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Item 1A. Risk Factors

2021-03-05 compared with 2020-03-06 · 485 added, 982 removed, 83 unchanged (95% of the section changed)

We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control.

The occurrence of any of these risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time.

In evaluating the Company and its business, you should carefully consider the information included under Part I, Item 1A “Risk Factors” in this Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Risk Factors Summary

The following is a summary of the risk factors that could materially affect our business, financial condition or future results, all of which are more fully described below.

This summary should be read in conjunction with the “Risk Factors” described below and should not be relied upon as a complete summary of the material risks facing our business.

Risks Relating to Our Business and Financial Condition

Our financial performance is significantly dependent on

a limited number of products, and disruptions in our ability to sell these products may have a material adverse effect on our business.

Our current revenue and profitability are

significantly dependent on the sale of the MRidium 3860+ MRI compatible IV infusion pump system, the 3880 MRI compatible patient

vital signs monitoring system (both Class II medical devices) and the ongoing sale of related disposables and services.

In the past, the FDA issued us a warning

letter that impacted our ability to commercially distribute our MRidium 3860+ MRI compatible IV infusion pump system.

we have resolved this warning letter and resumed commercial distribution of the MRidium 3860+ MRI compatible IV infusion pump system,

there can be no guarantee that the FDA will not take similar action in the future.

The FDA could require us to cease shipment of

our products, notify health professionals and others that the devices present unreasonable risk or substantial harm to public health,

order a recall, repair, replacement, or refund of the devices, detain or seize adulterated or misbranded medical devices, or ban

the medical devices.

The FDA may also issue further warning letters or untitled letters, refuse future requests for 510(k) submission

or premarket approval, revoke existing 510(k) clearances or premarket approvals previously granted, impose operating restrictions,

enjoin and restrain certain violations of applicable law pertaining to medical devices and assess civil or criminal penalties against

our officers, employees, or us.

Our products could be rendered obsolete

or economically impractical by numerous factors, many of which are beyond our control, including but not limited to:

● The COVID-19 pandemic or other public health crises.

● Our dependence on a limited number of products, and disruptions in our ability to sell these products.

● Securities class action litigation or derivative litigation.

● Sufficiency of our internal and external sources of liquidity.

● Dependence upon the integrity of our supply chain, including multiple single-source suppliers.

● Our reliance on third-party suppliers for certain of our raw materials and components.

● The strict adherence to regulatory requirements governing medical devices during the manufacturing process and that of suppliers.

● Our markets are very competitive and we sell certain of our products in a mature market.

● We manufacture and store our products at a single facility in Florida.

● Our inability to collect on our accounts receivables held by customers.

● Failure to maintain relationships with Group Purchasing Organizations.

● Cost-containment efforts of our customers and purchasing groups.

● A failure in our efforts to access and educate clinicians, anesthesiologists, radiologists, and hospital administrators regarding the advantages of our products.

● The lengthy sales cycle for medical devices could delay our sales.

● Our reliance on distributors to sell our products outside of the U.S.

● Successful development and commercialization of enhanced products or new products to remain competitive.

● Our dependency on our founder, Chairman, President and Chief Executive Officer, Roger Susi.

● Failure to attract and retain the talent required for our business.

● Inability to scale our operations.

● Our engagement in related party transactions.

● Difficulties associated with integrating acquisitions of technologies, products and businesses.

● Difficulties associated with accurately forecasting our business performance.

● Inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP.

● Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns.

● We are subject to various privacy and consumer protection laws.

Risks Related to Our Industry

● Changes in government regulations could force us to make modifications to how we develop, manufacture, market and price our products.

● Failure to obtain, or experience significant delays in obtaining, FDA clearances or other necessary approvals to commercially distribute new products.

● Risks associated with doing business outside of the U.S.

● We may incur product liability losses or become subject to other lawsuits related to our products, business, and insurance coverage could be inadequate or unavailable to cover these losses.

● Defects or failures associated with our products and/or our quality control systems.

● Our products or product types, or MR imaging could be subject to negative publicity.

● Impact of U.S.

healthcare policy and changes thereto.

● Healthcare fraud and abuse regulations potentially result in significant liability, require us to change our business practices and restrict our operations in the future.

● Impact of violations of the U.S.

Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.

● We and our suppliers and customers are required to obtain regulatory approvals to comply with regulations applicable to medical devices and infusion pumps.

● We and our suppliers and customers are required to maintain compliance with regulations applicable to medical devices and infusion pumps.

● Our operations are subject to environmental laws and regulations.

Risks Relating to our Intellectual Property

● Protection of our intellectual property.

● Our unpatented trade secrets, know-how, confidential and proprietary information, and technology may be inadequately protected.

● Uncertainties associated with timely patent reviews and approvals.

● We may become involved in patent litigation or other intellectual property proceedings relating to our future product approvals.

● Disclosure of confidential or proprietary information.

Risks Related to Ownership of Our Common Stock

● Significant fluctuations and volatility of our common stock.

● Use of capital to repurchase shares of our common stock.

● Our need or choice to raise additional capital in the future.

● The ability of Roger Susi, who serves as our Chairman of the Board of Directors, President and Chief Executive Officer, to exert significant influence over matters subject to stockholder approval.

● Payment of dividends.

● The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

● Failure to develop and maintain adequate internal controls or to implement new or improved controls.

● Impact of being a public company on our competitive environment and our risk of potential litigation.

● Impact from our involvement in securities class action litigation.

● Impact of securities or industry analysts’ failing to initiate research coverage of our stock, downgrading our stock, or discontinuing coverage.

● Our charter documents and Delaware law have provisions that may discourage an acquisition of us by others and may prevent attempts by our stockholders to replace or remove our current management.

Risks Relating to Our Business and Financial Condition

Our business, financial condition and operations may be materially adversely affected by the COVID-19 pandemic or other public health crises.

The COVID-19 pandemic, and the resulting restrictions intended to slow the spread of COVID-19, including stay-at-home orders, business shut downs and other restrictions, has and will likely continue to adversely affect our business in a number of ways.

To respond to the demands of managing COVID-19 and the resulting economic uncertainties, healthcare organizations may be forced to adjust spending priorities by increased spending related to COVID-19, which may have a significant effect on the demand and available budget for our products and related services.

The financial strains on healthcare systems may also lead to an increased risk of delays in customer payments.

In addition, a recession resulting from the spread of COVID-19 could materially affect our business, especially if a recession results in higher unemployment causing potential patients to not have access to health insurance.

Our ability to generate sales may be further disrupted by hospitals restricting access to hospital workers only.

A decline in operating results has limited and could further limit our generation of capital resources and cause financial stress if we are unable to increase revenues or adjust our costs appropriately to changes in revenue.

We believe that COVID-19’s adverse impact on our operating results, cash flows and financial condition will be primarily driven by the severity and duration of the pandemic and its impact on the U.S.

and global economy.

In addition to adversely impacting demand for our products, COVID-19 or other public health crises could have an adverse impact on our manufacturing capacity, supply chains, and distribution systems as we and other businesses and governments take preventative and precautionary measures designed to slow the spread of COVID-19.

We could experience other negative impacts of COVID-19 relating to lack of availability of our key personnel or temporary closures of our office or the facilities of our suppliers or third-party service providers.

The future progression of the COVID-19 pandemic and its resulting impacts on our customers, sales activity, supply chain and distribution networks are highly uncertain at this time.

However, the foregoing and other disruptions as a result of COVID-19 could have a material adverse effect on our business, operating results and financial condition, especially to the extent these impacts persist or exacerbate over an extended period of time.

Our financial performance is significantly dependent on a limited number of products, and disruptions in our ability to sell these products may have a material adverse effect on our business.

Our current revenue and profitability are significantly dependent on the sale of the MRidium 3860+ MRI compatible IV infusion pump system, the 3880 MRI compatible patient vital signs monitoring system (both Class II medical devices) and the ongoing sale of related disposables and services.

In the past, the FDA issued us a warning letter that impacted our ability to commercially distribute our MRidium 3860+ MRI compatible IV infusion pump system.

Although we have resolved this warning letter and resumed commercial distribution of the MRidium 3860+ MRI compatible IV infusion pump system, there can be no guarantee that the FDA will not take similar action in the future.

The FDA could require us to cease shipment of our products, notify health professionals and others that the devices present unreasonable risk or substantial harm to public health, order a recall, repair, replacement, or refund of the devices, detain or seize adulterated or misbranded medical devices, or ban the medical devices.

The FDA may also issue further warning letters or untitled letters, refuse future requests for 510(k) submission or premarket approval, revoke existing 510(k) clearances or premarket approvals previously granted, impose operating restrictions, enjoin and restrain certain violations of applicable law pertaining to medical devices and assess civil or criminal penalties against our officers, employees, or us.

Our products could be rendered obsolete or economically impractical by numerous factors, many of which are beyond our control, including but not limited to:

● entrance of new competitors into our markets;

● technological advancements of MRI scanners;

technological developments such as new imaging modalities which render MRI procedures obsolete or reduce the instances where

MRI imaging is utilized;

● technological developments such as new imaging modalities which render MRI procedures obsolete or reduce the instances where MRI imaging is utilized;

● loss of key relationships with suppliers, group purchasing organizations, or end-user customers;

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● product recalls or safety alerts.

Any major factor adversely affecting the

sale of our products or services would cause our revenues to decline and have a material adverse impact on our business, financial

condition and our common stock.

We have significant international sales as well as international

supply chain links and we face risks related to health epidemics that could adversely affect our revenue.

Our business could be adversely impacted

by the effects of COVID-19 (more commonly referred to as coronavirus) or other epidemics, particularly since we have experienced

an increasing concentration of sales in the Asia-Pacific region.

The recent COVID-19 outbreak may negatively impact our revenue

in the future.

With respect to our international distributors, some customers that are implementing heightened security policies

may inhibit the inability of our international distributors to access hospitals for purposes of selling our products and may cause

delays of orders for our products and negatively affect our revenues.

Our materials suppliers could also be disrupted

by conditions related to COVID-19, or other epidemics, possibly resulting in disruption to our supply chain.

If our suppliers are

unable or fail to fulfill their obligations to us for any reason, we may not be able to manufacture our products and satisfy customer

demand or our obligations under sales agreements in a timely manner, and our business could be harmed as a result.

At this point in time, there is uncertainty

relating to the potential effect of COVID-19 on our business.

Infections may become more widespread and should that limit our ability

to timely sell and distribute our products or cause supply disruptions it would have a negative impact on our business, financial

condition and operating results.

In addition, a significant health epidemic could adversely affect the economies and financial

markets of many countries, resulting in an economic downturn that could affect demand for our products which could have a material

adverse effect on our business, operating results and financial condition.

We have been subject to securities class action litigation

and derivative litigation and we may be subject to similar or other litigation in the future.

In the past, following adverse action by

the FDA or volatility in our stock price, securities class action litigation has been brought against us.

There can be no assurance

that we will not face other securities litigation in the future.

With respect to any litigation, our insurance may not reimburse

us or may not be sufficient to reimburse us for the expenses or losses we may suffer in contesting and concluding such lawsuits.

A decision adverse to our interests on these actions or resulting from these matters could result in the payment of substantial

damages and could have a material adverse effect on our business, financial condition and our common stock.

Regardless of the outcome,

these claims may result in injury to our reputation, significant costs, diversion of management’s attention and resources,

and loss of revenue.

There is no assurance that our internal and external sources

of liquidity will at all times be sufficient for our cash requirements.

We must have sufficient sources of liquidity

to fund our working capital requirements, our capital improvement plans, and execute on our strategic initiatives.

in operating results during 2017 limited our generation of capital resources and that situation could return if we are unable to

continue to increase revenues or adjust our costs appropriately to changes in revenue.

Further, future new product launches may

demand increased working capital before any long-term return is realized from increased revenue.

Our ability to achieve our business

and cash flow plans is based on a number of assumptions which involve significant judgments and estimates of future performance,

borrowing capacity and credit availability, which cannot at all times be assured.

Accordingly, there is no assurance that cash

flows from operations and other internal and external sources of liquidity will at all times be sufficient for our cash requirements.

If necessary, we may need to consider actions and steps to improve our cash position and mitigate any potential liquidity shortfall,

such as modifying our business plan, pursuing additional financing to the extent available, reducing capital expenditures, pursuing

and evaluating other alternatives and opportunities to obtain additional sources of liquidity and other potential actions to reduce

Any major factor adversely affecting the sale of our products or services would cause our revenues to decline and have a material adverse impact on our business, financial condition and our common stock.

We have significant international sales as well as international supply chain links and we face risks related to health epidemics that could adversely affect our revenue.

Our business could be adversely impacted by the effects of COVID-19 or other epidemics.

The COVID-19 pandemic has negatively impacted our revenues and may continue to do so in the future.

With respect to our sales, some customers that are implementing heightened security policies have inhibited the ability of our domestic sales force and international distributors to access hospitals for purposes of selling our products.

This has caused delays of orders for our products and negatively affected our revenues.

These heightened security policies and delays of orders may continue into the future.

Our materials suppliers could also be disrupted by conditions related to COVID-19, or other epidemics, possibly resulting in disruption to our supply chain.

If our suppliers are unable or fail to fulfill their obligations to us for any reason, we may not be able to manufacture our products and satisfy customer demand or our obligations under sales agreements in a timely manner, and our business could be harmed as a result.

At this point in time, there is uncertainty relating to the potential effect of COVID-19 on our business.

Infections may become more widespread or may recur at a later time, there may be variations in the global response to future outbreaks, and inefficiencies of testing and vaccination programs, and, should any one of these limit our ability to timely sell and distribute our products or cause supply disruptions, it would have a negative impact on our business, financial condition and operating results.

In addition, a significant health epidemic could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products which could have a material adverse effect on our business, operating results and financial condition.

We have been subject to securities class action litigation and derivative litigation and we may be subject to similar or other litigation in the future.

In the past, following adverse action by the FDA or volatility in our stock price, securities class action litigation has been brought against us.

There can be no assurance that we will not face other securities litigation in the future.

With respect to any litigation, our insurance may not reimburse us or may not be sufficient to reimburse us for the expenses or losses we may suffer in contesting and concluding such lawsuits.

A decision adverse to our interests on these actions or resulting from these matters could result in the payment of substantial damages and could have a material adverse effect on our business, financial condition and our common stock.

Regardless of the outcome, these claims may result in injury to our reputation, significant costs, diversion of management’s attention and resources, and loss of revenue.

There is no assurance that our internal and external sources of liquidity will at all times be sufficient for our cash requirements.

We must have sufficient sources of liquidity to fund our working capital requirements, our capital improvement plans, and execute on our strategic initiatives.

A decline in operating results could limit our generation of capital resources and cause financial stresses if we are unable to increase revenues or adjust our costs appropriately to changes in revenue.

Further, future new product launches or investments in other growth initiatives may demand increased working capital before any long-term return is realized from increased revenue.

Our ability to achieve our business and cash flow plans is based on a number of assumptions which involve significant judgments and estimates of future performance, borrowing capacity and credit availability, which cannot at all times be assured.

Accordingly, there is no assurance that cash flows from operations and other internal and external sources of liquidity will at all times be sufficient for our cash requirements.

If necessary, we may need to consider actions and steps to improve our cash position and mitigate any potential liquidity shortfall, such as modifying our business plan, pursuing additional financing to the extent available, reducing capital expenditures, pursuing and evaluating other alternatives and opportunities to obtain additional sources of liquidity and other potential actions to reduce costs.

There can be no assurance that any of these actions would be successful, sufficient or available on favorable terms.

inability to generate or obtain sufficient levels of liquidity to meet our cash requirements at the level and times needed could

have a material adverse impact on our business and financial position.

Our continued success depends on the integrity of our

supply chain, including multiple single-source suppliers, the disruption of which could negatively impact our business.

Many of the component parts of our products

are obtained through supply agreements with third parties.

Some of these parts require our partners to engage in complex manufacturing

processes and involve long lead times or delivery periods.

Considering our dependence on third-party suppliers, several of which

are single-source suppliers, we are subject to inherent uncertainties and risks related to their ability to produce or deliver

parts on a timely basis, to comply with product safety and other regulatory requirements and to provide quality parts to us at

a reasonable price.

For example, we are dependent upon a single

vendor for the ultrasonic motor at the core of our devices.

If this vendor fails to meet our volume requirements, which we anticipate

will increase over time, or if the vendor becomes unable or unwilling to continue supplying motors to us, this would impact our

ability to supply our devices to customers until a replacement source is secured.

Our executed agreement with this vendor provides

that the price at which we purchase products from the vendor is determined by agreement from time to time or should material costs

Although we have had a long history of stable pricing with this supplier, this provision may make it difficult for us to

continue to receive motors from this vendor on favorable terms or at all if we do not agree on pricing in the future.

In such event,

it could materially and adversely affect our commercial activities, operating results and financial condition.

In the near term, we do not anticipate finding

alternative sources for our primary suppliers, including single source suppliers.

Therefore, if our primary suppliers become unable

or unwilling to manufacture or deliver materials, or manufacture or deliver such materials later than anticipated, we could experience

protracted delays or interruptions in the supply of materials which would ultimately delay our manufacture of products for commercial

sale, which could materially and adversely affect our development programs, commercial activities, operating results and financial

Additionally, any failure by us to forecast

demand for, or to maintain an adequate supply of raw materials, parts, or finished products, could result in an interruption in

the supply of certain products and a decline in our sales.

We rely on third-party suppliers for certain of our raw

materials and components.

We rely on unaffiliated third-party suppliers

for certain raw materials and components necessary for the manufacturing and operation of our products.

Certain of those raw materials

and components are proprietary products of those unaffiliated third-party suppliers and are specifically cited in our applications

with regulatory agencies so that they must be obtained from that specific sole source or sources and could not be obtained from

another supplier unless and until an appropriate application amendment is approved by the regulatory agency.

Among the reasons we may be unable to obtain

these raw materials and components include, but are not limited to:

a supplier’s inability or unwillingness to continue supplying raw materials and/or components;

regulatory requirements or action by regulatory agencies or others, including changes in international trade treaties and/or

Any inability to generate or obtain sufficient levels of liquidity to meet our cash requirements at the level and times needed could have a material adverse impact on our business and financial position.

Our continued success depends on the integrity of our supply chain, including multiple single-source suppliers, the disruption of which could negatively impact our business.

Many of the component parts of our products are obtained through supply agreements with third parties.

Some of these parts require our partners to engage in complex manufacturing processes and involve long lead times or delivery periods.

Considering our dependence on third-party suppliers, several of which are single-source suppliers, we are subject to inherent uncertainties and risks related to their ability to produce or deliver parts on a timely basis, to comply with product safety and other regulatory requirements and to provide quality parts to us at a reasonable price.

For example, we are dependent upon a single vendor for the ultrasonic motor at the core of our devices.

If this vendor fails to meet our volume requirements, which we anticipate will increase over time, or if the vendor becomes unable or unwilling to continue supplying motors to us, this would impact our ability to supply our devices to customers until a replacement source is secured.

Our executed agreement with this vendor provides that the price at which we purchase products from the vendor is determined by agreement from time to time or should material costs change.

Although we have had a long history of stable pricing with this supplier, this provision may make it difficult for us to continue to receive motors from this vendor on favorable terms or at all if we do not agree on pricing in the future.

In such event, it could materially and adversely affect our commercial activities, operating results and financial condition.

In the near term, we do not anticipate finding alternative sources for our primary suppliers, including single source suppliers.

Therefore, if our primary suppliers become unable or unwilling to manufacture or deliver materials, or manufacture or deliver such materials later than anticipated, we could experience protracted delays or interruptions in the supply of materials which would ultimately delay our manufacture of products for commercial sale, which could materially and adversely affect our development programs, commercial activities, operating results and financial condition.

Additionally, any failure by us to forecast demand for, or to maintain an adequate supply of raw materials, parts, or finished products, could result in an interruption in the supply of certain products and a decline in our sales.

We rely on third-party suppliers for certain of our raw materials and components.

We rely on unaffiliated third-party suppliers for certain raw materials and components necessary for the manufacturing and operation of our products.

Certain of those raw materials and components are proprietary products of those unaffiliated third-party suppliers and are specifically cited in our applications with regulatory agencies so that they must be obtained from that specific sole source or sources and could not be obtained from another supplier unless and until an appropriate application amendment is approved by the regulatory agency.

Among the reasons we may be unable to obtain these raw materials and components include, but are not limited to:

● a supplier’s inability or unwillingness to continue supplying raw materials and/or components;

● regulatory requirements or action by regulatory agencies or others, including changes in international trade treaties and/or tariffs;

● adverse financial or other strategic developments at or affecting the supplier, including bankruptcy;

● unexpected demand for or shortage of raw materials or components;

failure of the supplier to comply with quality standards which results in quality and product failures, product contamination

and/or recall;

● failure of the supplier to comply with quality standards which results in quality and product failures, product contamination and/or recall;

● discovery of previously unknown or undetected imperfections in raw materials or components;

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● political instability and actual or anticipated military or political conflicts.

These events could negatively impact our

ability to satisfy demand for our products, which could have a material adverse effect on our products’

use and sales and

our business and results of operations.

We may experience these or other shortages in the future resulting in delayed shipments,

supply constraints, contract disputes and/or stock-outs of our products.

The manufacture of our products requires strict adherence

to regulatory requirements governing medical devices and if we or our suppliers encounter problems our business could suffer.

The manufacture of our products must comply

with strict regulatory requirements governing Class II medical devices in the U.S.

and other regulatory requirements in foreign

Problems may arise during manufacturing, quality control, storage or distribution of our products for a variety of reasons,

including equipment malfunction, failure to follow specific protocols and procedures, manufacturing quality concerns, or problems

with raw materials, electromechanical, software and other components, supplier issues, and natural disasters.

If problems arise

during production, the affected products may have to be discarded.

Manufacturing problems or delays could also lead to increased

costs, lost sales, damage to customer relations, failure to supply penalties, time and expense spent investigating the cause and,

depending on the cause, similar losses with respect to other batches of products.

If problems are not discovered before the product

is released to the market, voluntary recalls, corrective actions or product liability related costs may also be incurred.

we encounter difficulties in the manufacture of our products or be subject to a product recall, our business could suffer materially.

Our markets are very competitive and we sell certain of

our products in a mature market.

The market for our 3880 MRI compatible patient

vital signs monitoring system is well-developed and sales growth for our monitor could be slow.

Our vital signs monitoring system

could face difficult competition, including competitors offering lower prices, which could have an adverse effect on our revenue

Our competitors may have certain advantages, which include the ability to devote greater resources to the development,

promotion, and sale of their products.

Consequently, we may need to increase our efforts, and related expenses for research and

development, marketing, and selling to maintain or improve our position.

We may not realize the per unit revenue we have planned

for and expect.

Continued sales to our existing customers are expected to be significant to our revenue in the future, and if our

existing customers do not continue to purchase from us, our revenue may decline.

We manufacture and store our products at a single facility

We manufacture and store our products at

a single facility in Winter Springs, Florida.

If by reason of fire, hurricane or other natural disaster, or for any other reason,

the facility is destroyed or seriously damaged or our access to it is limited, our ability to provide products to our customers

would be seriously interrupted or impaired and our operating results and financial condition would be materially and negatively

Our inability to collect on our accounts receivables held

by customers may have an adverse effect on our business operations and financial condition.

We market our products to end users in the

United States and to distributors internationally.

These events could negatively impact our ability to satisfy demand for our products, which could have a material adverse effect on our products’ use and sales and our business and results of operations.

We may experience these or other shortages in the future resulting in delayed shipments, supply constraints, contract disputes and/or stock-outs of our products.

The manufacture of our products requires strict adherence to regulatory requirements governing medical devices and if we or our suppliers encounter problems our business could suffer.

The manufacture of our products must comply with strict regulatory requirements governing Class II medical devices in the U.S.

and other regulatory requirements in foreign locations.

Problems may arise during manufacturing, quality control, storage or distribution of our products for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, manufacturing quality concerns, or problems with raw materials, electromechanical, software and other components, supplier issues, and natural disasters.

If problems arise during production, the affected products may have to be discarded.

Manufacturing problems or delays could also lead to increased costs, lost sales, damage to customer relations, failure to supply penalties, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches of products.

If problems are not discovered before the product is released to the market, voluntary recalls, corrective actions or product liability related costs may also be incurred.

Should we encounter difficulties in the manufacture of our products or be subject to a product recall, our business could suffer materially.

Our markets are very competitive and we sell certain of our products in a mature market.

The market for our 3880 MRI compatible patient vital signs monitoring system is well-developed and sales growth for our monitor could be slower than we anticipate.

Our vital signs monitoring system could face difficult competition, including competitors offering lower prices, which could have an adverse effect on our revenue and margins.

Our competitors may have certain advantages, which include the ability to devote greater resources to the development, promotion, and sale of their products.

Consequently, we may need to increase our efforts, and related expenses for research and development, marketing, and selling to maintain or improve our position.

We may not realize

the per unit revenue we have planned for and expect.

Continued sales to our existing customers are expected to be significant to our revenue in the future, and if our existing customers do not continue to purchase from us, our revenue may decline.

We manufacture and store our products at a single facility in Florida.

We manufacture and store our products at a single facility in Winter Springs, Florida.

If by reason of fire, hurricane or other natural disaster, or for any other reason, the facility is destroyed or seriously damaged or our access to it is limited, our ability to provide products to our customers would be seriously interrupted or impaired completely and our operating results and financial condition would be materially and negatively affected.

Our inability to collect on our accounts receivables held by customers may have an adverse effect on our business operations and financial condition.

We market our products to end users in the United States and to distributors internationally.

Sales to end users in the United States are generally made on open credit terms.

Management maintains an allowance for potential credit losses.

From time to time, we have had, and may in the future have, accounts

receivables from one or more customers that accounted for 10 percent or more of our gross accounts receivable.

As a result, we

may be exposed to a certain level of concentration of credit risk.

If a major customer experiences financial difficulties, the

effect on us could be material and have an adverse effect on our business, financial condition and results of operations.

If we fail to maintain relationships with Group Purchasing

Organizations, sales of our products could decline.

From time to time, we have had, and may in the future have, accounts receivables from one or more customers that accounted for 10 percent or more of our gross accounts receivable.

As a result, we may be exposed to a certain level of concentration of credit risk.

If a major customer experiences financial difficulties, the effect on us could be material and have an adverse effect on our business, financial condition and results of operations.

Additionally, COVID-19 may cause delays in payments from customers, which may adversely impact our future results of operations and liquidity.

If we fail to maintain relationships with Group Purchasing Organizations, sales of our products could decline.

Our ability to sell our products to U.S.

hospitals, acute care facilities and outpatient imaging centers depends in part on our relationships with Group Purchasing Organizations

(“GPOs”).

hospitals, acute care facilities and outpatient imaging centers depends in part on our relationships with Group Purchasing Organizations (“GPOs”).

Many existing and potential customers for our products are members of GPOs.

GPOs negotiate pricing arrangements

and contracts, which are sometimes exclusive, with medical supply manufacturers and distributors, and these negotiated prices are

made available to a GPO’s affiliated hospitals and other members.

We pay the GPOs an administrative fee in the form of a

percentage of the volume of products sold to their affiliated hospitals and other members.

If we are not an approved provider selected

by a GPO, affiliated hospitals and other members may be less likely to purchase our products.

Should a GPO negotiate a sole source

or bundling contract covering a future or current competitor’s products, we may be precluded from making sales of our competing

products to members of that GPO for the duration of the contractual arrangement.

For example, even if we have an existing contract

with a GPO for sales of our MRidium 3860+ MRI compatible IV infusion pump, we may encounter difficulties in selling, or be unable

to sell, our 3880 MRI compatible patient vital signs monitoring system to that GPO’s affiliated hospitals and other members,

which may result in a longer sales cycle or an inability to sell.

Our failure to renew contracts with GPOs may cause us to lose

market share and could have a material adverse effect on our sales, financial condition and results of operations.

In the future,

if another competitive supplier emerges, and we fail to keep our relationships and develop new relationships with GPOs, our competitive

position would likely suffer.

Cost-containment efforts of our customers and purchasing

groups could adversely affect our sales and profitability.

Our MRI compatible medical devices are considered

capital equipment by many potential customers, and hence changes in the budgets of healthcare organizations and the timing of spending

under these budgets and conflicting spending priorities can have a significant effect on the demand for our products and related

Any decrease in expenditures by these healthcare facilities could decrease demand for our products and related services

and reduce our revenue.

Additionally, changes to reimbursement policies by third-party payors could also decrease demand for our

products and related services and reduce our revenue.

Any failure in our efforts to educate clinicians, anesthesiologists,

radiologists, and hospital administrators regarding the advantages of our products could significantly limit our product sales.

We believe our future success will require

us to educate a sufficient number of clinicians, anesthesiologists, radiologists, hospital administrators and other purchasing

decision-makers about our products and the costs and benefits of our products.

If we fail to demonstrate the safety, reliability

and economic benefits of our products to hospitals and acute medical facilities, our products may not be adopted and our expected

and actual sales would suffer.

The lengthy sales cycle for medical devices could delay

The decision-making process of customers

is often complex and time-consuming.

Based on our experience, we believe the period between initial discussions with customers

regarding our products and a customer’s purchase of our products is typically three to six months.

Sales cycles can also

be delayed because of capital budgeting procedures.

Moreover, even if one or two units are sold to a hospital, we believe that

it will take additional time and experience with our products before other medical professionals routinely use them for other procedures

and in other departments of the hospital.

Such time would delay potential sales of additional units and disposable products or

additional optional accessories to that medical facility or hospital.

These delays could have an adverse effect on our business,

financial condition and results of operations.

Because we rely on distributors to sell our products outside

of the U.S., our revenues could decline if our existing distributors do not continue to purchase products from us or if our relationship

with any of these distributors is terminated.

We rely on distributors for all our sales

outside the U.S.

GPOs negotiate pricing arrangements and contracts, which are sometimes exclusive, with medical supply manufacturers and distributors, and these negotiated prices are made available to a GPO’s affiliated hospitals and other members.

We pay the GPOs an administrative fee in the form of a percentage of the volume of products sold to their affiliated hospitals and other members.

If we are not an approved provider selected by a GPO, affiliated hospitals and other members may be less likely to purchase our products.

Should a GPO negotiate a sole source or bundling contract covering a future or current competitor’s products, we may be precluded from making sales of our competing products to members of that GPO for the duration of the contractual arrangement.

For example, even if we have an existing contract with a GPO for sales of our MRidium 3860+ MRI compatible IV infusion pump, we may encounter difficulties in selling, or be unable to sell, our 3880 MRI compatible patient vital signs monitoring system to that GPO’s affiliated hospitals and other members, which may result in a longer sales cycle or an inability to sell.

Our failure to renew contracts with GPOs may cause us to lose market share and could have a material adverse effect on our sales, financial condition and results of operations.

In the future, if another competitive supplier emerges, and we fail to keep our relationships and develop new relationships with GPOs, our competitive position would likely suffer.

Cost-containment efforts of our customers and purchasing groups could adversely affect our sales and profitability.

Our MRI compatible medical devices are considered capital equipment by many potential customers, and hence changes in the budgets of healthcare organizations and the timing of spending under these budgets and conflicting spending priorities, such as spending related to COVID-19, may have a significant effect on the demand for our products and related services.

Any decrease in expenditures by these healthcare facilities could decrease demand for our products

and related services and reduce our revenue.

Additionally, changes to reimbursement policies by third-party payors could also decrease demand for our products and related services and reduce our revenue.

Any failure in our efforts to access and educate clinicians, anesthesiologists, radiologists, and hospital administrators regarding the advantages of our products could significantly limit our product sales.

We believe our future success will require us to educate a sufficient number of clinicians, anesthesiologists, radiologists, hospital administrators and other purchasing decision-makers about our products and the costs and benefits of our products.

If we fail to demonstrate the safety, reliability and economic benefits of our products to hospitals and acute medical facilities, our products may not be adopted and our expected and actual sales would suffer.

The lengthy sales cycle for medical devices could delay our sales.

The decision-making process of customers is often complex and time-consuming.

Based on our experience, we believe the period between initial discussions with customers regarding our products and a customer’s purchase of our products have varied widely and have historically ranged between three and six months in duration, with more recent cycles lengthening beyond this historical range due to COVID-19.

Sales cycles can also be delayed because of capital budgeting procedures.

Moreover, even if one or two units are sold to a hospital, we believe that it will take additional time and experience with our products before other medical professionals routinely use them for other procedures and in other departments of the hospital.

Such time would delay potential sales of additional units and disposable products or additional optional accessories to that medical facility or hospital.

These delays could have an adverse effect on our business, financial condition and results of operations.

Because we rely on distributors to sell our products outside of the U.S., our revenues could decline if our existing distributors do not continue to purchase products from us or if our relationship with any of these distributors is terminated.

We rely on distributors for all our sales outside the U.S.

and hence do not have direct control over foreign sales activities.

These distributors also assist us with regulatory

approvals and the education of physicians and government agencies.

These distributors also assist us with regulatory approvals and the education of physicians and government agencies.

Our revenues outside the U.S.

have recently represented approximately

one-fifth of our net revenues.

If our existing international distributors fail to sell our products or sell at lower levels than

we anticipate, we could experience a decline in revenues or fail to meet our forecasts.

We cannot be certain that we will be able

to attract new international distributors nor retain existing ones that market our products effectively or provide timely and cost-effective

customer support and service.

have recently represented approximately one-fifth of our net revenues.

If our existing international distributors fail to sell our products or sell at lower levels than we anticipate, we could experience a decline in revenues or fail to meet our forecasts.

We cannot be certain that we will be able to attract new international distributors nor retain existing ones that market our products effectively or provide timely and cost-effective customer support and service.

None of our existing distributors are obligated to continue selling our products.

If we do not successfully develop and commercialize enhanced

products or new products that remain competitive, we could lose revenue opportunities and customers, and our ability to achieve

growth would be impaired.

The medical device industry is characterized

by rapid product development and technological advances, which places our products at risk of obsolescence.

Our long-term success

depends upon the development and successful commercialization of new products, new or improved technologies and additional applications

for MRI compatible infusion, therapeutic, diagnostic and safety products and services.

The research and development process is

time-consuming and costly and may not result in products or applications that we can successfully commercialize.

If we do not successfully

adapt our technology, products and applications, we could lose revenue opportunities and customers.

In addition, we may not be

able to improve our products or develop new products or technologies quickly enough to maintain a competitive position in our markets

and continue to grow our business.

We are highly dependent on our founder, Chairman and Chief

Technology Officer, Roger Susi.

If we do not successfully develop and commercialize enhanced products or new products that remain competitive, we could lose revenue opportunities and customers, and our ability to achieve growth would be impaired.

The medical device industry is characterized by rapid product development and technological advances, which places our products at risk of obsolescence.

Our long-term success depends upon the development and successful commercialization of new products, new or improved technologies and additional applications for MRI compatible infusion, therapeutic, diagnostic and safety products and services.

The research and development process is time-consuming and costly and may not result in products or applications that we can successfully commercialize.

If we do not successfully adapt our technology, products and applications, we could lose revenue opportunities and customers.

In addition, we may not be able to improve our products or develop new products or technologies quickly enough to maintain a competitive position in our markets and continue to grow our business.

We are highly dependent on our founder, Chairman, President and Chief Executive Officer, Roger Susi.

We believe that Mr.

Susi will play

a significant role in the development of new products.

Our current and future operations could be adversely impacted if we were

to lose his services.

Accordingly, our success will be dependent on appropriately managing the risks related to maintaining his

continued services.

If we fail to attract and retain the talent required for

our business, our business could be materially harmed.

Competition for highly skilled personnel

is often intense in the medical device industry, including in the MRI compatible medical device segment.

If our current employees

with experience in the MRI compatible device industry leave our company, we may have difficulty finding replacements with an equivalent

amount of experience and skill, which could harm our operations.

Our future success will also depend in part on our ability to

identify, hire and retain additional personnel, including executives, skilled engineers to develop new products and sales and production

We may not be successful in attracting, integrating or retaining qualified personnel to meet our current growth plans or

future needs.

Susi will play a significant role in the development of new products.

Our current and future operations could be adversely impacted if we were to lose his services.

Accordingly, our success will be dependent on appropriately managing the risks related to maintaining his continued services.

If we fail to attract and retain the talent required for our business, our business could be materially harmed.

Competition for highly skilled personnel is often intense in the medical device industry, including in the MRI compatible medical device segment.

If our current employees with experience in the MRI compatible device industry leave our company, we may have difficulty finding replacements with an equivalent amount of experience and skill,

which could harm our operations.

Our future success will also depend in part on our ability to identify, hire and retain additional personnel, including executives, skilled engineers to develop new products and sales and production staff.

We may not be successful in attracting, integrating or retaining qualified personnel to meet our current growth plans or future needs.

Our productivity may be adversely affected if we do not integrate and train our new employees quickly and effectively.

Any one of our executive officers or other

key employees could terminate his or her relationship with us at any time.

The loss of one or more of our executive officers or

key employees, and any failure to have in place and execute an effective succession plan for key executive officers, could significantly

delay or prevent us from achieving our business and/or development objectives and could materially harm our business.

our executive management team may also cause disruptions in, and harm to, our business.

As previously disclosed, Roger Susi, our

founder and our former chief executive officer, transitioned to his new role as chief technology officer and Leslie McDonnell was

appointed to replace him as chief executive officer effective August 19, 2019.

Although we strive to reduce the challenges

of this transition and the appointment of our new chief executive officer, failure to ensure effective transfer of knowledge and

a smooth transition could disrupt or adversely affect our business, results of operations, financial condition and prospects.

We may also have difficulty finding and

retaining qualified Board members.

Any one of our executive officers or other key employees could terminate his or her relationship with us at any time.

The loss of one or more of our executive officers or key employees, and any failure to have in place and execute an effective succession plan for key executive officers, could significantly delay or prevent us from achieving our business and/or development objectives and could materially harm our business.

Changes in our executive management team may also cause disruptions in, and harm to, our business.

We may also have difficulty finding and retaining qualified Board members.

Any failure to do so could be perceived negatively and could adversely affect our business.

Also, to the extent we hire personnel from

competitors, we may be subject to allegations that we have improperly solicited, or that they have divulged proprietary or other

confidential information, or that their former employers own their inventions or work product.

Also, to the extent we hire personnel from competitors, we may be subject to allegations that we have improperly solicited, or that they have divulged proprietary or other confidential information, or that their former employers own their inventions or work product.

We may be unable to scale our operations successfully.

We are working to expand our size and scale

via more penetration of existing markets and the launch of new complementary products.

This growth, if it occurs as planned, will

place significant demands on our management and manufacturing capacity, as well as our financial, administrative and other resources.

We cannot guarantee that any of the personnel, systems, procedures and controls we put in place will be adequate to support the

manufacture and distribution of our products.

Our operating results will depend substantially on the ability of our officers and

key employees to manage changing business conditions and to implement and improve our financial and administrative systems and

manage other resources.

If we are unable to respond to and manage changing business conditions, or the scale of our products, services

and operations, then the quality of our services, our ability to retain key personnel and our business could be harmed.

We engage in related party transactions, which result

in a conflict of interest involving our management.

We have engaged in the past, and continue

to engage, in related party transactions, particularly between our company and Roger Susi and his affiliates.

The only significant

ongoing related party transaction is the lease agreement between our company and Susi, LLC, an affiliate of Roger Susi, with respect

to our sole production and headquarters facility in Winter Springs, Florida.

Related party transactions present difficult conflicts

of interest, could result in disadvantages to our company and may impair investor confidence, which could materially and adversely

Related party transactions could also cause us to become materially dependent on related parties in the ongoing conduct

of our business, and related parties may be motivated by personal interests to pursue courses of action that are not necessarily

in the best interests of our company and our stockholders.

Any acquisitions of technologies, products and businesses,

may be difficult to integrate, could adversely affect our relationships with key customers, and/or could result in significant

charges to earnings.

We plan to periodically review potential

acquisitions of technologies, products and businesses that are complementary to our products and that could accelerate our growth.

However, our company has never completed an acquisition and there can be no assurance that we will be successful in finding any

acquisitions in the future.

The process of identifying, executing and realizing attractive returns on acquisitions involves a high

degree of uncertainty.

Acquisitions typically entail many risks and could result in difficulties in integrating operations, personnel,

technologies and products.

If we are not able to successfully integrate our acquisitions, we may not obtain the advantages and

synergies that the acquisitions were intended to create, which may have a material adverse effect on our business, results of operations,

financial condition and cash flows, our ability to develop and introduce new products and the market price of our stock.

The environment in which we operate makes it increasingly

difficult to accurately forecast our business performance.

Significant changes and volatility in most

aspects of the current business environment, including financial markets, consumer behavior, speed of technological, regulatory

and competitive changes, make it increasingly difficult for us to predict our revenues and earnings into the future.

Our quarterly

sales and profits depend substantially on the volume and timing of orders fulfilled during the quarter, and such orders are difficult

Product demand is dependent upon the capital spending budgets of our customers and prospects as well as government

funding policies and matters of public policy as well as product and economic cycles that can affect the spending decisions of

these entities.

As a result, any revenue, earnings or financial guidance or outlook which we have given or might give may turn

out to be inaccurate.

Though we will endeavor to give reasonable estimates of future revenues, earnings and financial information

at the time we give such guidance, based on then-current conditions, there is a significant risk that such guidance or outlook

will turn out to be incorrect.

Historically, companies that have overstated their operating guidance have suffered significant

declines in their stock price when such results are announced to the public.

There are inherent uncertainties involved in estimates,

judgments and assumptions used in the preparation of financial statements in accordance with United States Generally Accepted Accounting

Principles (“GAAP”).

Furthermore, portions of GAAP require the use of fair value models which are variable in application

and methodology from appraiser to appraiser.

Any changes in estimates, judgments and assumptions used could have a material adverse

effect on our business, financial position and operating results.

The preparation of financial statements

in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial

statements and accompanying notes.

Such assumptions and estimates include those related to revenue recognition, accruals for product

returns, allowances for doubtful accounts, valuation of inventory, impairment of intangibles and long-lived assets, accounting

for leases, accounting for income taxes and stock-based compensation and allowances for uncertainties.

These factors are also influenced

by regular changes to GAAP, some of which are material to most companies.

These changes introduce risk to our financial reporting

processes due to implementation and internal control implications.

We base the aforementioned estimates on

historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as discussed in

greater detail in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Our actual operating results may differ and fall below our assumptions and the financial forecasts of securities analysts and investors,

resulting in a significant decline in our stock price.

Changes in effective tax rates or adverse outcomes resulting

from examination of our income or other tax returns could adversely affect our results.

We are subject to the continuous examination

of our income tax returns by the Internal Revenue Service, or IRS, and other tax authorities.

It is possible that tax authorities

may disagree with certain positions we have taken, and any adverse outcome of such a review or audit could have a negative effect

on our financial position and operating results.

We regularly assess the likelihood of adverse outcomes resulting from these examinations

to determine the adequacy of our provision for income taxes, but the determination of our provision for income taxes and other

tax liabilities requires significant judgment by management, and there are transactions where the ultimate tax determination is

Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded

in our financial statements and may materially affect our financial results in the period or periods for which such determination

There can be no assurance that the outcomes from continuous examinations will not have an adverse effect on our business,

financial condition, and results of operations.

We are subject to various privacy and consumer protection

Our privacy policy is posted on our website,

and any failure by us or our vendor or other business partners to comply with it or with federal, state or international privacy,

data protection or security laws or regulations could result in regulatory or litigation-related actions against us, legal liability,

fines, damages and other costs.

Substantial expenses and operational changes may be required in connection with maintaining compliance

with such laws, and in particular certain emerging privacy laws are still subject to a high degree of uncertainty as to their interpretation

and application.

For example, in May 2018, the General Data Protection Regulation (the “GDPR”) began to fully

apply to the processing of personal information collected from individuals located in the European Union.

The GDPR has created

new compliance obligations and has significantly increased fines for noncompliance.

Although we take steps to protect the security

of our customers’

personal information, we may be required to expend significant resources to comply with data breach requirements

if third parties improperly obtain and use the personal information of our customers or we otherwise experience a data loss with

respect to customers’

personal information.

A breach of our network security and systems could have negative consequences

for our business and future prospects, including possible fines, penalties and damages, reduced customer demand for our products,

and harm to our reputation and brand.

Political and economic uncertainty arising from the outcome

of the United Kingdom’s referendum on its membership in the European Union could adversely affect our business and results

of operations.

June 23, 2016, the United Kingdom (“UK”) held a referendum in which voters approved a withdrawal from the European

Union (“EU”), commonly referred to as “Brexit.”

The United Kingdom officially withdrew from the EU on January 31,

The terms of the withdrawal are subject to ongoing negotiation that has created significant uncertainty about the future

relationship between the UK and the EU.

It is possible that the level of economic activity in this region will be adversely impacted

and that there will be increased regulatory and legal complexities, including those relating to tax, trade, security and employees.

In addition, Brexit could lead to economic uncertainty, including significant volatility in global stock markets and currency exchange

rates, which may adversely impact our business.

Although the specific terms of the separation are unknown, it is possible that

these changes could adversely affect our business and results of operations.

To attempt to reduce the impact of a potential Brexit

on our ability to sell our products in the EU, we have changed from a UK-based notified body, to notified bodies located

within the EU.

We are working to expand our size and scale via more penetration of existing markets and the launch of new complementary products and updates to existing products.

This growth, if it occurs as planned, will place significant demands on our management and manufacturing capacity, as well as our financial, administrative and other resources.

We cannot guarantee that any of the personnel, systems, procedures and controls we put in place will be adequate to support the manufacture and distribution of our products.

Our operating results will depend substantially on the ability of our officers and key employees to manage changing business conditions and to implement and improve our financial and administrative systems and manage other resources.

If we are unable to respond to and manage changing business conditions, or the scale of our products, services and operations, then the quality of our services, our ability to retain key personnel and our business could be harmed.

We engage in related party transactions, which result in a conflict of interest involving our management.

We have engaged in the past, and continue to engage, in related party transactions, particularly between our company and Roger Susi and his affiliates.

The only significant ongoing related party transaction is the lease agreement between our company and Susi, LLC, an affiliate of Roger Susi, with respect to our sole production and headquarters facility in Winter Springs, Florida.

Related party transactions present difficult conflicts of interest, could result in disadvantages to our company and may impair investor confidence, which could materially and adversely affect us.

Related party transactions could also cause us to become materially dependent on related parties in the ongoing conduct of our business, and related parties may be motivated by personal interests to pursue courses of action that are not necessarily in the best interests of our company and our stockholders.

Any acquisitions of technologies, products and businesses, may be difficult to integrate, could adversely affect our relationships with key customers, and/or could result in significant charges to earnings.

We plan to periodically review potential acquisitions of technologies, products and businesses that are complementary to our products and that could accelerate our growth.

However, our company has never completed an acquisition and there can be no assurance that we will be successful in finding any acquisitions in the future.

The process of identifying, executing and realizing attractive returns on acquisitions involves a high degree of uncertainty.

Acquisitions typically entail many risks and could result in difficulties in integrating operations, personnel, technologies and products.

If we are not able to successfully integrate our acquisitions, we may not obtain the advantages and synergies that the acquisitions were intended to create, which may have a material adverse effect on our business, results

of operations, financial condition and cash flows, our ability to develop and introduce new products and the market price of our stock.

The environment in which we operate makes it increasingly difficult to accurately forecast our business performance.

Significant changes and volatility in most aspects of the current business environment, including financial markets, consumer behavior, speed of technological, regulatory and competitive changes, and the continued impact of COVID-19, make it increasingly difficult for us to predict our revenues and earnings into the future.

Our quarterly sales and profits depend substantially on the volume and timing of orders fulfilled during the quarter, and such orders are difficult to forecast.

Product demand is dependent upon the capital spending budgets of our customers and prospects as well as government funding policies and matters of public policy as well as product and economic cycles that can affect the spending decisions of these entities.

As a result, any revenue, earnings or financial guidance or outlook which we have given or might give may turn out to be inaccurate.

Though we endeavor to give reasonable estimates of future revenues, earnings and financial information at the time we give such guidance, based on then-current conditions, there is a significant risk that such guidance or outlook will turn out to be incorrect.

Historically, companies that have overstated their operating guidance have suffered significant declines in their stock price when such results are announced to the public.

There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with GAAP.

Furthermore, portions of GAAP require the use of fair value models which are variable in application and methodology from appraiser to appraiser.

Any changes in estimates, judgments and assumptions used could have a material adverse effect on our business, financial position and operating results.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Such assumptions and estimates include those related to revenue recognition, accruals for product returns, allowances for doubtful accounts, valuation of inventory, impairment of intangibles and long-lived assets, accounting for leases, accounting for income taxes and stock-based compensation and allowances for uncertainties.

These factors are also influenced by regular changes to GAAP, some of which are material to most companies.

These changes introduce risk to our financial reporting processes due to implementation and internal control implications.

We base the aforementioned estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as discussed in greater detail in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our actual operating results may differ and fall below our assumptions and the financial forecasts of securities analysts and investors, resulting in a significant decline in our stock price.

Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results.

We are subject to the continuous examination of our income tax returns by the Internal Revenue Service, or IRS, and other tax authorities.

It is possible that tax authorities may disagree with certain positions we have taken, and any adverse outcome of such a review or audit could have a negative effect on our financial position and operating results.

We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes, but the determination of our provision for income taxes and other tax liabilities requires significant judgment by management, and there are transactions where the ultimate tax determination is uncertain.

Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made.

There can be no assurance that the outcomes from continuous examinations will not have an adverse effect on our business, financial condition, and results of operations.

We are subject to various privacy and consumer protection laws.

Our privacy policy is posted on our website, and any failure by us or our vendor or other business partners to comply with it or with federal, state or international privacy, data protection or security laws or regulations could result in regulatory or litigation-related actions against us, legal liability, fines, damages and other costs.

Substantial expenses and operational changes may be required in connection with maintaining compliance with such laws, and in particular

certain emerging privacy laws are still subject to a high degree of uncertainty as to their interpretation and application.

For example, in May 2018, the General Data Protection Regulation (the “GDPR”) began to fully apply to the processing of personal information collected from individuals located in the European Union.

The GDPR has created new compliance obligations and has significantly increased fines for noncompliance.

Although we take steps to protect the security of our customers’ personal information, we may be required to expend significant resources to comply with data breach requirements if third parties improperly obtain and use the personal information of our customers or we otherwise experience a data loss with respect to customers’ personal information.

A breach of our network security and systems could have negative consequences for our business and future prospects, including possible fines, penalties and damages, reduced customer demand for our products, and harm to our reputation and brand.

Risks Related to Our Industry

We are subject to substantial government regulation that

is subject to change and could force us to make modifications to how we develop, manufacture, market and price our products.

The medical device industry is regulated

extensively by governmental authorities, principally the FDA in the U.S.

We are subject to substantial government regulation that is subject to change and could force us to make modifications to how we develop, manufacture, market and price our products.

The medical device industry is regulated extensively by governmental authorities, principally the FDA in the U.S.

and corresponding state and foreign regulatory agencies.

The majority of our manufacturing processes are required to comply with quality systems regulations, including current good manufacturing

practice requirements that cover the methods and documentation of the design, testing, production, control, quality assurance,

labeling, packaging and shipping of our products.

Failure to comply with applicable medical device regulatory requirements could

result in, among other things, warning letters, fines, injunctions, civil penalties, repairs, replacements, refunds, recalls or

seizures of products, total or partial suspensions of production, refusal of the FDA or other regulatory agencies to grant pre-market

clearances or approvals for our products, withdrawals or suspensions of future or current clearances or approvals and criminal

In addition, our products are subject to

pre-clearance requirements by the FDA and similar international agencies that govern a wide variety of product activities from

design and development to labeling, manufacturing, promotion, sales and distribution.

Compliance with these regulations may be

time consuming, burdensome and expensive for us.

The failure to obtain, or the loss or suspension of any such pre-approval, would

negatively affect our ability to sell our products and harm our anticipated revenues.

Foreign governmental authorities that regulate

the manufacture and sale of medical devices have become increasingly stringent and, to the extent we sell our products in foreign

countries, we may be subject to rigorous regulation in the future.

Regulatory changes could result in restrictions on our ability

to carry on or expand our operations, higher than anticipated costs or lower than anticipated revenue.

If we fail to obtain, or experience significant delays

in obtaining, FDA clearances or other necessary approvals to commercially distribute new products, our ability to maintain profitability

or grow will suffer.

Our current products are Class II

medical devices and hence require regulatory pre-market approval by the FDA and other federal and state authorities prior to their

sale in the U.S.

Similar approvals are required by foreign governmental authorities for sale of our products outside of the U.S.,

including the EU.

The majority of our manufacturing processes are required to comply with quality systems regulations, including current good manufacturing practice requirements that cover the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging and shipping of our products.

Failure to comply with applicable medical device regulatory requirements could result in, among other things, warning letters, fines, injunctions, civil penalties, repairs, replacements, refunds, recalls or seizures of products, total or partial suspensions of production, refusal of the FDA or other regulatory agencies to grant pre-market clearances or approvals for our products, withdrawals or suspensions of future or current clearances or approvals and criminal prosecution.

In addition, our products are subject to pre-clearance requirements by the FDA and similar international agencies that govern a wide variety of product activities from design and development to labeling, manufacturing, promotion, sales and distribution.

Compliance with these regulations may be time consuming, burdensome and expensive for us.

The failure to obtain, or the loss or suspension of any such pre-approval, would negatively affect our ability to sell our products and harm our anticipated revenues.

Foreign governmental authorities that regulate the manufacture and sale of medical devices have become increasingly stringent and, to the extent we sell our products in foreign countries, we may be subject to rigorous regulation in the future.

Regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated revenue.

If we fail to obtain, or experience significant delays in obtaining, FDA clearances or other necessary approvals to commercially distribute new products, our ability to maintain profitability or grow will suffer.

Our current products are Class II medical devices and hence require regulatory pre-market approval by the FDA and other federal and state authorities prior to their sale in the U.S.

Similar approvals are required by foreign governmental authorities for sale of our products outside of the U.S., including the EU.

We are responsible for obtaining the applicable regulatory approval for the commercial distribution of our products.

As part of our strategy, we plan to seek approvals for new MRI compatible products.

The process of obtaining approvals is costly

and time consuming, and there can be no assurance that we will obtain the required approvals on a timely basis, or at all.

to receive approvals for new products will hurt our ability to grow.

We are subject to risks associated with doing business

outside of the U.S.

The process of obtaining approvals is costly and time consuming, and there can be no assurance that we will obtain the required approvals on a timely basis, or at all.

Failure to receive approvals for new products will hurt our ability to grow.

We are subject to risks associated with doing business outside of the U.S.

Sales to customers outside of the U.S.

historically comprised of approximately one-tenth to one-third of our net revenues and we expect that non-U.S.

sales will contribute

to future growth.

A majority of our international sales originate from Europe and Japan, and we also make sales in Canada, Hong

Kong, Australia, Mexico and certain parts of the Middle East.

have historically comprised of approximately one-fifth of our net revenues and we expect that non-U.S.

sales will contribute to future growth.

A majority of our international sales originate from Europe and Japan, and we also make sales in Canada, Hong Kong, Australia, Mexico and certain parts of the Middle East.

The risks associated with operations outside the U.S.

1 unchanged sentence

● possible failure to comply with anti-bribery laws such as the U.S.

Foreign Corrupt Practices Act and similar anti-bribery laws

in other jurisdictions;

Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions;

● foreign currency fluctuations that can impact our financial statements when foreign denominations are translated into U.S.

● different local product preferences and product requirements, which might increase with increasing nationalism;

trade protection and restriction measures under international trade treaties and via tariffs, and import or export licensing

requirements;

● trade protection and restriction measures under international trade treaties and via tariffs, and import or export licensing requirements;

● difficulty in establishing, staffing and managing non-U.S.

failure to maintain relationships with distributors, especially those who have assisted with foreign regulatory or government

● failure to maintain relationships with distributors, especially those who have assisted with foreign regulatory or government clearances;

● changes in labor, environmental, health and safety laws;

● healthcare crises or epidemics;

● potentially negative consequences from changes in or interpretations of tax laws, including U.S.

state and foreign tax jurisdiction

responses to recent changes in U.S.

state and foreign tax jurisdiction responses to recent changes in U.S.

federal tax laws;

political instability and actual or anticipated military or political conflicts, including instability related to war and terrorist

attacks and to political matters such as Brexit;

● political instability and actual or anticipated military or political conflicts, including instability related to war and terrorist attacks and to political matters such as Brexit;

● economic instability, inflation, deflation, recession or interest rate fluctuations;

1 unchanged sentence

● minimal or diminished protection of intellectual property.

These risks, individually or in the aggregate,

could have an adverse effect on our results of operations and financial condition.

We may incur product liability losses, or become subject

to other lawsuits related to our products, business, and insurance coverage could be inadequate or unavailable to cover these losses.

Our business is subject to potential product

liability risks that are inherent in the design, development, manufacture and marketing of our medical devices and consumable products.

We carry third-party product liability insurance coverage to protect against such risks, but there can be no assurance that our

policy is adequate.

In the ordinary course of business, we may become the subject of product liability claims and lawsuits alleging

that our products have resulted or could result in an unsafe condition or injury to patients.

Any product liability claim brought

against us, with or without merit, could be costly to defend and could result in settlement payments and adjustments not covered

by or in excess of our product liability insurance.

We currently have third-party product liability insurance with maximum coverage

of $5,000,000;

however, such coverage requires a substantial deductible that we must pay before becoming eligible to receive any

insurance proceeds.

These risks, individually or in the aggregate, could have an adverse effect on our results of operations and financial condition.

We may incur product liability losses, or become subject to other lawsuits related to our products, business, and insurance coverage could be inadequate or unavailable to cover these losses.

Our business is subject to potential product liability risks that are inherent in the design, development, manufacture and marketing of our medical devices and consumable products.

We carry third-party product liability insurance coverage to protect against such risks, but there can be no assurance that our policy is adequate.

In the ordinary course of business, we may become the subject of product liability claims and lawsuits alleging that our products have resulted or could result in an unsafe condition or injury to patients.

Any product liability claim brought against us, with or without merit, could be costly to defend and could result in settlement payments and adjustments not covered by or in excess of our product liability insurance.

We currently have third-party product liability insurance with maximum coverage of $5,000,000;

however, such coverage requires a substantial deductible that we must pay before becoming eligible to receive any insurance proceeds.

The deductible amount is currently equal to $50,000 per occurrence and $150,000 in the aggregate.

to pay for defending product liability or other claims that are not covered by our insurance.

These payments could have a material

adverse effect on our profitability and financial condition.

Product liability claims and lawsuits, safety alerts, recalls or corrective

actions, regardless of their ultimate outcome, could have a material adverse effect on our business, financial condition, reputation

and on our ability to attract and retain customers.

In addition, we may not be able to obtain insurance in the future on terms

acceptable to us or at all.

Defects or failures associated with our products and/or

our quality control systems could lead to the filing of adverse event reports, recalls or safety alerts and negative publicity

and could subject us to regulatory actions.

Safety problems associated with our products

could lead to a product recall or the issuance of a safety alert relating to such products and result in significant costs and

negative publicity.

We will have to pay for defending product liability or other claims that are not covered by our insurance.

These payments could have a material adverse effect on our profitability and financial condition.

Product liability claims and lawsuits, safety alerts, recalls or corrective actions, regardless of their ultimate

outcome, could have a material adverse effect on our business, financial condition, reputation and on our ability to attract and retain customers.

In addition, we may not be able to obtain insurance in the future on terms acceptable to us or at all.

Defects or failures associated with our products and/or our quality control systems could lead to the filing of adverse event reports, recalls or safety alerts and negative publicity and could subject us to regulatory actions.

Safety problems associated with our products could lead to a product recall or the issuance of a safety alert relating to such products and result in significant costs and negative publicity.

An adverse event involving one of our products could require us to file an adverse event report with the FDA.

Such disclosure could result in reduced market acceptance and demand for all our products, and could harm our reputation and our

ability to market our products in the future.

In some circumstances, adverse events arising from or associated with the design,

manufacture or marketing of our products could result in the suspension or delay of regulatory reviews of our applications for

new product approvals or clearances.

We may also voluntarily undertake a recall

of our products or temporarily shut down production lines based on internal safety, quality monitoring and testing data.

future product recalls we have made and continue to invest in our quality systems, processes and procedures.

We will continue to

make improvements to our products and systems to further reduce issues related to patient safety.

However, there can be no assurance our efforts

or systems will be sufficient.

Such disclosure could result in reduced market acceptance and demand for all our products, and could harm our reputation and our ability to market our products in the future.

In some circumstances, adverse events arising from or associated with the design, manufacture or marketing of our products could result in the suspension or delay of regulatory reviews of our applications for new product approvals or clearances.

We may also voluntarily undertake a recall of our products or temporarily shut down production lines based on internal safety, quality monitoring and testing data.

To avoid future product recalls we have made and continue to invest in our quality systems, processes and procedures.

We will continue to make improvements to our products and systems to further reduce issues related to patient safety.

However, there can be no assurance our efforts or systems will be sufficient.

Future quality concerns, whether real or perceived, could adversely affect our operating results.

Our products or product types, or MR imaging could be

subject to negative publicity, which could have a material adverse effect on our financial position and results of operations and

could cause the market value of our common stock to decline.

The market’s perception of our products

could be harmed if any of our products or similar products offered by others in our industry become the subject of negative publicity

due to a product safety issue, withdrawal, recall, or are proven or are claimed to be harmful to patients.

The harm to market perception

may have a material adverse effect on our business, financial position and results of operations and could cause the market value

of our common stock to decline.

Our products are designed for use around

MRI scanners.

MRI has been an important imaging diagnostic for some time now, however, should MRI technology change materially

or decline in usage due to new technologies or concerns about costs or efficacy of MR imaging, our products would suffer as MRI

usage and installations declined.

Such a matter may also have a material adverse effect on our business, financial position and

results of operations and could cause the market value of our common stock to decline.

healthcare policy and changes thereto, including

the Affordable Care Act and PPACA, may have a material adverse effect on our financial condition and results of operations.

Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively,

the “PPACA”), enacted in 2010, implemented changes that significantly impacted the medical device industry.

on January 1, 2013, the Affordable Care Act imposed a 2.3 percent excise tax on sales of products defined as “medical

devices”

by the regulations of the FDA.

We believe that all our current products are “medical devices”

the meaning of the FDA regulations.

On December 18, 2015, under the Consolidated Appropriations Act of 2015, the medical

device excise tax was suspended for two years beginning on January 1, 2016.

New legislation passed in January 2018 further

suspended the medical device excise tax through December 31, 2019.

While this tax was suspended by legislation for 2018 and

2019, its return beginning on January 1, 2020 and potential increases from the 2.3 percent level in future years would negatively

impact our operating results.

We cannot currently foresee that the suspension will be reinstated.

Other significant measures contained in

the PPACA include research on the comparative clinical effectiveness of different technologies and procedures, initiatives to revise

Medicare payment methodologies, such as bundling of payments across the continuum of care by providers and physicians, and initiatives

to promote quality indicators in payment methodologies.

The PPACA also includes significant new fraud and abuse measures, including

required disclosures of financial payments to and arrangements with physician customers, lower thresholds for violations and increasing

potential penalties for such violations.

Since its enactment, there have been judicial

and Congressional challenges to certain aspects of PPACA.

In January 2017, Congress voted to adopt a budget resolution for

fiscal year 2017, or the Budget Resolution, that authorizes the implementation of legislation that would repeal portions of PPACA.

The Budget Resolution is not a law;

however, it was widely viewed as the first step toward the passage of legislation that would

repeal certain aspects of PPACA.

Further, on January 20, 2017, President Trump signed an Executive Order directing federal

agencies with authorities and responsibilities under PPACA to waive, defer, grant exemptions from, or delay the implementation

of any provision of PPACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health

insurers, or manufacturers of pharmaceuticals or medical devices.

In addition, with enactment of the Tax Cuts and Jobs Act of 2017,

in December 2017, Congress repealed the “individual mandate”

portion of PPACA.

The repeal of this provision, which

requires most Americans to carry a minimal level of health insurance, became effective in January 2019.

The potential impact

of these efforts to repeal or defer and delay enforcement of PPACA on our business remains unclear.

Congress also could consider

subsequent legislation to replace elements of PPACA that are repealed.

Because of the continued uncertainty about the implementation

of the PPACA, including the potential for further legal challenges or repeal of PPACA, we cannot quantify or predict with any certainty

the likely impact of the PPACA or its repeal on our business, prospects, financial condition or results of operations.

We are subject to healthcare fraud and abuse regulations

that could result in significant liability, require us to change our business practices and restrict our operations in the future.

We and our customers are subject to various

federal, state and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claims

Violations of these laws are punishable by criminal or civil sanctions, including substantial fines, imprisonment and exclusion

from participation in healthcare programs such as Medicare and Medicaid, and Veterans’

Administration health programs and

health programs outside the U.S.

These laws and regulations are broad in scope and are subject to evolving interpretations, which

could require us to alter one or more of our sales or marketing practices.

In addition, violations of these laws, or allegations

of such violations, could disrupt our business and result in a material adverse effect on our sales, profitability and financial

Furthermore, since many of our customers rely on reimbursement from Medicare, Medicaid and other governmental programs

to cover a substantial portion of their expenditures, if we or our customers are excluded from such programs as a result of a violation

of these laws, it could have an adverse effect on our results of operations and financial condition.

We have developed and implemented business

practices and processes to train our personnel to perform their duties in compliance with healthcare fraud and abuse laws and conduct

informal oversight to detect and prevent these types of fraud and abuse.

However, we lack formal written policies and procedures

at this time.

If we are unable to formally document and implement the controls and procedures required in a timely manner or we

are otherwise found to be in violation of such laws, we might suffer adverse regulatory consequences or face criminal sanctions,

which could harm our operations, financial reporting or financial results.

Our products or product types, or MR imaging could be subject to negative publicity, which could have a material adverse effect on our financial position and results of operations and could cause the market value of our common stock to decline.

The market’s perception of our products could be harmed if any of our products or similar products offered by others in our industry become the subject of negative publicity due to a product safety issue, withdrawal, recall, or are proven or are claimed to be harmful to patients.

The harm to market perception may have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

Our products are designed for use around MRI scanners.

MRI has been an important imaging diagnostic for some time now, however, should traditional MRI technology change materially or decline in usage due to new technologies or concerns about costs or efficacy of MR imaging, our products would suffer as MRI usage and installations declined.

Such a matter may also have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

healthcare policy and changes thereto, including the Patient Protection and Affordable Care Act, may have a material adverse effect on our financial condition and results of operations.

In 2010 the Patient Protection and Affordable Care Act (ACA) was enacted.

While the provisions of the ACA are intended to expand access to health insurance coverage and improve the quality of healthcare over time, other provisions of the legislation, including Medicare provisions aimed at decreasing costs, comparative effectiveness research, an independent payment advisory board and pilot programs to evaluate alternative payment methodologies, are having a meaningful effect on the way healthcare is developed and delivered and could have a significant effect on our business.

There had been ongoing litigation and congressional efforts to modify or repeal all or certain provisions of the ACA.

We face uncertainties that might result from modification or repeal of any of the provisions of the ACA, or reimposision of any original provisions since removed or relaxed, including as a result of current and future executive orders and legislative actions.

We cannot predict what other healthcare programs and regulations will ultimately be implemented at the federal or state level or the effect of any future legislation or regulation in the United States may have on our business.

We are subject to healthcare fraud and abuse regulations that could result in significant liability, require us to change our business practices and restrict our operations in the future.

We and our customers are subject to various U.S.

federal, state and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claims laws.

Violations of these laws are punishable by criminal or civil sanctions, including substantial fines, imprisonment and exclusion from participation in healthcare programs such as Medicare and Medicaid, and Veterans’ Administration health programs and health programs outside the U.S.

These laws and regulations are broad in scope and are subject to evolving interpretations, which could require us to alter one or more of our sales or marketing practices.

In addition, violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our sales, profitability and financial condition.

Furthermore, since many of our customers rely on reimbursement from Medicare, Medicaid and other governmental programs to cover a substantial portion of their expenditures, if we or our customers are excluded from such programs as a result of a violation of these laws, it could have an adverse effect on our results of operations and financial condition.

We have developed and implemented business practices and processes to train our personnel to perform their duties in compliance with healthcare fraud and abuse laws and conduct informal oversight to detect and prevent these types of fraud and abuse.

However, we lack formal written policies and procedures at this time.

If we are unable to formally document and implement the controls and procedures required in a timely manner or we are otherwise found to be in violation of such laws, we might suffer adverse regulatory consequences or face criminal sanctions, which could harm our operations, financial reporting or financial results.

We could be adversely affected by violations of the U.S.

Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.

Foreign Corrupt Practices Act and

similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to non-U.S.

Foreign Corrupt Practices Act and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to non-U.S.

officials for the purpose of obtaining or retaining business.

We intend to adopt policies for compliance with these anti-bribery

laws, which often carry substantial penalties.

We cannot assure you that our internal control

policies and procedures always will protect us from reckless or other inappropriate acts committed by our affiliates, employees

Violations of these laws, or allegations of such violations, could have a material adverse effect on our business, financial

position and results of operations and could cause the market value of our common stock to decline.

We and our suppliers and customers are required to obtain

regulatory approvals to comply with regulations applicable to medical devices and infusion pumps, and these approvals could result

in delays or increased costs in developing new products.

December 2014, the FDA issued guidance entitled “Infusion Pumps Total Product Life Cycle.”

This guidance

established substantial additional pre-market requirements for new and modified infusion pumps.

Through this guidance, the FDA

indicated more data demonstrating product safety will be required for future 510(k) submissions for infusion pumps, including

the potential for more clinical and human factors data.

The process for obtaining regulatory approvals to market infusion pumps

and related accessories have become more costly and time consuming.

The impact of this guidance is likely to result in a more time

consuming and costly process to obtain regulatory clearance to market infusion pumps.

In addition, new requirements could result

in longer delays for the clearance of new products, modification of existing infusion pump products or remediation of existing

products in the market.

Future delays in the receipt of, or failure to obtain, approvals could result in delayed or no realization

of product revenues.

We and our suppliers and customers are required to maintain

compliance with regulations applicable to medical devices and infusion pumps, and it could be costly to comply with these regulations

and to develop compliant products and processes.

Failure to comply with these regulations could subject us to sanctions and could

adversely affect our business.

if we are able to obtain approval for introducing new products to the market, we and our suppliers may not be able to remain in

compliance with applicable FDA and other material regulatory requirements once clearance or approval has been obtained for a product.

These requirements include, among other things, regulations regarding manufacturing practices, product labeling, off-label marketing,

advertising and post-marketing reporting, adverse event reports and field alerts.

Compliance with these FDA requirements is subject

to continual review and is monitored through periodic inspections by the FDA.

For example, the FDA conducted routine inspections

of our facility in Winter Springs, Florida in July 2016.

The FDA issued a Form 483 on July 18, 2016 resulting from

an inspection of our facility between July 11 and July 18, 2016 that identified three observations.

These observations

were related to procedural and documentation issues associated with the CAPA system, vendor requirements and complaint investigation.

We submitted responses to the Form 483

in August 2016 and October 2016 in which we described our proposed corrective and preventative actions to address each

of the observations.

As part of our response, on October 13, 2016 we initiated a customer follow up to our August 2012

Safety Alert and made available an updated instruction card for customers.

We intend to adopt policies for compliance with these anti-bribery laws, which often carry substantial penalties.

We cannot assure you that our internal control policies and procedures always will protect us from reckless or other inappropriate acts committed by our affiliates, employees or agents.

Violations of these laws, or allegations of such violations, could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

We and our suppliers and customers are required to obtain regulatory approvals to comply with regulations applicable to medical devices and infusion pumps, and these approvals could result in delays or increased costs in developing new products.

In December 2014, the FDA issued guidance entitled “Infusion Pumps Total Product Life Cycle.” This guidance established substantial additional pre-market requirements for new and modified infusion pumps.

Through this guidance, the FDA indicated more data demonstrating product safety will be required for future 510(k) submissions for infusion pumps, including the potential for more clinical and human factors data.

The process for obtaining regulatory approvals to market infusion pumps and related accessories have become more costly and time consuming.

The impact of this guidance is likely to result in a more time consuming and costly process to obtain regulatory clearance to market infusion pumps.

In addition, new requirements could result in longer delays for the clearance of new products, modification of existing infusion pump products or remediation of existing products in the market.

Future delays in the receipt of, or failure to obtain, approvals could result in delayed or no realization of product revenues.

We and our suppliers and customers are required to maintain compliance with regulations applicable to medical devices and infusion pumps, and it could be costly to comply with these regulations and to develop compliant products and processes.

Failure to comply with these regulations could subject us to sanctions and could adversely affect our business.

Even if we are able to obtain approval for introducing new products to the market, we and our suppliers may not be able to remain in compliance with applicable FDA and other material regulatory requirements once clearance or approval has been obtained for a product.

These requirements include, among other things, regulations regarding manufacturing practices, product labeling, off-label marketing, advertising and post-marketing reporting, adverse event reports and field alerts.

Compliance with these FDA requirements is subject to continual review and is monitored

through periodic inspections by the FDA.

For example, the FDA conducted routine inspections of our facility in Winter Springs, Florida in July 2016.

The FDA issued a Form 483 on July 18, 2016 resulting from an inspection of our facility between July 11 and July 18, 2016 that identified three observations.

These observations were related to procedural and documentation issues associated with the CAPA system, vendor requirements and complaint investigation.

We submitted responses to the Form 483 in August 2016 and October 2016 in which we described our proposed corrective and preventative actions to address each of the observations.

As part of our response, on October 13, 2016 we initiated a customer follow up to our August 2012 Safety Alert and made available an updated instruction card for customers.

This Safety Alert was closed in August 2019.

In addition, manufacturing flaws, component

failures, design defects, off-label uses or inadequate disclosure of product related information could result in an unsafe condition

or the injury or death of a patient.

All of these events could harm our sales, margins and profitability in the affected periods

and may have a material adverse effect on our business.

Any adverse regulatory action or action taken by us to maintain appropriate

regulatory compliance, with respect to these laws and regulations could disrupt our business and have a material adverse effect

on our sales, profitability and financial condition.

Furthermore, an adverse regulatory action with respect to any of our products

or operating procedures or to our suppliers’

manufacturing facilities could materially harm our reputation in the marketplace.

Our operations are subject to environmental laws and regulations,

with which compliance is costly and which exposes us to penalties for non-compliance.

Our business, products, and product candidates

are subject to federal, state, and local laws and regulations relating to the protection of the environment, worker health and

safety and the use, management, storage, and disposal of hazardous substances, waste, and other regulated materials.

These environmental

laws and regulations could require us to pay for environmental remediation and response costs at third-party locations where we

dispose of or recycle hazardous substances.

The costs of complying with these various environmental requirements, as they now exist

or as may be altered in the future, could adversely affect our financial condition and results of operations.

In addition, manufacturing flaws, component failures, design defects, off-label uses or inadequate disclosure of product related information could result in an unsafe condition or the injury or death of a patient.

All of these events could harm our sales, margins and profitability in the affected periods and may have a material adverse effect on our business.

Any adverse regulatory action or action taken by us to maintain appropriate regulatory compliance, with respect to these laws and regulations could disrupt our business and have a material adverse effect on our sales, profitability and financial condition.

Furthermore, an adverse regulatory action with respect to any of our products or operating procedures or to our suppliers’ manufacturing facilities could materially harm our reputation in the marketplace.

Our operations are subject to environmental laws and regulations, with which compliance is costly and which exposes us to penalties for non-compliance.

Our business, products, and product candidates are subject to federal, state, and local laws and regulations relating to the protection of the environment, worker health and safety and the use, management, storage, and disposal of hazardous substances, waste, and other regulated materials.

These environmental laws and regulations could require us to pay for environmental remediation and response costs at third-party locations where we dispose of or recycle hazardous substances.

The costs of complying with these various environmental requirements, as they now exist or as may be altered in the future, could adversely affect our financial condition and results of operations.

Risks Relating to our Intellectual Property

Our success depends on our ability to protect our intellectual

We intend to rely on a combination of patents,

trademarks, trade secrets, know-how, license agreements and contractual provisions to establish and protect our proprietary rights

to our technologies and products.

We cannot guarantee that the steps we have taken or will take to protect our intellectual property

rights will be adequate or that they will deter infringement, misappropriation or violation of our intellectual property.

fail to secure patents that are important to our business, and we cannot guarantee that any pending U.S.

trademark or patent application,

if ultimately issued, will provide us some relative competitive advantage.

Litigation may be necessary to enforce our intellectual

property rights and to determine the validity and scope of our proprietary rights.

Any litigation could result in substantial

expenses and may not adequately protect our intellectual property rights.

In addition, the laws of some of the countries in which

our products may in the future be sold may not protect our products and intellectual property to the same extent as U.S.

Our success depends on our ability to protect our intellectual property.

We intend to rely on a combination of patents, trademarks, trade secrets, know-how, license agreements and contractual provisions to establish and protect our proprietary rights to our technologies and products.

We cannot guarantee that the steps we have taken or will take to protect our intellectual property rights will be adequate or that they will deter infringement, misappropriation or violation of our intellectual property.

We may fail to secure patents that are important to our business, and we cannot guarantee that any pending U.S.

trademark or patent application, if ultimately issued, will provide us some relative competitive advantage.

Litigation may be necessary to enforce our intellectual property rights and to determine the validity and scope of our proprietary rights.

Any litigation could result in substantial expenses and may not adequately protect our intellectual property rights.

In addition, the laws of some of the countries in which our products may in the future be sold may not protect our products and intellectual property to the same extent as U.S.

laws, or at all.

We may be unable to protect our rights in trade secrets and unpatented proprietary technology in these countries.

our trade secrets become known, we may lose our competitive advantages.

Even if we are able to secure necessary

patents in the U.S., we may not be able to secure necessary patents and trademarks in foreign countries in which we sell our products

or plan to sell our products.

If our trade secrets become known, we may lose our competitive advantages.

Even if we are able to secure necessary patents in the U.S., we may not be able to secure necessary patents and trademarks in foreign countries in which we sell our products or plan to sell our products.

In 2013, the U.S.

transitioned to a “first inventor to file”

system for patents in which,

assuming the other requirements for patentability are met, the first inventor to file a patent application is entitled to a patent.

transitioned to a “first inventor to file” system for patents in which, assuming the other requirements for patentability are met, the first inventor to file a patent application is entitled to a patent.

We may be subject to a third-party pre-issuance submission of prior art to the U.S.

Patent and Trademark Office, or become involved

in opposition, derivation, reexamination, inter parties review or interference proceedings challenging our patent rights or the

patent rights of others.

An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or

invalidate our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without

payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights.

Our unpatented trade secrets, know-how, confidential and

proprietary information, and technology may be inadequately protected.

We rely on unpatented trade secrets, know-how

and technology.

This intellectual property is difficult to protect, especially in the medical device industry, where much of the

information about a product must be submitted to regulatory authorities during the regulatory approval process.

We seek to protect

trade secrets, confidential information and proprietary information, in part, by entering into confidentiality and invention assignment

agreements with employees, consultants, and others.

These parties may breach or terminate these agreements, and we may not have

adequate remedies for such breaches.

Furthermore, these agreements may not provide meaningful protection for our trade secrets

or other confidential or proprietary information or result in the effective assignment to us of intellectual property, and may

not provide an adequate remedy in the event of unauthorized use or disclosure of confidential information or other breaches of

the agreements.

Despite our efforts to protect our trade secrets and our other confidential and proprietary information, we or

our collaboration partners, board members, employees, consultants, contractors, or scientific and other advisors may unintentionally

or willfully disclose our proprietary information to competitors.

There is a risk that our trade secrets and

other confidential and proprietary information could have been, or could, in the future, be shared by any of our former employees

with, and be used to the benefit of, any company that competes with us.

If we fail to maintain trade secret protection

or fail to protect the confidentiality of our other confidential and proprietary information, our competitive position may be adversely

Patent and Trademark Office, or become involved in opposition, derivation, reexamination, inter parties review or interference proceedings challenging our patent rights or the patent rights of others.

An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights.

Our unpatented trade secrets, know-how, confidential and proprietary information, and technology may be inadequately protected.

We rely on unpatented trade secrets, know-how and technology.

This intellectual property is difficult to protect, especially in the medical device industry, where much of the information about a product must be submitted to regulatory authorities during the regulatory approval process.

We seek to protect trade secrets, confidential information and proprietary information, in part, by entering into confidentiality and invention assignment agreements with employees, consultants, and others.

These parties may breach or terminate these agreements, and we may not have adequate remedies for such breaches.

Furthermore, these agreements may not provide meaningful protection for our trade secrets or other confidential or proprietary information or result in the effective assignment to us of intellectual property, and may not provide an adequate remedy in the event of unauthorized use or disclosure of confidential information or other breaches of the agreements.

Despite our efforts to protect our trade secrets and our other confidential and proprietary information, we or our collaboration partners, board members, employees, consultants, contractors, or scientific and other advisors may unintentionally or willfully disclose our proprietary information to competitors.

There is a risk that our trade secrets and other confidential and proprietary information could have been, or could, in the future, be shared by any of our former employees with, and be used to the benefit of, any company that competes with us.

If we fail to maintain trade secret protection or fail to protect the confidentiality of our other confidential and proprietary information, our competitive position may be adversely affected.

Competitors may also independently discover our trade secrets.

Enforcement of claims that a third party has illegally

obtained and is using trade secrets is expensive, time consuming and uncertain.

If our competitors independently develop equivalent

knowledge, methods and know-how, we would not be able to effectively assert our trade secret protections against them, which could

have a material adverse effect on our business.

There can be no assurance of timely patent review and

approval to minimize competition and generate sufficient revenues.

There can be no assurance that the Patent

and Trademark Office will have sufficient resources to review our patent applications in a timely manner.

Consequently, even if

our patent applications are ultimately successful, our patent applications may be delayed, which would prevent intellectual property

protection for our products.

If we fail to successfully commercialize our products due to the lack of intellectual property protection,

we may be unable to generate sufficient revenues to meet or grow our business according to our expected goals and this may have

a materially adverse effect on our profitability, financial condition, and operations.

We may become involved in patent litigation or other intellectual

property proceedings relating to our future product approvals, which could result in liability for damages or delay or stop our

development and commercialization efforts.

The medical device industry has been characterized

by significant litigation and other proceedings regarding patents, patent applications, and other intellectual property rights.

The situations in which we may become parties to such litigation or proceedings may include any third parties (which may have substantially

greater resources than we have) initiating litigation claiming that our products infringe their patent or other intellectual property

Enforcement of claims that a third party has illegally obtained and is using trade secrets is expensive, time consuming and uncertain.

If our competitors independently develop equivalent knowledge, methods and know-how, we would not be able to effectively assert our trade secret protections against them, which could have a material adverse effect on our business.

There can be no assurance of timely patent review and approval to minimize competition and generate sufficient revenues.

There can be no assurance that the Patent and Trademark Office will have sufficient resources to review our patent applications in a timely manner.

Consequently, even if our patent applications are ultimately successful, our patent applications may be delayed, which would prevent intellectual property protection for our products.

If we fail to successfully commercialize our products due to the lack of intellectual property protection, we may be unable to generate sufficient revenues to meet or grow our business according to our expected goals and this may have a materially adverse effect on our profitability, financial condition, and operations.

We may become involved in patent litigation or other intellectual property proceedings relating to our future product approvals, which could result in liability for damages or delay or stop our development and commercialization efforts.

The medical device industry has been characterized by significant litigation and other proceedings regarding patents, patent applications, and other intellectual property rights.

The situations in which we may become parties to such litigation or proceedings may include any third parties (which may have substantially greater resources than we have) initiating litigation claiming that our products infringe their patent or other intellectual property rights;

in such case, we will need to defend against such proceedings.

The large number of patents, the rapid rate

of new patent applications and issuances, the complexities of the technologies involved and the uncertainty of litigation significantly

increase the risks related to any patent litigation.

Any potential intellectual property litigation also could force us to do one

or more of the following:

The large number of patents, the rapid rate of new patent applications and issuances, the complexities of the technologies involved and the uncertainty of litigation significantly increase the risks related to any patent litigation.

Any potential intellectual property litigation also could force us to do one or more of the following:

● stop selling, making, or using products that use the disputed intellectual property;

obtain a license from the intellectual property owner to continue selling, making, licensing, or using products, which license

may require substantial royalty payments and may not be available on reasonable terms, or at all;

● obtain a license from the intellectual property owner to continue selling, making, licensing, or using products, which license may require substantial royalty payments and may not be available on reasonable terms, or at all;

● pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing;

● pay the attorney fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing;

redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and/or

If any of the foregoing events occur, we

may have to withdraw existing products from the market or may be unable to commercialize one or more of our products, all of which

could have a material adverse effect on our business, results of operations and financial condition.

As the number of participants

in our industry grows, the possibility of intellectual property infringement claims against us increases.

Furthermore, the costs of resolving any

patent litigation or other intellectual property proceeding, even if resolved in our favor, could be substantial.

Uncertainties

resulting from the initiation and continuation of patent litigation or other intellectual property proceedings could have a material

adverse effect on our ability to compete in the marketplace.

Patent litigation and other intellectual property proceedings may

also consume significant management time.

In the event that a competitor infringes

upon our patent or other intellectual property rights, enforcing those rights may be costly, difficult, and time-consuming.

if successful, litigation to enforce our intellectual property rights or to defend our patents against challenge could be expensive

and time-consuming and could divert our management’s attention.

We may not have sufficient resources to enforce our intellectual

property rights or to defend our patent or other intellectual property rights against a challenge.

If we are unsuccessful in enforcing

and protecting our intellectual property rights and protecting our products, it could materially harm our business.

There may also be situations where we use

our business judgment and decide to market and sell products, notwithstanding the fact that allegations of patent infringement(s) have

not been finally resolved by the courts (i.e., an “at-risk launch”).

The risk involved in doing so can be substantial

because the remedies available to the owner of a patent for infringement may include, among other things, damages measured by the

profits lost by the patent owner and not necessarily by the profits earned by the infringer.

In the case of a willful infringement,

the definition of which is subjective, such damages may be increased up to three times.

An adverse decision could have a material

adverse effect on our business, financial position and results of operations and could cause the market value of our common stock

In addition, we may indemnify our customers

and distributors with respect to infringement by our products of the proprietary rights of third parties.

Third parties may assert

infringement claims against our customers or distributors.

These claims may require us to initiate or defend protracted and costly

litigation on behalf of our customers or distributors, regardless of the merits of these claims.

If any of these claims succeed,

we may be forced to pay damages on behalf of our customers or distributors or may be required to obtain licenses for the products

If we cannot obtain all necessary licenses on commercially reasonable terms, our customers may be forced to stop using

our products.

We may be subject to claims that we, our board members,

employees or consultants have used or disclosed alleged trade secrets or other proprietary information belonging to third parties

and any such individuals who are currently affiliated with one of our competitors may disclose our proprietary technology or information.

As is commonplace in the medical device

industry, some of our board members, employees and consultants are or have been associated with other medical device companies

that compete with us.

● redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and/or infeasible.

If any of the foregoing events occur, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products, all of which could have a material adverse effect on our business, results of operations and financial condition.

As the number of participants in our industry grows, the possibility of intellectual property infringement claims against us increases.

Furthermore, the costs of resolving any patent litigation or other intellectual property proceeding, even if resolved in our favor, could be substantial.

Uncertainties resulting from the initiation and continuation of patent litigation or other intellectual property proceedings could have a material adverse effect on our ability to compete in the marketplace.

Patent litigation and other intellectual property proceedings may also consume significant management time.

In the event that a competitor infringes upon our patent or other intellectual property rights, enforcing those rights may be costly, difficult, and time-consuming.

Even if successful, litigation to enforce our intellectual property rights or to defend our patents against challenge could be expensive and time-consuming and could divert our management’s attention.

We may not have sufficient resources to enforce our intellectual property rights or to defend our patent or other intellectual property rights against a challenge.

If we are unsuccessful in enforcing and protecting our intellectual property rights and protecting our products, it could materially harm our business.

There may also be situations where we use our business judgment and decide to market and sell products, notwithstanding the fact that allegations of patent infringement(s) have not been finally resolved by the courts (i.e., an “at-risk launch”).

The risk involved in doing so can be substantial because the remedies available to the owner of a patent for infringement may include, among other things, damages measured by the profits lost by the patent owner and not necessarily by the profits earned by the infringer.

In the case of a willful infringement, the definition of which is subjective, such damages may be increased up to three times.

An adverse decision could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

In addition, we may indemnify our customers and distributors with respect to infringement by our products of the proprietary rights of third parties.

Third parties may assert infringement claims against our customers or distributors.

These claims may require us to initiate or defend protracted and costly litigation on behalf of our customers or distributors, regardless of the merits of these claims.

If any of these claims succeed, we may be forced to pay damages on behalf of our customers or distributors or may be required to obtain licenses for the products they use.

If we cannot obtain all necessary licenses on commercially reasonable terms, our customers may be forced to stop using our products.

We may be subject to claims that we, our board members, employees or consultants have used or disclosed alleged trade secrets or other proprietary information belonging to third parties and any such individuals who are currently affiliated with one of our competitors may disclose our proprietary technology or information.

As is commonplace in the medical device industry, some of our board members, employees and consultants are or have been associated with other medical device companies that compete with us.

For example, Mr.

Susi and a number of our other employees are former employees of Invivo Corporation

and/or other medical device firms.

While associated with such other companies, these individuals may have been exposed to research

and technology similar to the areas of research, technology, sales methodology, pricing models and other such matters in which

we are engaged.

We may become subject to future claims that we, our employees, board members, or consultants have inadvertently

or otherwise used or disclosed alleged trade secrets or other proprietary information of those companies.

Litigation may be necessary

to defend against such claims.

We have entered into confidentiality agreements

with our executives and key consultants.

However, we do not have, and are not planning to enter into, any confidentiality agreements

with our non-executive directors because they have a fiduciary duty of confidentiality as directors.

There is the possibility that any of our

former board members, employees, or consultants who are currently or who may be employed at, or associated with, one of our competitors

may unintentionally or willfully disclose our proprietary technology or information.

Susi and a number of our other employees are former employees of Invivo Corporation and/or other medical device firms.

While associated with such other companies, these individuals may have been exposed to research and technology similar to the areas of research, technology, sales methodology, pricing models and other such matters in which we are engaged.

We may become subject to future claims that we, our employees, board members, or consultants have inadvertently or otherwise used or disclosed alleged trade secrets or other proprietary information of those companies.

Litigation may be necessary to defend against such claims.

We have entered into confidentiality agreements with our executives and key consultants.

However, we do not have, and are not planning to enter into, any confidentiality agreements with our non-executive directors because they have a fiduciary duty of confidentiality as directors.

There is the possibility that any of our former board members, employees, or consultants who are currently or who may be employed at, or associated with, one of our competitors may unintentionally or willfully disclose our proprietary technology or information.

Risks Related to Ownership of Our Common Stock

Our common stock price has been and will likely continue

to be subject to significant fluctuations and volatility, and you may be unable to sell your shares at a fair price, or at all.

Our stock could be subject to wide fluctuations

in price in response to various factors, including the following:

Our common stock price has been and will likely continue to be subject to significant fluctuations and volatility, and you may be unable to sell your shares at a fair price, or at all.

Our stock could be subject to wide fluctuations in price in response to various factors, including the following:

● a lack of liquidity in the public trading of our common stock;

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● varying economic and market conditions in the U.S.;

negative developments impacting the medical device industry in general and changes in the market valuations of companies deemed

similar to us;

● negative developments impacting the medical device industry in general and changes in the market valuations of companies deemed similar to us;

● negative developments concerning our sources of manufacturing supply;

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● changes in our Board of Directors, management or key personnel;

the other factors described in this “Risk Factors”

Any one of the factors above, or the cumulative

effect of some of the factors referred to above, may result in significant fluctuations in our quarterly or annual operating results,

fluctuations in our share price and investors’

perception of our business.

If we fail to meet or exceed such expectations,

our business and stock price could be materially adversely affected.

Any use of capital to repurchase shares of our common

stock could have a material adverse effect on our stock price and our business.

Our Board of Directors has historically

authorized stock repurchase programs and, pursuant to these authoriations, we have used a significant amount of cash to repurchase

shares of common stock of our company.

Historically, we have opportunistically repurchased additional shares of common stock from

time to time at prices that we believe are attractive.

While our stock repurchase program has expired, should our Board of Directors

authorize another stock repurchase program, there can be no assurance that we will be able to repurchase shares on favorable terms

or, if we do repurchase shares, that such repurchases will increase shareholder value.

Additionally, if we use a significant portion

of our capital to repurchase shares, our financial flexibility will be reduced, and we may not be able to execute on other strategic

initiatives or tolerate periods of operating losses.

If we repurchase shares on unfavorable terms or if our use of capital to repurchase

shares inhibits our ability to pursue other strategic initiatives or tolerate periods of operating losses, it could have a material

adverse effect on our stock price and our business.

We may need or choose to raise additional capital in the

future, which could result in dilution to our stockholders and adversely affect stock price.

While we believe that our cash and investment

balances and prospective cash flow from our operations will provide us with adequate capital to fund operations for at least the

next 12 months from the date of the issuance of the financial statements included herein, we may need or choose to raise additional

funds prior to that time.

We may seek to sell additional equity or debt securities or to obtain a credit facility, which we may

not be able to do on favorable terms, or at all.

The sale of additional equity or convertible debt securities could result in

additional dilution to our stockholders.

If additional funds are raised through the issuance of debt securities or preferred stock,

these securities could have rights that are senior to holders of common stock and any debt securities could contain covenants

that would restrict our operations.

The sale of such securities could hurt demand for our common stock and lead our share price

Roger Susi, who serves as our Chairman of the Board of

Directors and Chief Technology Officer, owns a significant percentage of our stock and will be able to exert significant influence

over matters subject to stockholder approval.

Susi, our founder, who serves as

our Chairman of the Board of Directors, Chief Technology Officer, and his affiliates, beneficially owns a significant percentage

of our outstanding common stock.

Susi may be able to significantly influence matters requiring approval by our stockholders,

including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions.

have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests.

● the other factors described in this “Risk Factors” section.

Any one of the factors above, or the cumulative effect of some of the factors referred to above, may result in significant fluctuations in our quarterly or annual operating results, fluctuations in our share price and investors’ perception of our business.

If we fail to meet or exceed such expectations, our business and stock price could be materially adversely affected.

Any use of capital to repurchase shares of our common stock could have a material adverse effect on our stock price and our business.

Our Board of Directors has historically authorized stock repurchase programs and, pursuant to these authorizations, we have used a significant amount of cash to repurchase shares of common stock of our company.

Historically, we have opportunistically repurchased additional shares of common stock from time to time at prices that we believe are attractive.

While our stock repurchase program has expired, should our Board of Directors authorize another stock repurchase program, there can be no assurance that we will be able to repurchase shares on favorable terms or, if we do repurchase shares, that such repurchases will increase shareholder value.

Additionally, if we use a significant portion of our capital to repurchase shares, our financial flexibility will be reduced, and we may not be able to execute on other strategic initiatives or tolerate periods of operating losses.

If we repurchase shares on unfavorable terms or if our use of capital to repurchase shares inhibits our ability to pursue other strategic initiatives or tolerate periods of operating losses, it could have a material adverse effect on our stock price and our business.

We may need or choose to raise additional capital in the future, which could result in dilution to our stockholders and adversely affect stock price.

While we believe that our cash and investment balances and prospective cash flow from our operations will provide us with adequate capital to fund operations for at least the next 12 months from the date of the issuance of the financial statements included herein, we may need or choose to raise additional funds prior to that time.

We may seek to sell additional equity or debt securities or to obtain a credit facility, which we may not be able to do on favorable terms, or at all.

The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders.

If additional funds are raised through the issuance of debt securities or preferred stock, these securities could have rights that are senior to holders of common stock and any debt securities could contain covenants that would restrict our operations.

The sale of such securities could hurt demand for our common stock and lead our share price to decline.

Roger Susi, who serves as our Chairman of the Board of Directors, President and Chief Executive Officer, owns a significant percentage of our stock and will be able to exert significant influence over matters subject to stockholder approval.

Susi, our founder, who serves as our Chairman of the Board of Directors, President and Chief Executive Officer, and his affiliates, beneficially own a significant percentage of our outstanding common stock.

Susi may be able to significantly influence matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions.

He may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests.

This concentration of ownership may have the effect of delaying or deterring a change of control of our company.

We do not intend to pay dividends for the foreseeable

We do not anticipate that we will pay any

cash dividends on shares of our common stock for the foreseeable future.

Any determination to pay dividends in the future will

be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, contractual restrictions,

restrictions imposed by applicable law and other factors our Board of Directors deems relevant.

Investors seeking cash dividends

should not purchase our common stock.

Accordingly, if you purchase shares, realization

of a gain on your investment will depend solely on the appreciation of the price of our common stock, which may never occur.

The requirements of being a public company may strain

our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified

board members.

As a public company, we are subject to the

reporting requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Sarbanes-Oxley Act,

the Dodd-Frank Act, the listing requirements of the Nasdaq Stock Market and other applicable securities rules and regulations.

Pursuant to Section 404 of the Sarbanes-Oxley Act, our independent registered public accounting firm is required to deliver

an attestation report on the effectiveness of our internal control over financial reporting.

Compliance with these rules and

regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly

and increase demand on our systems and resources.

The Exchange Act requires, among other things, that we file annual, quarterly

and current reports with respect to our business and operating results.

As a result, management’s attention may be diverted

from other business concerns, which could adversely affect our business and operating results.

We may need to hire more employees

in the future or engage outside consultants to monitor and advise us regarding compliance, which will increase our costs and expenses.

In addition, changing laws, regulations

and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing

legal and financial compliance costs and making some activities more time consuming.

These laws, regulations and standards are

subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice

may evolve over time as new guidance is provided by regulatory and governing bodies.

This could result in continuing uncertainty

regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

investing additional resources to comply with evolving laws, regulations and standards, and this investment may result in increased

general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities

to compliance activities.

If our efforts to comply with new laws, regulations and standards differ from the activities intended

by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate

legal proceedings against us, and our business may be adversely affected.

We believe that being a public company and

compliant with these new rules and regulations has made it more expensive for us to obtain director and officer liability

insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.

These factors

could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve

on our audit committee and compensation committee, and qualified executive officers.

As a result of being a public company, we are obligated

to establish and maintain adequate internal controls.

Failure to develop and maintain adequate internal controls or to implement

new or improved controls could have a material adverse effect on our business, financial position and results of operations and

could cause the market value of our common stock to decline.

Ensuring that we have adequate internal

financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis

is a costly and time-consuming effort.

Our internal controls over financial reporting are designed to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

evaluation and testing process, if we identify one or more material weaknesses in our internal controls over financial reporting,

we will be unable to assert that our internal controls are effective.

We are required to disclose changes made

in our internal controls and procedures on a quarterly basis.

Our independent registered public accounting firm may issue a report

that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

remediation efforts may not enable us to avoid a material weakness in the future.

Our business practices have become more visible as a public

company, and this could impact our competitive environment and our risk of potential litigation.

As a result of disclosure of information

in filings required of a public company, our business and financial condition have become more visible potentially exposing us

to new competition and threatened or actual litigation, including by competitors and other third parties.

New competition could

result in reduced sales of our products and adversely impact our profitability.

If lawsuits prevail against us, our business and

operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor,

these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely

affect our business and operating results.

We may and have become involved in securities class action

litigation that could divert management’s attention from our business and adversely affect our business and could subject

us to significant liabilities.

The stock markets have from time to time

experienced significant price and volume fluctuations that have affected the market prices of small capitalization medical device

These broad market fluctuations as well a broad range of other factors, including the realization of any of the risks

described in this “Risk Factors”

section, may cause the market price of our common stock to decline.

In the past, securities

class action litigation has often been brought against a company following a decline in the market price of its securities.

have become, and may in the future, become involved in this type of litigation.

Litigation is expensive and could divert management’s

attention and resources from our primary business, which could adversely affect our operating results.

Any adverse determination

in any such litigation or any amounts paid to settle any such actual or threatened litigation could require us to make significant

At this time, we do not intend to pay dividends.

At this time, we do not anticipate that we will pay any cash dividends on shares of our common stock.

Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.

Investors seeking cash dividends should not purchase our common stock.

Accordingly, if you purchase shares, realization of a gain on your investment will depend solely on the appreciation of the price of our common stock, which may never occur.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the Nasdaq Stock Market and other applicable securities rules and regulations.

Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources.

The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results.

As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results.

We may need to hire more employees in the future or engage outside consultants to monitor and advise us regarding compliance, which will increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming.

These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.

This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

We may need to invest in additional resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.

If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business may be adversely affected.

We believe that being a public company and compliant with these rules and regulations has made it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.

These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

As a result of being a public company, we are obligated to establish and maintain adequate internal controls.

Failure to develop and maintain adequate internal controls or to implement new or improved controls could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort.

Our internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

During the evaluation and testing process, if we identify one or more material weaknesses in our internal controls over financial reporting, we will be unable to assert that our internal controls are effective.

We are required to disclose changes made in our internal controls and procedures on a quarterly basis.

Our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

Our remediation efforts may not enable us to avoid a material weakness in the future.

Our business practices have become more visible as a public company, and this could impact our competitive environment and our risk of potential litigation.

As a result of disclosure of information in filings required of a public company, our business and financial condition have become more visible potentially exposing us to new competition and threatened or actual litigation, including by competitors and other third parties.

New competition could result in reduced sales of our products and adversely impact our profitability.

If lawsuits prevail against us, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

We may and have become involved in securities class action litigation that could divert management’s attention from our business and adversely affect our business and could subject us to significant liabilities.

The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices of small capitalization medical device companies.

These broad market fluctuations as well a broad range of other factors, including the realization of any of the risks described in this “Risk Factors” section, may cause the market price of our common stock to decline.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities.

We have become, and may in the future, become involved in this type of litigation.

Litigation is expensive and could divert management’s attention and resources from our primary business, which could adversely affect our operating results.

Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require us to make significant payments.

Such payment could have a material impact on how investors view our company and result in a decline in our stock price.

If securities or industry analysts fail to initiate research

coverage of our stock, downgrade our stock, or discontinue coverage, our trading volume might be reduced and our stock price could

The trading market for our common stock

depends, in part, on the research reports that securities or industry analysts publish about our business.

If securities or industry

analysts do not commence or continue coverage of our company, the trading market for our stock may not be robust and the price

of our stock could likely be negatively impacted.

In the event securities or industry analysts initiate coverage, and later downgrade

our stock or discontinue such coverage, our stock price could decline.

Our charter documents and Delaware law have provisions

that may discourage an acquisition of us by others and may prevent attempts by our stockholders to replace or remove our current

Provisions in our charter documents, as

well as provisions of the Delaware General Corporation Law (“DGCL”), could depress the trading price of our common

stock by making it more difficult for a third party to acquire us at a price favorable to our shareholders.

If securities or industry analysts fail to initiate research coverage of our stock, downgrade our stock, or discontinue coverage, our trading volume might be reduced and our stock price could decline.

The trading market for our common stock depends, in part, on the research reports that securities or industry analysts publish about our business.

If securities or industry analysts do not commence or continue coverage of our company, the trading market for our stock may not be robust and the price of our stock could likely be negatively impacted.

In the event securities or industry analysts initiate coverage, and later downgrade our stock or discontinue such coverage, our stock price could decline.

Our charter documents and Delaware law have provisions that may discourage an acquisition of us by others and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our charter documents, as well as provisions of the Delaware General Corporation Law (“DGCL”), could depress the trading price of our common stock by making it more difficult for a third party to acquire us at a price favorable to our shareholders.

These provisions include:

authorizing the issuance of “blank check”

preferred stock, the terms of which may be established and shares of

which may be issued without stockholder approval to defend against a takeover attempt;

establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that

can be acted upon at stockholder meetings.

In addition, these provisions may frustrate

or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders

to replace members of our Board of Directors.

We are subject to Section 203 of the DGCL, which generally prohibits a Delaware

corporation from engaging in any of a broad range of business combinations with an interested stockholder for a period of three

years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our

Board of Directors.

This provision could have the effect of delaying or preventing a change of control, whether or not it is desired

by or beneficial to our stockholders, which could also affect the price that some investors are willing to pay for our common

● authorizing the issuance of “blank check” preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval to defend against a takeover attempt;

● establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted upon at stockholder meetings.

In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board of Directors.

We are subject to Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our Board of Directors.

This provision could have the effect of delaying or preventing a change of control, whether or not it is desired by or beneficial to our stockholders, which could also affect the price that some investors are willing to pay for our common stock.

UNRESOLVED STAFF COMMENTS

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