What changed in this filing

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Item 1A. Risk Factors

2024-07-15 compared with 2023-06-28 · 289 added, 247 removed, 6 unchanged (99% of the section changed)

You should carefully consider the risk factors described

If any of the following risk factors actually occur, our business, prospects, financial condition or results of operations would

likely suffer.

In such case, the trading price of our common stock could fall, resulting in the loss of all or part of your investment.

should carefully consider the risk factors described below.

If any of the following risk factors actually occur, our business, prospects,

financial condition or results of operations would likely suffer.

In such case, the trading price of our common stock could fall, resulting

in the loss of all or part of your investment.

You should look at all these risk factors in total.

Some risk factors may stand on their own.

Some risk factors may affect (or be affected

by) other risk factors.

Some risk factors may stand on their

Some risk factors may affect (or be affected by) other risk factors.

You should not assume we have identified these connections.

You should not assume that we will always update these

and future risk factors in a timely manner.

We are not undertaking any obligation to update these risk factors to reflect events or circumstances

after the date of this report or to reflect the occurrence of unanticipated events.

Among the factors that could cause future results

and financial condition to be materially different from expectations are:

We are monitoring the ongoing

outbreak of Covid-19, and the related mandated precautions to mitigate the spread of the disease, including various business

restrictions and its impact on operations, financial position, cash flow, inventory, supply chains, purchasing trends, customer

payments, the industry in general and its impact on our employees.

The impact of the disease and related public health measures is

highly uncertain, cannot be predicted, and will dependent upon future developments.

During the 2023 and 2022 fiscal years, our

operations were still significantly negatively impacted by Covid-19.

This reduction was primarily due to a significant reduction in

elective surgical procedures due to Covid-19, which reduced demand for our products.

Our products may not be accepted by the market .

The success of our products and our financial condition depends on the acceptance of AEM products by the medical community in commercially

viable quantities during fiscal year 2023 and beyond.

We cannot predict how quickly or how broadly AEM products will be accepted by the

medical community.

We need to continually educate the marketplace about the potential hazards involved in the use of conventional electrosurgical

products during MIS procedures and the expected benefits associated with the use of AEM products.

If we are unsuccessful in educating

the marketplace about our technology and the hazards of conventional instruments, we will not create sufficient demand by hospitals and

surgeons for AEM products and our financial condition, results of operations and cash flows could be adversely affected.

We need to continually develop and train our network

of direct and independent sales representatives and expand our distribution efforts in order to be successful.

Our attempts to develop

and train a network of direct and independent sales representatives in the U.S.

and to expand our international distribution efforts may

take longer than expected and may result in considerable amounts of retraining effort as the direct and independent sales representatives

change their product lines, product focus and personnel.

We may not be able to obtain full coverage of the U.S.

by direct and independent

sales representatives as quickly as anticipated.

The independent sales representative network has inherent flaws and inefficiencies, which

can include conflicts of interest and competing products.

Optimizing the quality of the network and the performance of direct and independent

sales representatives in the U.S.

You should not assume that we will always update these and future risk factors in a timely manner.

We are not undertaking any obligation

to update these risk factors to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated

the factors that could cause future results and financial condition to be materially different from expectations are:

products may not be accepted by the market .

The success of our products and our financial condition depends on the acceptance of

AEM products by the medical community in commercially viable quantities during fiscal year 2024 and beyond.

We cannot predict how quickly

or how broadly AEM products will be accepted by the medical community.

We need to continually educate the marketplace about the potential

hazards involved in the use of conventional electrosurgical products during MIS procedures and the expected benefits associated with

the use of AEM products.

If we are unsuccessful in educating the marketplace about our technology and the hazards of conventional instruments,

we will not create sufficient demand by hospitals and surgeons for AEM products and our financial condition, results of operations and

cash flows could be adversely affected.

need to continually develop and train our network of direct and independent sales representatives and expand our distribution efforts

in order to be successful.

Our attempts to develop and train a network of direct and independent sales representatives in the U.S.

and to expand our international distribution efforts may take longer than expected and may result in considerable amounts of retraining

effort as the direct and independent sales representatives change their product lines, product focus and personnel.

We may not be able

to obtain full coverage of the U.S.

by direct and independent sales representatives as quickly as anticipated.

The independent sales

representative network has inherent flaws and inefficiencies, which can include conflicts of interest and competing products.

the quality of the network and the performance of direct and independent sales representatives in the U.S.

is an ongoing challenge.

We may also encounter difficulties in developing our international presence

due to regulatory issues and our ability to successfully develop international distribution options.

Our inability to expand our network

of direct and independent sales representatives and optimize their performance could adversely affect our financial results.

We may need additional funding to support our operations.

We were formed in 1991 and have incurred losses of approximately $22 million since that date.

We have primarily financed research, development

and operational activities with issuances of our common stock and warrants, the exercise of stock options to purchase our common stock,

loans, and, in some years, by operating profits.

For the fiscal year ended March 31, 2023, our cash used in operations was $861,000.

March 31, 2023, we had cash and equivalents of $182,000.

If we are unable to maintain cash flows sufficient to support ongoing operations,

we will need to seek additional financing.

There is no assurance that we will be able to raise additional capital on acceptable terms

If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our

existing stockholders could be diluted, and these newly issued securities may have rights, preferences or privileges senior to those of

existing stockholders.

If we raise additional funds through debt financing, which may involve restrictive covenants, our ability to operate

our business may be restricted.

If adequate funds are not available or are not available on acceptable terms, if and when needed, our

ability to fund our operations, our business, results of operations and financial condition could be materially and adversely affected.

We may not be able to compete successfully against

current manufacturers of conventional (“unshielded, unmonitored”) electrosurgical instruments or against competitors who manufacture

products that are based on surgical technologies that are alternatives to monopolar electrosurgery.

The electrosurgical products market

is intensely competitive.

We expect that manufacturers of “unshielded, unmonitored” electrosurgical instruments will resist

any loss of market share that might result from the presence of our “shielded and monitored” instruments in the marketplace.

We also believe that manufacturers of products that are based upon surgical technologies that are alternatives to monopolar electrosurgery

are our competitors.

These technologies include bipolar electrosurgery, the harmonic scalpel and lasers.

The alternative technologies

may gain market share and new competitive technologies may be developed and introduced.

Most of our competitors and potential competitors

have significantly greater financial, technical, product development, marketing and other resources than we do.

Most of our competitors

also currently have substantial customer bases in the medical products market and have significantly greater market recognition than we

As a result of these factors, our competitors may be able to respond more quickly to new or emerging technologies and changes in

customer requirements or to devote greater resources to the development, promotion and sale of their products.

It is possible that new

competitors or new alliances among competitors may emerge and rapidly acquire significant market share.

The competitive pressures we face

may materially adversely affect our financial position, results of operations and cash flows, and this may hinder our ability to respond

to competitive threats.

If we do not continually enhance our products and

keep pace with rapid technological changes, we may not be able to attract and retain customers.

Our future success and financial performance

will depend in part on our ability to meet the increasingly sophisticated needs of customers through the timely development and successful

introduction of product upgrades, enhancements and new products.

These upgrades, enhancements and new products are subject to significant

technological risks.

The medical device market is subject to rapid technological change, resulting in frequent new product introductions

and enhancements of existing products, as well as the risk of product obsolescence.

While we are currently developing new products and

enhancing our existing product lines, we may not be successful in completing the development of new products or enhancements.

we must respond effectively to technological changes by continuing to enhance our existing products to incorporate emerging or evolving

We may not be successful in developing and marketing product enhancements or new products that respond to technological changes

or evolving industry standards.

We may experience difficulties that could delay or prevent the successful development, introduction and

marketing of those products, and our new products and product enhancements may not adequately meet the requirements of the marketplace

and achieve commercially viable levels of market acceptance.

If any potential new products, upgrades, or enhancements are delayed, or

if any potential new products, upgrades, or enhancements experience quality problems or do not achieve market acceptance, or if new products

make our existing products obsolete, our financial position, results of operations and cash flows would be materially adversely affected.

If government regulations change or if we fail

to comply with existing and/or new regulations, we might miss market opportunities and experience increased costs and limited growth.

The research, development, manufacturing, marketing and distribution of our products in the United States and other countries are

subject to extensive regulation by numerous governmental authorities including, but not limited to, the Food and Drug Administration.

Under the Federal Food, Drug and Cosmetic Act, medical devices must receive clearance from the Food and Drug Administration through the

Section 510(k) pre-market notification process or through the lengthier pre-market approval process before they can be sold in the United

The process of obtaining required regulatory approvals is lengthy and has required the expenditure of substantial resources.

can be no assurance that we will be able to continue to obtain the necessary approvals.

As part of our strategy, we also intend to pursue

commercialization of our products in international markets.

Our products are subject to regulations that vary from country to country.

The process of obtaining foreign regulatory approvals in certain countries can be lengthy and require the expenditure of substantial resources.

We may not be able to obtain necessary regulatory approvals or clearances on a timely basis or at all, and delays in receipt of or failure

to receive such approvals or clearances, or failure to comply with existing or future regulatory requirements would have a material adverse

effect on our financial position, results of operations and cash flows.

Tariffs will increase our material costs and, if they are fully

absorbed by us, then they will negatively affect our gross profit margins.

If we fail to comply with the extensive regulatory

requirements governing the manufacturing of our products, we could be subject to fines, suspensions or withdrawals of regulatory approvals,

product recalls, suspension of manufacturing, operating restrictions and/or criminal prosecution.

The manufacturing of our products

is subject to extensive regulatory requirements administered by the Food and Drug Administration and other regulatory agencies.

of our manufacturing facilities and processes can be conducted at any time, without prior notice, by the Food and Drug Administration

and such regulatory agencies.

In addition, future changes in regulations or interpretations made by the Food and Drug Administration or

other regulatory agencies, with possible retroactive effect, could adversely affect us.

Changes in existing regulations or adoption of

new regulations or policies could prevent us from obtaining, or affect the timing of, future regulatory approvals or clearances.

not be able to obtain necessary regulatory approvals or clearances on a timely basis in the future, or at all.

Delays in receipt of, failure

to receive such approvals or clearances and/or failure to comply with existing or future regulatory requirements would have a material

adverse effect on our financial position, results of operations and cash flows.

Our current patents, trade secrets and know-how

may not provide a competitive advantage, the pending applications may not result in patents being issued, and our competitors may design

around any patents issued to us.

Our success will continue to depend in part on our ability to maintain patent protection for our

products and processes, to preserve our trade secrets and to operate without infringing the proprietary rights of third parties.

16 issued U.S.

patents on several technologies embodied in our AEM Monitoring system, AEM instruments and related accessories and we have

applied for additional U.S.

may also encounter difficulties in developing our international presence due to regulatory issues and our ability to successfully develop

international distribution options.

Our inability to expand our network of direct and independent sales representatives and optimize

their performance could adversely affect our financial results.

may need additional funding to support our operations.

We were formed in 1991 and have incurred losses of approximately $22 million

since that date.

We have primarily financed research, development and operational activities with issuances of our common stock and warrants,

the exercise of stock options to purchase our common stock, loans, and, in some years, by operating profits.

For the fiscal year ended

March 31, 2024, our cash provided by operations was $144,000.

At March 31, 2024, we had cash and equivalents of $43,000.

If we are unable

to maintain cash flows sufficient to support ongoing operations, we will need to seek additional financing.

There is no assurance that

we will be able to raise additional capital on acceptable terms or at all.

If we raise additional funds through the issuance of equity

or convertible debt securities, the percentage ownership of our existing stockholders could be diluted, and these newly issued securities

may have rights, preferences or privileges senior to those of existing stockholders.

If we raise additional funds through debt financing,

which may involve restrictive covenants, our ability to operate our business may be restricted.

If adequate funds are not available or

are not available on acceptable terms, if and when needed, our ability to fund our operations, our business, results of operations and

financial condition could be materially and adversely affected.

may not be able to compete successfully against current manufacturers of conventional (“unshielded, unmonitored”) electrosurgical

instruments or against competitors who manufacture products that are based on surgical technologies that are alternatives to monopolar

electrosurgery.

The electrosurgical products market is intensely competitive.

We expect that manufacturers of “unshielded,

unmonitored” electrosurgical instruments will resist any loss of market share that might result from the presence of our “shielded

and monitored” instruments in the marketplace.

We also believe that manufacturers of products that are based upon surgical technologies

that are alternatives to monopolar electrosurgery are our competitors.

These technologies include bipolar electrosurgery, the harmonic

scalpel and lasers.

The alternative technologies may gain market share and new competitive technologies may be developed and introduced.

Most of our competitors and potential competitors have significantly greater financial, technical, product development, marketing and

other resources than we do.

Most of our competitors also currently have substantial customer bases in the medical products market and

have significantly greater market recognition than we have.

As a result of these factors, our competitors may be able to respond more

quickly to new or emerging technologies and changes in customer requirements or to devote greater resources to the development, promotion

and sale of their products.

It is possible that new competitors or new alliances among competitors may emerge and rapidly acquire significant

market share.

The competitive pressures we face may materially adversely affect our financial position, results of operations and cash

flows, and this may hinder our ability to respond to competitive threats.

we do not continually enhance our products and keep pace with rapid technological changes, we may not be able to attract and retain customers.

Our future success and financial performance will depend in part on our ability to meet the increasingly sophisticated needs of customers

through the timely development and successful introduction of product upgrades, enhancements and new products.

These upgrades, enhancements

and new products are subject to significant technological risks.

The medical device market is subject to rapid technological change,

resulting in frequent new product introductions and enhancements of existing products, as well as the risk of product obsolescence.

we are currently developing new products and enhancing our existing product lines, we may not be successful in completing the development

of new products or enhancements.

In addition, we must respond effectively to technological changes by continuing to enhance our existing

products to incorporate emerging or evolving standards.

We may not be successful in developing and marketing product enhancements or

new products that respond to technological changes or evolving industry standards.

We may experience difficulties that could delay or

prevent the successful development, introduction and marketing of those products, and our new products and product enhancements may not

adequately meet the requirements of the marketplace and achieve commercially viable levels of market acceptance.

If any potential new

products, upgrades, or enhancements are delayed, or if any potential new products, upgrades, or enhancements experience quality problems

or do not achieve market acceptance, or if new products make our existing products obsolete, our financial position, results of operations

and cash flows would be materially adversely affected.

government regulations change or if we fail to comply with existing and/or new regulations, we might miss market opportunities and experience

increased costs and limited growth.

The research, development, manufacturing, marketing and distribution of our products in the United

States and other countries are subject to extensive regulation by numerous governmental authorities including, but not limited to, the

Food and Drug Administration.

Under the Federal Food, Drug and Cosmetic Act, medical devices must receive clearance from the Food and

Drug Administration through the Section 510(k) pre-market notification process or through the lengthier pre-market approval process before

they can be sold in the United States.

The process of obtaining required regulatory approvals is lengthy and has required the expenditure

of substantial resources.

There can be no assurance that we will be able to continue to obtain the necessary approvals.

As part of our

strategy, we also intend to pursue commercialization of our products in international markets.

Our products are subject to regulations

that vary from country to country.

The process of obtaining foreign regulatory approvals in certain countries can be lengthy and require

the expenditure of substantial resources.

We may not be able to obtain necessary regulatory approvals or clearances on a timely basis

or at all, and delays in receipt of or failure to receive such approvals or clearances, or failure to comply with existing or future

regulatory requirements would have a material adverse effect on our financial position, results of operations and cash flows.

will increase our material costs and, if they are fully absorbed by us, then they will negatively affect our gross profit margins.

we fail to comply with the extensive regulatory requirements governing the manufacturing of our products, we could be subject to fines,

suspensions or withdrawals of regulatory approvals, product recalls, suspension of manufacturing, operating restrictions and/or criminal

The manufacturing of our products is subject to extensive regulatory requirements administered by the Food and Drug

Administration and other regulatory agencies.

Inspection of our manufacturing facilities and processes can be conducted at any time,

without prior notice, by the Food and Drug Administration and such regulatory agencies.

In addition, future changes in regulations or

interpretations made by the Food and Drug Administration or other regulatory agencies, with possible retroactive effect, could adversely

Changes in existing regulations or adoption of new regulations or policies could prevent us from obtaining, or affect the

timing of, future regulatory approvals or clearances.

We may not be able to obtain necessary regulatory approvals or clearances on a

timely basis in the future, or at all.

Delays in receipt of, failure to receive such approvals or clearances and/or failure to comply

with existing or future regulatory requirements would have a material adverse effect on our financial position, results of operations

and cash flows.

current patents, trade secrets and know-how may not provide a competitive advantage, the pending applications may not result in patents

being issued, and our competitors may design around any patents issued to us.

Our success will continue to depend in part on our

ability to maintain patent protection for our products and processes, to preserve our trade secrets and to operate without infringing

the proprietary rights of third parties.

We have 16 issued U.S.

patents on several technologies embodied in our AEM Monitoring system,

AEM instruments and related accessories and we have applied for additional U.S.

In addition, we have four issued foreign patents.

The validity and breadth of claims coverage in

medical technology patents involve complex legal and factual questions and may be highly uncertain.

Also, patents may not protect our

proprietary information and know-how or provide adequate remedies for us in the event of unauthorized use or disclosure of such information,

and others may be able to develop competing technology, independent of such information.

There has been substantial litigation regarding

patent and other intellectual property rights in the medical device industry.

Litigation may be necessary to enforce patents issued to

us, to protect trade secrets or know-how owned by us, to defend us against claimed infringement of the rights of others or to determine

the ownership, scope or validity of our proprietary rights or those of others.

Any such claims may require us to incur substantial litigation

expenses and to divert substantial time and effort of management personnel and could substantially decrease the amount of capital available

for our operations.

An adverse determination in litigation involving the proprietary rights of others could subject us to significant

liabilities to third parties, could require us to seek licenses from third parties, and could prevent us from manufacturing, selling or

using our products.

The occurrence of any such actual or threatened litigation or the effect on our business of such litigation may materially

adversely affect our financial position, results of operations and cash flows.

Additionally, our assessment that a patent is no longer

of value could result in a significant charge against our earnings.

We depend on single source suppliers for certain

of the key components of our products and sub-contractors to provide much of the materials used in the manufacturing of our products.

The loss of a supplier or limitation in supply from existing suppliers could have a material adverse effect on our ability to manufacture

our products until a new source of supply is located.

Although we believe that there are alternative suppliers, any interruption in

the supply of key components could have a material adverse effect on us.

A sudden increase in customer demand may create a backorder situation

as lead times for some of our critical materials are in excess of 16 weeks.

We rely on subcontractors to provide products, either in the

form of finished goods or sub-assemblies that we then assemble and test.

While these sub-contractors reduce our total cost of manufacturing,

they may not be as responsive to increased demand as we would be if we had our manufacturing capacity entirely in-house, which may limit

our growth strategy and sales.

The potential fluctuation in future quarterly results

may cause our stock price to fluctuate.

We expect that our operating results could fluctuate significantly from quarter to quarter

in the future and will depend upon a number of factors, many of which are outside our control.

These factors include the extent to which

our AEM technology and related accessories gain market acceptance;

our investments in marketing, sales, research and development and administrative

personnel necessary to support growth;

our ability to expand our market share;

The validity and breadth of claims coverage in medical technology patents involve complex legal and factual questions and may be highly

Also, patents may not protect our proprietary information and know-how or provide adequate remedies for us in the event of

unauthorized use or disclosure of such information, and others may be able to develop competing technology, independent of such information.

There has been substantial litigation regarding patent and other intellectual property rights in the medical device industry.

may be necessary to enforce patents issued to us, to protect trade secrets or know-how owned by us, to defend us against claimed infringement

of the rights of others or to determine the ownership, scope or validity of our proprietary rights or those of others.

Any such claims

may require us to incur substantial litigation expenses and to divert substantial time and effort of management personnel and could substantially

decrease the amount of capital available for our operations.

An adverse determination in litigation involving the proprietary rights

of others could subject us to significant liabilities to third parties, could require us to seek licenses from third parties, and could

prevent us from manufacturing, selling or using our products.

The occurrence of any such actual or threatened litigation or the effect

on our business of such litigation may materially adversely affect our financial position, results of operations and cash flows.

Additionally,

our assessment that a patent is no longer of value could result in a significant charge against our earnings.

depend on single source suppliers for certain of the key components of our products and sub-contractors to provide much of the materials

used in the manufacturing of our products.

The loss of a supplier or limitation in supply from existing suppliers could have a material

adverse effect on our ability to manufacture our products until a new source of supply is located.

Although we believe that there

are alternative suppliers, any interruption in the supply of key components could have a material adverse effect on us.

A sudden increase

in customer demand may create a backorder situation as lead times for some of our critical materials are in excess of 16 weeks.

on subcontractors to provide products, either in the form of finished goods or sub-assemblies that we then assemble and test.

sub-contractors reduce our total cost of manufacturing, they may not be as responsive to increased demand as we would be if we had our

manufacturing capacity entirely in-house, which may limit our growth strategy and sales.

potential fluctuation in future quarterly results may cause our stock price to fluctuate.

We expect that our operating results could

fluctuate significantly from quarter to quarter in the future and will depend upon a number of factors, many of which are outside our

These factors include the extent to which our AEM technology and related accessories gain market acceptance;

our investments

in marketing, sales, research and development and administrative personnel necessary to support growth;

our ability to expand our market

actions of competitors;

and, general economic conditions.

The market value of our common stock has dramatically fluctuated in the past and is likely to fluctuate in the future.

Any of these factors,

or factors not listed, could have an immediate and significant negative impact on the market price of our stock.

Our common stock is thinly traded, the prices at

which it trades are volatile and the buying or selling actions of a few shareholders may adversely affect our stock price.

31, 2023, we had a public float, which is defined as shares outstanding minus shares held by our officers, directors, or beneficial holders,

of greater than 10% of our outstanding common stock, of 7,311,381 shares, or 62% of our outstanding common stock.

The average number of

shares traded in any given day over the past year has been relatively small compared to the public float.

Thus, the actions of a few shareholders

either buying or selling shares of our common stock may adversely affect the price of the shares.

Historically, thinly-traded securities

such as our common stock have experienced extreme price and volume fluctuations that do not necessarily relate to operating performance.

Product liability claims may exceed our current

insurance coverage.

We face an inherent business risk of exposure to product liability claims in the event that the use of our products

is alleged to have resulted in adverse effects to a patient.

We maintain a general liability insurance policy up to the amount of $10,000,000

that includes coverage for product liability claims.

Liability claims may be excluded from the policy, may exceed the coverage limits

of the policy, or the insurance may not continue to be available on commercially reasonable terms or at all.

Consequently, a product liability

claim or other claim with respect to uninsured liabilities or in excess of insured liabilities could have a material adverse effect on

our financial position, results of operations and cash flows.

We depend on certain key personnel.

highly dependent on a limited number of key management personnel, particularly our President and CEO, Gregory J.

Our loss of key

personnel to death, disability or termination, or our inability to hire and retain qualified personnel, could have a material adverse

effect on our financial position, results of operations and cash flow.

Any cybersecurity-related attack, significant data

breach or disruption of the information technology systems or networks on which we rely could negatively affect our business.

operations rely on information technology systems for the use, storage and transmission of sensitive and confidential information with

respect to our customers, suppliers, employees and other parties.

A malicious cybersecurity-related attack, intrusion or disruption by

either an internal or external source or other breach of the systems on which we and our employees conduct business, could lead to unauthorized

access to, use of, loss of or unauthorized disclosure of sensitive and confidential information, disruption of our services, and resulting

regulatory enforcement actions, litigation, indemnity obligations and other possible liabilities, as well as negative publicity, which

could damage our reputation, impair sales and harm our business.

Cyberattacks and other malicious internet-based activity continue to

In addition to traditional computer “hackers,” malicious code (such as viruses and worms), phishing, employee theft

or misuse and denial-of-service attacks, sophisticated nation-state and nation-state supported actors now engage in attacks (including

advanced persistent threat intrusions).

Despite efforts to create security barriers to such threats, it is not feasible, as a practical

matter, for us to entirely mitigate these risks.

If our security measures are compromised as a result of third-party action, employee,

customer, or user error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation would be damaged,

our data, information or intellectual property, or those of our customers, may be destroyed, stolen or otherwise compromised, our business

may be harmed and we could incur significant liability.

Unresolved Staff Comments

Not required for small reporting companies.

We lease 28,696 square feet of office and manufacturing

space under noncancelable lease agreements through October 31, 2024 at 6797 Winchester Circle, Boulder, Colorado.

We believe that our

existing facilities are adequate for our current operations.

The market value of our common stock has dramatically fluctuated in

the past and is likely to fluctuate in the future.

Any of these factors, or factors not listed, could have an immediate and significant

negative impact on the market price of our stock.

common stock is thinly traded, the prices at which it trades are volatile and the buying or selling actions of a few shareholders may

adversely affect our stock price.

As of May 31, 2024, we had a public float, which is defined as shares outstanding minus shares

held by our officers, directors, or beneficial holders, of greater than 10% of our outstanding common stock, of 7,400,465 shares, or

62% of our outstanding common stock.

The average number of shares traded in any given day over the past year has been relatively small

compared to the public float.

Thus, the actions of a few shareholders either buying or selling shares of our common stock may adversely

affect the price of the shares.

Historically, thinly traded securities such as our common stock have experienced extreme price and volume

fluctuations that do not necessarily relate to operating performance.

liability claims may exceed our current insurance coverage.

We face an inherent business risk of exposure to product liability claims

in the event that the use of our products is alleged to have resulted in adverse effects to a patient.

We maintain a general liability

insurance policy up to the amount of $10,000,000 that includes coverage for product liability claims.

Liability claims may be excluded

from the policy, may exceed the coverage limits of the policy, or the insurance may not continue to be available on commercially reasonable

terms or at all.

Consequently, a product liability claim or other claim with respect to uninsured liabilities or in excess of insured

liabilities could have a material adverse effect on our financial position, results of operations and cash flows.

depend on certain key personnel.

We are highly dependent on a limited number of key management personnel, particularly our President

and CEO, Gregory J.

Our loss of key personnel to death, disability or termination, or our inability to hire and retain qualified

personnel, could have a material adverse effect on our financial position, results of operations and cash flow.

cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely

could negatively affect our business.

Our operations rely on information technology systems for the use, storage and transmission

of sensitive and confidential information with respect to our customers, suppliers, employees and other parties.

A malicious cybersecurity-related

attack, intrusion or disruption by either an internal or external source or other breach of the systems on which we and our employees

conduct business, could lead to unauthorized access to, use of, loss of or unauthorized disclosure of sensitive and confidential information,

disruption of our services, and resulting regulatory enforcement actions, litigation, indemnity obligations and other possible liabilities,

as well as negative publicity, which could damage our reputation, impair sales and harm our business.

Cyberattacks and other malicious

internet-based activity continue to increase.

In addition to traditional computer “hackers,” malicious code (such as viruses

and worms), phishing, employee theft or misuse and denial-of-service attacks, sophisticated nation-state and nation-state supported actors

now engage in attacks (including advanced persistent threat intrusions).

Despite efforts to create security barriers to such threats,

it is not feasible, as a practical matter, for us to entirely mitigate these risks.

If our security measures are compromised as a result

of third-party action, employee, customer, or user error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise,

our reputation would be damaged, our data, information or intellectual property, or those of our customers, may be destroyed, stolen

or otherwise compromised, our business may be harmed and we could incur significant liability.

of Disclosure Controls and Procedures

the supervision and with the participation of our management, including our principal executive officer and principal financial officer,

as of March 31, 2024, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e)

and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended.

Based on this evaluation, our principal executive

officer and principal financial officer have concluded that, based on the material weaknesses discussed below, our disclosure controls

and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted

under the Securities Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the SEC’s

rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by

us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to management, including our

principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely

decisions regarding required disclosure.

in Internal Control over Financial Reporting

have been no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter that have materially

affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Annual Report on Internal Control over Financial Reporting

is responsible for establishing and maintaining adequate internal control over financial reporting.

As defined in Rules 13a-15(f) under

the Securities Exchange Act of 1934, internal control over financial reporting is a process designed by, or under the supervision of,

the Company’s principal executive, principal operating and principal financial officers, or persons performing similar functions,

and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records, that,

in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;

(2) provide reasonable

assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted

accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the

Company’s management and directors;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized

acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of

any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,

or that the degree of compliance with the policies or procedures may deteriorate.

management, including our principal executive officer and principal financial officer, assessed the effectiveness of our internal control

over financial reporting at March 31, 2024.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring

Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013).

Based on that assessment under

those criteria, management has determined that, as of March 31,2024, our internal control over financial reporting was not effective.

internal controls are not effective for the following reason:

(i) there is an inadequate segregation of duties consistent with control

objectives as management is comprised of only two persons, one of which is our principal executive officer and the other is the principal

financial officer.

order to mitigate the foregoing material weaknesses, we have engaged an outside accounting consultant with significant experience in

the preparation of financial statements in conformity with GAAP to assist us in the preparation of our financial statements to ensure

that these financial statements are prepared in conformity with GAAP.

We will continue to monitor the effectiveness of this action and

make any changes that our management deems appropriate.

would need to hire additional staff to provide greater segregation of duties.

Currently, it is not feasible to hire additional staff

to obtain optimal segregation of duties.

Management will continue to reassess this matter to determine whether improvement in segregation

of duty is feasible.

In addition, we would need to expand our board to include independent members.

forward, we intend to evaluate our processes and procedures and, where practicable and resources permit, implement changes in order to

have more effective controls over financial reporting.

Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial

Management’s report was not subject to attestation by our registered public accounting firm pursuant to the exemption

provided to issuers that are not “large accelerated filers” nor “accelerated filers” under the Dodd-Frank Wall

Street Reform and Consumer Protection Act.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors