doing business there;~~

•lessTable effective protection of intellectual property;Contents

~~•stringent~~PART ~~regulation~~II of the end products incorporating Rockley’s products and stringent consumer protection and product compliance regulations, including but not limited to General Data Protection Regulation in the European Union, European competition law, the Restriction of Hazardous Substances Directive, the Waste Electrical and Electronic Equipment Directive, and the European Ecodesign Directive that are costly to comply with and may vary from country to country;

~~•difficulties~~Unless ~~and~~specifically ~~costs~~noted or the context clearly requires otherwise, all information set forth in this annual report on Form 10-K relates to the Company as it existed as of ~~staffing~~December 31, 2022 and ~~managing~~prior ~~foreign~~to the Company’s bankruptcy proceedings and does not, and is not intended and should not be read to, reflect the business, financial condition, and results of operations; of any other entity, including any entity which may result from the bankruptcy proceedings.

~~•foreign~~Item ~~taxes~~5. Market for Registrant’s Common Equity, ~~including~~Related ~~withholding~~Stockholder Matters and Issuer Purchases of ~~payroll~~Equity ~~taxes;~~Securities ~~and~~

~~•the~~Market ~~U.S.~~Information ~~government’s and U.K. government’s restrictions on certain technology transfer to certain countries of concern.~~

~~For~~Our ~~example,~~ordinary weshares ~~have~~and ~~significant~~public ~~international~~warrants ~~operations~~previously ~~that~~traded ~~are~~on ~~denominated~~the inNYSE ~~foreign~~under ~~currencies, primarily~~ the ~~British~~symbol ~~Pound~~“RKLY” and ~~Euro, subjecting us to foreign currency exchange risk that may adversely impact our financial results~~“RKLY.WS.” ~~The~~As ~~occurrence~~ of ~~any~~February 21, of2023, ~~these~~our ~~risks~~ordinary ~~could~~shares ~~negatively affect Rockley’s international business~~ and ~~consequently~~public ~~its~~warrants ~~business,~~were ~~operating~~delisted ~~results,~~from ~~and~~the ~~financial condition~~NYSE.

~~The~~Holders average selling prices of Rockley’s products could decrease rapidly over the life of the product, which may negatively affect Rockley’s revenue and margins. In addition, the selling prices Rockley is able to ultimately charge in the future for the products it is currently developing or commercializing may be less than what Rockley currently anticipates, which may cause Rockley’s actual operating results to differ materially from its expectations.

~~The~~As ~~prices that Rockley is able to ultimately charge in the future for the products it is currently developing or commercializing may experience declines for a variety~~ of ~~reasons~~March 10, ~~many of which are outside of Rockley’s control. In order to sell products that have a falling average unit selling price and maintain margins at the same time~~2023, ~~Rockley~~there ~~will~~were ~~need~~approximately to116 ~~continually~~holders ~~reduce~~of ~~product~~record and manufacturing costs. To manage manufacturing costs, Rockley must engineer the most cost-effective design for its products and collaborate with its manufacturing counterparties to reduce manufacturing costs. Rockley also needs to continually introduce new products with higher sales prices and gross margin in order to maintain its overall gross margin. If Rockley is unable to manage the cost of ~~older~~our ~~products~~ordinary ~~or successfully introduce new products with higher gross margin, its revenue and overall gross margin would likely decline~~shares. In addition, the selling prices Rockley is able to ultimately charge in the future for the products it is currently developing or commercializing may be less than what Rockley currently projects, which may cause Rockley’s actual operating results to differ materially from its estimates.

~~Rockley’s~~Dividend ~~gross~~Policy ~~margins may fluctuate due to a variety of factors, which could negatively impact Rockley’s results of operations and Rockley’s financial condition.~~

30We have not paid any cash dividends on our ordinary shares to date. We may retain future earnings, if any, for future operations, expansion and debt repayment and we have no current plans to pay cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur. We do not anticipate declaring any cash dividends to holders of the ordinary shares in the foreseeable future.

~~Table~~Recent Sales of ~~Contents~~Unregistered Equity Securities

Rockley’s gross margins may fluctuate due to a number of factors, including customer and product mix, market acceptance of Rockley’s new products, yield, wafer pricing, packaging and testing costs, competitive pricing dynamics, the impact of the COVID-19 pandemic, and geographic and market pricing strategiesNone. To the extent Rockley may offer certain customers favorable prices, it would decrease Rockley’s average selling prices and likely impact gross margins. Further, Rockley may in the future offer pricing incentives to Rockley’s customers on earlier generations of products that inherently have a higher cost structure, which would negatively affect Rockley’s gross margins. In addition, in the event Rockley’s customers, including Rockley’s larger customers, exert more pressure with respect to pricing and other terms, it could put downward pressure on Rockley’s margins.

~~Because~~Purchases ~~Rockley~~of ~~does~~Equity ~~not~~Securities ~~operate~~by its own manufacturing, assembly, or testing facilities, it may not be able to reduce its costs as rapidly as companies that operate their own facilities, and Rockley’s costs may even increase, which could further reduce Rockley’s gross margins. Rockley relies primarily on obtaining yield improvements and volume-based cost reductions to drive cost reductions. To the ~~extent~~Issuer ~~that such cost reductions do not occur at a sufficient level~~ and inAffiliated aPurchaser ~~timely manner, Rockley’s business, financial condition, and results of operations could be adversely affected and may vary from Rockley’s estimates.~~

~~In addition, Rockley may in the future maintain an inventory of Rockley’s products at various stages of production and in finished goods inventory~~None. Rockley will hold these inventories in anticipation of customer orders. If those customer orders do not materialize in a timely manner, Rockley may have excess or obsolete inventory which Rockley would have to reserve or write-down, and Rockley’s gross margins would be adversely affected.

~~Because~~Item ~~some~~6. ofSelected ~~the~~Financial ~~raw~~Data materials and key components in its products come from limited or single source suppliers, Rockley is susceptible to supply shortages, long lead times for components, and supply changes, including as a result of industry consolidation, any of which could disrupt its supply chain and could delay deliveries of its products to customers, which could adversely affect Rockley’s business, results of operations, and financial condition.

~~Some~~The ofCompany the components used in the manufacturing of Rockley’s products are sourced from third-party suppliers. To date, Rockley has produced its products in relatively limited quantities for use in products. Rockley does not have extensive experience in managing its supply chain to manufacture and deliver its products at scale. Some of the key components used to manufacture Rockley’s products come from limited or single source suppliers. Rockley is ~~therefore subject to the risk of shortages and long lead times in the supply of these components and the risk that its suppliers discontinue or modify components used in its products. Rockley has~~ a ~~global~~smaller ~~supply~~reporting chain and the COVID-19 pandemic and other health epidemics and outbreaks may adversely affect its ability to source components in a timely or cost effective manner from its third-party suppliers due tocompany, ~~among~~as ~~other~~defined things, work stoppages or interruptions. For example, Rockley relies on third-party foundries to manufacture its silicon photonic integrated circuits and for wafer scale integration. Any disruptions to those foundries could materially and adversely affect Rockley’s ability to manufacture its products. In addition, the lead times associated with certain components are lengthy and preclude rapid changes in quantities and delivery schedules. Rockley has in the past experienced and may in the future experience component shortages and price fluctuations of certain key components and materials, and the predictability of the availability and pricing of these components may be limited. In the event of a component shortage, supply interruption or material pricing change from suppliers of these components, Rockley may not be able to develop alternate sources in a timely manner or at all in the case of sole or limited sources. These risks may be exacerbated if any of Rockley’s suppliers were to cease operations or be acquired by aRule ~~third party. If this were to occur, Rockley may need to re~~12b-~~qualify~~2 the supplier and/or otherwise confirm that such an event would not cause concerns with Rockley’s end customers or otherwise negatively impact Rockley’s relationships with its end customers. Developing alternate sources of supply for these components may be time-consuming, difficult, and costly and Rockley may not be able to source these components on terms that are acceptable to it, or at all, which may undermine Rockley’s ability to meet its requirements or to fill customer orders in a timely manner. Any interruption or delay in the ~~supply~~Securities ofExchange ~~any~~Act of ~~these parts or components~~1934, oras ~~the inability to obtain these parts or components from alternate sources at acceptable prices and within a reasonable amount of time~~amended, ~~would adversely affect Rockley’s ability to meet its scheduled product deliveries to its customers. This could adversely affect Rockley’s relationships with its customers~~ and channel partners and could cause delays in shipment of its products and adversely affect its operating results. In addition, increased component costs could result in lower gross margins. Even where Rockley is able to pass increased component costs along to its customers, there may be a lapse of time before it is able to do so such that Rockley must absorb the increased cost. If Rockley is unable to buy these components in quantities sufficient to meet its requirements on a timely basis, it will not berequired ~~able~~ to ~~deliver~~provide ~~products~~this ~~to its customers~~item. ~~This in turn could materially and adversely affect Rockley’s business, financial condition, and results of operations.~~

IfItem ~~the~~7. ~~foundries~~Management’s ~~with~~Discussion ~~which~~and ~~Rockley~~Analysis ~~contracts~~of doFinancial ~~not~~Condition ~~achieve satisfactory yields or quality, Rockley’s reputation~~ and ~~customer~~Results ~~relationships~~of ~~could~~Operation ~~be harmed.~~

Unless specifically noted or the context clearly requires otherwise, all information set forth in this annual report on Form 10-K relates to the Company as it existed as of December 31, 2022 and prior to the Company’s bankruptcy proceedings and does not, and is not intended and should not be read to, reflect the business, financial condition, and results of operations of any other entity, including any entity which may result from the bankruptcy proceedings.

~~Table~~The following discussion and analysis provides information that Rockley’s management believes is relevant to an assessment and understanding of ~~Contents~~Rockley’s consolidated results of operations and financial condition. The discussion should be read together with the audited annual consolidated financial statements as of and for the years ended December 31, 2022 and 2021 and the related notes thereto, included elsewhere in this Annual Report on Form 10-K. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements. Unless the context otherwise requires, references in these notes to “Rockley”, the “Company”, “we”, “us”, or “our” and any related terms are intended to mean the Company, Rockley Photonics Holdings Limited, while “Legacy Rockley” and “SC Health” refers to the entities prior to the Business Combination.

~~Rockley~~34 depends on satisfactory wafer foundry manufacturing capacity, wafer prices, and production yields, as well as timely wafer delivery, to meet customer demand and enable it to maintain gross margins. The fabrication of Rockley’s products is a complex and technically demanding process. Minor deviations in the manufacturing process can cause substantial decreases in yields and, in some cases, cause production to be suspended. Rockley’s foundry vendors may experience manufacturing defects and reduced manufacturing yields from time to time. Further, any new foundry vendors Rockley employs, whether due to industry consolidation, customer requirements, or otherwise, may present additional and unexpected manufacturing challenges that could require significant management time and focus. Changes in manufacturing processes or the inadvertent use of defective or contaminated materials by the foundries that Rockley employs could result in lower than anticipated

productionTable yields or unacceptable performance of Rockley’s products. Many of these problems are difficult to detect at an early stage of the manufacturing process and may be time-consuming and expensive to correct. Poor production yields from the foundries that Rockley employs, or defects, integration issues, or other performance problems in Rockley’s products could significantly harm Rockley’s customer relationships and financial results, and give rise to financial or other damages to Rockley’s customers. Any product liability claim brought against Rockley, even if unsuccessful, would likely be time-consuming and costly to defend.Contents

~~Manufacturing~~Overview yields for new products initially tend to be lower as Rockley completes product development and commence volume manufacturing, and typically increase as Rockley brings the product to full production. While Rockley’s business model includes this assumption of improving manufacturing yields its assumptions may be incorrect and, as a result, material variances between projected and actual manufacturing yields will have a direct effect on Rockley’s gross margin and profitability. The difficulty of accurately forecasting manufacturing yields and maintaining cost competitiveness through improving manufacturing yields will continue to be magnified by the increasing process complexity of manufacturing silicon photonics products.

~~Raw~~We ~~material~~have ~~price~~developed ~~fluctuations~~a unique sensing platform that we believe can ~~increase~~reshape the ~~cost~~wellness ofand ~~Rockley’s~~healthcare ~~products~~industries through multiple applications in non-invasive, ~~impact~~multi-modal ~~Rockley’s~~biomarker ~~ability~~monitoring. We believe products based on our technology platform could have the potential to ~~meet~~unlock ~~customer~~and ~~commitments~~accelerate advancements in areas such as early disease detection, nutrition management, and ~~may~~preventative ~~adversely~~healthcare ~~affect~~delivery ~~its~~through ~~results~~continuous ofhealth ~~operations~~and wellness monitoring.

~~The~~To ~~cost~~date, ofwe ~~raw~~have ~~materials~~been isengaged ain ~~key~~developing ~~element~~customer-specific indesigns ~~the~~of ~~cost~~our ofsilicon ~~Rockley’s~~photonics ~~products.~~chipsets ~~Rockley’s~~for ~~inability~~incorporation tointo ~~offset~~our ~~material~~customers’ ~~price~~end ~~inflation~~products. ~~through~~Accordingly, ~~increased~~all ~~prices~~of toour ~~customers,~~products ~~suppliers,~~are ~~productivity~~presently ~~actions,~~in orthe ~~through~~development ~~commodity~~stage ~~hedges~~and ~~could~~we ~~adversely~~do ~~affect~~not ~~Rockley’s~~currently ~~results~~have any of ~~operations.~~our ~~Many~~own ~~major~~end ~~components,~~products ~~product~~in ~~equipment~~commercial ~~items,~~production and ~~raw~~have ~~materials~~not ~~are~~yet ~~procured~~shipped orany ~~subcontracted~~products oncommercially. aOur ~~single~~unique orsensing ~~sole-source~~platform ~~basis.~~has ~~Although~~been ~~Rockley~~built ~~maintains~~upon aour ~~qualification~~silicon ~~and~~photonics technology, which enables compelling sensor performance, ~~surveillance~~power, ~~process~~resolution, and ~~Rockley~~density. ~~believes~~This ~~that~~technology ~~sources~~has ofthe ~~supply~~potential ~~for~~to ~~raw~~allow ~~materials~~monitoring ~~and~~devices, ~~components~~currently ~~are~~the ~~generally~~size ~~adequate~~of clinical machines, itto isbe ~~difficult~~condensed to ~~predict~~the ~~what~~size ~~effects~~of ~~shortages~~a orwearable ~~price~~device. ~~increases~~We ~~may~~believe ~~have~~this in ~~the~~turn ~~future.~~has ~~Rockley’s~~the ~~inability~~potential to ~~fill~~unlock ~~its~~additional ~~supply~~uses ~~needs~~in ~~would~~consumer ~~jeopardize~~electronics ~~its~~and ~~ability~~medical todevices. ~~fulfill~~The ~~its~~resulting ~~contractual~~combination ~~obligations,~~of technologies and manufacturing know-how is the “full-stack Rockley Platform” which ~~could,~~is made up of PICs in ~~turn~~silicon with integrated III-V devices (devices incorporating certain conductor elements that offer superior electronic properties, ~~result~~such inas ~~reduced~~lasers), ~~revenue~~ASICs, ~~contract~~photonic ~~penalties~~and orelectronic ~~terminations~~co-packaging, together with biosensing algorithms and ~~damage~~AI tocloud ~~Rockley’s~~analytics, ~~customer~~firmware/software, ~~relationships~~system architecture, and hardware design.

~~Furthermore,~~As ~~increases~~testament into the ~~price~~relevance of ~~wafers,~~our ~~testing~~product ~~costs~~development, ~~and~~we ~~commodities,~~have ~~which~~captured ~~may~~the ~~result~~attention inof ~~increased~~several ~~production~~consumer ~~costs~~electronics companies and, ~~mainly~~as ~~assembly~~of ~~and~~the ~~packaging~~date ~~costs,~~of ~~may~~this ~~result~~Annual inReport aon ~~decrease~~Form in10-K, ~~Rockley’s~~we ~~gross~~have ~~margins.~~established ~~Moreover,~~strategic ~~Rockley’s~~relationships ~~suppliers~~with ~~may~~six ~~pass~~of the ~~increase~~world’s intop-ten ~~raw~~largest ~~materials~~manufacturers ~~and~~of ~~commodity~~smart ~~costs~~watches ~~onto~~and itwristbands ~~which~~(based ~~would~~on ~~further~~volume ~~reduce~~as ~~the~~reported ~~gross~~by ~~margin~~IDC) and two of ~~Rockley’s~~the ~~products.~~five Inlargest ~~addition,~~medtech ascompanies ~~Rockley~~(based ison aBecker’s ~~fabless~~ASC ~~company,~~Review). ~~global~~We ~~market~~plan ~~trends~~to ~~such~~leverage asthis aattention ~~shortage~~to ofdevelop ~~capacity~~new tocapabilities ~~fulfill~~in ~~Rockley’s~~consumer ~~fabrication~~wearables ~~needs~~in ~~also~~the ~~may~~near ~~increase~~term, ~~Rockley’s~~and ~~raw~~to ~~material~~expand ~~costs~~over ~~and~~time ~~thus~~into ~~decrease~~medical ~~its~~devices ~~gross~~and ~~margin~~other industry applications.

~~Rockley~~Our vision is ~~subject~~to address many pressing healthcare concerns using our technology and we believe that there exists a large market opportunity for our platform. We estimate that the TAM for the consumer wearables, mobile device, and medical device markets is projected to be over $50 billion by 2025, based on data sourced from the ~~cyclical~~Yole ~~nature~~Report, the IDtexEx Report, the TrendForce Report, and our internal volume forecasts for smartphone, smart watch, and smart earbuds through 2025 (based on customer data), as the universe of healthcare and consumer wearable devices incorporating additional sensing capabilities emerges. Our target biomarkers for consumer healthcare include lactate, alcohol, glucose (indicator), carbon monoxide, blood pressure, blood oxygen, and core body temperature, among others. Our high-performance lasers have up to 1,000,000 times higher resolution, 1,000 times higher accuracy and 100 times broader range in wavelengths compared with existing LED offerings in wearable solutions (based on product analysis undertaken by Rockley comparing the ~~semiconductor~~Rockley ~~industry~~silicon photonics-based spectrometer chip to existing solutions). In addition, as opposed to LED-based solutions, our lasers can be turned on more intermittently, and we employ dynamic adaptive power control to optimize laser on-time and overall power consumption for each different biomarker measurement, thus our solution will be more efficient than existing solutions.

~~The~~We ~~semiconductor~~believe ~~industry~~our isplatform ~~highly~~will ~~cyclical~~also ~~and~~be isable ~~characterized~~to byaddress ~~constant~~existing ~~and~~applications ~~rapid technological change, rapid product obsolescence, price erosion, evolving standards, short product life cycles, industry consolidation, and wide fluctuations~~ in ~~product~~consumer ~~supply~~wearable ~~and~~devices ~~demand.~~with ~~The~~significantly ~~industry~~higher ~~experienced significant downturns during past global recessions. These downturns have been characterized by diminished product demand~~resolution, ~~production overcapacity~~accuracy, ~~high inventory levels,~~ and ~~accelerated erosion of average selling prices~~range. ~~While these downturns have not directly impacted Rockley’s business to date~~Further, ~~any~~we ~~prolonged~~believe orthere ~~significant~~are ~~downturn~~multiple inadditional ~~the~~markets ~~semiconductor industry could adversely affect Rockley’s business~~ and ~~reduce~~concrete ~~demand~~opportunities for ~~Rockley’s~~our ~~products.~~technology ~~Any~~platform ~~future downturns~~ in ~~the~~areas ~~semiconductor~~such ~~industry~~as ~~could~~data ~~also~~center ~~harm~~connectivity ~~Rockley’s~~(optical ~~business~~transceivers), ~~financial~~machine ~~condition,~~vision (robotic and ~~results~~automotive ~~of operations. Furthermore~~LiDAR), ~~any~~and ~~significant~~compute ~~upturn~~connectivity ~~in the semiconductor industry could result in increased competition for access to third~~(co-~~party~~packaged ~~foundry~~optics, ~~and~~or ~~assembly capacity~~CPO). Rockley is dependent on the availability of this capacity to manufacture and assemble Rockley’s products and Rockley can provide no assurance that adequate capacity will be available to it in the future.

IfFollowing ~~Rockley~~the orcompletion ~~its~~of ~~suppliers~~our doproduct ~~not~~development ~~maintain~~phase ~~sufficient~~and ~~inventory~~introduction orof ifour ~~they~~products doto ~~not~~the ~~adequately~~consumer ~~manage~~and ~~their~~medtech ~~respective~~wearable ~~inventory~~markets, ~~Rockley~~we ~~could~~expect ~~lose~~our ~~sales~~revenue orto ~~incur~~be ~~higher~~derived ~~inventory~~from sales of both high-~~related~~volume ~~expenses~~consumer wearable products and wearables targeting medical applications. In addition, ~~which~~we plan to offer advanced module applications with biomarker detection capabilities for advanced health metrics that can detect and classify data that could ~~negatively~~potentially ~~affect~~alert ~~Rockley’s~~patients ~~operating~~and ~~results~~healthcare providers to take preemptive action to prevent disease. We also expect to offer a cloud analytics platform to provide a full range of subscription services, including the deployment of our technology through a subscription and cloud-based software as a service

3235

To ~~ensure adequate inventory supply~~date, ~~Rockley~~we ~~and~~have ~~its~~generated ~~suppliers~~revenue ~~must~~primarily ~~forecast~~from ~~inventory~~non-recurring ~~needs~~engineering ~~and~~(“NRE”) ~~expenses, place orders sufficiently in advance with their respective suppliers~~ and ~~manufacturing~~development ~~counterparties,~~services ~~and manufacture products based on its estimates of future demand~~ for ~~particular products. Changes in~~ customer-specific ~~purchasing~~designs ~~patterns~~of ~~may~~silicon ~~affect~~photonics ~~Rockley’s~~chipsets ~~ability to forecast its future operating results, including revenue, gross margins, cash flows, and profitability. Rockley’s ability to accurately forecast demand~~ for ~~its~~incorporation ~~products~~into ~~could~~their ~~be affected by many factors, including the growth rate, if any, in Rockley~~customers’s ~~target markets or the market adoption of the~~ end products ~~into which Rockley’s products are incorporated, the emergence of new markets, an increase or decrease in customer demand for Rockley’s products or for products~~ and ~~services~~we ofhave ~~its~~financed ~~competitors,~~our ~~product~~operations ~~introductions~~primarily bythrough ~~competitors,~~ the ~~COVID-19 pandemic,~~Business ~~other health epidemics and outbreaks~~Combination, ~~and~~issuance ~~any~~of ~~associated~~convertible ~~work~~loan ~~stoppages or interruptions~~notes, ~~unanticipated~~as ~~changes~~well inas ~~general~~private ~~market~~placements ~~conditions, and the weakening~~ of ~~economic~~ordinary ~~conditions or consumer confidence in future economic conditions~~shares. IfFor ~~Rockley’s products are commercialized in markets that are quickly growing, including~~ the ~~consumer~~year ~~wearables,~~ended ~~mobile device~~December 31, ~~and medical device markets~~2022, ~~Rockley~~we ~~may~~incurred ~~face challenges acquiring adequate supplies to manufacture its products and/or Rockley and its manufacturing counterparties may not be able to manufacture its products at~~ a ~~rate~~net ~~necessary~~loss ~~to satisfy the levels~~ of ~~demand, which would negatively affect Rockley’s revenue~~$224.0 million ~~This~~and ~~risk~~utilized ~~may be exacerbated by the fact that Rockley may not carry or be able to obtain for its manufacturers a significant amount of inventory to satisfy short-term~~$126.2 ~~demand~~million ~~increases.~~in Ifcash ~~it fails~~ to ~~accurately~~fund ~~forecast~~our ~~customer demand, Rockley may experience excess inventory levels or a shortage of products available for sale~~operations.

~~Inventory~~We ~~levels~~expect inboth ~~excess~~our ofcapital ~~customer demand may result in inventory write-downs or write-offs~~ and ~~the~~operating ~~sale~~expenditures ofwill ~~excess~~increase ~~inventory~~significantly atin ~~discounted~~connection ~~prices,~~with ~~which~~our ~~would~~ongoing ~~adversely affect Rockley’s financial results~~activities, ~~including~~as ~~its~~we: gross margin, and have a negative effect on its brand. Conversely, if Rockley underestimates customer demand for its products, Rockley, or its manufacturing counterparties, may not be able to deliver products to meet its requirements, and this could result in damage to Rockley’s brand and customer relationships and adversely affect its revenue and operating results.

If• ~~Rockley’s~~continue ~~products do not conform~~ to, orinvest ~~are not compatible with, existing or emerging industry standards, demand for Rockley’s products may decrease, which~~ in ~~turn~~our ~~would~~technology ~~harm~~and ~~Rockley’s~~our ~~business~~silicon ~~and~~photonics ~~operating results.~~solutions;

~~Rockley’s~~• ~~ability~~continue to ~~compete~~develop ininnovative ~~the~~solutions ~~future will depend on its ability to identify~~ and ~~ensure~~applications compliance with evolving industry standards in its target markets, as well as in the silicon photonics and sensing technology industry generally. The emergence of new industry standards could render Rockley’s products incompatible with products developed by third-party suppliers or make it difficult for ~~Rockley’s~~our products to meet the requirements of certain device manufacturers and their suppliers. If Rockley’s customers or Rockley’s third-party suppliers adopt new or competing industry standards with which Rockley’s solutions are not compatible, or if industry groups fail to adopt standards with which Rockley’s products are compatible, Rockley’s products would become less desirable to its current or prospective customers. As a result, Rockley’s sales would suffer and it could be required to make significant expenditures to develop new products. Although Rockley designs its products to be compliant with applicable industry standards, proprietary enhancements may not in the future result in conformance with existing industry standards under all circumstances. If Rockley’s products do not conform to, or are not compatible with, existing or emerging standards, it would harm its business, financial condition, and results of operations.technology;

~~Rockley~~• ~~may~~commercialize beour ~~subject~~silicon tophotonics ~~warranty or product liability claims, which could result in unexpected expenses and loss of market share.~~solutions;

~~Rockley~~• ~~may~~continue ~~be subject~~ to ~~warranty~~invest or product liability claims. These claims may require Rockley to make significant expenditures to defend those claims, replace Rockley’s solutions, refund payments, or pay damage awards. Rockley has not yet commercialized its products. Accordingly, the operation of Rockley’s products and technology has not been validated over longer periods. If a customer’s end product fails in ~~use,~~our ~~the~~sales customer may incur significant monetary damages, including a product recall or associated replacement expenses as well as lost revenue. The customer may claim that a defect in Rockley’s product caused the product failure and ~~assert~~marketing aactivities ~~claim against Rockley to recover monetary damages. The cost of defending these claims~~ and ~~satisfying~~distribution any arbitration award or judgment with respect to these claims would result in unexpected expenses, which could be substantial, and could harm Rockley’s business, financial condition, and results of operations. Although Rockley carries product liability insurance, this insurance is subject to significant deductibles and may not adequately cover Rockley’s costs arising from defects in its products or otherwise.channels;

~~The~~• ~~complexity~~invest ~~of Rockley’s products~~ and ~~its~~improve ~~anticipated~~our ~~future product and service offerings could result in unforeseen delays or expenses from undetected defects~~operational, ~~errors~~financial, ~~or reliability issues in hardware or software that could reduce the market adoption of its new products, damage its reputation with current or prospective customers,~~ and ~~adversely~~management ~~affect~~information ~~its operating costs.~~systems;

33• retain key talent and increase our headcount;

~~Table~~• ofmaintain ~~Contents~~and expand our intellectual property portfolio

~~Rockley’s~~Impact current and future products and service offerings are or are expected to be highly technical and very complex and require high standards to manufacture or distribute and have in the past and will likely in the future experience defects, errors, or reliability issues at various stages of ~~development.~~COVID-19 Rockley may be unable to timely release new products, product updates, manufacture existing products, correct problems that have arisen, or correct such problems to its customers’ satisfaction. Additionally, undetected errors, defects, or security vulnerabilities, especially as new products or updates are introduced or as new versions are released, could result in inaccurate data to the end users of products incorporating Rockley’s products. Any of the foregoing could negatively impact Rockley’s ability to commercialize a product or service offering, result in litigation against Rockley, and damage Rockley’s credibility. These risks may be heightened in the medical device industry, one of Rockley’s target markets, where the end user may act in reliance upon inaccurate data as a result of errors or defects, or where there may be a privacy or data breach of an end user’s personal health information. Some errors or defects in Rockley’s products and service offerings may only be discovered after they have been tested, commercialized, and deployed by customers. In these cases, Rockley may incur significant additional development costs and product recall, repair, or replacement costs. These problems may also result in claims, including class actions, against Rockley by its customers or others. Rockley’s reputation or brand may be damaged as a result of these problems and customers may be reluctant to buy its products, which could adversely affect its ability to retain existing customers and attract new customers and could adversely affect its financial results.

InThe ~~addition~~COVID-19 topandemic ~~product~~has ~~liability~~nearly ~~claims,~~reached ~~Rockley~~the ~~could~~three-year ~~face~~mark ~~material~~and ~~legal~~our ~~claims~~priority ~~for~~continues ~~breach~~to ofbe ~~contract,~~the ~~fraud,~~health ~~tort,~~and orsafety ~~breach~~ of ~~warranty~~our asemployees. aThe ~~result~~overall ofrecovery ~~these~~from ~~problems.~~the ~~Defending~~COVID-19 apandemic ~~lawsuit,~~has ~~regardless~~been ofuneven ~~its~~and ~~merit,~~has ~~could~~presented bemany ~~costly~~challenges and ~~may~~risks ~~divert~~from ~~management’s~~general ~~attention~~economic ~~and~~uncertainty, ~~adversely~~changes ~~affect~~in ~~the~~consumer ~~market’s~~demand, ~~perception~~disruption of ~~Rockley~~supply ~~and~~chains, ~~its~~challenges ~~products.~~with ~~In addition~~hiring, ~~Rockley’s~~and ~~business~~labor ~~liability~~and ~~insurance~~supply ~~coverage~~cost ~~could~~inflation. ~~prove~~However, ~~inadequate~~as ~~with~~we ~~respect~~implemented toour aphased ~~claim~~return ~~and~~to ~~future~~office ~~coverage~~plan ~~may~~starting bein ~~unavailable~~July on2021, ~~acceptable~~we ~~terms~~were orable atto ~~all.~~provide ~~These~~greater ~~product-related issues~~levels ~~could~~of ~~result~~work inflexibility ~~claims~~to ~~against~~employees ~~Rockley~~and maintain health and ~~its~~safety ~~business~~standards ~~could~~for beemployees ~~adversely~~meeting ~~affected~~all regulatory requirements.

~~Rockley~~We ~~currently~~continually ~~expects~~evaluate the nature and extent of changes to ~~recognize~~the ~~subscription~~market ~~revenue~~and ~~from~~economic ~~its~~conditions ~~future~~related ~~cloud~~to the COVID-~~based~~19 ~~analytics~~pandemic ~~subscription~~and ~~offering~~assess ~~ratably~~the ~~over~~potential impact on our business and financial position. Despite the ~~term~~emergence of ~~these~~vaccines ~~subscriptions~~ and vaccine boosters, tothe aend ~~lesser~~of ~~extent~~the COVID-19 pandemic is still uncertain. As such, ~~perpetual~~we ~~licenses~~expect ~~ratably~~that ~~over~~the anpandemic ~~expected~~may ~~period~~continue ofto ~~benefit~~have ~~and,~~an aseffect aon ~~result~~our results, ~~downturns~~although inthe ~~sales~~magnitude, ~~may~~duration, ~~not~~and befull ~~immediately~~effects ~~reflected~~of inthe ~~its~~pandemic ~~operating~~on our future results of operations or cash flows remain difficult to predict at this time.

IfFor ~~Rockley~~more isinformation ~~able~~on torisks ~~commercially~~associated ~~launch its cloud-based analytics subscription service, which is currently expected to occur as early as 2023, it expects to recognize revenue ratably over the terms of its subscriptions~~ with ~~customers. As a result, a substantial portion of~~ the ~~revenue~~COVID-19 ~~that~~pandemic it will report in each period will be derived from the recognition of deferred revenue relating to agreements entered into during previous periods. Consequently, a decline in new sales or renewals in any one period may not be immediately reflected in its revenue results for that period. This decline, however, will negatively affect its revenue in future periods. Accordingly, the effect of significant downturns in sales and ~~market~~regulatory acceptance of its subscription service and potential changes in the rate of renewals may not be fully reflected in its results of operations until future periods. This will also make it difficult for Rockley to rapidly increase revenue growth through additional sales in any periodactions, assee ~~revenue~~“Risk ~~from~~Factors ~~new~~— ~~customers~~General ~~generally will be recognized over the term of the applicable agreement~~Risks.” ~~Rockley may be unable to commercially launch its subscription service offering in a timely manner or at all and such subscription offering may not achieve widespread customer adoption.~~

~~Any~~Business ~~decline~~Combination inand ~~customer~~Public ~~renewals,~~Company ~~terminations,~~Costs ~~or failure to convince customers to use Rockley’s cloud-based analytics subscription service would harm its business, results of operations, and financial condition.~~

~~The~~As ~~rate~~described atin ~~which~~“Note ~~Rockley’s~~1 ~~customers~~– ~~purchase~~Description ~~subscriptions~~of toBusiness ~~its~~and ~~cloud-based~~Significant ~~analytics~~Accounting ~~service~~Policies” ~~will~~and ~~depend~~“Note on2 a– ~~number~~Note of2 ~~factors,~~– ~~including~~Business ~~the~~Combination” ~~perceived value~~ of the ~~service.~~notes ~~Rockley anticipates that its subscription offerings for enterprise customers will range from one~~ to ~~two~~the ~~years~~consolidated ~~subject~~financial ~~to renewal terms. Rockley’s ability to grow revenue from its cloud-based analytics subscription offering~~statements, ifwe ~~and~~completed ~~when~~the ~~commercially~~Business ~~launched,~~Combination ~~will depend~~ on ~~a significant percentage of customer renewals when the then-existing subscription terms expire~~August 11, ~~as well as renewals on the same or more favorable terms. Customers will have no obligation to renew their subscriptions~~2021, ~~and~~with ~~Rockley~~Legacy ~~may not be able to accurately predict customer renewal rates. The growth of~~ Rockley’s ~~business~~surviving ~~will~~the ~~depend~~Business inCombination ~~part~~as ona ~~its~~wholly ~~customers~~owned ~~adopting~~subsidiary ~~and expanding their use~~ of ~~Rockley’s~~the ~~cloud-based analytics subscription offering and related services~~Company. ~~If Rockley’s customers do not maintain or renew their subscriptions or renew on less favorable terms, Rockley’s future business prospects and growth opportunities may suffer.~~

IfPrior ~~Rockley’s~~to ~~future~~the ~~platform~~Business ~~offerings~~Combination, doLegacy ~~not~~Rockley ~~interoperate~~financed ~~with~~ its ~~customers’~~operations ~~network~~primarily ~~and~~from ~~security~~the ~~infrastructure~~issuance orof ~~with~~convertible ~~third-party~~loan ~~products,~~notes ~~websites, or services, it would negatively impact its business~~ and ~~results~~private placements of ~~operations~~ordinary shares.

~~Rockley’s~~36 cloud-based analytics subscription offering, which is under development and is currently expected to be commercially launched as early as 2023, is expected to allow for the deployment of Rockley’s technology through a cloud-

34Table of Contents

~~Table~~Upon the consummation of ~~Contents~~the Business Combination, we issued 104.0 million shares of ordinary shares for all the issued and outstanding equity interests of Legacy Rockley inclusive of ordinary shares issued in exchange for the issued and outstanding convertible loan notes (inclusive of interest accrued thereon) and warrants, as if each had converted into the Company’s ordinary shares immediately prior to the Business Combination. In addition, certain accredited investors (including entities affiliated with the SC Health Sponsor) purchased an aggregate of 15.0 million ordinary shares for a purchase price of $10.00 per share, or an aggregate purchase price of $150.0 million. The net cash received from the Business Combination after underwriter and transaction costs was $122.5 million.

~~based software-as-a-service model. As a result, it must interoperate with Rockley’s customers’ existing network and security infrastructure.~~ The ~~components~~Business ofCombination ~~Rockley’s~~was ~~customers’~~accounted ~~infrastructure~~for ~~have~~as ~~different~~a ~~specifications,~~forward ~~rapidly evolve~~recapitalization, ~~utilize~~with ~~multiple~~no ~~protocol~~goodwill ~~standards,~~or ~~include~~other ~~multiple~~intangible ~~versions~~assets ~~and generations of products~~recorded, ~~and~~in ~~may~~accordance bewith ~~highly customized~~GAAP. ~~Rockley~~Under ~~must~~this bemethod ~~able~~of ~~to interoperate and provide its software service to customers with highly complex and customized networks~~accounting, ~~which~~SC ~~requires~~Health ~~careful~~was ~~planning~~treated ~~and~~as ~~execution~~the ~~between~~acquired ~~its~~company ~~customers, its customer support teams,~~ and ~~its channel partners. Further, whenever there are new or updated elements of the customers’ infrastructure or new industry standards or protocols,~~ Rockley ~~may~~was ~~have~~deemed to ~~update~~be orthe ~~enhance~~accounting ~~its~~acquirer ~~cloud~~for ~~platform~~financial toreporting ~~continue to provide service to customers~~purposes. ~~Rockley’s~~This ~~competitors~~determination orwas ~~other~~primarily ~~vendors may refuse to work with Rockley to allow their products to interoperate with Rockley’s, which could make it difficult for Rockley’s cloud-~~based ~~analytics~~on ~~subscription~~the ~~service~~evaluation toof ~~function~~the ~~properly~~following infacts ~~customer~~and ~~networks~~circumstances: ~~that include these third-party products.~~

~~Rockley~~• ~~may~~Legacy ~~not deliver or maintain interoperability quickly or cost-effectively, or at all. If~~ Rockley ~~fails to maintain compatibility of its cloud-based analytics subscription service with its customers~~’s ~~network~~existing ~~and~~shareholders ~~security~~hold ~~infrastructures,~~a ~~its~~majority ~~customers~~voting ~~may~~interest ~~not~~in ~~be able to fully utilize~~ the ~~service~~combined company, and ~~Rockley~~as ~~may~~such, ~~among~~have ~~other~~the ~~consequences,~~power ~~fail~~ to ~~achieve~~appoint ~~widespread~~a ~~customer~~majority ~~adoption~~ of ~~this~~the ~~subscription~~members ~~service~~of ~~and~~the ~~experience~~Company’s ~~reduced demand for its products and services, which would materially harm its business, operating results, and financial condition.~~Board;

~~Rockley~~• ~~licenses~~Legacy ~~technology~~Rockley’s ~~from~~senior ~~third~~management ~~parties,~~team ~~and~~comprise ~~its~~the ~~inability~~majority toof ~~maintain~~the ~~those~~senior ~~licenses~~management ~~could~~of ~~harm~~the ~~its~~combined ~~business.~~company;

~~Rockley~~• ~~incorporates~~Legacy ~~technology that it licenses from third parties, including software, into its software subscriptions.~~ Rockley ~~cannot~~is bethe ~~certain~~larger ~~that~~of ~~its~~the ~~licensors~~companies ~~are~~based ~~not~~on ~~infringing~~historical ~~the~~operating ~~intellectual~~activity ~~property~~and ~~rights~~employee ofbase; and

~~third~~• ~~parties~~Legacy ~~or that its licensors have sufficient rights to the licensed intellectual property in all jurisdictions in which~~ Rockley ~~may sell its software subscriptions. In addition, some licenses may be non-exclusive, and therefore its competitors may have access to the same technology licensed to Rockley. Some of Rockley~~’s ~~license~~operations ~~agreements~~comprise ~~may be terminated for convenience by~~ the ~~licensors.~~ongoing ~~Rockley~~operations ~~may also be subject to additional fees or be required to obtain new licenses if any~~ of ~~its licensors allege that Rockley has not properly paid for such licenses or that it has improperly used~~ the ~~technologies~~combined ~~under such licenses, and such licenses may not be available on terms acceptable to Rockley or at all~~entity. If Rockley is unable to continue to license any of this technology because of intellectual property infringement claims brought by third parties against its licensors or against it, or claims against Rockley by its licensors, or if Rockley is unable to continue its license agreements or enter into new licenses on commercially reasonable terms, its ability to develop and sell software subscriptions containing such technology would be severely limited, and its business could be harmed. Additionally, if Rockley is unable to license necessary technology from third parties, it may be forced to acquire or develop alternative technology, which it may be unable to do in a commercially feasible manner or at all, and Rockley may be required to use alternative technology of lower quality or performance standards. This would limit and delay its ability to offer new or competitive software subscriptions and increase its costs of production. As a result, Rockley’s margins, market share, and operating results could be significantly harmed.

~~Portions~~Accordingly, offor ~~Rockley’s~~accounting ~~cloud-based~~purposes, ~~analytics~~the ~~subscription~~financial ~~offering~~statements ~~utilize~~of ~~open~~the ~~source~~Company ~~software,~~represent ~~and~~a ~~any~~continuation ~~failure~~of tothe ~~comply~~financial statements of Legacy Rockley with the ~~terms~~acquisition ofbeing ~~one~~treated oras ~~more~~the equivalent of ~~these~~Rockley ~~open~~issuing ~~source~~stock ~~licenses~~for ~~could~~the ~~negatively~~net ~~affect~~assets ~~its~~of ~~business~~SC Health, accompanied by a recapitalization.

~~Rockley’s~~As ~~cloud-based~~a ~~analytics~~consequence ~~subscription~~of ~~offering~~the ~~contains~~Business ~~software~~Combination, ~~made~~the ~~available~~Company bybecame ~~third~~an ~~parties~~SEC-registered ~~under~~and soNYSE-~~called~~listed ~~“open~~company, ~~source”~~which ~~licenses.~~requires ~~From~~us ~~time~~ to ~~time,~~hire ~~there~~additional ~~have~~talent ~~been~~and ~~claims~~implement ~~against~~procedures ~~companies that distribute or use open source software in their products~~ and ~~services,~~processes ~~asserting that such open source software infringes the claimants’ intellectual property rights. Rockley could be subject~~ to ~~suits~~address bypublic ~~parties~~company ~~claiming~~regulatory ~~that~~requirements ~~what Rockley believes to be licensed open source software infringes their intellectual property rights. Use~~ and ~~distribution~~customary of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the codepractices. InWe ~~addition,~~expect ~~certain open source licenses require that source code for software programs that are subject~~ to ~~the~~incur ~~license~~incremental beannual ~~made~~expenses ~~available~~as toa ~~the~~ public ~~and~~company ~~that any modifications or derivative works to such open source software continue to be licensed under the same terms. Further~~for, ~~certain~~among ~~open~~other ~~source licenses also include a provision that if Rockley enforces any patents against the software programs that are subject to the license~~things, itincreased ~~will~~directors’ ~~lose~~and ~~the~~officers’ ~~license~~liability toinsurance; ~~such~~director ~~software.~~fees; Ifand ~~Rockley~~additional ~~were~~internal toand ~~fail~~external ~~to comply with the terms of such open source software licenses~~accounting, ~~such failures could result in costly litigation~~legal, ~~lead~~and toadministrative ~~negative public relations, or require that it quickly find replacement software which may be difficult to accomplish in a timely manner~~resources.

~~Although~~Key ~~Rockley~~Factors ~~monitors~~Affecting ~~its~~Operating ~~use~~Results of open source software in an effort both to comply with the terms of the applicable open source licenses and to avoid subjecting its software to conditions it does not intend, the terms of many open source licenses have not been interpreted by U.S. or international courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on its ability to commercialize its product or operate its business. By the terms of certain open source licenses, Rockley could be required to release the source code of its software and to make its proprietary software available under open source licenses, if Rockley combines or distributes its software with open source

35We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including, without limitation, the following:

~~Table~~Resource ofConstraints ~~Contents~~

~~software~~Our inproducts aare ~~certain~~currently ~~manner.~~under Indevelopment ~~the~~and ~~event~~we ~~that~~do ~~portions~~not ofhave ~~its~~any ~~software~~products ~~are~~in ~~determined~~commercial toproduction. beOur ~~subject~~ability to anachieve ~~open~~our ~~source~~product ~~license,~~roadmaps ~~Rockley~~and ~~could~~development betimelines, ~~required~~including toour ~~publicly~~ability ~~release~~to ~~the~~commence ~~affected~~commercial ~~portions~~production of ~~its~~our ~~source code~~products, ~~re-engineer~~may ~~all,~~be orimpacted aby ~~portion~~resource ofconstraints, ~~that~~including ~~software~~the orneed ~~otherwise~~for beadditional ~~limited~~capital. inWe ~~the~~have ~~licensing~~a history of ~~its~~losses ~~software,~~and ~~each~~our determination of ~~which~~substantial doubt as a going concern could ~~reduce~~materially orlimit ~~eliminate~~our ability to raise additional funds through the ~~value~~issuance of ~~its~~equity ~~product.~~securities ~~Many~~or ofotherwise. ~~the~~Further, ~~risks~~our ~~associated~~products ~~with~~must ~~usage~~also ofmeet ~~open~~certain ~~source~~technical ~~software~~standards ~~cannot~~and becustomer ~~eliminated~~requirements, ~~and~~which ~~could~~in ~~negatively~~turn ~~affect~~require ~~its~~additional ~~business,~~funds ~~results~~and ofother ~~operations,~~resources. Additional financing and ~~financial~~resources ~~condition~~may not be available to us when needed or on commercially reasonable terms.

~~Customer~~Ability to Achieve Design Wins or Long-~~Related~~Term ~~Risks~~Production Contracts

~~Rockley~~We ~~currently~~may ~~has,~~engage in discussions with customers and ~~intends~~co-develop products but we may not be able to ~~target,~~convert ~~customers~~the ~~and~~relationship ~~suppliers~~into ~~that~~a ~~are~~design ~~large~~win ~~corporations~~or ~~with~~a ~~substantial~~long-term ~~negotiating~~production ~~power,~~contract ~~exacting~~due ~~product~~to resource constraints, ~~quality~~delays, ~~and~~or ~~warranty~~technical ~~standards,~~challenges. ~~and~~We ~~potentially~~work ~~competitive~~closely ~~internal~~with ~~solutions.~~our Ifcustomers ~~Rockley~~and ispotential ~~unable~~customers to ~~sell~~understand ~~its~~their ~~products~~product toroadmaps ~~these~~and ~~customers~~strategies. orOur iscustomers ~~unable~~also tocontinuously ~~enter~~develop ~~into~~new ~~agreements~~products ~~with~~in ~~customers~~existing and ~~suppliers~~new onapplication ~~satisfactory~~areas. ~~terms,~~We ~~its~~believe ~~prospects~~achieving ~~and~~design ~~results~~wins ofand ~~operations~~the ~~will~~ability beto ~~adversely~~secure ~~affected.~~long-term

~~Many~~37 of Rockley’s customers and suppliers, and potential customers, are large corporations with substantial negotiating power relative to it and, in some instances, may have internal solutions that are competitive to Rockley’s products. Many of these large corporations that are customers or potential customers also have significant development resources, which may allow them to acquire or develop independently, or in partnership with others, competitive technologies. Meeting the technical requirements and securing design wins with any of these companies will require a substantial investment of Rockley’s time and resources. Rockley cannot assure you that its products or technology will secure design wins from these or other companies or that it will generate meaningful revenue from the sales of its products to these key customers and potential customers. If Rockley’s products are not selected by these large corporations or if these corporations develop or acquire competitive technology, it will have an adverse effect on Rockley’s business.

RockleyTable currently depends on a few large customers for a substantial portion of its revenue. The loss of, or a significant reduction in, orders from Rockley’s customers, including its largest customer, could significantly reduce its revenue and adversely impact Rockley’s operating results.Contents

~~Rockley~~ production ~~believes~~contracts ~~that its operating results for the foreseeable future~~ will ~~continue~~be tocritical ~~depend~~ to aour ~~significant~~future ~~extent on revenue attributable to a few large customers, including Apple Inc~~success., ~~Rockley’s~~The ~~largest~~selection ~~customer,~~process ~~and~~is ~~Hengtong~~typically ~~Rockley~~lengthy ~~Technology Co., Ltd. (“HRT”), its second largest customer. Rockley’s two largest customers collectively accounted for 82%~~ and ~~100%~~may ofrequire ~~Rockley’s~~us ~~revenue in 2021 and 2020, respectively. Revenue attributable~~ to ~~Rockley’s~~incur largest customer accounted for the majority of its revenue in 2021 and 2020, respectively. Rockley anticipates revenue attributable to this customer will fluctuate from period to period, although it expects to remain dependent on this customer for a significant ~~portion~~design ~~of its revenue for the foreseeable future. Rockley has a master supply~~ and development ~~agreement~~expenditures ~~with~~in ~~this~~pursuit ~~customer,~~of ~~which provides~~ a ~~general~~design ~~framework~~win ~~for Rockley’s transactions~~ with ~~it.~~no ~~This~~assurance ~~agreement~~that ~~continues~~our ~~until~~products ~~either~~will ~~party~~be ~~terminates for material breach~~selected. ~~Under~~The ~~this~~failure ~~agreement, Rockley has agreed~~ to ~~develop~~secure ~~and~~a ~~deliver~~design ~~new~~win ~~products to this customer at its request, provided it also meets Rockley’s business purposes, and has agreed to indemnify it for intellectual property infringement~~ or ~~any~~long-term ~~injury~~production orcontract ~~damages caused by Rockley’s products. This customer does not have any minimum or binding purchase obligations to Rockley under this agreement and~~ could ~~elect~~adversely toaffect ~~discontinue~~our ~~or reduce making purchases from Rockley with little or no notice~~business.

~~HRT~~Customer isOrders a joint venture (the "JV") formed by Rockley with Jiangsu Hengtong Optic-Electric Co., Ltd. (“Hengtong”), a subsidiary of Hengtong Group, Co., Ltd., in 2017. Under the Sino-Foreign Equity Joint Venture Contract dated December 19, 2017 by and ~~between~~Forecasts Hengtong and Rockley Photonics Ltd, a wholly-owned subsidiary of Rockley (the “JV Agreement”) and the related technology development agreement and license agreement, HRT must procure chipsets from Rockley for use in finished products and HRT owns the copyright in the final designs. HRT has a license to the underlying intellectual property in the reference designs and Rockley has certain non-compete obligations under the JV Agreement. During the years ended December 31, 2021 and 2020, Rockley made sales to HRT of $0.3 million and $5.3 million, respectively. See “Certain Relationships and Related Party Transactions – Rockley – Hengtong JV” and Notes 4 and 13 to the notes to Rockley’s consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

InWe ~~addition,~~currently ~~customers~~anticipate ~~may~~that ~~seek~~sales toof ~~enter~~our ~~into~~future ~~licensing~~products ~~arrangements~~will inbe ~~lieu~~made ofpursuant ~~product~~to ~~purchases~~standard purchase orders, which ~~could~~may ~~negatively~~be ~~impact Rockley’s revenue~~cancelled, ~~and~~reduced, toor arescheduled ~~lesser~~with ~~extent,~~little ~~Rockley’s~~or ~~gross~~no ~~margins. If~~notice ~~Rockley’s~~and ~~customers~~without ~~were~~penalty. toCancellations ~~choose~~of toorders ~~work~~could ~~with~~result ~~other~~in ~~manufacturers~~the orloss ~~its~~of ~~relationships~~anticipated ~~with~~sales ~~its~~without ~~customers~~allowing isus ~~disrupted~~sufficient ~~for~~time ~~any~~to ~~reason,~~reduce itour ~~could~~inventory ~~have~~and aoperating ~~significant~~expenses. ~~negative~~In ~~impact~~addition, onchanges ~~Rockley’s~~in ~~business.~~forecasts ~~Any~~or ~~reduction~~the intiming ~~sales~~of ~~attributable~~orders tofrom ~~Rockley’s larger~~ customers, ~~would~~including ~~have~~if aand ~~significant~~when ~~and~~we ~~disproportionate~~commence ~~impact~~commercial onproduction ~~Rockley’s~~of ~~business~~our products, ~~financial~~could ~~condition,~~expose ~~and~~us ~~results~~to the risks of ~~operations~~inventory shortages or excess inventory.

~~Rockley’s~~Pricing customers, or the distributors through which it sells to these customers, may choose to use products in addition to Rockley’s, use a different product altogether, or develop an in-house solution. Any of these events could significantly harm its business, financial condition, and ~~results~~Customer ofDemand ~~operations. In addition, if Rockley’s distributors’ relationships with Rockley’s~~

36We expect our operating results, including if and when we commence commercial production of our products, will be impacted by the pricing of our products, our average selling prices, and fluctuations in customer purchasing volumes. If and when we begin commercial production of our products, we may not be able to fulfill customer demand in a timely manner or at all. We monitor and work to reduce our product manufacturing costs and improve the potential value our products can provide to our customers’ end products. The cost of raw materials and components critical for the manufacture of our anticipated products is largely out of our control and may fluctuate significantly. Since we rely on third-party wafer foundries and assembly and test contractors to manufacture, assemble, and test our products, we maintain a close relationship with our suppliers to improve quality, increase yields, and lower manufacturing costs.

~~Table~~New ofMarkets ~~Contents~~and Applications

~~end~~As ~~customers~~we evaluate potential markets and applications for the products we are developing, ~~including~~we ~~its~~analyze ~~larger~~forecasts ~~end~~by ~~customers~~industry analysts, ~~are~~the ~~disrupted~~adoption ~~for~~curve ~~inability~~of technology, and potential competing forces that could hinder such adoption. If we fail to ~~deliver~~anticipate ~~sufficient~~or respond to technological shifts or market demands, or to timely develop products or ~~for~~technologies ~~any~~in ~~other~~response ~~reason~~to the same, it could ~~have~~result ain ~~significant~~our ~~negative~~inability ~~impact~~to onachieve ~~Rockley’s~~revenue ~~business,~~growth ~~financial~~and ~~condition,~~could ~~and~~harm ~~results~~our ofbusiness and operations.

~~Rockley~~Cyclical isNature ~~dependent~~of inthe ~~part~~Semiconductor ~~upon~~Industry ~~its relationships and alliances with industry participants to generate revenue, which involves risks and uncertainties.~~

~~Rockley~~The ~~has,~~semiconductor and in the future may, acquire interests in joint ventures, which may subject Rockley to risk because, among other things, Rockley cannot exercise sole decision-making power and its partners may have different economic interests than Rockley has. For example, Rockley currently holds a 24.9% share in a strategic joint venture with another industry ~~participant and~~ is ~~currently~~highly incyclical ~~discussions~~and ~~regarding potential licensing of technology to the joint venture in return for future payments. Rockley~~ is ~~therefore~~characterized ~~dependent~~by onconstant ~~the~~and ~~successful~~rapid ~~execution~~technological of a licensing agreement with this joint venture partner to generate additional revenue. Rockley may also acquire interests in other joint ventures with third parties. There are additional risks involved in joint venture transactions. For examplechange, asrapid aproduct ~~co-investor in a joint venture~~obsolescence, ~~Rockley~~price ~~may not be in a position to exercise sole decision-making authority relating to the joint venture or other entity. As a result~~erosion, ~~the~~evolving ~~operations of any joint venture are subject to the risk that third parties may make business~~standards, ~~financial,~~short orproduct ~~management~~life ~~decisions with which Rockley does not agree~~cycles, orand ~~the~~wide ~~management~~fluctuations ~~of the joint venture may take risks or otherwise act~~ in aproduct ~~manner~~supply ~~that~~and ~~does not serve Rockley’s interests~~demand. ~~Further,~~Downturns ~~there may be a potential risk of impasse~~ in ~~some business decisions because Rockley may not be in a position to exercise sole decision-making authority. In such situations, it is possible that Rockley may not be able to exit~~ the ~~relationship~~semiconductor ~~because~~industry ~~it may not~~ have ~~the~~been ~~funds~~characterized ~~necessary~~by todiminished ~~complete~~product ademand, ~~buy-out~~production ofovercapacity, ~~the~~high ~~other~~inventory ~~partner or it may be difficult to locate a third-party purchaser for its interest. Because Rockley may not have the ability to exercise control over such operations~~levels, itand ~~may~~accelerated ~~not~~erosion ~~be able to realize some or all~~ of ~~the~~average ~~benefits~~selling ~~that it believes will be created from its involvement~~prices. InAny ~~addition,~~prolonged ~~there is the potential that a joint venture partner may become bankrupt~~ or ~~have~~significant ~~divergent,~~downturn ~~conflicting, or inconsistent economic or business interests from Rockley. This could result~~ in, ~~among other things, exposing Rockley to liabilities of~~ the ~~joint~~semiconductor ~~venture~~industry ingenerally ~~excess~~could ofadversely ~~its~~affect ~~proportionate~~our ~~share~~business ofand ~~these~~reduce ~~liabilities.~~demand Iffor ~~any~~our ofproducts ~~the~~and ~~foregoing~~otherwise ~~were~~harm toour ~~occur, Rockley’s business,~~ financial condition, and results of operations ~~could suffer~~.

IfSee ~~Rockley~~the is“Risk ~~unable~~Factors” tosection ~~expand~~of orthis ~~further~~annual ~~diversify~~report ~~its~~on ~~customer~~Form ~~base,~~10-K ~~its~~for ~~business,~~additional ~~financial~~discussion ~~condition,~~of ~~and~~the ~~results~~risks ofand ~~operations~~challenges ~~could~~facing ~~suffer~~our business.

~~Rockley~~Basis ~~currently expects the composition~~ of ~~its~~Presentation largest customers to vary over time, and that revenue attributable to its largest customers in any given period may decline over time. Rockley’s relationships with existing customers may deter potential customers who compete with these customers from buying Rockley’s products. If Rockley is unable to expand or further diversify its customer base, it could harm its business, financial condition, and results of operations.

~~Rockley does not currently have any products in commercial production. Accordingly~~Currently, ~~Rockley~~we ~~views~~conduct ~~its~~business ~~current~~through ~~customer~~one ~~relationships~~operating in the following stages: (a) customers with whom it is “engaged”, or in discussions with, regarding potential product features for incorporation into such customer’s end products or (b) customers with whom it is “contracted” where Rockley has non-binding MOUs or development and ~~supply~~reportable ~~agreements~~segment. ~~These~~All ~~non~~long-~~binding~~lived ~~MOUs~~assets ~~and~~are ~~development~~maintained ~~and~~in, ~~supply agreements provide a general framework for Rockley’s transactions with the customer~~ and ~~typically~~all ~~provide~~losses ~~that~~are ~~Rockley~~attributable ~~will~~to ~~develop and deliver new products meeting~~ the ~~customer’s~~one ~~specifications~~segment. ~~These~~See ~~agreements~~Note do1 ~~not contain any minimum or binding purchase obligations. If Rockley is unable to transition customers with whom it is engaged~~ in ~~discussions~~our toaccompanying ~~contracted~~audited ~~customers~~consolidated orfinancial ifstatements ~~Rockley~~for ~~fails~~more toinformation ~~otherwise~~about ~~attract~~our ~~new~~operating ~~customers, it would negatively impact Rockley’s ability to grow its business and gain market share, which in turn would harm Rockley’s financial condition and results of operations~~segment.

~~Because~~38 Rockley does not anticipate long-term purchase commitments with its customers, orders may be cancelled, reduced, or rescheduled with little or no notice, which in turn exposes Rockley to inventory risk, and may cause its business and results of operations to suffer.

RockleyTable anticipates that its products will be sold directly to customers as well as through distributors and resellers, with, in certain cases, no long-term or minimum purchase commitments from them or their end customers. Rockley expects that sales of its products will be primarily made pursuant to standard purchase orders, which orders may be cancelled, reduced, changed, or rescheduled with little or no notice or penalty. Cancellations of orders could result in the loss of anticipated sales without allowing Rockley sufficient time to reduce its inventory and operating expenses. In addition, changes in forecasts or the timing of orders from its customers expose Rockley to the risks of inventory shortages or excess inventory. As a result, Rockley’s revenue and operating results could fluctuate materially and could be materially and disproportionately impacted by purchasing decisions of Rockley’s customers, including Rockley’s larger customers. In the future, Rockley’s customers or its distributors or their end customers may decide to purchase fewer units than expected, may alter their purchasing patterns at any time with Contents

37Components of Results of Operations

~~Table~~The following discusses certain line items in our consolidated statements of ~~Contents~~operations.

~~limited~~Revenue or no notice, or may decide not to continue to purchase Rockley’s products at all, any of which could cause Rockley’s revenue to decline materially and materially harm Rockley’s business, financial condition, and results of operations.

~~Cancellations~~To ofdate, ~~reductions~~we ~~in,~~have orprimarily ~~rescheduling~~generated ofrevenue ~~customer~~from ~~orders~~development ~~could~~services, ~~also~~which ~~result~~entail indeveloping ~~the~~customer-specific ~~loss~~designs of ~~anticipated~~silicon ~~sales~~photonics ~~without~~chipsets. ~~allowing~~Our ~~Rockley~~contracts ~~sufficient~~with ~~time~~customers toinclude ~~reduce~~specific ~~its~~achievement ~~inventory~~of ~~and~~agreed-upon ~~operating~~projects ~~expenses,~~and as a ~~substantial~~substantive ~~portion~~acceptance ofcriteria ~~Rockley’s~~for ~~expenses~~each ~~are~~agreed-upon ~~fixed~~project. atIn ~~least in~~ the ~~short~~event ~~term.~~an Inagreed-upon ~~addition,~~project ~~changes~~is insuccessful ~~forecasts~~and or the ~~timing~~customer ofprovides ~~orders~~acceptance, ~~expose~~we ~~Rockley~~allocate to the ~~risks~~contract ofconsideration ~~inventory~~related ~~shortages~~to orthe ~~excess~~performance ~~inventory.~~obligations ~~Any~~that ofare ~~the~~satisfied ~~foregoing~~during ~~events~~the ~~could~~period ~~materially~~ and ~~adversely~~recognize ~~affect~~the ~~Rockley’s~~revenue ~~business,~~at ~~financial~~that ~~condition,~~point ~~and~~in ~~results of operations~~time.

IfFollowing ~~Rockley~~the iscompletion ~~unable~~of toour ~~establish~~product ~~and~~development ~~maintain~~phase ~~confidence~~and inintroduction ~~its~~of ~~long~~our spectra-~~term~~sense ~~business~~chipsets ~~prospects~~to ~~among~~the ~~customers~~wearable ~~and~~devices ~~analysts~~market, ~~and~~we ~~within~~expect ~~its~~the ~~industry~~majority orof isour ~~subject~~revenue to ~~negative~~be ~~publicity,~~derived ~~then~~from ~~Rockley’s~~sales ~~financial~~of ~~condition,~~high-volume ~~operating~~consumer ~~results~~wearable products. In addition, ~~business~~we ~~prospects~~plan to offer advanced module applications with biomarker detection capabilities for advanced health metrics that can detect, classify, and ~~access~~potentially prevent disease. We also expect to ~~capital~~offer ~~may~~a ~~suffer~~cloud ~~materially~~analytics platform to provide a full range of subscription services, including the deployment of our technology through a subscription and cloud-based software as a service.

~~Rockley~~Cost ~~has not yet fully developed or commercialized its products or services and the successful commercialization~~ of ~~Rockley’s~~Revenue products depends in part on Rockley’s customers and potential customers committing to use Rockley’s products in their own products. Customers may be less likely to purchase Rockley’s products if they are not convinced that Rockley’s business will succeed or that its service and support and other operations will continue in the long term. Similarly, suppliers and other third parties will be less likely to invest time and resources in developing business relationships with Rockley if they are not convinced that Rockley’s business will succeed. If Rockley is unable to establish and maintain confidence in its long-term business prospects among customers, suppliers, analysts, ratings agencies, and within its industry or is subject to negative publicity, then Rockley’s financial condition, operating results, business prospects, and access to capital may suffer materially.

~~Rockley’s~~To ~~investments~~date, inour ~~educating~~cost ~~its~~of ~~customers~~revenue has included cost related to our development services, which include cost of materials, cost associated with packaging and ~~potential~~assembly, ~~customers~~testing ~~about~~and ~~the~~shipping, ~~advantages~~cost of ~~Rockley’s~~talent, ~~silicon~~including ~~photonics~~stock-based compensation, and ~~sensing~~equipment ~~technology~~associated with manufacturing support, logistics, and ~~its~~quality ~~applications~~assurance, overhead, and occupancy costs. Once we commence commercial production of our silicon photonics chipsets, cost of revenues will ~~require~~include ~~significant~~direct ~~financial~~parts, material, and ~~talent~~labor ~~resources~~costs, manufacturing overhead, including amortized tooling costs, shipping and ~~may~~logistics ~~not~~costs, ~~result~~and inreserves ~~sales~~for ofestimated ~~Rockley’s~~warranty ~~products~~expenses.

~~Educating~~Gross ~~Rockley’s~~Profit ~~prospective customers,~~ and toGross aMargin lesser extent, its existing customers, about Rockley’s silicon photonics and sensing technology and its applications in health monitoring devices, its advantages over competitive technologies, and the potential application of Rockley’s products in different industries and use cases is an integral part of Rockley’s strategy to expand into additional markets. Rockley’s efforts to educate potential customers and the market generally will require significant financial and talent resources. These educational efforts may not be successful and Rockley may not offset the costs of such efforts with revenue from the new customers. If Rockley is unable to acquire new customers to offset these expenses, its financial condition will be adversely affected.

~~Rockley’s~~Gross ~~business~~profit ~~depends~~is ~~substantially~~calculated based on the ~~efforts~~difference between our revenue and cost of ~~its~~revenue. ~~executive~~Gross ~~officers,~~margin ~~including~~is ~~its~~the ~~Chief~~percentage ~~Executive~~obtained ~~Officer~~by ~~and~~dividing ~~founder,~~gross Drprofit by our revenue. ~~Andrew~~ ~~Rickman~~As we approach commercial production of spectra-sense chipsets, ~~OBE~~advanced module applications, and ~~highly~~Rockley ~~skilled~~Photonics ~~talent,~~Cloud ~~and~~Analytics ~~its~~technology, ~~operations~~we ~~may~~expect beour ~~severely~~gross ~~disrupted~~profit ifand itgross ~~lost~~margin ~~their~~to ~~services~~vary.

~~Rockley is highly dependent on its founder~~Selling, ~~Dr. Andrew Rickman~~General, ~~OBE as well its other executive officers,~~ and ~~the~~Administrative ~~loss~~Expense of his services would adversely affect Rockley’s business because his loss could make it more difficult to, among other things, compete with other market participants, manage Rockley’s research and development activities, and retain existing customers or cultivate new ones. Competition for highly-skilled talent is often intense and Rockley may incur significant costs to attract highly-skilled talent. Rockley may not be successful in attracting, integrating, or retaining qualified talent to fulfill its current or future needs. Rockley has, from time to time, experienced, and it expects to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications.

InSelling, ~~addition~~general, ~~job candidates~~ and ~~existing~~administrative ~~employees~~expenses ~~often~~consist ~~consider~~of ~~the~~human ~~value~~capital ofrelated ~~the~~expenses ~~equity~~for ~~awards~~employees ~~they~~involved ~~receive~~ in ~~connection~~general ~~with~~corporate ~~their~~functions, ~~employment.~~including Ifexecutive ~~the~~management ~~perceived~~and ~~value~~administration, ofaccounting, ~~Rockley’s~~finance, ~~equity~~tax, orlegal, ~~equity~~information ~~awards~~technology, ~~declines~~marketing, itand ~~may~~human ~~adversely~~resources; ~~affect~~depreciation ~~Rockley’s~~expense ~~ability~~and torent ~~retain~~relating ~~highly~~to ~~skilled~~facilities; ~~employees.~~travel Ifcosts; ~~Rockley~~professional ~~fails~~fees; toand ~~attract~~other ~~new~~general ~~talent~~corporate orcosts. ~~fails~~Human tocapital ~~retain~~expenses ~~and~~primarily ~~motivate~~include ~~its~~salaries, ~~current~~benefits, ~~talent~~bonuses, ~~its business~~ and ~~future~~stock-based ~~growth prospects could be adversely affected~~compensation.

~~Legal~~Research and ~~Regulatory~~Development ~~Risks~~Expense ~~Related to Rockley’s Business~~

~~Rockley~~Research isand ~~subject~~development toexpense ~~governmental~~consists ~~export~~primarily of talent costs for engineers and ~~import~~third ~~control~~parties ~~laws~~engaged in the design and ~~regulations~~development of products, software, and technologies, including salary, bonus, and stock-based compensation expense, project material costs, services, and depreciation of our research and development facilities and equipment. ~~Rockley’s~~We ~~failure~~expense research and development costs as they are incurred. Research and development expense also includes the research and development tax credits that we are able to ~~comply~~claim in accordance with ~~these~~the ~~laws~~relevant ~~and~~U.K. ~~regulations~~tax ~~could~~legislation. ~~have~~These antax ~~adverse~~credits ~~effect~~are payable to us in cash and are carried on ~~its~~the ~~business,~~consolidated ~~prospects,~~balance ~~financial~~sheets ~~condition,~~at the amount claimed and ~~results~~expected to be received from the U.K. government within the next 12 months. We expect research and development expense to increase in absolute dollars as we continue to invest in the development of ~~operations~~our products and technology.

~~Certain~~39 of Rockley’s products and services are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. U.S. export control laws and regulations

38Table of Contents

~~Table~~Other ofIncome ~~Contents~~(Expense)

~~and~~Other ~~economic~~income ~~sanctions~~consists ~~prohibit the shipment~~ of ~~certain~~miscellaneous ~~products and services to U.S. embargoed or sanctioned countries, governments and persons. In addition, complying with export control and sanctions regulations for a particular sale may be time~~non-~~consuming and~~operating result in the delay or loss of sales opportunities. Exports of Rockley’s products and technology must be made in compliance with these laws and regulations. If Rockley fails to comply with these laws and regulationsitems, ~~Rockley~~such ~~and~~as ~~certain~~forgiveness of ~~its~~debt ~~employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges, fines, which may be imposed on Rockley~~ and ~~responsible~~related ~~employees~~accrued ~~or managers, and, in extreme cases, the incarceration of responsible employees or managers~~interest.

~~Changes~~Interest toIncome ~~trade~~(Expense) ~~policy, tariffs, and import/export regulations may have a material adverse effect on Rockley’s business, financial condition, and results of operations.~~

~~Changes~~Interest inincome ~~global~~consists ~~political,~~primarily ~~regulatory,~~of ~~and~~interest ~~economic~~received ~~conditions,~~ or inearned ~~laws~~on ~~and~~our ~~policies governing foreign trade~~cash, ~~manufacturing,~~cash ~~development~~equivalents, and investment inbalances ~~the~~held ~~territories or countries where Rockley may purchase its components, sell its products, or conduct its business, could adversely affect Rockley’s business. The United States has~~ in ~~the~~interest-bearing ~~past~~deposit instituted or proposed changes in trade policies that included the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the United States, economic sanctions on individuals, corporations, or countries, and other government regulations affecting trade between the United States and other countries where Rockley conducts its businessaccounts. ~~For~~Interest ~~instance,~~expense ~~effective~~consists ~~December 17, 2021, the U.S. Bureau~~ of ~~Industry~~interest ~~and~~paid ~~Security ("BIS”) of the U.S. Department of Commerce placed Hengtong and certain of its affiliates~~ on ~~the~~our ~~BIS~~convertible ~~“Entity~~loan ~~List,”~~notes ~~meaning that the U.S. Export Administration Regulations prohibit companies from providing products~~ and ~~technologies~~capital tolease ~~organizations on the “Entity List” without prior authorization~~obligations. In response to this decision, the Company terminated a planned technical sale to the JV. A number of other nations have proposed or instituted similar measures directed at trade with the United States in response. As a result of these developments or any future similar developments, there may be greater restrictions and economic disincentives on international trade and economic cooperation that could adversely affect Rockley’s business. It may be time-consuming and expensive for Rockley to alter its business operations to adapt to or comply with any such changes, and any failure to do so could have a material adverse effect on its business, financial condition, and results of operations.

~~Rockley~~Equity ~~may~~Method ~~become~~Investment ~~involved in legal and regulatory proceedings and commercial or contractual disputes, which could have an adverse effect on its profitability and financial position.~~

~~Rockley~~Equity ~~may~~method ~~be,~~investments ~~from~~consist ~~time~~of toentities ~~time,~~over ~~involved~~which inwe ~~litigation,~~have ~~regulatory proceedings, and commercial or contractual disputes that may be~~ significant. ~~These~~influence ~~matters~~but ~~may~~not ~~include,~~control ~~without~~or ~~limitation,~~joint disputes with Rockley’s suppliers and customers, intellectual property claims, shareholder litigation, government investigations, class action lawsuits, personal injury claims, environmental issues, customs and value-added tax disputes, and employment and tax issuescontrol. InUnder ~~addition, Rockley could face in~~ the ~~future~~equity amethod ~~variety~~ of ~~labor and employment claims against it~~accounting, ~~which~~all ~~could~~of ~~include~~our ~~but~~investments isare ~~not~~initially ~~limited~~recognized toat ~~general~~cost ~~discrimination, wage~~ and ~~hour,~~adjusted ~~privacy,~~thereafter ~~ERISA, or disability claims. In such matters, government agencies or private parties may seek~~ to ~~recover~~recognize ~~from~~our ~~Rockley~~share ~~indeterminate~~of ~~amounts~~the inpost-acquisition ~~penalties~~profits or ~~monetary~~losses ~~damages~~of ~~(including,~~the ininvestee ~~some cases, treble or punitive damages) or seek to limit Rockley’s operations~~ in ~~some~~our ~~way.~~consolidated ~~These~~statements ~~types~~ of ~~lawsuits could require significant management time and attention or could involve substantial legal liability, adverse regulatory outcomes, and/or substantial expenses to defend~~operations. Often these cases raise complex factual and legal issues and create risks and uncertainties. No assurances can be given that any proceedings and claims will not have a material adverse impact on Rockley’s operating results and financial position or that its established reserves or its available insurance will mitigate this impact.

~~Rockley~~Change ~~is subject to, and must remain~~ in ~~compliance~~Fair ~~with,~~Value ~~numerous laws and governmental regulations across various jurisdictions concerning the use, distribution, and sale~~ of ~~its~~Debt ~~products.~~Instruments ~~Some of Rockley’s customers also require that it comply with their own unique requirements relating to these matters.~~

~~Rockley~~Gains ~~sells~~or ~~products~~losses ~~that~~from ~~contain electronic components, and such components may contain materials that are subject to government regulation in locations where Rockley sells its products. For example, certain regulations limit~~ the ~~use~~change ~~of lead~~ in ~~electronic~~fair ~~components.~~value ~~Since Rockley operates on a global basis, compliance with regulations is a complex process which requires continual monitoring~~ of ~~regulations~~debt ~~and~~instruments ~~an ongoing compliance process to ensure that Rockley and its suppliers~~ are inrecorded ~~compliance~~from ~~with~~the ~~existing~~remeasurement ~~regulations in each market where it operates. If there is an unanticipated new regulation that significantly impacts Rockley’s use and sourcing~~ of various components or requires more expensive components, that regulation could materially and adversely affect its business, results of operations, and financial condition. Rockley’s products may also be used in healthcare monitoring and other medical devices, which are subject to additional regulation. If Rockley fails to adhere to these new regulations or fails to continually monitor the ~~updates,~~fair itvalue ~~may be subject to litigation, loss~~ of ~~customers,~~our orconvertible ~~negative~~loan ~~publicity~~notes ~~and~~using ~~its~~a ~~business,~~discounted ~~results~~cash offlow ~~operations,~~methodology ~~and~~based ~~financial~~upon ~~condition~~certain ~~will~~valuation ~~be adversely affected~~assumptions.

39Change in Fair Value of Warrant Liabilities

~~Table~~Gains or losses from the change in fair value of ~~Contents~~warrants are recorded from the remeasurement of the fair value of our private placement warrants, public warrants and warrants issued in connection with certain convertible notes based upon certain valuation assumptions.

~~Rockley~~Gain ~~may in the future become subject to additional regulations, including Food and Drug Administration~~ (~~the “FDA”~~Loss) ~~clearance~~on orForeign ~~approval,~~Currency ~~for health monitoring products in which Rockley’s products are incorporated. Achieving and maintaining compliance and approval under applicable regulations may be difficult to achieve.~~

~~Rockley’s~~We ~~products~~have ~~may~~significant beinternational ~~incorporated~~operations ~~into~~that ~~end~~are ~~products~~denominated in ~~the~~foreign ~~health monitoring sector~~currencies, ~~including~~primarily ~~products which collect clinical data. Accordingly, it is possible that certain of Rockley’s products, or~~ the ~~end~~British ~~products~~Pound ~~which incorporate Rockley’s products will be subject to current~~ and ~~future regulation by the FDA~~Euro, assubjecting ~~well~~us asto byforeign ~~other~~currency ~~federal,~~exchange ~~state,~~risk ~~and local agencies. As Rockley’s target market is consumer wellness rather than medical, Rockley currently anticipates~~ that ~~FDA~~may ~~clearance~~adversely ~~will~~impact beour ~~unnecessary~~financial ~~for~~results. ~~its~~We ~~products~~calculate ~~targeting~~ the ~~consumer~~year-over-year ~~wearables~~impact ~~market;~~of ~~however,~~foreign ~~Rockley~~currency ~~intends~~movement toon ~~monitor~~our ~~and~~business ~~comply~~using ~~with~~foreign ~~regulations~~currency toexchange ~~the~~rates ~~extent~~that ~~they~~are ~~become~~applied ~~applicable~~ to ~~Rockley~~transactional currency amounts.

~~Manufacturers~~Provision offor ~~medical~~Income ~~devices~~Tax are required to comply with applicable laws and regulations governing development, testing, manufacturing, labeling, marketing, and distribution of medical devices. Devices are generally subject to varying levels of regulatory control, based on the risk level of the device. Governmental regulations specific to medical devices are wide-ranging and govern, among other things:

~~•product~~We ~~design~~are subject to income taxes in the United Kingdom, ~~development~~the United States, Finland, Ireland, and ~~manufacture;~~Switzerland. Our income tax provision consists of an estimate of federal, state, and foreign income taxes based on enacted federal, state, and foreign tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws. Due to cumulative losses, we maintain a valuation allowance against our U.S. federal and foreign deferred tax assets.

~~•laboratory,~~40 ~~pre-clinical and clinical testing, labeling, packaging, storage, and distribution;~~

•premarketingTable clearanceof or approval;Contents

~~•record-keeping;~~Results of Operations for the Years Ended December 31, 2022 and 2021

~~•product~~The ~~marketing,~~following ~~promotion~~table ~~and~~sets ~~advertising,~~forth ~~sales,~~our ~~and~~historical ~~distribution;~~operating ~~and~~results for the periods indicated (in thousands):

•post-marketing surveillance, including reporting of deaths or serious injuries and recalls and correction and removals.


	Years Ended December 31,
	2022			2021
Revenue	$	3,248		$	8,213
Cost of revenue		8,461			11,416
Gross profit		(5,213	)		(3,203	)
Operating expenses:
Selling, general, and administrative expenses		61,532			39,976
Research and development expenses		103,095			72,573

Total operating expenses		164,627			112,549

Loss from operations		(169,840	)		(115,752	)
Other income (expense):
Forgiveness of PPP loan		—			2,860
Other income		(348	)		—
Interest expense, net		(14,697	)		(4,781	)
Equity method investment loss		(523	)		(703	)
Change in fair value of debt instruments		(73,361	)		(59,916	)
Change in fair value of warrant liabilities		44,138			10,827
Gain (loss) on foreign currency		(5,905	)		119

Total other income (expense)		(50,696	)		(51,594	)

Loss before income taxes		(220,536	)		(167,346	)
Provision for income tax		3,504			667

Net loss	$	(224,040	)	$	(168,013	)

~~Rockley~~Discussion or its customers may not be able to obtain the necessary clearances or approvals for their products or may be unduly delayed in doing so, which could harm Rockley’s business. Furthermore, even if Rockley is granted regulatory clearances or approvals, they may include significant limitations on the permitted uses for the product, which may limit the market potential for the product. Delays in obtaining clearance or approval could increase Rockley’s costs and ~~harm~~Analysis ~~Rockley’s~~of ~~revenue~~Results ~~and~~of ~~growth.~~Operations

~~Additionally,~~Revenue ~~Rockley’s products may be subject to regulation by similar agencies~~ (in ~~other states and foreign countries. While Rockley believes that it has complied with all applicable laws and regulations~~thousands, ~~continued~~except ~~compliance~~for ~~with~~percentages) ~~such laws or regulations, including any new laws or regulations, might impose additional costs on Rockley which could adversely affect its financial performance and results of operations.~~

Rockley is subject to various environmental laws and regulations that could impose substantial costs upon Rockley.


	Years Ended December 31,				Change
	2022		2021		$			%

Revenue	$	3,248	$	8,213	$	(4,965	)		(60	)%

~~Concerns~~Revenue ~~over~~decreased ~~environmental~~by pollution and climate change have produced significant legislative and regulatory efforts on a global basis, and Rockley believes this will continue both in scope and in the number of countries participating$5. ~~In addition~~0 million, asor ~~climate~~60% ~~change issues become more prevalent, foreign, federal, state, and local governments and Rockley’s customers have been responding~~ to ~~these issues~~$3.2 million ~~The~~for ~~increased~~the ~~focus~~year onended ~~environmental sustainability may result in new regulations and customer requirements~~December 31, or2022 ~~changes~~from in$8.2 million ~~current~~for ~~regulations~~the ~~and~~year ~~customer~~ended ~~requirements~~December 31, ~~which could materially and adversely impact Rockley’s business, results of operations, and financial condition~~2021. IfThis ~~Rockley~~decrease is ~~unable~~primarily todriven ~~effectively~~by ~~manage~~timing ~~real~~of orproject ~~perceived~~milestones ~~issues,~~for ~~including~~our ~~concerns~~significant ~~about~~customers ~~environmental~~in ~~impacts~~fiscal or2022 ~~similar~~when ~~matters,~~compared ~~sentiments~~to ~~toward~~fiscal ~~Rockley or its products could be negatively impacted, and its business, results of operations, or financial condition could suffer~~2021.

~~Rockley’s~~Cost ~~operations are and will be subject to foreign, federal, state, and local environmental laws and regulations, and such laws and regulations could directly increase the cost~~ of ~~energy,~~Revenue which may have an effect on the way Rockley manufactures products or utilizes energy to produce its products. In addition, any new regulations or laws in the environmental area might increase the cost of raw materials or key components Rockley uses in its products. Environmental regulations require Rockley to reduce product energy usage, monitor and ~~exclude~~Gross anProfit ~~expanding list of restricted substances, and to participate~~ (in ~~required recovery and recycling of its products. Environmental and health and safety laws and regulations can be complex~~thousands, ~~and~~except ~~Rockley~~for ~~has~~percentages) limited experience complying with them. Capital and operating expenses needed to comply with environmental laws and regulations can be significant, and violations may result in substantial fines and penalties, third-party damages, suspension of production, or a cessation of Rockley’s operations.


	Years Ended December 31,						Change
	2022			2021			$			%

Cost of revenue	$	8,461		$	11,416		$	(2,955	)		(26	)%
Gross Profit	$	(5,213	)	$	(3,203	)	$	(2,010	)		NM
Gross Margin		(62	)%		(28	)%		NM			NM

~~Table~~41 ~~of Contents~~

TheTable costs of complying with environmental laws and regulations and any claims concerning noncompliance, or liability with respect to contamination in the future, could have a material adverse effect on Rockley’s financial condition or operating results. Rockley may face unexpected delays in obtaining the required permits and approvals in connection with its planned production facilities that could require significant time and financial resources and delay its ability to operate these facilities, which would adversely impact Rockley’s business, prospects, financial condition, and operating results.Contents

~~Rockley~~NM is– ~~subject~~Not tomeaningful ~~U.S. and foreign anti-corruption and anti-money laundering laws and regulations. Rockley can face criminal liability and other serious consequences for violations, which can harm its business.~~

~~Rockley~~Cost ~~is subject to the U.S. Foreign Corrupt Practices Act~~ of ~~1977,~~revenue asdecreased ~~amended,~~by ~~the U~~$3.~~S. domestic bribery statute contained in 18 U.S.C. § 201~~0 million, ~~the~~or ~~U.S. Travel Act~~26%, ~~the~~to ~~USA PATRIOT Act, the U~~$8.~~K. Bribery Act of 2010, and possibly other anti-bribery~~5 ~~and~~million ~~anti-money laundering~~for ~~laws~~the inyear ~~countries~~ended ~~in which Rockley conducts activities. Anti-corruption~~December ~~laws are interpreted broadly and prohibit companies and their employees~~31, ~~agents,~~2022 ~~contractors, and other collaborators~~ from ~~authorizing, promising, offering, or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector~~$11.4 million ~~Rockley can be held liable~~ for the ~~corrupt~~year orended ~~other illegal activities of its employees~~December 31, ~~agents,~~2021. ~~contractors,~~This ~~and~~decrease ~~other~~in ~~collaborators,~~cost ~~even if Rockley does not explicitly authorize or have actual knowledge~~ of ~~such~~revenue ~~activities.~~was ~~Any~~primarily ~~violations~~driven ofby ~~the~~an ~~laws~~overall ~~and~~decrease ~~regulations described above may result~~ in ~~substantial~~revenue ~~civil~~ and ~~criminal~~decrease ~~fines~~in ~~and~~allocation ~~penalties, imprisonment, the loss~~ of ~~export~~costs orrelated ~~import~~to ~~privileges,~~revenue ~~debarment,~~generating ~~tax~~activities ~~reassessments,~~when ~~breach~~compared ofto ~~contract~~the ~~and~~prior ~~fraud litigation, reputational harm, and other consequences~~year.

~~Failures,~~Gross orprofit ~~perceived~~decreased ~~failures,~~by $2.0 million to ~~comply~~$(5.2) ~~with~~million ~~privacy,~~for ~~data protection, and information security requirements in~~ the ~~variety~~year ofended ~~jurisdictions~~December 31, in2022 ~~which~~from ~~Rockley~~$(3.2) ~~operates~~million for ~~may~~the ~~adversely~~year ~~impact~~ended ~~its business~~December 31, ~~and~~2021. ~~such~~The ~~legal~~decrease ~~requirements~~in ~~are~~gross ~~evolving,~~profit ~~uncertain,~~was ~~and~~primarily ~~may~~driven ~~require~~by ~~improvements~~a decrease in, orrevenue ~~changes~~for ~~to,~~the ~~Rockley’s~~year ~~policies~~ended ~~and~~December 31, ~~operations~~2022.

~~Rockley’s~~Our ~~current~~gross ~~and~~margin ~~potential~~has ~~future~~fluctuated ~~operations~~ and ~~sales~~may ~~are~~fluctuate ~~subject~~from period to ~~laws~~period ~~and~~based ~~regulations~~on ~~addressing privacy and the collection, use, storage, disclosure, transfer, and protection of~~ a ~~variety~~number of ~~types of data. For example~~factors, ~~the~~including ~~European Commission has adopted~~ the ~~General~~timing ~~Data Protection Regulation and California recently enacted the California Consumer Privacy Act~~ of ~~2018,~~completion ~~both~~ of ~~which~~project ~~provide for potentially material penalties for non-compliance. These regimes may~~milestones, ~~among~~with ~~other~~each ~~things,~~project ~~impose~~requiring ~~data~~differing ~~security~~levels ~~requirements,~~of ~~disclosure~~time ~~requirements,~~ and ~~restrictions on data collection, uses, and sharing that may impact Rockley’s operations and the development of its business~~costs. ~~Rockley~~The ~~has~~projects ~~limited~~we ~~access~~undertake toare ~~collect,~~determined ~~store, process, or share certain information collected~~ by ~~its~~our ~~products,~~customer ~~and~~commitments ~~Rockley’s products may evolve to collect additional information. Therefore, the full impact of these privacy regimes on Rockley’s business is rapidly evolving across jurisdictions~~ and ~~remains~~our ~~uncertain~~long-term atstrategy ~~this time~~goals.

~~Rockley~~To ~~may~~date, ~~also~~our becost ~~affected~~of byrevenue ~~cyber-attacks and~~has ~~other~~included ~~means~~cost ofrelated ~~gaining~~to ~~unauthorized~~our ~~access~~development toservices ~~its~~which ~~products,~~include ~~systems,~~cost ~~and~~of ~~data.~~materials, ~~For~~cost ~~instance,~~associated ~~cyber~~with ~~criminals~~packaging orand ~~insiders~~assembly, ~~may~~testing ~~target~~and ~~Rockley~~shipping, orcost ~~third~~of ~~parties~~talent, ~~with~~including ~~which~~stock-based itcompensation, ~~has~~and ~~business~~equipment ~~relationships~~associated towith ~~obtain~~manufacturing ~~data~~support, orlogistics, inand aquality ~~manner~~assurance, ~~that~~overhead, ~~disrupts~~and ~~Rockley’s~~occupancy ~~operations~~costs. orOnce ~~compromises~~we ~~its~~commence ~~products~~commercial orproduction ~~the~~of ~~systems~~our ~~into~~silicon ~~which~~photonics ~~its~~chipsets, ~~products~~cost ~~are~~of ~~integrated.~~revenues ~~Due~~will toinclude ~~the~~direct ~~political~~parts, ~~uncertainty~~material, ~~involving Russia~~ and ~~Ukraine~~labor costs, ~~there~~manufacturing isoverhead, anincluding ~~increased~~amortized ~~likelihood~~tooling ~~that~~costs, ~~escalation~~shipping ofand ~~tensions~~logistics ~~could~~costs, ~~result~~and inreserves ~~cyber~~for ~~attacks~~estimated ~~that~~warranty ~~could either directly or indirectly impact our operations~~expenses.

~~Rockley~~Gross profit is ~~assessing~~calculated ~~the~~based ~~continually~~on ~~evolving~~the ~~privacy~~difference ~~and~~between ~~data~~our ~~security~~revenue ~~regimes~~ and ~~measures~~cost itof ~~believes are appropriate in response~~revenue. ~~Since~~Gross ~~these~~margin ~~data~~is ~~security~~the ~~regimes~~percentage ~~are~~obtained ~~evolving,~~by ~~uncertain,~~dividing ~~and~~gross ~~complex,~~profit ~~especially~~by ~~for~~our ~~a global business like Rockley, Rockley may need to update or enhance its compliance measures and these updates or enhancements may require implementation costs~~revenue. InAs ~~addition,~~we ~~Rockley~~approach ~~may~~commercial ~~not~~production be able to monitor and react to all developments in a timely manner. The compliance measures Rockley does adopt may prove ineffective. Any failure, or perceived failure, by Rockley to comply with current and future regulatory or customer-driven privacy, data protection, and information security requirements, or to prevent or mitigate security breaches, cyber-attacks, or improper access to, use of, ~~or disclosure of data, or any security issues or cyber~~spectra-~~attacks affecting~~sense ~~Rockley~~chipsets, ~~could~~advanced ~~result~~module ~~in significant liability~~applications, ~~costs (including the costs of mitigation~~ and ~~recovery),~~Rockley ~~and~~Photonics aCloud ~~material~~Analytics ~~loss of revenue resulting from the adverse impact on its reputation and brand~~technology, ~~loss~~we ofexpect ~~proprietary~~our ~~information~~gross ~~and~~profit ~~data, disruption to its business~~ and ~~relationships,~~gross ~~and~~margin ~~diminished ability~~ to ~~retain or attract customers and business partners~~vary. Such events may result in governmental enforcement actions and prosecutions, private litigation, fines, and penalties or adverse publicity, and could cause customers and business partners to lose trust in Rockley, which could have an adverse effect on its reputation and business.

~~Further~~Selling, inGeneral the event Rockley’s products, or the end products into which Rockley’s products are incorporated, involve the collection of personal medical or clinical data, Rockley would be subject to additional privacy regulations. For example, the Health Insurance Portability and ~~Accountability~~Administrative ~~Act~~Expenses ~~of 1996~~ (~~“HIPAA”) regulations apply U.S. national standards for some types of electronic health information transactions and the data elements used~~ in ~~those transactions to ensure the integrity~~thousands, ~~security,~~except ~~and~~for ~~confidentiality~~percentages) ~~of health information and standards to protect the privacy of individually identifiable health~~


	Years Ended December 31,				Change
	2022		2021		$		%

Selling, general and administrative expenses	$	61,532	$	39,976	$	21,556		54	%

~~Table~~Selling, general and administrative expenses increased by $21.6 million, or 54%, to $61.5 million for the year ended December 31, 2022 from $40.0 million for the year ended December 31, 2021. The increase was primarily due to an increase in professional fees of ~~Contents~~$16 million related to our financing activities in fiscal 2022. Further, the increase relates general corporate growth, of which $2.9 million was due to an increase in insurance expense, $1.6 million and $0.6 million were due to increased human capital and stock-based compensation costs, respectively.

~~information~~Selling, ~~businesses receive~~general, ~~maintain or transmit. The Health Information Technology for Economic~~ and ~~Clinical Health~~ ~~Act~~administrative ofexpenses ~~2009~~consist ~~(“HITECH Act”) expanded the scope~~ of ~~the privacy and~~human ~~security~~capital ~~requirements~~related ~~under~~expenses ~~HIPAA~~for ~~and~~employees ~~increased~~involved ~~penalties~~in ~~for~~general ~~violations.~~corporate ~~In addition~~functions, ~~the~~including ~~HITECH~~executive ~~Act~~management ~~enacted~~and ~~federal~~administration, ~~breach~~accounting, ~~notification~~finance, ~~rules~~tax, ~~requiring~~legal, ~~notification~~information totechnology, ~~affected~~marketing, ~~individuals~~ and ~~the~~human ~~Department~~resources; ofdepreciation ~~Health~~expense and ~~Human~~rent ~~Services~~relating ~~(and in some cases, relevant media outlets) whenever a breach of protected health information occurs. Rockley’s failure~~ to ~~maintain~~facilities; ~~confidentiality~~travel ofcosts; ~~sensitive~~professional ~~protected~~fees; ~~health~~and ~~information or~~ other ~~personal~~general ~~information~~corporate incosts. ~~accordance~~Human ~~with~~capital ~~the~~expenses ~~applicable~~primarily ~~regulatory~~include ~~requirements could damage its reputation and expose Rockley to claims~~salaries, ~~fines~~benefits, ~~and penalties. Rockley’s business~~bonuses, ~~operating results,~~ and ~~financial~~stock-based ~~condition could also be negatively impacted by a violation of the HIPAA privacy or security rules or any other applicable privacy or data security law~~compensation.

~~Many~~Research ~~U.S. states~~ and ~~international~~Development ~~jurisdictions~~Expenses (in ~~which Rockley operates also have laws and regulations that protect the privacy and security of confidential~~thousands, ~~protected~~except ~~health~~for ~~information,~~percentages) or other personal information and have similar or even more protection than U.S. federal regulations. Furthermore, state data breach notification laws continue to expand the type of protected health information and other personal information they encompass, and in many cases are more burdensome than the HIPAA/HITECH breach reporting requirements.

Regulations related to conflict minerals may cause Rockley to incur additional expenses and could limit the supply and increase the costs of certain metals used in the manufacturing of its products.


	Years Ended December 31,				Change
	2022		2021		$		%

Research and development expenses	$	103,095	$	72,573	$	30,522		42	%

AsResearch ~~a public company, Rockley is subject to the requirements under the Dodd-Frank Wall Street Reform~~ and ~~Consumer~~development ~~Protection~~expenses ~~Act~~increased ofby ~~2010~~$30.5 million, or ~~the Dodd-Frank Act~~42%, ~~that will require it~~ to ~~determine, disclose, and report whether its products contain conflict minerals~~$103.1 million ~~The~~for ~~implementation of these requirements could adversely affect~~ the ~~sourcing,~~year ~~availability~~December 31, ~~and~~2022 ~~pricing~~from of$72.6 million ~~the~~for ~~materials used in~~ the ~~manufacture~~year ofended ~~components~~December 31, ~~used in Rockley’s products~~2021. InThe ~~addition,~~increase ~~Rockley~~was ~~will~~primarily ~~incur~~attributable ~~additional costs~~ to ~~comply~~an ~~with~~increase ~~the disclosure requirements, including costs related to conducting diligence procedures to determine the sources of conflict minerals that may be used~~ in orstock-based ~~necessary~~compensation toexpenses ~~the production~~ of ~~its products and~~$1.7 million, ifhigher ~~applicable,~~IT ~~potential~~infrastructure ~~changes~~costs toof ~~products~~$1.4 million, ~~processes,~~higher orthird ~~sources~~party ofengineering ~~supply~~costs ~~as a consequence~~ of ~~such verification activities~~$5.1 million Itand isa ~~also~~decrease ~~possible~~in ~~that~~allocation ~~its~~of ~~reputation~~expenses ~~may be adversely affected if Rockley determines that certain~~ of ~~its products contain minerals not determined to be conflict-free~~$7.9 ormillion ~~if Rockley is unable~~ to ~~alter~~R&D ~~its~~and ~~products,~~a ~~processes,~~decrease orin ~~sources~~the ofR&D ~~supply~~tax tocredit ~~avoid use~~ of ~~such materials~~$16.6 million.

~~Risks~~42 ~~Related to Rockley’s Intellectual Property~~

DespiteTable theof actions Rockley is taking to defend and protect its intellectual property, Rockley may not be able to adequately protect or enforce its intellectual property rights or prevent unauthorized parties from copying or reverse engineering its products or technology. Rockley’s efforts to protect and enforce its intellectual property rights and prevent third parties from violating its rights may be costly.Contents

~~The~~Research ~~success~~and development expense consists primarily of ~~Rockley’s~~talent ~~products~~costs for engineers and ~~its~~third ~~business~~parties ~~depend~~engaged in ~~part~~the ondesign ~~Rockley’s~~and ~~ability~~development toof ~~obtain~~products, ~~patents~~software, and ~~other~~technologies, ~~intellectual~~including ~~property~~salary, ~~rights~~bonus, and ~~maintain~~stock-based ~~adequate~~compensation ~~legal~~expense, ~~protection~~project ~~for~~material ~~its~~costs, ~~products~~services, inand ~~the~~depreciation ~~United States~~of our research and ~~other~~development ~~international~~facilities ~~jurisdictions~~and equipment. ~~Rockley~~We ~~relies~~expense onresearch aand ~~combination~~development ofcosts ~~patent,~~as ~~trademark,~~they are incurred. Research and ~~trade~~development ~~secret~~expense ~~laws,~~also asincludes ~~well~~the asresearch ~~confidentiality~~and ~~procedures~~development tax credits that we are able to claim in accordance with the relevant U.K. tax legislation. These tax credits are payable to us in cash and ~~contractual~~are ~~restrictions,~~carried on the consolidated balance sheets at the amount claimed and expected to ~~establish~~be received from the U.K. government within the next 12 months. We proactively manage research and ~~protect~~development ~~its~~expense ~~proprietary~~whilst ~~rights,~~remaining ~~all~~focused ofin ~~which~~the ~~provide~~development ~~only~~of ~~limited~~our ~~protection~~products and technology.

AsOther ~~of December 31~~income, ~~2021,~~net ~~Rockley had 192 issued and allowed patents and 90 other patent applications pending~~ (in the United States and 81 patents in foreign jurisdictions. The 192 issued and allowed patents in the United States expire in the years beginning in 2022 through 2040. The 81 patents in foreign jurisdictions include 51 in the United Kingdomthousands, 26except infor ~~China,~~percentages) ~~1 in Europe, and 3 in Japan, and they expire in the years beginning 2027 through 2039. Many of Rockley’s issued patents and pending patent applications relate to sensors and sensor chips.~~

Rockley cannot assure you that any patents will be issued with respect to its currently pending patent applications or that any trademarks will be registered with respect to its currently pending applications in a manner that gives Rockley adequate defensive protection or competitive advantages, if at all, or that any patents issued to Rockley or any trademarks registered by it will not be challenged, invalidated, or circumvented. Rockley may file for patents and trademarks in the United States and in certain international jurisdictions, but such protections may not be available in all countries in which it operates or in which Rockley seeks to enforce its intellectual property rights, or may be difficult to enforce in practice. For example, the legal environment relating to intellectual property protection in certain emerging market countries where Rockley may operate in the future is relatively weaker, often making it difficult to create and enforce such rights. Rockley’s currently registered trademarks and any patents and trademarks that may be issued or registered, as applicable, in the future with respect to pending or future applications may not provide sufficiently broad protection or may not prove to be enforceable in actions against alleged infringers. Rockley cannot be certain that the steps it has taken will prevent unauthorized use of its technology or the reverse engineering of its technology. Moreover, others may independently develop technologies that are competitive to Rockley or infringe Rockley’s intellectual property.


	Years Ended December 31,					Change
	2022			2021		$			%
Other income, net	$	(348	)	$	2,860	$	(3,208	)		(112	)%

42The decrease in other income, net, for the year ending December 31, 2022 compared to the year ending December 31, 2021, is attributable to the absence of the forgiveness of Paycheck Protection Program debt and related accrued interest which only occurred in fiscal 2021.

~~Table~~Interest ofExpense, ~~Contents~~net (in thousands, except for percentages)

Protecting against the unauthorized use of Rockley’s intellectual property, products, and other proprietary rights is expensive and difficult, particularly internationally. Unauthorized parties may attempt to copy or reverse engineer Rockley’s sensing technology or certain aspects of Rockley’s products or manufacturing processes that it considers proprietary. Litigation may be necessary in the future to enforce or defend Rockley’s intellectual property rights, to prevent unauthorized parties from copying or reverse engineering its products, or technology to determine the validity and scope of the proprietary rights of others or to block the importation of infringing products into the United States.


	Years Ended December 31,						Change
	2022			2021			$			%
Interest expense, net	$	(14,697	)	$	(4,781	)	$	(9,916	)		207	%

~~Any~~The ~~such~~change ~~litigation,~~in ~~whether~~interest ~~initiated~~expense, net by ~~Rockley~~$9.9 million, or ~~a third party~~207%, ~~could~~for ~~result~~the inyears ~~substantial~~ended ~~costs and diversion of management resources~~December 31, ~~either~~2022 ofand ~~which could adversely affect Rockley’s business~~December 31, ~~operating results~~2021, ~~and~~respectively ~~financial~~was ~~condition.~~primarily ~~Even~~due ifto itthe ~~obtains~~interest ~~favorable~~expense ~~outcomes~~recorded in ~~litigation,~~fiscal ~~Rockley~~2022 ~~may~~due ~~not be able~~ to ~~obtain~~the ~~adequate~~imputed ~~remedies,~~interest ~~especially~~expense infrom the ~~context~~2020 ofTerm ~~unauthorized~~Facility ~~parties~~Loan ~~copying~~and orinterest ~~reverse~~on ~~engineering~~the ~~its~~May ~~products~~and orOctober ~~technology~~Notes.

~~Further,~~Interest ~~many~~income ofconsists ~~Rockley’s~~primarily current and potential competitors have the ability to dedicate substantially greater resources to defending intellectual property infringement claims and to enforcing their intellectual property rights than Rockley has. Attempts to enforce its rights against third parties could also provoke these third parties to assert their own intellectual property or other rights against Rockley or result in a holding that invalidates or narrows the scope of ~~Rockley’s~~interest ~~rights,~~received ~~in whole~~ or inearned ~~part.~~on ~~Effective~~our ~~patent~~cash, ~~trademark,~~cash ~~service mark~~equivalents, ~~copyright,~~ and ~~trade~~investment ~~secret~~balances ~~protection~~held ~~may not be available~~ in ~~every~~interest-bearing ~~country~~deposit inaccounts. ~~which~~Interest ~~Rockley’s~~expense ~~products~~consists ~~are~~of ~~available~~interest ~~and~~paid ~~competitors based in other countries may sell infringing products in one~~ or ~~more~~accrued ~~markets.~~on ~~Failure~~our toTerm ~~adequately~~Facility ~~protect~~Loan ~~Rockley’s intellectual property rights could result in Rockley’s competitors offering similar products, potentially resulting in the loss of some of Rockley’s competitive advantage~~ and aMay ~~decrease in its revenue, which would adversely affect Rockley’s business, operating results, financial condition,~~ and ~~prospects~~October Notes.

~~Third-party~~Equity ~~claims~~Method ~~that~~Investment ~~Rockley~~Loss is(in ~~infringing intellectual property~~thousands, ~~whether~~except ~~successful~~for orpercentages) ~~not, could subject Rockley to costly and time-consuming litigation or expensive licenses, and its business could be adversely affected.~~

Although Rockley has applied for patents related to its products and technology, a number of companies hold patents covering aspects of sensing and photonic chip technologies. In addition to these patents, participants in this industry typically also protect their technology, especially embedded software, through copyrights and trade secrets. As a result, there is frequent litigation based on allegations of infringement, misappropriation, or other violations of intellectual property rights. Rockley may in the future receive inquiries from other intellectual property holders and may become subject to claims that it infringes their intellectual property rights, particularly as Rockley expands its presence in the market, expands to new use cases, and faces increasing competition. In addition, parties may claim that the names and branding of Rockley’s products infringe their trademark rights in certain countries or territories. If such a claim were to prevail, Rockley may have to change the names and branding of its products in the affected territories and it could incur other costs.


	Years Ended December 31,						Change
	2021			2020			$		%
Equity method investment loss	$	(523	)	$	(703	)	$	180		(26	)%

~~Rockley~~Change ~~currently has a number of agreements~~ in ~~effect~~equity ~~pursuant~~method toinvestment ~~which~~captures itour ~~has~~share agreed to defend, indemnify, and hold harmless its customers, suppliers, and channel partners and other counterparties from damages and costs which may arise from the infringement by Rockley’s products of ~~third-party patents~~losses ~~or other intellectual property rights. The scope~~ of ~~these~~the ~~indemnity~~investment ~~obligations varies, and,~~ in ~~some~~HRT ~~instances,~~according include indemnification for damages and expenses, including attorneys’ fees. Rockley’s insurance may not cover all intellectual property infringement claims. A claim that its products infringe a third party’s intellectual property rights, even if untrue, could adversely affect Rockley’s relationships with its customers, may deter future customers from purchasing its products, and could expose Rockley to ~~costly~~our ~~litigation~~percentage and settlement expenses. Even if Rockley is not a party to any litigation between a customer and a third party relating to infringement by its products, an adverse outcome in any such litigation could make it more difficult for Rockley to defend its products against intellectual property infringement claims in any subsequent litigation in which it is a named party. Any of ~~these results could adversely affect Rockley’s brand and operating results~~ownership.

~~Rockley~~Change ~~may~~ in ~~the~~Fair ~~future~~Value ~~need to initiate infringement claims or litigation to try to protect its intellectual property rights. In addition to litigation where Rockley is a plaintiff, Rockley’s defense~~ of ~~intellectual~~Debt ~~property~~Instruments ~~rights~~(in ~~claims brought against it or its customers~~thousands, ~~suppliers,~~except ~~and~~for ~~channel~~percentages) partners, with or without merit, could be time-consuming, expensive to litigate or settle, divert management resources and attention, and force Rockley to acquire intellectual property rights and licenses, which may involve substantial royalty or other payments and may not be available on acceptable terms or at all. Further, a party making such a claim, if successful, could secure a judgment that requires Rockley to pay substantial damages or obtain an injunction and also Rockley may lose the opportunity to license its technology to others or to collect royalty payments. An adverse determination also could invalidate or narrow Rockley’s intellectual property rights and adversely affect its ability to offer its products to its customers and may require that Rockley procure or develop substitute products that do not infringe, which could require significant effort and expense. Any of these events could adversely affect Rockley’s business, reputation, operating results, financial condition, and prospects.


	Years Ended December 31,						Change
	2022			2021			$			%
Change in fair value of debt instruments	$	(73,361	)	$	(59,916	)	$	(13,445	)		22	%

~~Table~~43 ~~of Contents~~

Rockley’sTable intellectualof property applications, including patent applications, may not be approved or granted or may take longer than expected to result in approval or grant, which may have a material adverse effect on Rockley’s ability to prevent others from commercially exploiting products similar to Rockley’s.Contents

~~Rockley~~Change ~~cannot~~in befair ~~certain~~value ~~that it is the first inventor~~ of ~~the~~debt ~~subject~~instruments ~~matter~~captures tolosses ~~which~~from ~~it has filed~~ a ~~particular~~change patent application, or if it is the first party to file such a patent application. If another party has filed a patent application to the same subject matter as Rockley has, Rockley may not be entitled to the protection sought by the patent application. Rockley also cannot be certain whether the claims included in afair ~~patent~~value ~~application~~estimates ~~will~~using ~~ultimately~~discounted becash ~~allowed~~flow inand ~~the~~binomial ~~applicable~~lattice ~~issued~~methodologies ~~patent~~that orare ~~the~~based ~~timing~~upon ~~of any approval or grant of~~ a ~~patent~~set ~~application. Further, the scope~~ of ~~protection~~valuation ofassumptions ~~issued patent claims is often difficult~~ to ~~determine.~~value ~~As a result, Rockley cannot be certain that~~ the ~~patent~~May applications that it files will issue, or that its issued patents will afford protection against competitors with similar technology. In addition, Rockley’s competitors may design around Rockley’s registered or issued intellectual property, which may adversely affect Rockley’s business, prospects, financial condition, and ~~operating~~October ~~results~~Notes.

InAll ~~addition~~convertible debt instruments held by the Company prior to ~~patented~~the ~~technology,~~Business ~~Rockley~~Combination ~~relies~~in onAugust ~~its~~2021 ~~unpatented~~were ~~proprietary~~converted ~~technology,~~to ~~trade~~ordinary ~~secrets,~~shares ~~designs,~~in ~~experiences,~~the ~~workflows,~~Company ~~data,~~as ~~processes,~~part ~~software,~~of ~~and~~the ~~know-how~~close of the Business Combination in August 2021.

~~Rockley~~Change relies on proprietary information (such as trade secrets, designs, experiences, workflows, data, know-how, and confidential information) to protect intellectual property that may not be patentable or subject to copyright, trademark, trade dress, or service mark protection, or that Rockley believes is best protected by means that do not require public disclosure. Rockley generally seeks to protect this proprietary information by entering into confidentiality agreements, or consulting, services, or employment agreements that contain non-disclosure and non-use provisions with its employees, consultants, contractors, and third parties. However, these agreements may be breached or may otherwise fail to prevent disclosure, third-party infringement, or misappropriation of its proprietary information, may be limited as to their term, and may not provide an adequate remedy in ~~the~~Fair ~~event~~Value of ~~unauthorized~~Warrant ~~disclosure~~Liabilities or use of proprietary information. Rockley has limited control over the protection of trade secrets used by its current or future manufacturing counterparties and suppliers and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, Rockley’s proprietary information may otherwise become known or be independently developed by its competitors or other third parties. To the extent that its employees, consultants, contractors, advisors, and other third parties use intellectual property owned by others (in ~~their work for Rockley~~thousands, ~~disputes~~except may arise as to the rights in related or resulting know-how and inventions. Costly and time-consuming litigation could be necessary to enforce and determine the scope of Rockley’s proprietary rights, and failure to obtain or maintain protection for ~~its~~percentages) proprietary information could adversely affect its competitive business position. Furthermore, laws regarding trade secret rights in certain markets where Rockley operates may afford little or no protection to its trade secrets.

Rockley also relies on physical and electronic security measures to protect its proprietary information, but it cannot provide assurance that these security measures will not be breached or provide adequate protection for its property. There is a risk that third parties may obtain and improperly utilize Rockley’s proprietary information to its competitive disadvantage. Rockley may not be able to detect or prevent the unauthorized use of such information or take appropriate and timely steps to enforce its intellectual property rights.


	Years Ended December 31,				Change
	2022		2021		$		%
Change in fair value of warrant liabilities		44,138	$	10,827	$	33,311		308	%

~~Rockley~~Change ~~may~~in befair ~~subject~~value toof ~~damages~~warrant ~~resulting~~liabilities captures activity from ~~claims~~a ~~that~~change itin orfair ~~its~~value ~~current~~estimates orbased ~~former~~upon ~~employees~~a ~~have~~set ~~wrongfully~~of ~~used~~Black-Scholes valuation assumptions or ~~disclosed~~binomial ~~alleged~~lattice ~~trade~~methodologies. ~~secrets~~The warrant liabilities include the Private Placement Warrants assumed from SC Health as part of ~~its~~the ~~current~~Business orCombination ~~former~~in ~~employees’~~August ~~former~~2021 ~~employers.~~and ~~Rockley~~the ~~may~~May be144A ~~subject~~Warrants toissued ~~damages~~by ifthe ~~its~~Company ~~current~~in orMay ~~former~~2022 ~~employees~~and ~~wrongfully~~the ~~use~~October or144A ~~disclose~~Warrants ~~Rockley’s~~issued ~~trade~~by ~~secrets~~the Company in October 2022.

~~Rockley~~Gain ~~may~~(Loss) beon ~~subject~~Foreign toCurrency claims that it or its current or former employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of a current or former employee’s former employers. Litigation may be necessary to defend against these claims. If Rockley fails to defend against such claims, (in ~~addition to paying monetary damages~~thousands, itexcept ~~may~~for ~~lose~~percentages) valuable intellectual property rights or talent. A loss of key talent or their work product could hamper or prevent Rockley’s ability to commercialize its products, which could severely harm its business. Even if Rockley is successful in defending against these claims, litigation could result in substantial costs and demand on management resources.

Risks Related to Infrastructure, Cybersecurity and Privacy


	Years Ended December 31,					Change
	2022			2021		$			%
Gain (loss) on foreign currency	$	(5,905	)	$	119	$	(6,024	)		(5,062	)%

AChange ~~network~~in orgain ~~data~~(loss) ~~security~~on ~~incident~~foreign ~~may~~currency ~~allow~~captures ~~unauthorized~~losses ~~access~~from tothe ~~Rockley’s~~impact ~~network~~of orforeign ~~data~~currency exchange rates as a result of the translation of foreign functional currencies into our reporting currency and the re-measurement of foreign currency transactions and balances. For the years ended December 31, ~~harm~~2022 ~~its~~and ~~reputation~~2021, ~~create~~most ~~additional~~of ~~liability~~our balances are held in the reporting currency, ~~and~~which ~~adversely~~decrease the impact ~~its~~of ~~financial~~foreign currency fluctuations on the results of our operations.

~~Rockley~~Provision ~~and~~for ~~its~~Income ~~third-party~~Tax ~~service~~(in ~~providers may face security threats and attacks from a variety of sources. In addition to traditional computer “hackers~~thousands,” ~~malicious~~except ~~code~~for ~~(such as viruses and worms~~percentages), ~~phishing attempts, employee theft or misuse,~~


	Years Ended December 31,				Change
	2022		2021		$		%
Provision for income tax	$	3,504	$	667	$	2,837		425	%

~~Table~~Change in provision for income tax expense for the years ended December 31, 2022 and 2021 is due primarily to changes in U.S. tax laws which required capitalization of ~~Contents~~certain research and development expenditures for tax purposes. Our effective tax rate differs from the U.K. statutory rate primarily due to a substantially full valuation allowance against our net deferred tax assets where it is more likely than not that some or all of the deferred tax assets will not be realized. The income tax expenses shown above are primarily related to corporate income taxes in the United States, which operates on a cost-plus arrangement and minimum filing fees in the foreign jurisdictions where we have operations.

~~and~~Liquidity ~~denial of service attacks, sophisticated nation-state~~ and ~~nation-state~~Capital ~~supported~~Resources actors engage in attacks (including advanced persistent threat intrusions) and increase the risks to Rockley’s internal networks and customer facing environments and the information they store and process. These risks may increase due to COVID-19. A breach in Rockley’s data or an attack against its service availability, or that of its third-party service providers, could impact Rockley’s networks, creating system disruptions or slowdowns and exploiting security vulnerabilities of Rockley’s products, and the information stored on Rockley’s networks or those of its third-party service providers could be accessed, publicly disclosed, altered, lost, or stolen, which could subject Rockley to liability and cause it financial harm.

~~Unauthorized~~Due ~~access by a third party~~ to Rockley’s ~~internal~~history ~~network, any actual or perceived breach~~ of ~~network~~recurring ~~security~~losses infrom ~~its systems or networks~~operations, ~~or any other actual or perceived data security incident Rockley or its third-party service providers suffer, could result in damage to its reputation,~~ negative ~~publicity,~~cash ~~loss~~flows offrom ~~channel partners~~operations, ~~end-customers~~ and ~~sales,~~a ~~loss~~significant ofaccumulated ~~competitive advantages over its competitors~~deficit, ~~increased costs to remedy any problems~~ and ~~otherwise~~the ~~respond~~Chapter to11 ~~any~~bankruptcy ~~incident,~~petition ~~regulatory~~filed ~~investigations~~in ~~and~~January ~~enforcement actions~~2023, ~~costly~~management ~~litigation,~~concluded ~~and~~that ~~other~~there ~~liability.~~is Insubstantial ~~addition,~~doubt ~~Rockley~~about ~~may incur significant costs to investigate and remediate any security breaches and other security incidents.~~ Rockley’s ~~data,~~ability ~~corporate systems, third-party systems, and security measures may be breached due~~ to ~~the~~continue ~~actions~~as ofa ~~outside~~going ~~parties,~~concern. ~~employee~~In ~~error~~addition, ~~malfeasance,~~our aindependent ~~combination~~registered ofpublic ~~these,~~accounting orfirm ~~otherwise,~~has ~~and,~~included ~~as a result,~~ an ~~unauthorized~~explanatory ~~party~~paragraph ~~may~~in ~~obtain~~their ~~access~~opinion ~~to its~~for ~~data.~~the ~~For~~year ~~example,~~ended ~~in late 2020~~December 31, ~~Rockley~~2022 ~~was~~as ~~subject~~ to ~~phishing~~the ~~attacks,~~substantial ~~one~~doubt ~~involving~~about aour ~~spoofed~~ability ~~email whereby certain vendor account information was charged and payment was made~~ to acontinue ~~fraudulent~~as ~~account and~~ a ~~second~~going ~~closely timed incident where a “forwarding” rule was applied to the spoofed email’s recipient~~concern. ~~While~~Since ~~no personal data was accessed and the issue was addressed~~inception, ~~the incident resulted in a net loss of approximately $66,345, which loss has been accounted for in~~ Rockley’s ~~2020 financial statements (which amount~~ has ~~been~~financed ~~offset~~its byoperations aprimarily ~~payout~~through ~~under~~the ~~our~~issuance ~~cybersecurity~~and ~~insurance~~sale ~~policy~~of inconvertible ~~March~~loan ~~2021). While Rockley maintains cybersecurity insurance~~notes, ~~such~~ordinary ~~insurance~~shares ~~may be insufficient to cover all liabilities incurred by these incidents,~~ and ~~any~~agreed-upon ~~incidents may result in loss or increased costs of its cybersecurity insurance~~projects. ~~Any~~As of ~~these~~December 31, ~~negative~~2022, ~~outcomes could adversely impact~~ the ~~market~~Company ~~perception~~had ofcash, cash equivalents and ~~investor~~investments ~~confidence~~of ~~in,~~approximately ~~Rockley~~$23.0 million.

~~Any~~44 ~~disruption or performance issues with Rockley’s network infrastructure could harm its brand, reputation, and business.~~

RockleyTable has experienced, and may in the future experience, disruptions, outages, and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, capacity constraints, and fra

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