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Item 1. Business

2025-03-31 compared with 2024-03-29 · 1743 added, 1919 removed, 1514 unchanged (71% of the section changed)

We are an AI company focused

We are an Artificial Intelligence (“AI”) company focused

on predictive medical diagnostics.

Our DeepView System uses proprietary AI algorithms to distinguish between fully damaged, partially

damaged and healthy human tissue characters invisible to the naked eye, at the initial time point of wound presentation.

damaged and healthy human tissue characteristics invisible to the naked eye, at the initial time point of wound presentation.

System delivers a binary prediction on the wounds capacity to heal or not-heal by a specified time point in the future.

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Our focus from 2013 through 2021 was on the burn indication.

In 2022, we expanded our focus to include

the DFU indication.

We were notified that our DeepView

System, comprised of the multispectral imaging (“MSI”) component integrated with the predictive AI-Burn ® software

component received United Kingdom Conformity Assessed (UKCA) marking for use in the United Kingdom for burn indications on February 22,

The UKCA marking registration was fully completed on March 7, 2024.

We anticipate that our full DeepView System may achieve Class

II medical device designation in the with the United States Food and Drug Administration (FDA) via a De Novo application.

Subject to our

receipt of additional necessary market authorization, our business will have two revenue streams, a SaaS model component predicated on

utilizing the regulatory method, SaMD (software as a medical device), and the imaging device component.

The SaaS component will feature

a software licensing fee that includes maintenance, image hosting, and access to algorithm updates.

The proprietary imaging device acquires

the images for the AI algorithms and is a universal platform to house multiple clinical applications including burn and DFU.

for these components will be evaluated and strategically set per country and site-of-service for heightened customer adoption.

The MSI imaging technology,

which comprises one part of the DeepView System, consists of patented proprietary multi-spectral optics and sensors, capturing injured

tissue images ranging from near UV lights, through the human visible wavelengths, all the way into the near infrared range (NIR).

broad wavelength ranges go beyond what the human eyes can see and capture what medical professionals cannot observe with their naked eyes.

This wide range of wavelength images contains wound tissue physiology and captures the viability of various biomarkers within the skin

and from the injured tissue spectral signatures.

The imaging technology extracts appropriate clinical data, processes the image data to

provide the injured tissue spectral signatures to the AI model and algorithms.

The AI algorithm classifies various severities of the injuries

as (i) full damaged (non-healing), (ii) partially damaged or (iii) healthy tissue (healing) and displays a comparison of

the original image next to an image with a color overlay of the non-healing portions of the wound.

The image acquisition takes 0.2 seconds,

and all image processing and AI model classification takes approximately 20 to 25 seconds.

Our DeepView System’s proprietary optics

can extract millions of pixels of data or AI model features from each group of raw images.

This information is then used to build and

continually improve the AI model, which is trained and tested against a proprietary and clinically validated database of approximately

340 billion pixels of DFU and burn data as of December 31, 2023.

The DeepView-AI Burns ® software is used with

the DeepView SnapShot ® imaging device, and it is intended to be used as an adjunctive tool to aid health care providers

in the assessment of burn wound healing potential by differentiating non-healing from healing burned tissue within an image.

Below at Figure 1 is an example

of the DeepView System technological process.

We were notified that our DeepView System, comprised of the multispectral

imaging (“MSI”) component integrated with the predictive AI-Burn ® software component received United Kingdom

Conformity Assessed (“UKCA”) marking for use in the United Kingdom for burn indications on February 22, 2024.

The UKCA marking

registration was fully completed on March 7, 2024.

We anticipate that our full DeepView System may achieve Class II medical device designation

with the United States Food and Drug Administration (FDA) via a De Novo application.

Subject to our receipt of additional necessary market

authorization, our business will have two revenue streams, a SaaS (software as a service) model component predicated on utilizing the

regulatory method, SaMD (software as a medical device), and the imaging device component.

The SaaS component will feature a software licensing

fee that includes maintenance, image hosting, and access to algorithmic updates.

The proprietary imaging device acquires the images for

the AI algorithms and is a universal platform to house multiple clinical indications including burn wound healing analysis and other tissue

indication assessments.

Pricing for these components will be evaluated and strategically set per country and site-of-service for

heightened customer adoption.

The MSI imaging technology, which comprises one part of the DeepView

System, consists of patented proprietary multi-spectral optics and sensors, capturing injured tissue images ranging from near UV light,

through the human visible wavelengths, all the way into the near infrared range (NIR).

The broad wavelength ranges go beyond what the

human eyes can see and capture what medical professionals cannot observe with their naked eyes.

This wide range of wavelength images contains

wound tissue physiology and captures the viability of various biomarkers within the skin and from the injured tissue spectral signatures.

The imaging technology extracts appropriate clinical data, processes the image data to provide the injured tissue spectral signatures

to the AI model and algorithms.

The AI algorithm classifies various severities of the injuries as (i) fully damaged (non-healing),

(ii) partially damaged or (iii) healthy tissue (healing) and displays a comparison of the original image next to an image with

a color overlay of the non-healing portions of the wound.

The image acquisition takes 0.2 seconds, and all image processing and AI model

classification takes approximately 20 to 25 seconds.

Our DeepView System’s proprietary optics can extract millions of pixels of

data or AI model features from each group of raw images.

This information is then used to advance algorithm optimization, which is trained

and tested against a proprietary and clinically validated database of approximately 340 billion pixels of image data as of December

The DeepView-AI Burns ® software is used with the DeepView SnapShot ® imaging device, and it is

intended to be used as an adjunctive tool to aid health care providers in the assessment of burn wound healing potential by differentiating

non-healing from healing tissue within an image.

Below at Figure 1 is an

example of the DeepView System technological process.

Figure 1 — DeepView Imaging technology

To our knowledge, there are

no digital wound healing assessment in predictive medical diagnostic products that provide clinicians with an objective and immediate

assessment of a wound’s future healing potential and that benefit from the application of AI.

To our knowledge, there

are no comparable digital wound healing predictive medical diagnostic products that provide clinicians with an objective and immediate

assessment of a wound’s future healing potential that benefit from the application of AI.

Currently, healthcare professionals

rely on their experience and subjective assessments to determine if wounds, such as burn injuries and DFUs, will heal under routine care

after a period of time, typically several weeks, or are in need of advanced wound care products and procedures including surgical interventions.

Our DeepView System allows health care professionals to make a “Day One” assessment of a wound’s healing potential over

We have received substantial support from the U.S.

for our DeepView System’s application for burn wounds, including from agencies such as BARDA, which is part of the HHS Office of

the Assistant Secretary for Preparedness and Response (“ASPR”) in the United States, established to aid in securing the

United States from chemical, biological, radiological, and nuclear threats, as well as from pandemic influenza and emerging infectious

We have also received funding from the National Science Foundation (“NSF”), National Institute of Health (“NIH”)

and the DHA an agency within the Department of Defense (“DoD”).

Since 2013, we have been awarded approximately $279.6 million

in funding from government contracts, substantially all of which is from BARDA, which accounts for $272.9 million.

This has allowed

us to develop our technology and further our clinical trials.

On September 27, 2023, the Company executed a new contract with BARDA,

providing the Company with additional funding of up to $150.0 million, including an initial award of approximately $54.9 million

to support the clinical validation and application for FDA De Novo status of our DeepView AI – Burn software.

This will include

the distribution of up to 30 DeepView Systems in various emergency rooms and burn centers to support the clinical validation study.

contract also includes options, similar to our prior BARDA contracts, with an additional total value of approximately $95.1 million

which can be exercised for additional product development, procurement and the expanded deployment of DeepView Systems at emergency rooms,

trauma and burn centers.

These deployments will enable the Company to conduct health economic and outcome research to support the broader

clinical adoption of the DeepView System.

This grant funding is non-dilutive to our stockholders, and we believe it validates the important

nature of our mission and technology.

Subject to our receipt of the

necessary regulatory market authorizations, we intend to initially sell the DeepView System throughout the United States and the

UK for its burn and its DFU indication.

Given our receipt of the UKCA authorization for our burn indication we anticipate initial sales

in UK in the second half of 2024.

The sales channel for these two indications are different.

We expect that our burn indication will be

supported by existing and future governmental contracts, primarily from agencies such as BARDA and the DHA, while the DFU indication will

be an add-on to the burn indication sales channel and will have its own separate sales channel to penetrate the podiatric and wound care

In the United States, there are approximately 100 burn centers, 700 trauma centers and 5,400 federal and community hospitals

with Emergency Rooms where the burn patients are most likely to visit upon injuries.

The DeepView System provides a quick clinical decision

tool to the emergency rooms, so it can be decided quickly whether patients need routine care or should be transferred to trauma centers

or burn centers for advanced care, and for quick and accurate surgical planning.

In the burn centers, the DeepView System provides an

advanced guidance on the non-healing areas of a burns, Therefore, we plan to target our sales efforts to these facilities through our

highly-trained technical sales support staff that we plan to hire given the nature of DeepView as a truly disruptive AI driven predictive

assistance tool.

For the DeepView System’s burn application and following receipt of any future contract awards, we plan to partner

with the U.S.

governmental agency sponsors to implement the distribution of our DeepView System throughout the United States

into key regions to support the United Stats’ mass casualty countermeasure directives, with the goal of making our country better

prepared for mass casualty events and saving scarce healthcare resources.

Subject to our receipt of the

necessary market authorizations, we plan to begin our commercial sales efforts of the DeepView System’s DFU application in the UK

through key clinical sites and related networks.

We expect to engage contract sales organizations to distribute our DeepView System throughout

the UK as well as eventually in the Netherlands, Germany, Italy and Spain (“EU4”).

Preliminary discussions with distributors

occurred during 2023 to determine which organizations possess the key relationships and insights for selling diagnostic systems within

their respective countries.

We intend to focus our commercial strategy initially in the UK, which we are targeting for mid-2024, with

the EU4 to follow in 2026, subject to CE mark approval for our technologies.

Similar to the United States, the primary customer base

for the DFU application in Europe will be outpatient wound centers and secondary sites of care that have a high-volume of DFU patients.

We also expect to engage internal and/or third party resources to help us navigate the various regional tender and contracting entities

within each country.

In the United States, subject to our receipt of the necessary regulatory market authorization, we anticipate

initially distributing the DeepView Systems using our DFU indication in hospitals’ emergency rooms and trauma centers.

build in additional indications, given that we can run multiple indications on the same imaging devices.

In addition, wound care centers

are typically the first line of specialty care for DFUs in the United States.

Vascular and cardiology companies and outpatient podiatry

practices also treat wounds.

We will need to grow our distribution network to support the expanded sales efforts for the DFU indication

to these facilities by initially focusing on management companies that have multiple podiatric and/or wound care centers under their management.

In this way, we believe we can build a mature sales model, pricing structure, and customer instructions, to enable us to further grow

our distribution networks with third-parties and other sales channel sources.

As noted above, subject to

our receipt of the necessary regulatory market authorizations, our business is expected to have two revenue streams, a SaaS model component

predicated on utilizing the regulatory method, SaMD (software as a medical device), and an imaging device component.

The SaaS component

will feature a software licensing fee that includes maintenance, image hosting, and access to algorithm updates.

The capital sale component

will be competitively priced for acceptance into independent practices and clinics.

In 2018, the FDA designated

our earlier version of the DeepView System with BDD status for its burn indication.

The FDA’s designation as a Breakthrough Device

(“BDD”) allows for prioritized reviews and a dedicated line of communication with reviewing members of the FDA.

first quarter of 2021, the Health Products Regulatory Authority of Ireland (HPRA) provided a medical device classification recommendation

of IIa for our DeepView System.

We have enrolled subjects in our DFU studies in clinical and academic sites across the United States

In 2022, we completed our first DFU clinical training study with 100 adult subjects in the United States at five

well-known medical facilities.

In the third quarter of 2022, we extended the AI training study with an additional 100 adult subjects.

We completed this study in January 2023, providing us with a much-improved DFU AI prediction performance at 86%.

In April 2023,

we commenced our validation study with an additional 200 adult subjects at 10 well-known medical facilities.

This study is expected to

be completed in 2024.

We have also signed with international partners, including well-respected institutions in the field and have partnered

with leading wound care physicians.

We believe that we will be able to leverage these relationships to access other institutions and individuals,

which should increase awareness and early adoption of our technology in the United States, the UK and the EU.

will also benefit from the potential future BARDA funding of technology placement for burns applications.

Our focus will be on the continued

development of the DFU AI model as we progress through the validation study.

We expect to complete the validation

studies for the DFU regulatory application in the United States in 2024, while targeting for the FDA’s grant of our De Novo

petition in early 2025.

Subject to our receipt of the

necessary regulatory market authorization, we would expect to leverage results from the U.S.

study for a simultaneous conformity

assessment procedure in the EU to obtain the CE marking of conformity (“CE Mark”), and we would expect to commence post-market

studies in the UK and Germany.

Subject to our receipt of the necessary regulatory market authorization, we would expect to initiate commercialization

in the United States during 2025 and intend to submit for FDA review of the burn application in 2025 in accordance with the projected

timeline for our BARDA contract.

rely on their experience and subjective assessments to determine if wounds, such as burn injuries, will heal under routine care after

a period of time, typically several weeks, or are in need of advanced wound care products and procedures including surgical interventions.

Our DeepView System allows health care professionals to make a “Day One” assessment of a wound’s healing potential

We have received substantial

support from the U.S.

government for our DeepView System’s application for burn wounds, including from agencies such as BARDA,

which is part of the Department of Health and Human Services (“HHS”) Office of the Assistant Secretary for Preparedness and

Response (“ASPR”) in the United States, established to aid in securing the United States from chemical, biological,

radiological, and nuclear threats, as well as from pandemic influenza and emerging infectious diseases.

We have also received funding

from the National Science Foundation (“NSF”), National Institute of Health (“NIH”) and the DHA an agency within

the Department of Defense (“DoD”).

Since 2013, we have been awarded approximately $281.5 million in funding from government

contracts, substantially all of which is from BARDA, which accounts for $272.9 million.

This has allowed us to develop our technology

and advance our clinical trials.

On September 27, 2023, the Company executed a new contract with BARDA, providing the Company with

additional funding of up to $150.0 million, including an initial award of approximately $54.9 million to support the clinical

validation and application for FDA De Novo status of our DeepView AI – Burn software.

This will include the distribution of up to

30 DeepView Systems in various emergency rooms and burn centers to support the clinical validation study.

The contract also includes options,

similar to our prior BARDA contracts, with an additional total value of approximately $95.1 million which can be exercised for additional

product development, procurement and the expanded deployment of DeepView Systems at emergency rooms, trauma and burn centers.

These deployments

will enable the Company to conduct health economic and outcome research to support the broader clinical adoption of the DeepView System.

This grant funding is non-dilutive to our stockholders, and we believe it validates the important nature of our mission and technology.

Subject to our receipt of the necessary regulatory market authorizations,

we intend to initially sell the DeepView System throughout the United States and the UK for its burn indication.

Given our receipt

of the UKCA authorization for our burn indication we anticipate initial sales in UK to begin in 2025.

The sales channel for our burn indication

will be supported by existing and future governmental contracts, primarily from agencies such as BARDA and the DHA.

In the United States,

there are approximately 100 burn centers, 700 trauma centers and 5,400 federal and community hospitals with Emergency Rooms where the

burn patients are most likely to visit upon injury.

The DeepView System provides a quick clinical decision tool to emergency room clinicians.

It can be used to quickly assess the healing potential for burn wounds so decisions regarding whether patients need routine care or should

be transferred to trauma centers or burn centers for advanced care and accurate surgical planning can be made in a much more timely fashion.

In the burn centers, the DeepView System provides an advanced assessment of the non-healing areas of a burn.

Therefore, we plan to target

our sales efforts to these facilities through our highly-trained technical sales support staff that we plan to hire given the nature of

DeepView as a truly disruptive AI driven predictive assistance tool.

For the DeepView System’s burn application and following receipt

of any future contract awards, we plan to partner with the U.S.

governmental agency sponsors to implement the distribution of our

DeepView System throughout the United States into key regions to support the United States’ mass casualty countermeasure directives,

with the goal of making our country better prepared for mass casualty events and saving scarce healthcare resources.

As noted above, subject

to our receipt of the necessary regulatory market authorizations, our business is expected to have two revenue streams, a SaaS model

component predicated on utilizing the regulatory method, SaMD (software as a medical device), and an imaging device component.

component will feature a software licensing fee that includes maintenance, image hosting, and access to algorithmic updates.

sale component will be competitively priced for acceptance into burn centers, independent practices, hospitals and clinics.

Furthermore, we would expect to leverage results from the U.S.

for a simultaneous conformity assessment procedure in the EU to obtain the CE marking of conformity (“CE Mark”), and we would

expect to commence post-market studies in the UK and Germany.

Subject to our receipt of the necessary regulatory market authorization,

we would expect to initiate commercialization in the United States during 2026 and intend to submit for FDA review of the burn application

in 2025 in accordance with the projected timeline for our BARDA contract.

Burn Indication

We began conducting our validation

study for burn in the early 2024, where we plan to enroll an additional 240 adult and pediatric subjects at up to 20 clinical sites.

In adult participants, the

DeepView GEN3 System has shown 92% accuracy, with cross-validation from the AI model for identification of non-healing burn regions.

This represents a significant improvement above the diagnostic accuracy of burn physicians assessing the same adult burn patients, and

above 50% to 75% accuracy, according to industry literature.

In addition, in head-to-head clinical trial evaluations, our DeepView System

provided higher accuracy on “Day One” to “ground truth” determined on day 21 on burn wound analysis than the accuracy

of burn specialists, reporting at 70 – 80% accuracy, and non-burn specialist physicians, reporting at 50 – 60%

We have conducted three large clinical studies with multiple sites across the United States, enrolling 413 patients, including

329 adult burn patients and 84 pediatric patients.

Through these studies we were able to determine burn assessment accuracy in both healing

and non-healing wounds.

In pediatric patients, the

AI performance of the DeepView System showed 88% accuracy, underlining how the AI technology is responding with significant reliability

to variability in the study population.

Based on these strong results, we have bolstered our infrastructure to facilitate the expansion

of the study to additional sites and have begun enrollment in a larger study in order to complete the AI algorithm’s development.

As of December 31, 2023,

our proprietary and clinically validated database for burns is comprised of approximately 340 billion pixels of DFU and burn data.

database presents both a significant barrier to entry to would-be competitors in wound care healing assessment, and a potential additional

commercial opportunity for us to develop further in the future.

DFU Indication

We made substantial progress

DFU Clinical Validation Study (the “US DFU Clinical Study”) in 2023.

The endpoint that we are pursuing in

the clinical study is to predict on “Day One” whether the DFU wound will reduce in size by 50% by week four.

System showed improvement of the AI diagnostic accuracy to 86%.

The data collected from the

US DFU Clinical Study will be used to augment our existing proprietary and clinically validated database of DFU data and healthcare matrix

and to validate the DeepView DFU AI algorithm as we prepare for U.S.

regulatory submission in 2024.

In the first half of 2023,

we continued to enroll subjects in the US DFU Clinical Study to finalize our admission goal.

Additionally, we increased investment in

the DFU indication in 2023 to drive our commercialization strategy.

We intend to submit for U.K.

Conformity Assessment (“UKCA”)

regulatory evaluations in mid-2024.

We are currently targeting to receive the required UKCA certificates in 2024, and to receive FDA marketing

authorization in 2025, although these authorizations cannot be guaranteed, and may take longer than expected.

In February 2023, we also

initiated a clinical study in the EU with the Royal College of Surgeons in Ireland conducted at Connolly Hospital in Dublin, Ireland.

The EU clinical study will collect data from DFU patients monitored for up to 12 weeks.

The intention of the clinical study is to

further develop the DeepView AI algorithm to support our regulatory submissions for UKCA, FDA, and EU CE Mark.

The imaging system that

makes up our DeepView System recently received United Kingdom Conformity Assessed (UKCA) marking for use in the United Kingdom and has

Class I medical device classification with the United States Food and Drug Administration (FDA), while we anticipate that the

DeepView System as a whole, including the AI component, may achieve Class II classification in the US via a De Novo application.

The Company has completed

the enrollment of 164 patients, including 49 pediatric subjects, representing the full enrollment requirements in its validation study

for the burn indication.

The DeepView System has shown significant improvement in the sensitivity

assessment of the burn wound and non-inferiority in assessing the specificity of a burn wound with cross-validation from the AI model

for identification of non-healing burn regions.

This represents a significant improvement above the diagnostic performance of burn physicians

assessing the same adult burn patients.

In addition to our validation study, we have conducted three large clinical studies with multiple

sites across the United States, enrolling 413 patients, including 329 adult burn patients and 84 pediatric patients.

Through these

studies we were able to determine burn assessment accuracy in both healing and non-healing wounds.

As of December 31, 2024, our proprietary and clinically validated database

for burns is comprised of approximately 340 billion pixels of image data.

This database presents both a significant barrier to entry to

would-be competitors in wound care healing assessment, and a potential additional commercial opportunity for us to develop further indications

in the future.

Other DeepView Programs in Development

Funding from the U.S.

has also allowed us to develop additional “Horizon” indication uses of our DeepView System, including DeepView Snapshot M,

DeepView AI 3-D wound measurement technology, and other indications.

We believe that our DeepView System’s use in emergency rooms,

trauma and burn centers and other would care facilities should be expanded to provide greater utility of the DeepView System in such settings.

government has also allowed us to develop

additional “Horizon” indication uses of our DeepView System, including DeepView SnapShot ® M, DeepView AI 3-D

wound measurement technology, and other indications, including diabetic foot ulcers which the Company has done significant work on to

We believe that our DeepView System’s use in emergency rooms, trauma and burn centers and other would care facilities should

be expanded to provide greater utility of the DeepView System in such settings.

DeepView SnapShot M

In addition to our DeepView

System, our primary additional technology is the DeepView SnapShot ® M, a fully handheld, portable, wireless diagnostic

tool based on the DeepView System’s AI platform.

The DeepView SnapShot M provides a potential enhanced and expanded use for the

government and emergency care, first responders and potentially home health care professionals.

On June 23, 2021, we were

awarded a two-year, $1.1 million, Sequential Phase II STTR contract by the DHA within the U.S.

In addition to our DeepView System, our primary additional technology

is the DeepView SnapShot M, a fully handheld, portable, wireless diagnostic tool based on the DeepView System’s AI platform.

DeepView SnapShot M provides a potential enhanced and expanded use for the U.S.

government and emergency care, first responders and

potentially home health care professionals.

On June 23, 2021, we were awarded a two-year, $1.1 million, Sequential Phase II

Small Business Technology Transfer (“STTR”) contract by the DHA within the U.S.

Department of Defense.

funding enables us to research and develop the DeepView SnapShot M product primarily for military and combat settings.

In April 2023,

we were awarded a $4.0 million grant from the Medical Technology Enterprise Consortium (“MTEC”), a 501I(3) biomedical

technology consortium working in partnership with the Department of Defense, to develop our DeepView SnapShot M device in a Phase III

feasibility and commercialization study.

This grant was increased by over $500,000 on March 12, 2024.

These grants, along with prior awards

from DHA, bring our funding total for our DeepView SnapShot ® M to over $6.0 million.

The funding will be used to support

military battlefield burn evaluation using DeepView SnapShot M.

This funding enables

us to research and develop the DeepView SnapShot M product primarily for military and combat settings.

In April 2023, we were awarded

a $4.0 million grant from the Medical Technology Enterprise Consortium (“MTEC”), a 501(c)(3) biomedical technology

consortium working in partnership with the Department of Defense, to develop our DeepView SnapShot M device in a Phase III feasibility

and commercialization study.

In August 2024, the MTEC award was increased to $4.9 million and is currently intended to run through December

2025 with funding dependent on various milestones.

In September 2024, we received an additional $0.9 million from MTEC for further development

of the handheld device.

In March 2024, we received an additional $0.5 million award from the Defense Health Agency to further this development.

These grants, along with prior awards from DHA, bring our funding total for our DeepView SnapShot M to over $7.2 million.

will be used to support military battlefield burn evaluation using DeepView SnapShot M.

3-D Wound Measurement Technology

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This technology will produce rapid, accurate and easy-to-use

wound size measurement images to produce an accurate 3-D tissue representation from a single image snapshot enabling distance, area and

volume measurements with sub-millimetric accuracy without reference to any attendant markers or manually placed stickers or multiple images.

wound size measurement images to produce an accurate 3-D tissue representation from a single image snapshot enabling length, width and

area measurements with sub-millimetric accuracy without reference to any attendant markers or manually placed stickers or multiple images.

We believe this is a significant improvement over current wound size measurement technologies which are limited in their ability to measure

all three wound dimensions (distance, area and volume) or are otherwise cumbersome, requiring reference markers/stickers or multiple images

all three wound dimensions (length, width and area) or are otherwise cumbersome, requiring reference markers/stickers or multiple images

to determine would size measurements.

Our 3D wound measurement technology calculates the total body surface area (“TBSA”)

This technology will be integrated into our DeepView System and applies the “rule of nines”;

a method that divides

the body’s surface area into percentages to calculate the size of a burn or wound.

For example, the front and back of the head and

neck equal 9% of the body’s surface area and the front and back of each arm and hand equal 9% of the body’s surface area.

This technology enhancement will not only generate the TBSA measurement, but will also indicate the “healthy” versus “unhealthy”

tissue for advanced treatment applications to be applied to the burn or wound area.

This is a critical step in assuring that these alternative

medical solutions will be successful in-patient applications.

The 3-D wound size measurement tool has completed the proof-of-concept phase.

This technology will be integrated into our DeepView System This technology enhancement will not only generate the TBSA measurement,

but will also indicate the “healing” versus “non-healing” burn tissue area.

This is a critical step in assuring

that these alternative medical solutions will be successful in-patient applications.

The 3-D wound size measurement tool has completed

the proof-of-concept phase.

We are currently developing this technology in cooperation with BARDA.

Business Focus and Milestones

Our current focus is categorized

in two parts:

(1) we will continue to fulfill our contractual obligations and meet milestones under our BARDA PBS contract (described

in further detail below);

and (2) we will pursue the commercialization of the DFU application in the UK, United States and EU4.

Our near-term goals related to the BARDA PBS contract are to deliver on the current phase of the contract (Phase 1a), and to complete

the remaining phases of the BARDA PBS contract.

Completion of these contractual phases support our long-term goal of entering into a federal

procurement contract with BARDA.

We intend to submit a De Novo

application to the FDA for market authorization of the burn application in early 2025.

In 2023, we received our ISO 13485:2016 certification

for Medical Devices.

The certification audit is expected to occur in the first quarter of 2024.

In parallel, we are in the process of

scheduling the DeepView System Technical Documentation audit necessary to obtain the CE Mark and UKCA certificates to allow market access

in the EU and UK, respectively.

In March, Spectral completed its UKCA Mark registration for the full DeepView System for our burn indication.

Figure 2 below provides a summary of our key anticipated regulatory submissions.

There can be no assurance that we will be able to obtain

market authorization in the US, UK or EU of our DeepView GEN 3 System with AI on our projected timeline, or at all.

Figure 2 — Summary

of key regulatory submissions

Our current focus is to fulfill our contractual obligations and meet

milestones under our BARDA PBS contract (described in further detail below);

and to pursue other indications for the commercialization

of the DeepView System in the UK, United States and EU.

Our near-term goals related to the BARDA PBS contract are to deliver on the

current phase of the contract (Phase 1a), and to complete the remaining phases of the BARDA PBS contract.

Completion of these contractual

phases support our long-term goal of entering a federal procurement contract with BARDA.

We intend to submit a De

Novo application to the FDA for market authorization of the burn application by the end of the first half of 2025.

In 2023, we received

our ISO 13485:2016 certification for Medical Devices.

Our certification audit was completed in the first quarter of 2024, without any

In parallel, we are in the process of scheduling the DeepView System Technical Documentation audit necessary to obtain the

CE Mark and UKCA certificates to allow market access in the EU and UK, respectively.

In March, Spectral completed its UKCA Mark registration

for the full DeepView System for our burn indication.

DeepView in Practice

DeepView is a predictive analytics

platform that combines AI algorithms and MSI imaging for an assessment of wound healing potential.

It is non-invasive, non-radiation,

non-laser and does not require the use of injectable dye.

DeepView is a predictive analytics platform that combines AI algorithms

and MSI imaging for an assessment of wound healing potential.

It is non-invasive, non-radiation, non-laser and does not require the use

of injectable dye.

This integration can be characterized into four distinct components:

imaging, data extraction, AI model building and AI wound healing potential assessment.

The DeepView AI ® - Burn software

is used with the DeepView SnapShot ® imaging device, and it is intended to be used as an adjunctive tool to aid health care

providers in the assessment of burn wound healing potential by differentiating non-healing from healing burned tissue within an image.

● The DeepView technology consists of patented proprietary

multi-spectral optics and sensors that can classify wound tissue physiology and capture the viability of various biomarkers within the

● The imaging technology extracts appropriate clinical data,

processes the image and displays a comparison of the original image next to an image with a color overlay of the non-healing portions

of the wound.

DeepView imaging, data extraction, AI model building

and AI wound healing potential assessment.

The DeepView AI- Burn software is used with the DeepView SnapShot imaging device, and it is

intended to be used as an adjunctive tool to aid health care providers in the assessment of burn wound healing potential by differentiating

non-healing from healing burned tissue within an image.

The DeepView technology

consists of patented proprietary multi-spectral optics and sensors that can classify wound tissue physiology and capture the viability

of various biomarkers within the skin.

The imaging technology extracts appropriate imaging data, processes

the image and displays a comparison of the original image next to an image with a color overlay of the non-healing portions of the wound.

The image acquisition takes 0.2 seconds and the output takes approximately 20 to 25 seconds.

● DeepView’s proprietary optics can extract millions

of pixels of data or AI model features from each raw image.

This information is then used to build and continually improve the AI model,

which is trained and tested against a proprietary and clinically validated database of approximately 340 billion pixels of DFU and burn

data as of December 31, 2023.

● The AI algorithm then seeks to produce an objective, accurate,

and immediate binary wound healing assessment.

This assessment would be graphically represented to the clinician through a colored overlay

of the original image that annotates the portion of the wound that is predicted to be non-healing over a specified period of time –

21 days (See Figure 4 below).

DeepView’s proprietary

optics can extract millions of pixels of data or AI model features from each raw image.

This information is then used to build and

continually improve the AI model, which is trained and tested against a proprietary and clinically validated database of approximately

340 billion pixels of image data as of December 31, 2024.

The AI algorithm then seeks

to produce an objective, accurate, and immediate binary wound healing assessment.

This assessment would be graphically represented

to the clinician through a colored overlay of the original image that annotates the portion of the wound that is predicted to be

non-healing over a specified period of time – 21 days (See Figure 2 below).

Figure 2 — Illustration of DeepView’s

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to assist clinicians in making accurate, timely, and informed decisions regarding the treatment of the patient’s wound.

of DFUs, an assessment that the wound will not heal over time would provide the health care professional with the appropriate justification

to use an advanced wound care therapy on “Day One” as opposed to waiting 30 days using standard of care and potentially

losing the patient to follow-up or risking patient non-compliance with standard wound therapy.

The current clinical accuracy of DeepView

in ongoing clinical trials is 86% for DFUs compared with current physician accuracy as low as 50%.

Subject to FDA market authorization

of the product, for burn wounds, the clinician could make an immediate and objective determination for appropriate candidates for surgery

as well as determining what specific areas of the burn wound will require skin grafting.

In ongoing clinical trials, DeepView’s

current accuracy for burn wounds non-healing predictions is 92%, compared with current physician accuracy of 50 to 75%, according to industry

In addition, in head-to-head clinical trial evaluations, when compared to “ground truth” our DeepView System provided

higher accuracy of burn wound analysis than the accuracy of burn specialists, reporting at 70 – 80% accuracy, and

non-burn specialist physicians, reporting at 50 – 60% accuracy, when comparing “Day One” analysis to

“ground truth” determined on day 21.

We have conducted three large clinical studies with multiple sites across the United States,

enrolling 413 patients, including 329 adult burn patients and 84 pediatric burn patients.

Through these studies, we were able to

determine burn assessment accuracy in both surgery and non-surgical treatment.

See the table below for an

analysis of the current DeepView System’s benefits to patient care:

Current Time to Decision

DeepView ® Time to Decision

Current Clinical Accuracy

DeepView ® Accuracy in Ongoing Clinical Trials

DeepView ® Estimated Cost savings

~$24,000 per stay

provides physicians with an immediate assessment of a burn wound’s healing potential with a binary outcome determination.

conducted three large clinical studies with multiple sites across the United States, enrolling 413 patients, including 329

adult burn patients and 84 pediatric burn patients.

Through these studies, we were able to determine burn assessment accuracy in both

surgery and non-surgical treatment.

See the table below for

an analysis of the current DeepView System’s benefits to patient care:

Time to Decision

Estimated Cost savings

~$24,000 per stay

Key Strengths

We believe the following key

strengths will help us to maintain and grow our business going forward:

We believe the following

key strengths will help us to maintain and grow our business going forward:

Market Leading Technology

We have developed proprietary

AI algorithms and imaging technology to assist clinicians to make more accurate and efficient treatment decisions in managing patient’s

This technology is the result of 13 years of research and development, thousands of hours of user feedback, and most

importantly, the continual commitment to ensuring that the output from DeepView answers a clinical question that is to meaningful physicians.

We own and control the entirety of our data pipeline.

We only rely images and data that the DeepView System collects in a controlled clinical

environment and do not rely on stock images or databases for our algorithms.

All optical technology has been developed in-house and is

specifically engineered to collect this imaging data.

We have developed proprietary AI algorithms and imaging technology

to assist clinicians to make more accurate and efficient treatment decisions in managing a patient’s wounds.

This technology is

the result of 13 years of research and development, thousands of hours of user feedback, and most importantly, the continual

commitment to ensuring that the output from DeepView answers a clinical question that is meaningful to physicians.

We own and control

the entirety of our data pipeline.

We only rely on images and data that the DeepView System collects in a controlled clinical environment

and do not rely on stock images or databases for our algorithms.

All optical technology has been developed in-house and is specifically

engineered to collect this imaging data.

A current image of our cart-based DeepView System appears below in Figure 3.

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Unmet Clinical Need

The biggest unmet need for

clinicians treating DFU and burn wounds is the lack of a diagnostic tool that provides an objective wound healing determination on “Day

One.” While burns and DFUs appear to be very different types of wounds, they are in fact similar from the perspective of assessment

and diagnosis.

The treatment pathways for each of these wounds can be generally characterized by a subjective initial assessment from

the physician followed by multiple weeks of clinical observation to assess whether or not the wound responded to treatment.

are primarily staged by their penetration depth into the skin and involvement of tissues below the skin in severe cases.

Both DFUs and

burns are diagnosed by expert clinical opinion without the aid of objective diagnostic tools that provide a wound healing prediction.

Furthermore, the current methods of diagnosis rely on a “wait and see” approach that result in prolonged hospital stays and

costly delays in the delivery of definitive treatment.

Our goal is to eliminate these costly delays between initial screening and the

delivery of a definitive treatment through the use of AI algorithms applied to our proprietary multispectral wound images.

The biggest unmet need for clinicians treating burn wounds is the lack

of a diagnostic tool that provides an objective wound healing determination on “Day One.” The treatment pathway for these

wounds can be generally characterized by a subjective initial assessment from the physician followed by multiple weeks of clinical

observation to assess whether or not the wound responded to treatment.

Burn wounds are primarily staged by their penetration depth into

the skin and involvement of tissues below the skin in severe cases.

Burn wounds are diagnosed by expert clinical opinion without the aid

of objective diagnostic tools that provide a wound healing prediction.

Furthermore, the current methods of diagnosis rely on a “wait

and see” approach that results in prolonged hospital stays and costly delays in the delivery of definitive treatment.

to eliminate these costly delays between initial screening and the delivery of a definitive treatment using AI algorithms applied to our

proprietary multispectral wound images.

Significant Market Opportunity

Geography — DeepView

has the potential to service a large total addressable market.

We estimate that there are over 57,000 sites of clinical care in which

the technology could be placed in the United States and over 20,000 sites across the UK and EU4.

For all geographies, these sites

include both acute inpatient hospitals and outpatient sites of care, in order to include physician offices.

As we expand from the United States

into the UK and EU4, we will consider follow-on markets for commercial expansion, including the Middle East, among others.

Pipeline Applications — Though

we are currently focused on the DFU and burn applications for DeepView, there are other pipeline applications that we are considering

for future commercialization.

Geography — DeepView has the potential to service a large total addressable market.

We estimate that there are over 57,000 sites of clinical care in which the technology could be placed in the United States and over

20,000 sites across the UK and EU.

For all geographies, these sites include both acute inpatient hospitals and outpatient sites of care,

in order to include physician offices.

As we expand from the United States into the UK and EU, we will consider follow-on markets

for commercial expansion, including the Middle East, among others.

Pipeline Applications — Though we are currently focused on the burn application for DeepView,

there are other pipeline applications that we are considering for future commercialization.

As noted above, we have already received U.S.

government funding for the development of our DeepView

SnapShot ® M fully handheld device for use in combat, military and home health care uses.

In connection with our BARDA contract,

we are working on expanding the indication usage of the DeepView System to incorporate a wound and burn measurement tool for clinicians.

have also explored the technology’s potential for the assessment of critical limb ischemia, level of lower limb amputation selection,

post-operative perfusion assessment for peripheral interventions, and military applications.

For all future pipeline applications, we

believe that the technology would remain constant, in that we will leverage our data analytics algorithms to improve predictive analyses.

With any new application, we would need to conduct one or more clinical studies to collect enough patient data to appropriately support

algorithm development for each new application.

These new algorithms could easily be uploaded to existing machines in the future.

a regulatory perspective, we believe that these follow-on applications would all follow a 510(k) clearance process although in some

cases, we may need to follow the De Novo classification or premarket approval pathway if we are not able to identify a predicate, or if

use of the device for a new indication is classified as a Class III device.

funding for the development of our DeepView SnapShot ® M fully handheld device for use in combat, military and home health

In connection with our BARDA contract, we are working on expanding the indication usage of the DeepView System to incorporate

a wound and burn measurement tool for clinicians.

We have completed significant work on DFU and will continue to evaluation the predictive

use of the DeepView System for the DFU indication as the Company moves into 2025 and beyond.

We have also explored the technology’s

potential for the assessment of wound bed preparation, critical limb ischemia, level of lower limb amputation selection, post-operative

perfusion assessment for peripheral interventions, and military applications.

For all future pipeline applications we will leverage our

data analytics algorithms to improve predictive analyses.

With any new application, we would need to conduct one or more clinical studies

to collect enough patient data to appropriately support algorithm development for each new application.

These new algorithms could easily

be uploaded onto existing DeepView devices in the future.

From a regulatory perspective, we believe that these follow-on applications

would all follow a 510(k) clearance process although in some cases, we may need to follow the De Novo classification or premarket

approval pathway if we are not able to identify a predicate, or if use of the device for a new indication is classified as a Class III

Existing and future revenue base from long

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On September 27, 2023,

2023, the Company executed a new contract with BARDA, providing the Company with additional funding of up to $150.0 million,

including an initial award of approximately $54.9 million to support the clinical validation and application for FDA De Novo

status of our DeepView System.

This will include the distribution of up to 30 DeepView Systems in various emergency rooms and burn

centers to support the clinical validation study.

The contract also includes options, similar to our prior BARDA contracts, with an

additional total value of approximately $95.1 million which can be exercised for additional product development, procurement

and the expanded deployment of DeepView Systems at emergency rooms, trauma and burn centers.

These deployments will enable the

Company to conduct health economic and outcome research to support the broader clinical adoption of the DeepView System.

funding is non-dilutive to our stockholders, and we believe it validates the important nature of our mission and technology.

Significant Wound Data Repository from Artificial

Neural Network

the Company executed a new contract with BARDA, providing the Company with additional funding of up to $150.0 million, including

an initial award of approximately $54.9 million to support the clinical validation and application for FDA De Novo status of our

DeepView System.

This will include the distribution of up to 30 DeepView Systems in various emergency rooms and burn centers to support

the clinical validation study.

The contract also includes options, similar to our prior BARDA contracts, with an additional total value

of approximately $95.1 million which can be exercised for additional product development, procurement and the expanded deployment

of DeepView Systems at emergency rooms, trauma and burn centers.

These deployments will enable the Company to conduct health economic

and outcome research to support the broader clinical adoption of the DeepView System.

This grant funding is non-dilutive to our stockholders,

and we believe it validates the important nature of our mission and technology.

Significant Wound Data Repository from

Artificial Neural Network

As of December 31, 2024,

approximately 340 billion pixels of proprietary DFU and burn data have been acquired and utilized for the deep learning algorithms

approximately 340 billion pixels of proprietary image data have been acquired and utilized for the deep learning algorithms training.

This presents a significant barrier to entry to would-be competitors in wound care healing assessments.

The data collection

to clinical output, the flow, quality and control of the data pipeline is managed entirely by us.

Our DeepView System uses deep learning

on its wound data repository to recognize patterns and correlations of injured tissue spectral signatures to produce reliable and reasonable

assessment for clinicians to make accurate and faster treatment decisions.

We believe that our strategic partnerships with various leading

medical institutions and healthcare providers in the United States and Europe will enable us to access high quality image data and

build the world’s leading wound biopsy tissue database.

Our AI algorithms are designed and trained to the clinical “ground

truth” that has been verified and vetted by various U.S.

The data collection to clinical

output, the flow, quality and control of the data pipeline is managed entirely by us.

Our DeepView System uses deep learning on its wound

data repository to recognize patterns and correlations of injured tissue spectral signatures to produce reliable and reasonable assessment

for clinicians to make accurate and faster treatment decisions.

We believe that our strategic partnerships with various leading medical

institutions and healthcare providers in the United States and Europe will enable us to access high quality image data and build

the world’s leading wound biopsy tissue database.

Our AI algorithms are designed and trained to the clinical “ground truth”

that has been verified and vetted by various U.S.

government agencies and leading clinicians in their respective fields.

They have not yet been reviewed or cleared by FDA.

not yet been reviewed or cleared by FDA.

Strategic Partnerships

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partnerships with multiple clinical and academic partners.

In the United States, we are currently engaged with leading research hospitals

that are enrolling subjects for our Burn AI training study.

In the EU and UK, we have partnered with the Royal College of Surgeons Ireland,

as well as key opinion leaders to provide us with greater knowledge in the wound care sector.

Our partnerships with these institutions

provide us with the opportunity to collaborate with leading wound care providers to develop effective early stage wound assessment technology.

We utilize these strategic partnerships to support the ongoing clinical validation studies we are using to develop our algorithmic model.

Each of our clinical study/trials include certain protocol requirements to ensure a uniform testing process for our technology.

In the United States, we are currently engaged with leading research

hospitals that are enrolling subjects for our Burn AI training study.

In the EU and UK, we have partnered with the Royal College of Surgeons

Ireland, as well as key opinion leaders to provide us with greater knowledge in the wound care sector.

In July 2024, we entered into

a memorandum of understanding with PolyNovo, Ltd.

to assist in the expansion of our DeepView System throughout Australia by utilizing

the Australian Special Access Scheme.

As of December 31, 2024, the Company was accepted into the Special Access Scheme with three hospitals

in Melbourne, Perth and Sydney and anticipates delivering the DeepView Systems to those institutions in the first quarter of 2025.

partnerships with these institutions provide us with the opportunity to collaborate with leading wound care providers to develop effective

early stage wound assessment technology.

We utilize these strategic partnerships to support the ongoing clinical validation studies we

are using to develop our algorithmic model.

Each of our clinical study/trials include certain protocol requirements to ensure a uniform

testing process for our technology.

Proven Experienced Management Team

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operational acumen, strategic relationships and the ability to understand and navigate the complexities of healthcare.

Our directors also

bring significant expertise from previous public company experience along with financial, governance and technical oversight.

Our directors

also bring significant expertise from previous public company experience along with financial, governance and technical oversight.

Respected Advisory Board

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correlated to predictive wound healing.

Several companies have developed

wound imaging systems for burn injuries and DFUs;

however, these systems incorporate technology such as spatial frequency domain imaging,

thermal imaging, photographic documentation, hyperspectral imaging, and near-infrared imaging that provide physiologic data to the physician.

Ultimately, this physiologic data appears to only provide an indirect linkage to wound healing and does not display a binary result of

non-healing.” Furthermore, the majority of systems in the wound care space are merely documentation tools that

record measurements of the wound for health record purposes and still rely upon subjective clinician opinion for treatment decisions.

The advent of a novel technology such as the DeepView System not only has the potential to disrupt the therapeutic pathway within the

wound care market, but also to create a new diagnostic market for wound care that did not exist previously for clinics and physicians,

subject to successful development of the device and FDA marketing authorization.

As noted above, although our previous DeepView Systems

received 510(k) clearance, and we have received FDA BDD clearance for our DeepView GEN 3 System, there can be no assurance that we will

be able to obtain market authorization in the US, UK or EU.

Several companies have developed wound imaging systems for wounds;

however, these systems incorporate technology such as spatial frequency domain imaging, thermal imaging, photographic documentation, hyperspectral

imaging, and near-infrared imaging that provide physiologic data to the physician.

Ultimately, this physiologic data appears to only provide

an indirect linkage to wound healing and does not display a binary result of “healing vs.

non-healing.” Furthermore, the majority

of systems in the wound care space are merely documentation tools that record measurements of the wound for health record purposes and

still rely upon subjective clinician opinion for treatment decisions.

The advent of a novel technology such as the DeepView System not

only has the potential to disrupt the therapeutic pathway within the wound care market, but also to create a new diagnostic market for

wound care that did not exist previously for clinics and physicians, subject to successful development of the device and FDA marketing

authorization.

As noted above, although our previous DeepView Systems received 510(k) clearance, and we have received FDA BDD clearance

for our DeepView GEN 3 System, there can be no assurance that we will be able to obtain market authorization in the US or EU, especially

as the Company seeks a De Novo clearance with the FDA.

Commercialization and Revenue Strategy

We intend to pursue the complete

development of our DeepView System and, if marketing authorization is obtained, to commercialize it on our own, or potentially with a

partner, in the United States and other regions.

We intend to pursue the

complete development of our DeepView System and, if marketing authorization is obtained, to commercialize it on our own, or potentially

with a partner, in the United States and other regions.

We currently have no sales, marketing or commercial product distribution capabilities and

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United States

Subject to our receipt of the

necessary regulatory marketing authorization, we intend to market our DeepView System using internal and third party resources to inpatient

and outpatient sites of care throughout the United States.

Wound Care Centers are typically the first line of specialty care for

DFUs in the United States, but vascular and cardiology groups and outpatient podiatry practices also treat wounds.

Sales will initially

target wound care centers and podiatry practices presiding in areas with high prevalence of diabetes such as the south and southeastern

areas of the United States.

As noted above, subject to our receipt of the necessary regulatory marketing authorization, our business

is expected to have two revenue streams, a SaaS model component predicated on utilizing the regulatory method, SaMD (software as a medical

device), and an imaging device component.

The SaaS component will feature a software licensing fee that includes maintenance, image hosting,

and access to algorithm updates.

The capital sale component will be competitively priced for acceptance into independent practices and

Given our recent receipt of

the UKCA mark for our burn indication, commercial sales are expected to commence in 2024 for the burn indication in the UK and in 2025

for DFU indication.

In the United States, the Company will continue to perform under its new BARDA contract with respect to the burn indication

and will receive significant governmental funding prior to seeking FDA clearance of the DeepView System in late 2025.

Subject to our receipt of

the necessary regulatory marketing authorization, we intend to market our DeepView System using internal and third-party resources to

inpatient and outpatient sites of care throughout the United States.

As noted above, subject to our receipt of the necessary regulatory

marketing authorization, our business is expected to have two revenue streams, a SaaS model component predicated on utilizing the regulatory

method, SaMD (software as a medical device), and an imaging device component.

The SaaS component will feature a software licensing fee

that includes maintenance, image hosting, and access to algorithm updates.

The capital sale component will be competitively priced for

acceptance into independent practices and clinics.

Given our receipt of the

UKCA mark for our burn indication, commercial sales are expected to commence in 2025 for the burn indication in the UK.

In the United

States, the Company will continue to perform under its new BARDA contract with respect to the burn indication and will receive significant

governmental funding prior to seeking FDA clearance of the DeepView System in the first half of 2025.

Reimbursement

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As clinical evidence is developed and utilization increases over the next several years, we

plan to apply for CPT Ò codes.

plan to apply for Current Procedural Terminology (CPT Ò )

We view our DeepView technology

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Manufacturing Arrangements

We currently outsource all

of our manufacturing to a Contract Manufacturer.

Cobalt Product Solutions (“Cobalt”), located in Plano, Texas, is involved

with manufacturing the current generation DeepView System and we anticipate that they will continue to do so for the foreseeable future.

In addition to Cobalt, we partner

with several other highly specialized contract manufacturers in the areas of optics, technology design, and electronics.

We employ experienced

regulatory and quality control personnel to ensure that our manufacturing processes and quality management systems are in compliance with

FDA and EU regulations and standards.

As we expand into the European market, we will most likely consider manufacturing devices in the

EU in preparation for commercialization.

We currently outsource all our manufacturing to a Contract Manufacturer.

Cobalt Product Solutions (“Cobalt”), located in Plano, Texas, is involved with manufacturing the current generation DeepView

System and we anticipate that they will continue to do so for the foreseeable future.

In addition to Cobalt, we

partner with several other highly specialized contract manufacturers in the areas of optics, technology design, and electronics.

experienced regulatory and quality control personnel to ensure that our manufacturing processes and quality management systems are in

compliance with FDA and EU regulations and standards.

As we expand into the European market, we will most likely consider manufacturing

devices in the EU in preparation for commercialization.

We do not have any plans to develop our own manufacturing facility at this time.

Intellectual Property

We strive to protect and enhance

the proprietary technologies that we believe are important to our business by seeking patents to cover our technology.

We also rely on

trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

We strive to protect and

enhance the proprietary technologies that we believe are important to our business by seeking patents to cover our technology.

rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent

Our technology is protected

with issued and/or allowed patents across nine families of active patents:

● Burn/Wound Classification on MSI and PPG;

● Tissue classification on MSI and PPG;

● Amputation site analysis on MSI, ML and healthcare matrix;

● DFU healing potential prediction and wound assessment on

MSI, ML and healthcare matrix;

● High-precision, multi-aperture, MSI snapshot imaging;

● Wound assessment based on MSI;

● Burn/histology assessment based on MSI and ML;

● High-precision, single-aperture MSI snapshot imaging;

● Topological characterization and assessment of tissues using

Burn/Wound Classification on MSI and Photoplethysmography (“PPG”);

Tissue classification on

Amputation site analysis on MSI, machine learning (“ML”)

and healthcare matrix;

DFU healing potential prediction

and wound assessment on MSI, ML and healthcare matrix;

High-precision, multi-aperture,

MSI snapshot imaging;

Wound assessment based

Burn/histology assessment

based on MSI and ML;

High-precision, single-aperture

MSI snapshot imaging;

Topological characterization

and assessment of tissues using MSI and ML

We have 12 issued and allowed

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international patent applications pending.

In addition, we support the

development of our brand and product offerings through trademark protection at the United States Patent and Trademark Office.

of December 31, 2023, we maintain a portfolio of 64 trademarks and nine trademark applications pending relating to our DeepView System

product offerings.

Our trademarks and pending trademark applications are spread over nine jurisdictions mostly in the UK the EU and China.

is our intention to maintain these registrations indefinitely and to expand the number of jurisdictions in which we have registered trademarks

as deemed necessary to protect our freedom to use the marks and/or block competitors in additional markets.

We will continue to look to

protect our intellectual property in the United States, UK and the EU as those are the first commercial markets for our products

and rely on third party experts to assist in doing this.

addition, we support the development of our brand and product offerings through trademark protection at the United States Patent

and Trademark Office.

As of December 31, 2024, we maintain a portfolio of 6 8

trademarks and nine trademark applications pending relating to our DeepView System product offerings.

Our trademarks and pending trademark

applications are spread over nine jurisdictions mostly in the UK the EU and China.

It is our intention to maintain these registrations

indefinitely and to expand the number of jurisdictions in which we have registered trademarks as deemed necessary to protect our freedom

to use the marks and/or block competitors in additional markets.

We will continue to look to protect our intellectual property in the

United States, UK and the EU as those are the first commercial markets for our products and rely on third party experts to assist

in doing this.

Our corporate headquarters

is located in Dallas, Texas, where we occupy approximately 11,000 square feet of space under a lease agreement.

The lease agreement for

our corporate headquarters expires in in December 2024 with an additional three monthly extensions through March 31, 2025.

In April, 2024, the Company

executed an extension of its existing lease agreement for our corporate headquarters which expires on February 29, 2028.

Human Capital Resources and Employees

We employ a growing and highly

skilled employee base, including our sales force, and promote a culture of innovation to continuously iterate and enhance our products,

systems and commercial footprint.

Our human capital objectives include, as applicable, identifying, recruiting, retaining, incentivizing

and integrating our existing and additional employees.

We anticipate the expansion

of our business in 2024 as we continue to build a focused and highly skilled team.

At December 31, 2023 had 78 full-time employees

in the United States and UK.

In 2024, we anticipate new hires will be made in all areas, in particular in operations, sales, marketing,

and government contracts.

This will further enable us to meet our technology, IP, clinical, regulatory, and commercial goals in 2024

We have designed and implemented

our cash and stock compensation programs to attract, motivate, and retain our employees.

We regularly review our compensation structure

to ensure that we remain competitive, reward top performance, and ensure internal equity, while maintaining proper fiscal governance.

Our compensation packages are designed based on market benchmarks.

We offer robust benefits package including health (medical, dental

and vision) insurance, paid time off, paid parental leave, a retirement plan and life and disability coverage.

Business Combination

On September 11, 2023, we consummated the business combination (the

“Business Combination”) contemplated by that certain Business Combination Agreement, dated as of April 11, 2023, by and among

Rosecliff Acquisition Corp I (“RCLF”), Ghost Merger Sub I, Inc.

(“Merger Sub I”), Ghost Merger Sub II, LLC (“Merger

Sub II”), and Spectral MD Holdings, Ltd.

(“Legacy Spectral”), whereby Merger Sub I merged with and into Legacy Spectral

(the “First Merger”), with Legacy Spectral surviving the First Merger as a wholly owned subsidiary of RCLF and RCLF changed

its name to “Spectral AI, Inc.”, and, immediately following the First Merger, Legacy Spectral merged with and into Merger

Sub II (the “Second Merger”), with Merger Sub II surviving the Second Merger as a wholly owned subsidiary of RCLF (collectively,

the “Merger”).

For additional information, please refer to our final prospectus, as amended, on Form S-4, filed with the SEC

on August 10, 2023.

We employ a growing and

highly skilled employee base, including our sales force, and promote a culture of innovation to continuously iterate and enhance our

products, systems and commercial footprint.

Our human capital objectives include, as applicable, identifying, recruiting, retaining,

incentivizing and integrating our existing and additional employees.

We continued to expand our workforce in 2024 as we continue to build

a focused and highly skilled team.

At December 31, 2024 we had 78 full-time employees in the United States and UK.

In 2025, we anticipate

new hires will be made in all areas, in particular in operations, sales, marketing, and government contracts.

This will further enable

us to meet our technology, IP, clinical, regulatory, and commercial goals in 2025 and beyond.

We have designed and implemented our cash and stock compensation programs

to attract, motivate, and retain our employees.

We regularly review our compensation structure to ensure that we remain competitive, reward

top performance, and ensure internal equity, while maintaining proper fiscal governance.

Our compensation packages are designed based

on market benchmarks.

We offer robust benefits package including health (medical, dental and vision) insurance, paid time off, paid parental

leave, a retirement plan and life and disability coverage.

Available Information

internet address is www.spectral-ai.com.

Our website and the information contained therein or linked thereto are not part of this Annual

We make available free of charge through our internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q,

current reports on Form 8-K, proxy statements, registration statements and amendments to those reports filed or furnished pursuant to

the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish them to the SEC.

maintains a website that contains reports, proxy statements and other information regarding issuers that file electronically with the

These materials may be obtained electronically by accessing the SEC’s website at www.sec.gov.

Our internet address is

www.spectral-ai.com .

Our website and the information contained therein or linked thereto are not part of this Annual Report.

make available free of charge through our internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports

on Form 8-K, proxy statements, registration statements and amendments to those reports filed or furnished pursuant to the Exchange Act

as soon as reasonably practicable after we electronically file such material with, or furnish them to the SEC.

The SEC maintains a website

that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC.

These materials

may be obtained electronically by accessing the SEC’s website at www.sec.gov .

Risk Factors.

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and $20.9 million, respectively, and on a consolidated basis our cash balance at December 31, 2024 was $5.2 million.

accumulated deficit of $32.8 million as of December 31, 2023.

Our losses have resulted primarily from costs incurred in connection

with our design, manufacturing and development activities, research and development activities, building our commercial infrastructure,

legal, and general and administrative expenses associated with our operations.

an accumulated deficit of approximately $48.1 million as of December 31, 2024.

Our losses have resulted primarily from costs incurred

in connection with our design, manufacturing and development activities, research and development activities, building our commercial

infrastructure, legal, and general and administrative expenses associated with our operations.

On September 27, 2023,

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Company will utilize its existing cash balance and the initial award from BARDA for its near-term liquidity and operating needs.

believes that it has sufficient cash and revenue from its BARDA contract to support its operations until it is able to obtain equity or

debt investments on terms acceptable to the Company to meet its expected operating cash-flow needs for its burn, DFU and other indication

research and development.

We do not know whether or when

we will become profitable.

Our ability to generate revenue and achieve profitability will depend upon our ability, alone or with others,

to complete the development of our DeepView System, including receipt of the necessary regulatory clearances, approvals, or classifications

Company believes that it has sufficient cash and revenue from its BARDA contract to support its operations until it is able to obtain

equity or debt investments on terms acceptable to the Company to meet its expected operating cash-flow needs for its burn, DFU and other

indication research and development.

We do not know whether or

when we will become profitable.

Our ability to generate revenue and achieve profitability will depend upon our ability, alone or with

others, to complete the development of our DeepView System, including receipt of the necessary regulatory clearances, approvals, or classifications

and thereafter to successfully commercialize our DeepView System.

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We may also encounter unforeseen

expenses, difficulties, complications, delays and other known and unknown factors and risks frequently experienced by medical device companies

in rapidly evolving fields.

In addition, the Company’s ability to develop its DeepView System for multiple indications requires

research and development costs that may exceed the Company’s current cash balance.

The Company may need to seek additional equity

or debt investments to meet its projected operating costs for the timely development of the DeepView System.

expenses, difficulties, complications, delays and other known and unknown factors and risks frequently experienced by medical device

companies in rapidly evolving fields.

In addition, the Company’s ability to develop its DeepView System for multiple indications

requires research and development costs that may exceed the Company’s current cash balance.

The Company may need to seek additional

equity or debt investments to meet its projected operating costs for the timely development of the DeepView System.

To the extent additional

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you that we will achieve profitability in the future or that, if we do become profitable, we will sustain profitability.

Our failure to

achieve and sustain profitability in the future will make it more difficult to finance the capital requirements needed to operate our

business and accomplish our strategic objectives, which would have a material adverse effect on our business, financial condition and

results of operations, and cause the market price of our common stock to decline.

to achieve and sustain profitability in the future will make it more difficult to finance the capital requirements needed to operate

our business and accomplish our strategic objectives, which would have a material adverse effect on our business, financial condition

and results of operations, and cause the market price of our common stock to decline.

We are devoting a significant portion of

our efforts towards research and development of our DeepView System.

Our business, prospects, results

of operations and financial condition depend upon our ability, alone or with others, to complete the development of our DeepView System,

including receipt of the necessary regulatory clearances, approvals, or classifications and thereafter to successfully commercialize our

DeepView System.

In addition, though we are currently focused on the DFU and burn applications for DeepView, there are other pipeline

applications that we are considering for future commercialization.

Our business, prospects,

results of operations and financial condition depend upon our ability, alone or with others, to complete the development of our DeepView

System, including receipt of the necessary regulatory clearances, approvals, or classifications and thereafter to successfully commercialize

our DeepView System.

In addition, though we are currently focused on the burn application for DeepView, there are other pipeline applications

that we are considering for future commercialization.

However, we may be unable to achieve these goals.

Approval or clearance

from the FDA and comparable regulatory bodies may never be obtained.

We also may encounter unforeseen expenses, difficulties, complications,

delays and other known and unknown factors and risks frequently experienced by medical device companies in rapidly evolving fields.

failure to receive the necessary approvals and clearances and to successfully commercialize our DeepView System would have a material

adverse effect on our business, prospects, results of operations and financial condition.

Approval or clearance from the

FDA and comparable regulatory bodies may never be obtained.

We also may encounter unforeseen expenses, difficulties, complications, delays

and other known and unknown factors and risks frequently experienced by medical device companies in rapidly evolving fields.

to receive the necessary approvals and clearances and to successfully commercialize our DeepView System would have a material adverse

effect on our business, prospects, results of operations and financial condition.

Further, our business plan

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our business, prospects, results of operations and financial condition.

We depend on government funding, which if

lost or reduced, could have a material adverse effect on our research and development activities and our ability to commercialize our

DeepView technology.

We depend on government funding, which

if lost or reduced, could have a material adverse effect on our research and development activities and our ability to commercialize

our DeepView technology.

Our largest contract is with BARDA and is the largest single source of revenue for us.

Our BARDA contract is not

guaranteed to be extended.

Our BARDA contract is

not guaranteed to be extended.

We have not made any commercial

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from BARDA and DHA.

Our BARDA contract is the largest single source of revenue for us.

On September 27, 2023, the Company executed a new contract with BARDA, providing the Company with additional funding of up to $150.0 million,

including an initial award of approximately $54.9 million to support the clinical validation and FDA clearance of our DeepView System,

in place of the prior contract Option 2 award which was approximately $21.9 million.

The contract also includes options, similar

to our prior BARDA contracts, with an additional total value of approximately $95.1 million which can be exercised for additional

product development, procurement and the expanded deployment of DeepView Systems at emergency rooms, trauma and burn centers.

currently have no reason to believe that we will fail to achieve these contract milestones and decision gates or that these further options

will not be exercised, and while the BARDA contract has been renewed or extended historically, there is no guarantee that the BARDA contract

will be renewed or extended in the future, and there are no assurances that we will achieve the contract milestones and decision gates

on a timely basis, or at all.

As the BARDA contract is significant to us and is our largest single source of revenue, a decision by BARDA

not to exercise further options would have a material adverse impact on our business, prospects, results of operations and financial condition.

Our BARDA contract is the

largest single source of revenue for us.

On September 27, 2023, the Company executed a new contract with BARDA, providing the Company

with additional funding of up to $150.0 million, including an initial award of approximately $54.9 million to support the clinical

validation and FDA clearance of our DeepView System, in place of the prior contract Option 2 award which was approximately $21.9 million.

The contract also includes options, similar to our prior BARDA contracts, with an additional total value of approximately $95.1 million

which can be exercised for additional product development, procurement and the expanded deployment of DeepView Systems at emergency rooms,

trauma and burn centers.

While we currently have no reason to believe that we will fail to achieve these contract milestones and decision

gates or that these further options will not be exercised, and while the BARDA contract has been renewed or extended historically, there

is no guarantee that the BARDA contract will be renewed or extended in the future, and there are no assurances that we will achieve the

contract milestones and decision gates on a timely basis, or at all.

As the BARDA contract is significant to us and is our largest single

source of revenue, a decision by BARDA not to exercise further options would have a material adverse impact on our business, prospects,

results of operations and financial condition.

Under the terms of the BARDA

contract, the U.S.

government has the right to terminate the contract for convenience or to terminate for default if we fail to meet

our obligations as set forth in the contract.

While the government has a right to terminate the BARDA contract for convenience, we believe

that the government generally does not terminate funding awards unless there is reason, such as the funding contract becomes too costly,

the agency seeks to avoid a dispute with another branch of government, or the agency decides to restructure its contractual arrangements

and perform work in-house.

government has the right to terminate the contract for convenience or to terminate for default if we fail to

meet our obligations as set forth in the contract.

While the government has a right to terminate the BARDA contract for convenience,

we believe that the government generally does not terminate funding awards unless there is reason, such as the funding contract becomes

too costly, the agency seeks to avoid a dispute with another branch of government, or the agency decides to restructure its contractual

arrangements and perform work in-house.

We believe it is unlikely that BARDA will terminate its contract with us.

However, there can be no guarantee

that the BARDA contract will not be terminated.

However, there can

be no guarantee that the BARDA contract will not be terminated.

If BARDA were to terminate

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impact on our business, prospects, results of operations and financial condition.

We received a contract from the DHA within the U.S.

Department of Defense,

which enables us to research and develop a fully portable, handheld version of our DeepView solution and has been extended through the

first quarter of 2024.

We were previously awarded a $1.1 million, Sequential Phase II STTR contract by the DHA within the U.S.

of Defense, which is paid to us monthly, as well as a STTR Phase I and initial Phase II contract from the DHA.

Though the Company has no reason

to believe that it will not be offered a Phase III contract, and while DHA contracts have been renewed or extended historically,

We receive funding from

a contract by the DHA within the U.S.

Department of Defense, which enables us to research and develop a fully portable, handheld version

of our DeepView System and has been extended through the second quarter of 2025.

We were previously awarded a $1.1 million, Sequential

Phase II STTR contract by the DHA within the U.S.

Department of Defense, which is paid to us monthly, as well as a STTR Phase I

and initial Phase II contract from the DHA.

Though the Company has no

reason to believe that it will not be offered a Phase III contract, and while DHA contracts have been renewed or extended historically,

there is no guarantee that the contract will be extended after the current period or that we will be offered a Phase III contract.

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a material adverse impact on the Company’s business, prospects, results of operations and financial condition.

Under the terms of

the DHA contract, the U.S.

government has the right to terminate the contract for convenience or to terminate for default if we fail

to meet our obligations as set forth in the contract.

Under the terms

of the DHA contract, the U.S.

government has the right to terminate the contract for convenience or to terminate for default if

we fail to meet our obligations as set forth in the contract.

We also are party to a Research

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pay us a firm fixed fee based upon our achievement of certain milestones (such as development of the image technology in the handheld

device, validation of the design and development of a handheld device from the current cart based system, completion of verification testing

builds, and development of commercialization plan) through April 5, 2025.

However, there are no assurances that we will achieve the

contract milestones on a timely basis, or at all.

Failure to receive the fee under the contract could have a material adverse impact on

the Company’s business, prospects, results of operations and financial condition.

device, validation of the design and development of a handheld device from the current cart-based system, completion of verification

testing builds, and development of commercialization plan) through April 5, 2025.

However, there are no assurances that we will

achieve the contract milestones on a timely basis, or at all.

Failure to receive the fee under the contract could have a material adverse

impact on the Company’s business, prospects, results of operations and financial condition.

We may need additional funding to finance

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our products or delay establishment of sales and marketing capabilities or other activities necessary to commercialize our products.

On December 26, 2023, the

Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with B.

Riley Principal Capital II, LLC

Riley”), pursuant to which, upon the terms and subject to the satisfaction of the conditions contained in the Purchase

Agreement, the Company have the right to sell to B.

Riley up to $10,000,000 of shares of the Common Stock (subject to certain limitations

contained in the Purchase Agreement), from time to time during the term of the Purchase Agreement.

Additionally, On March 20, 2024, the

Company entered into the Standby Equity Purchase Agreement (“SEPA”) with YA II PN, LTD, a Cayman Islands exempt limited partnership

(“Yorkville”) pursuant to which the Company has the right to sell to Yorkville up to $30,000,000 of its shares of Common Stock,

subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA (such transaction,

the “Yorkville Transaction”).

In connection with the SEPA, and subject to the conditions set forth therein, Yorkville has

agreed to advance to the Company in the form of convertible promissory notes (the “Convertible Notes”) an aggregate principal

amount of up to $12,500,000 (the “Pre-Paid Advance”), which will be paid in three tranches.

Based on our current operating plan, we believe that our cash and cash

equivalents, together with the remaining funding available to us under the Purchase Agreement, the BARDA contract, the MTEC Agreement,

and the Yorkville financing will be sufficient to meet our capital requirements and fund our operations through at least the next 12 months

from the release date of the consolidated financial statements included in this annual report.

However, we have based these estimates

on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to raise capital sooner

or in greater amounts than currently expected because of circumstances beyond our control.

We may require additional capital

in the future to fund our operating expenses and to further our product development efforts, including seeking the necessary regulatory

clearances, approvals, De Novo classifications, or certifications (each which cannot be guaranteed and may take longer than planned) for

our DeepView System and growing our sales and marketing organization.

To the extent additional capital is necessary, there are no assurances

that we will be able to raise additional capital on favorable terms or at all, and therefore we may not be able to execute our business

On December 26, 2023, the Company entered into a Common Stock Purchase

Agreement (the “Purchase Agreement”) with B.

Riley Principal Capital II, LLC (“B.

Riley”), pursuant to which,

upon the terms and subject to the satisfaction of the conditions contained in the Purchase Agreement, the Company have the right to sell

Riley up to $10,000,000 of shares of the Common Stock (subject to certain limitations contained in the Purchase Agreement), from

time to time during the term of the Purchase Agreement.

Additionally, On March 20, 2024, the Company entered into the Standby Equity Purchase

Agreement (“SEPA”) with YA II PN, LTD, a Cayman Islands exempt limited partnership (“Yorkville”) pursuant to which

the Company has the right to sell to Yorkville up to $30,000,000 of its shares of Common Stock, subject to certain limitations and conditions

set forth in the SEPA, from time to time during the term of the SEPA (such transaction, the “Yorkville Transaction”).

the Company received $12,500,000 of prepaid advances from Yorkville (the “Pre-Paid Advance”) in the form of convertible promissory

notes (the “Convertible Notes”).

Based on our current operating

plan, we believe that our cash and cash equivalents, together with the remaining funding available to us under the Purchase Agreement,

the BARDA contract, the MTEC Agreement, and the Yorkville financing will be sufficient to meet our capital requirements and fund our

operations through at least the next 12 months from the release date of the consolidated financial statements included in this annual

However, we have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital

resources sooner than we currently expect.

Changing circumstances could cause us to consume capital significantly faster than we currently

anticipate, and we may need to raise capital sooner or in greater amounts than currently expected because of circumstances beyond our

We may require additional

capital in the future to fund our operating expenses and to further our product development efforts, including seeking the necessary

regulatory clearances, approvals, De Novo classifications, or certifications (each which cannot be guaranteed and may take longer than

planned) for our DeepView System and growing our sales and marketing organization.

To the extent additional capital is necessary, there

are no assurances that we will be able to raise additional capital on favorable terms or at all, and therefore we may not be able to

execute our business plan.

Our future funding requirements will depend on many factors, including:

● the cost of our research and development activities;

● the scope, rate of progress and cost of our clinical studies;

● the cost and timing of additional regulatory clearances,

approvals, De Novo classifications, or certifications;

● the degree and rate of market acceptance of our DeepView

System, assuming we receive the necessary regulatory clearances, approvals, De Novo classifications, or certifications (each of which

cannot be guaranteed and may take longer than planned);

● the scope and timing of investment in our sales force and

expansion of our commercial organization;

● the costs associated with manufacturing our DeepView System

at increased production levels;

● the terms and timing of any collaborative, licensing and

other arrangements that we may establish;

● the costs associated with any product recall that may occur;

● the costs of attaining, defending and enforcing our intellectual

property rights;

● the emergence of competing new products or technologies or

other adverse market developments;

● the impact on our business from the global COVID-19 pandemic

or any other pandemic, epidemic or outbreak of an infectious disease.

the cost of our research

and development activities;

the scope, rate of progress

and cost of our clinical studies;

the cost and timing of

additional regulatory clearances, approvals, De Novo classifications, or certifications;

the degree and rate of

market acceptance of our DeepView System, assuming we receive the necessary regulatory clearances, approvals, De Novo classifications,

or certifications (each of which cannot be guaranteed and may take longer than planned);

the scope and timing of

investment in our sales force and expansion of our commercial organization;

the costs associated with

manufacturing our DeepView System at increased production levels;

the terms and timing of

any collaborative, licensing and other arrangements that we may establish;

the costs associated with

any product recall that may occur;

the costs of attaining,

defending and enforcing our intellectual property rights;

the emergence of competing

new products or technologies or other adverse market developments;

the impact on our business

from the global COVID-19 pandemic or any other pandemic, epidemic or outbreak of an infectious disease.

We may seek to raise additional

capital through equity offerings or debt financings and such additional financing may not be available to us on acceptable terms, or at

capital through equity offerings or debt financings and such additional financing may not be available to us on acceptable terms, or

In addition, any additional equity or debt financing that we raise may contain terms that are not favorable to us or our stockholders.

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price per share paid by investors in this offering.

In addition, the terms of debt

securities issued or borrowings could impose significant restrictions on our operations including restrictive covenants, such as limitations

on our ability to incur additional debt or issue additional equity, limitations on our ability to pay dividends, limitations on our ability

to acquire or license intellectual property rights, and other operating restrictions that could adversely affect our ability to conduct

our business.

In the event that we enter into collaborations or licensing arrangements to raise capital, we may be required to accept

unfavorable terms, such as relinquishment or licensing of certain rights related to our products or technologies that we otherwise would

seek to develop or commercialize ourselves.

In addition, we may be forced to work with a partner, which could lower the economic value

of our programs to us.

In addition, the terms of

debt securities issued or borrowings could impose significant restrictions on our operations including restrictive covenants, such as

limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to pay dividends, limitations

on our ability to acquire or license intellectual property rights, and other operating restrictions that could adversely affect our ability

to conduct our business.

In the event that we enter into collaborations or licensing arrangements to raise capital, we may be required

to accept unfavorable terms, such as relinquishment or licensing of certain rights related to our products or technologies that we otherwise

would seek to develop or commercialize ourselves.

In addition, we may be forced to work with a partner, which could lower the economic

value of our programs to us.

If we are unable to obtain

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capabilities or other activities necessary to commercialize our products.

If this were to occur, our ability to grow and support our business

and to respond to market challenges could be significantly limited, which could have a material adverse effect on our business, financial

condition and results of operations.

If this were to occur, our ability to grow and support our

business and to respond to market challenges could be significantly limited, which could have a material adverse effect on our business,

financial condition and results of operations.

Risks Related to Product Development and Regulatory

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regulatory authorities, which regulations differ from country to country.

There is no guarantee that our DeepView System

or any future products will receive the requisite market authorization, approval, or De Novo classification for clinical testing, manufacturing,

or marketing.

While preliminary results have been encouraging and indicative of the potential performance of our DeepView System, data

already obtained, or obtained in the future, from clinical studies do not necessarily predict the results that will be obtained from later

clinical studies.

We will be required to incur significant costs in obtaining market authorization, or De Novo classifications for our

DeepView System.

There is no guarantee that

our DeepView System or any future products will receive the requisite market authorization, approval, or De Novo classification for clinical

testing, manufacturing, or marketing.

While preliminary results have been encouraging and indicative of the potential performance of

our DeepView System, data already obtained, or obtained in the future, from clinical studies do not necessarily predict the results that

will be obtained from later clinical studies.

We will be required to incur significant costs in obtaining market authorization, or De

Novo classifications for our DeepView System.

In the United States,

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clearance, approval, or certification by regulatory authorities in other countries.

However, failure to obtain or delay in obtaining authorization,

registration, clearance, approval, or certification in one or more regulatory jurisdictions may have a negative effect on the regulatory

process in others.

However, failure to obtain or delay in obtaining

authorization, registration, clearance, approval, or certification in one or more regulatory jurisdictions may have a negative effect

on the regulatory process in others.

We may experience significant delays in

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for several reasons, including:

● we may fail to or be unable to conduct the clinical trials

in accordance with regulatory requirements;

● selection and onboarding of clinical sites or a Contract

Research Organization (“CRO”) may take longer than anticipated;

● sites participating in a clinical trial may drop out of the

trial, which may require us to engage new sites for an expansion of the number of sites that are permitted to be involved in the trial;

● patients may not enroll in, remain in or complete, clinical

trials at the rates we expect;

● adverse events or unexpected developments may occur that

affect the patients’ safety;

● supply issues may prevent us from continuing to use our investigational

devices in clinical evaluations;

● clinical investigators may not perform our clinical trials

on our anticipated schedule or consistent with the clinical trial protocol and good clinical practices.

we may fail to or be unable

to conduct the clinical trials in accordance with regulatory requirements;

selection and onboarding

of clinical sites or a Contract Research Organization (“CRO”) may take longer than anticipated;

sites participating in

a clinical trial may drop out of the trial, which may require us to engage new sites for an expansion of the number of sites that

are permitted to be involved in the trial;

patients may not enroll

in, remain in or complete, clinical trials at the rates we expect;

adverse events or unexpected

developments may occur that affect the patients’ safety;

supply issues may prevent

us from continuing to use our investigational devices in clinical evaluations;

clinical investigators

may not perform our clinical trials on our anticipated schedule or consistent with the clinical trial protocol and good clinical

In addition, the FDA, applicable

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US, or certification of a device for many reasons, including:

● our inability to demonstrate to the satisfaction of the FDA

or the applicable regulatory entity or notified body that our products are (i) substantially equivalent, in the case of a 510(k) clearance,

(ii) safe or effective for their intended uses, in the case of a PMA, or (iii) that general controls alone or general and special controls

together provide reasonable assurance of safety and effectiveness for the intended use, in the case of De Novo classification;

● the disagreement of the FDA or the applicable foreign regulatory

body with the design or implementation of our clinical trials (including, for purposes of the EU, clinical investigations) or the interpretation

of data from pre-clinical studies or clinical trials, as applicable and to the extent required to support marketing authorization or

certification;

● our inability to demonstrate that the clinical and other

benefits of the device outweigh the risks;

● the manufacturing process or facilities we use may not meet

applicable requirements;

● unanticipated discovery of issues that relate to safety or

effectiveness of the device during or after the regulatory review process;

● the potential for policies or regulations of the FDA or applicable

foreign regulatory bodies to change significantly in a manner rendering our clinical data, as applicable, and/or regulatory filings insufficient

for market authorization, De Novo classification, or certification.

our inability to demonstrate

to the satisfaction of the FDA or the applicable regulatory entity or notified body that our products are (i) substantially equivalent,

in the case of a 510(k) clearance, (ii) safe or effective for their intended uses, in the case of a PMA, or (iii) that general

controls alone or general and special controls together provide reasonable assurance of safety and effectiveness for the intended

use, in the case of De Novo classification;

the disagreement of the

FDA or the applicable foreign regulatory body with the design or implementation of our clinical trials (including, for purposes of

the EU, clinical investigations) or the interpretation of data from pre-clinical studies or clinical trials, as applicable and to

the extent required to support marketing authorization or certification;

our inability to demonstrate

that the clinical and other benefits of the device outweigh the risks;

the manufacturing process

or facilities we use may not meet applicable requirements;

unanticipated discovery

of issues that relate to safety or effectiveness of the device during or after the regulatory review process;

the potential for policies

or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data,

as applicable, and/or regulatory filings insufficient for market authorization, De Novo classification, or certification.

If our clinical trials are

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authorizations or certifications to commercialize our products.

We do not have the ability

to independently conduct all of our pre-clinical and clinical trials for our DeepView System and to prepare the associated regulatory

submissions without the participation of third-party research hospitals, burn and wound centers.

We must rely on third parties such as

CROs, medical institutions and clinical investigators to conduct such trials.

If these third parties do not successfully carry-out their

contractual duties or comply with regulatory obligations, including compliance with Good Clinical Practice (“GCP”) requirements

or meet expected deadlines, if these third parties need to be replaced, if the quality or accuracy of the data they obtain is compromised

due to a failure to adhere to our clinical protocols or regulatory requirements or for other reasons, or if the prepared regulatory submission

does not meet the regulatory agencies’ expectations or requirements, our pre-clinical development activities or clinical trials

may be extended, delayed, suspended or terminated.

Furthermore, our third-party clinical trial investigators may be delayed in conducting

our clinical trials for reasons outside of their control, including the COVID-19 pandemic, or another pandemic, epidemic or outbreak of

an infectious disease.

In the event of such extensions, delays, suspensions or terminations, we may not be able to obtain market authorization,

De Novo classification, certification or other required regulatory authorizations or certifications for, or successfully commercialize,

our DeepView System on a timely basis, if at all, and our business, financial condition and results of operations may be adversely affected.

We do not have the

ability to independently conduct all of our pre-clinical and clinical trials for our DeepView System and to prepare the associated

regulatory submissions without the participation of third-party research hospitals, burn and wound centers.

We must rely on third

parties such as CROs, medical institutions and clinical investigators to conduct such trials.

If these third parties do not

successfully carry-out their contractual duties or comply with regulatory obligations, including compliance with Good Clinical

Practice (“GCP”) requirements or meet expected deadlines, if these third parties need to be replaced, if the quality or

accuracy of the data they obtain is compromised due to a failure to adhere to our clinical protocols or regulatory requirements or

for other reasons, or if the prepared regulatory submission does not meet the regulatory agencies’ expectations or

requirements, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated.

Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of

their control, including the COVID-19 pandemic, or another pandemic, epidemic or outbreak of an infectious disease.

In the event of

such extensions, delays, suspensions or terminations, we may not be able to obtain market authorization, De Novo classification,

certification or other required regulatory authorizations or certifications for, or successfully commercialize, our DeepView System

on a timely basis, if at all, and our business, financial condition and results of operations may be adversely affected.

New legislation and regulations and legislative

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For example, it is unclear the extent to which any proposals,

if adopted, could impose additional regulatory requirements on us that could delay our ability to obtain new 510(k) clearances, increase

the costs of compliance, or restrict our ability to maintain our current clearances, or otherwise create competition that may negatively

affect our business.

The FDA regulations and guidance

are often revised or reinterpreted by the FDA in ways that may significantly affect our business.

Any new statutes or regulations or revisions

or reinterpretations of existing statutes or regulations may impose additional costs or lengthen review times or make it more difficult

to obtain market authorization for our DeepView System.

We cannot determine what effect changes in regulations, statutes, legal interpretation

or policies, when and if promulgated, enacted or adopted may have on our business.

Such changes could, among other things, require:

testing prior to obtaining marketing authorization;

if adopted, could impose additional regulatory requirements on us that could delay our ability to obtain new 510(k) clearances,

increase the costs of compliance, or restrict our ability to maintain our current clearances, or otherwise create competition that may

negatively affect our business.

The FDA regulations and

guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business.

Any new statutes or regulations

or revisions or reinterpretations of existing statutes or regulations may impose additional costs or lengthen review times or make it

more difficult to obtain market authorization for our DeepView System.

We cannot determine what effect changes in regulations, statutes,

legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business.

Such changes could, among other

things, require:

additional testing prior to obtaining marketing authorization;

changes to manufacturing methods;

recall, replacement or discontinuance of our products;

recall, replacement

or discontinuance of our products;

or additional record keeping.

The FDA’s and other regulatory

authorities’ policies may change and additional government regulations may be promulgated that could prevent, limit or delay regulatory

clearance, approval, or De Novo classification of our DeepView System.

We cannot predict the likelihood, nature or extent of government

regulation that may arise from future legislation or administrative action, either in the United States or abroad.

If we are slow

or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain

regulatory compliance, we may lose any marketing clearance, approval, or De Novo classification that we may have obtained and we may not

achieve or sustain profitability.

The FDA’s and other

regulatory authorities’ policies may change and additional government regulations may be promulgated that could prevent, limit

or delay regulatory clearance, approval, or De Novo classification of our DeepView System.

We cannot predict the likelihood, nature or

extent of government regulation that may arise from future legislation or administrative action, either in the United States or

If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if

we are not able to maintain regulatory compliance, we may lose any marketing clearance, approval, or De Novo classification that we may

have obtained and we may not achieve or sustain profitability.

In addition, the landscape

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This new regulatory framework for medical devices in the UK is expected to become applicable as from July 2024.

not clear to what extent the future UK regulatory framework will align with the EU Medical Devices Regulation, which may lead to duplicative

is not clear to what extent the future UK regulatory framework will align with the EU Medical Devices Regulation, which may lead to duplicative

or divergent requirements.

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impact our business.

The ability of the FDA, foreign

regulatory agencies and the notified body, to review and clear, approve, certify, or grant De Novo classifications for new products can

be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept

the payment of user fees and statutory, regulatory and policy changes.

Average review times at these organizations have fluctuated in

recent years as a result.

In addition, government funding of other government agencies that oversee clearances and approvals and

that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

The ability of the FDA,

foreign regulatory agencies and the notified body, to review and clear, approve, certify, or grant De Novo classifications for new

products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key

personnel and accept the payment of user fees and statutory, regulatory and policy changes.

Average review times at these

organizations have fluctuated in recent years as a result.

In addition, government funding of other government agencies that

oversee clearances and approvals and that fund research and development activities is subject to the political process, which is

inherently fluid and unpredictable.

Disruptions at these agencies

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may adopt similar restrictions, inspection priorities, or other policy measures in response to the COVID-19 or any other public health

emergency or revert to relying on remote interactive evaluations, record requests or information from trusted regulatory partners if on-site

inspections are not feasible.

emergency or revert to relying on remote interactive evaluations, record requests or information from trusted regulatory partners if

on-site inspections are not feasible.

In addition, the FDA reallocated

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and certification bodies to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

For instance, in the EU, notified

bodies must be officially designated to certify products and services in accordance with the EU Medical Devices Regulation.

While several

notified bodies have been designated, the COVID-19 pandemic significantly slowed down their designation process and the current designated

notified bodies are facing a large amount of requests with the new regulation, resulting in longer notified body review times.

This situation

could impact our ability to grow our business in the EU and EEA.

The ongoing labor shortage may limit our

ability or the investigators’ ability to find and retain medical staff that are needed to conduct the clinical studies

The COVID-19 pandemic has caused and, there still

remains an ongoing shortage of labor force, including nurses, doctors, clinicians, and other medical personnel despite the changing economic

and financial conditions.

This shortage is causing medical institutions and other establishments to change their operations to accommodate

the shortage, and in many cases, it results in increased personnel costs in finding and retaining the staff necessary to conduct the institutions’

and establishments’ operations.

If the ongoing shortage continues or becomes worse, our ability to conduct clinical trials may be

negatively affected, and we may need to modify or stop clinical trials, or expend greater resources in identifying and retaining the appropriate

personnel necessary for the clinical investigations.

For instance, in the EU,

notified bodies must be officially designated to certify products and services in accordance with the EU Medical Devices Regulation.

While several notified bodies have been designated, the COVID-19 pandemic significantly slowed down their designation process and the

current designated notified bodies are facing a large amount of requests with the new regulation, resulting in longer notified body review

This situation could impact our ability to grow our business in the EU and EEA.

Risks Related to Ongoing Government Regulation

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of any other countries in which we receive the necessary regulatory approvals.

These regulations pertain to the design, development, evaluation,

manufacturing, testing, labeling, marketing, sale, advertising, promotion, distribution, shipping and servicing of products.

These entities

regulate and oversee record-keeping procedures, safety alerts, recalls, market withdrawals, removals and field corrective actions, post-market

surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to reoccur, could lead to death or

serious injury, and product import and export.

The regulations to which we

will be subject are complex and have become more stringent over time.

Regulatory changes could result in restrictions on our ability to

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

These regulations pertain to the design, development,

evaluation, manufacturing, testing, labeling, marketing, sale, advertising, promotion, distribution, shipping and servicing of products.

These entities regulate and oversee record-keeping procedures, safety alerts, recalls, market withdrawals, removals and field corrective

actions, post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to reoccur,

could lead to death or serious injury, and product import and export.

The regulations to which

we will be subject are complex and have become more stringent over time.

Regulatory changes could result in restrictions on our ability

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

Such regulations, and interpretations

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or De Novo classification, under the FDCA and FDA regulations, the scope of marketing claims we can make about cleared or approved devices,

or devices that were granted De Novo classification is limited to the indications that were previously reviewed and permitted by the FDA.

countries also have similar laws and regulations restricting marketing to such indications.

If a regulatory agency determines that any

of our marketing claims exceed the scope of permitted indications in a particular country, we may be subject to enforcement action and/or

we may be required to cease making the challenged marketing claims, issue corrective communications, pay fines or stop selling products

until the incorrect claims have been corrected.

or devices that were granted De Novo classification is limited to the indications that were previously reviewed and permitted by the

Other countries also have similar laws and regulations restricting marketing to such indications.

If a regulatory agency determines

that any of our marketing claims exceed the scope of permitted indications in a particular country, we may be subject to enforcement

action and/or we may be required to cease making the challenged marketing claims, issue corrective communications, pay fines or stop

selling products until the incorrect claims have been corrected.

Sales of our DeepView System

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to market our products or enhancements in certain international markets effectively, or at all.

Modifications to our DeepView GEN 3 System

may require new clearances, approvals, De Novo classifications, certifications, or new or amended certifications, and may require us to

cease marketing or to recall the modified device until clearances, approvals, De Novo classifications, or the relevant certifications

are obtained.

In the United States, any modification to

a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended

use, design, or manufacture, requires a new 510(k) clearance, or depending on the type and extent of the modification, a De Novo

classification or a PMA.

If we wish to market modified versions of DeepView System, we will need to make this determination before

doing so and document our conclusion regarding the necessity of further regulatory review.

The FDA may review such determinations and

may not agree with our decisions regarding whether new 510(k), PMA, or De Novo classifications are necessary.

If we are found to be marketing

our products for off-label uses or indications for use that have not received the requisite clearances, approvals, De Novo classifications,

or certifications, we might become subject to FDA and other competent authorities’ enforcement action or have other resulting liability.

In addition, if the FDA or the competent authorities in the EU member states and EEA countries determine that our promotional materials

or training constitute promotion of a use which is unapproved, not cleared, not covered by the De Novo classification order, not covered

by a CE mark, or not in compliance with other regulatory authorities’ requirements, they could request that we modify our training

or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter,

an injunction, product seizures, consent decrees, civil fines, criminal penalties, import detention, import refusals, or import alerts.

The DeepView System requires a De Novo

classification.

In the United States,

since the DeepView System utilizes a novel approach to wound healing prediction that has not been previously classified by the FDA and

it is not substantially equivalent to any existing device on the market, it requires a De Novo classification.

If we wish to market modified

versions of DeepView System, we will need to make this determination before doing so and document our conclusion regarding the necessity

of further regulatory review.

The FDA may review such determinations and may not agree with our decisions regarding whether new 510(k),

PMA, or De Novo classifications are necessary.

If we are found to be marketing our products for off-label uses or indications for use

that have not received the requisite clearances, approvals, De Novo classifications, or certifications, we might become subject to FDA

and other competent authorities’ enforcement action or have other resulting liability.

In addition, if the FDA or the competent

authorities in the EU member states and EEA countries determine that our promotional materials or training constitute promotion of a

use which is unapproved, not cleared, not covered by the De Novo classification order, not covered by a CE mark, or not in compliance

with other regulatory authorities’ requirements, they could request that we modify our training or promotional materials or subject

us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, an injunction, product seizures,

consent decrees, civil fines, criminal penalties, import detention, import refusals, or import alerts.

If our DeepView System is found to cause

or contribute to adverse medical events, this could interrupt, delay, or prevent its continued development, or negatively affect the market

authorization, De Novo classification, or certification.

We may be required to report them to the FDA or comparable regulatory authority,

and if we fail to do so, we could be subject to sanctions that could harm our reputation, business, financial condition and results of

operations, and become subject to further administrative and regulatory enforcement actions.

The discovery of serious safety issues with

our DeepView System, or a recall of our device either voluntarily or at the direction of the FDA or another governmental authority, could

have a negative impact on us.

If our DeepView System is approved

for commercialization, we will be subject to the FDA’s medical device reporting regulations and similar foreign regulations, which

require us to report to the FDA or comparable regulatory authorities when we receive or become aware of information that reasonably suggests

that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction

were to recur, it could cause or contribute to a death or serious injury.

For investigational devices in clinical evaluation, investigators

are required to submit a report of an unanticipated adverse device effect (“UADE”) to the sponsor within 10 working days

after becoming aware of the UADE.

We, as the sponsor, must evaluate the UADE and report the result of the investigation to FDA, institutional

review boards, and all participating investigators within 10 working days of receiving the notice of the UADE.

In certain cases,

we may be required to terminate the clinical investigation.

The timing of our obligation to report is triggered by the date when we receive

the notice or when we otherwise become aware of the event, as well as the nature of the event.

or contribute to adverse medical events, this could interrupt, delay, or prevent its continued development, or negatively affect the

market authorization, De Novo classification, or certification.

We may be required to report them to the FDA or comparable regulatory

authority, and if we fail to do so, we could be subject to sanctions that could harm our reputation, business, financial condition and

results of operations, and become subject to further administrative and regulatory enforcement actions.

The discovery of serious safety

issues with our DeepView System, or a recall of our device either voluntarily or at the direction of the FDA or another governmental

authority, could have a negative impact on us.

If our DeepView System

is approved for commercialization, we will be subject to the FDA’s medical device reporting regulations and similar foreign

regulations, which require us to report to the FDA or comparable regulatory authorities when we receive or become aware of

information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or

malfunctioned in a way that, if the malfunction were to recur, it could cause or contribute to a death or serious injury.

investigational devices in clinical evaluation, investigators are required to submit a report of an unanticipated adverse device

effect (“UADE”) to the sponsor within 10 working days after becoming aware of the UADE.

We, as the sponsor,

must evaluate the UADE and report the result of the investigation to FDA, institutional review boards, and all participating

investigators within 10 working days of receiving the notice of the UADE.

In certain cases, we may be required to

terminate the clinical investigation.

The timing of our obligation to report is triggered by the date when we receive the notice or

when we otherwise become aware of the event, as well as the nature of the event.

We may fail to report within the prescribed

timeframe events of which we become aware.

The investigator in the clinical evaluation may not be aware of the reporting or notification

requirements or may otherwise fail to report a UADE.

We may also fail to recognize that a reportable event has occurred, especially

if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of the

If we fail to comply with our reporting obligations, the FDA or comparable regulatory authorities could act, including warning

letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, delay or termination

of clinical investigations, revocation of our marketing authorizations, seizure of our products or delay in obtaining marketing authorizations

or certifications for our product candidates.

The investigator in the clinical evaluation may not be aware of the reporting or

notification requirements or may otherwise fail to report a UADE.

We may also fail to recognize that a reportable event has

occurred, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in

time from the use of the product.

If we fail to comply with our reporting obligations, the FDA or comparable regulatory authorities

could act, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary

penalties, delay or termination of clinical investigations, revocation of our marketing authorizations, seizure of our products or

delay in obtaining marketing authorizations or certifications for our product candidates.

The FDA and in certain cases,

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in design or manufacture of a product or in the event that a product poses an unacceptable risk to health.

The FDA’s authority to

require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death.

The FDA’s authority

to require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death.

We may also choose to voluntarily recall a product if we determine that such reasonable probability exists, or otherwise, if any material

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or refuse to clear, approve, issue the De Novo classification request, or issue a certification for our device.

Depending on the corrective action we take to

redress a product’s deficiencies or defects, the FDA or foreign regulatory authorities or bodies may require, or we may decide,

that we need to obtain new clearances, approvals, De Novo classifications, or certifications for the device before we may market or distribute

the corrected device.

Seeking such clearances, approvals, De Novo classifications, or certifications may delay our ability to replace

the recalled devices in a timely manner.

Moreover, if we do not adequately address problems associated with our devices, we may face additional

regulatory enforcement action, including FDA or foreign regulatory bodies’ warning letters, product seizures, injunctions, administrative

penalties or civil or criminal fines.

Quality problems and product liability claims

could lead to recalls or safety alerts, reputational harm, adverse verdicts or costly settlements, and could have a material adverse effect

on our business, results of operations, financial condition, and cash flows.

Depending on the corrective

action we take to redress a product’s deficiencies or defects, the FDA or foreign regulatory authorities or bodies may require,

or we may decide, that we need to obtain new clearances, approvals, De Novo classifications, or certifications for the device before

we may market or distribute the corrected device.

Seeking such clearances, approvals, De Novo classifications, or certifications may

delay our ability to replace the recalled devices in a timely manner.

Moreover, if we do not adequately address problems associated with

our devices, we may face additional regulatory enforcement action, including FDA or foreign regulatory bodies’ warning letters,

product seizures, injunctions, administrative penalties or civil or criminal fines.

Quality problems and product liability

claims could lead to recalls or safety alerts, reputational harm, adverse verdicts or costly settlements, and could have a material adverse

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

Quality is extremely important

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exposes us to potential product liability risks that are inherent in the design, manufacture, and marketing of medical devices.

Once commercialized,

many of our products will be used in settings with seriously ill patients where the devices’ failure may cause serious adverse effects

on the patients.

Component failures, manufacturing non-conformances, design defects, off-label or unapproved use, insufficient training

of healthcare professionals, or inadequate disclosure of product-related risks or product-related information with respect to our products,

if they were to occur, could result in an unsafe condition or injury to a patient.

These problems could lead to recall of, or issuance

of a safety alert relating to, our products, and could result in product liability claims and lawsuits, including class actions.

problems occur during clinical investigations, FDA or other foreign regulatory agencies may refuse to grant market authorization or a

De Novo classification request, or issue certifications for our products.

In addition, negative publicity resulting from such problems

may negatively affect or seriously hinder the sales of our products even after market authorization, De Novo classification, or certification.

Any of the foregoing problems, including future product liability claims or recalls, regardless of their ultimate outcome, could harm

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

commercialized, many of our products will be used in settings with seriously ill patients where the devices’ failure may cause

serious adverse effects on the patients.

Component failures, manufacturing non-conformances, design defects, off-label or unapproved

use, insufficient training of healthcare professionals, or inadequate disclosure of product-related risks or product-related information

with respect to our products, if they were to occur, could result in an unsafe condition or injury to a patient.

These problems could

lead to recall of, or issuance of a safety alert relating to, our products, and could result in product liability claims and lawsuits,

including class actions.

If such problems occur during clinical investigations, FDA or other foreign regulatory agencies may refuse to

grant market authorization or a De Novo classification request, or issue certifications for our products.

In addition, negative publicity

resulting from such problems may negatively affect or seriously hinder the sales of our products even after market authorization, De

Novo classification, or certification.

Any of the foregoing problems, including future product liability claims or recalls, regardless

of their ultimate outcome, could harm our reputation and have a material adverse effect on our business, results of operations, financial

condition and cash flows.

The FDA and other regulatory enforcement

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improperly promoted off-label or unapproved uses, we may become subject to significant liability.

If we decide to market any

of our products, our marketing practices must stay within the scope of the permitted claims under the market authorization or De Novo

classification order that we may receive in the future.

The FDA and other regulatory enforcement agencies strictly regulate the promotional

claims that may be made about medical devices.

While we cannot restrict or dictate the healthcare professionals’ use of our devices,

we cannot market for any off-label uses, or any uses that FDA has not reviewed and permitted.

The use of the DeepView System for indications

other than those for which FDA cleared, approved, or granted De Novo classification requests, or otherwise were certified by a notified

body or foreign regulatory enforcement authority, may not effectively diagnose conditions not referenced in product indications, which

could harm our reputation in the marketplace among clinicians.

If we are found to have promoted such off-label uses or unapproved uses,

we may become subject to significant government fines and other related liability.

For example, if the FDA or any foreign regulatory body

determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training

or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter,

which is used for violators that do not necessitate a warning letter, injunction, seizure, civil fine, or criminal penalties, among others.

It is also possible that other federal, state or foreign enforcement authorities might take action under other regulatory authority, such

as false claims laws, if they consider our business activities to constitute promotion of an off-label use, which could result in significant

penalties, including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion from participation

in government healthcare programs and the curtailment of our operations.

The federal government has levied large civil and criminal fines

against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion or promotion

of unapproved uses.

If we decide to market

any of our products, our marketing practices must stay within the scope of the permitted claims under the market authorization or De

Novo classification order that we may receive in the future.

The FDA and other regulatory enforcement agencies strictly regulate the

promotional claims that may be made about medical devices.

While we cannot restrict or dictate the healthcare professionals’

use of our devices, we cannot market for any off-label uses, or any uses that FDA has not reviewed and permitted.

The use of the

DeepView System for indications other than those for which FDA cleared, approved, or granted De Novo classification requests, or

otherwise were certified by a notified body or foreign regulatory enforcement authority, may not effectively diagnose conditions not

referenced in product indications, which could harm our reputation in the marketplace among clinicians.

If we are found to have

promoted such off-label uses or unapproved uses, we may become subject to significant government fines and other related liability.

For example, if the FDA or any foreign regulatory body determines that our promotional materials or training constitute promotion of

an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement

actions, including the issuance or imposition of an untitled letter, which is used for violators that do not necessitate a warning

letter, injunction, seizure, civil fine, or criminal penalties, among others.

It is also possible that other federal, state or

foreign enforcement authorities might take action under other regulatory authority, such as false claims laws, if they consider our

business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not

limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion from participation in government

healthcare programs and the curtailment of our operations.

The federal government has levied large civil and criminal fines against

companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion or promotion of

unapproved uses.

The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified

promotional conduct is changed or curtailed.

In addition, clinicians may

misuse our products or use improper techniques if they are not adequately trained, potentially leading to misdiagnosis, injury, and an

increased risk of product liability.

In addition, clinicians

may misuse our products or use improper techniques if they are not adequately trained, potentially leading to misdiagnosis, injury, and

an increased risk of product liability.

If our device is misused or used with improper technique, we may become subject to costly litigation

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and abuse, false claims, transparency, and other healthcare laws and regulations.

If our DeepView System is approved

for commercialization, our future operations will be subject to various federal and state healthcare laws and regulations.

will affect our sales, marketing and other promotional activities by limiting the kinds of financial arrangements, including sales programs,

we may develop with hospitals, clinicians or other potential purchasers or users of medical devices and services.

They also impose additional

administrative and compliance burdens on us.

In particular, these laws will influence, among other things, how we structure our sales,

placement and rental offerings, including discount practices, clinician support, education and training programs and clinician consulting

and other service arrangements.

If our DeepView System is

approved for commercialization, our future operations will be subject to various federal and state healthcare laws and regulations.

laws will affect our sales, marketing and other promotional activities by limiting the kinds of financial arrangements, including sales

programs, we may develop with hospitals, clinicians or other potential purchasers or users of medical devices and services.

impose additional administrative and compliance burdens on us.

In particular, these laws will influence, among other things, how we structure

our sales, placement and rental offerings, including discount practices, clinician support, education and training programs and clinician

consulting and other service arrangements.

The laws that may affect our practices and arrangements include, but are not limited to:

federal Anti-Kickback Statute, which prohibits,

among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or paying any remuneration, directly

or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase,

lease, order, or arranging for or recommending the purchase, lease or order of, any good or service, for which payment may be made, in

whole or in part, under federal healthcare programs such as Medicare and Medicaid.

The term “remuneration” has been broadly

interpreted to include anything of value, and the government can establish a violation of the Anti-Kickback Statute without proving that

a person or entity had actual knowledge of, or a specific intent to violate, the law.

The Anti-Kickback Statute is subject to evolving

interpretations and has been applied by government enforcement officials to a number of common business arrangements in the medical device

There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution;

however, those exceptions and safe harbors are drawn narrowly, and there is no exception or safe harbor for many common business activities.

Failure to meet all of the requirements of a particular statutory exception or regulatory safe harbor does not make the conduct per se

illegal under the Anti-Kickback Statute, but the legality of the arrangement will be evaluated on a case-by-case basis based on the totality

of the facts and circumstances.

Practices that involve remuneration to those who prescribe, purchase, or recommend medical device products,

including discounts, or engaging individuals as speakers, consultants, or advisors, may be subject to scrutiny if they do not fit squarely

within an exception or safe harbor.

Our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback

federal civil False Claims Act, which prohibits

any person from, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment of government

knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the

government or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the U.S.

federal Anti-Kickback

Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or

paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral

of an individual for, or the purchase, lease, order, or arranging for or recommending the purchase, lease or order of, any good or

service, for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid.

term “remuneration” has been broadly interpreted to include anything of value, and the government can establish a violation

of the Anti-Kickback Statute without proving that a person or entity had actual knowledge of, or a specific intent to violate, the

The Anti-Kickback Statute is subject to evolving interpretations and has been applied by government enforcement officials to

a number of common business arrangements in the medical device industry.

There are a number of statutory exceptions and regulatory

safe harbors protecting some common activities from prosecution;

however, those exceptions and safe harbors are drawn narrowly, and

there is no exception or safe harbor for many common business activities.

Failure to meet all of the requirements of a particular

statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute, but the legality

of the arrangement will be evaluated on a case-by-case basis based on the totality of the facts and circumstances.

Practices that

involve remuneration to those who prescribe, purchase, or recommend medical device products, including discounts, or engaging individuals

as speakers, consultants, or advisors, may be subject to scrutiny if they do not fit squarely within an exception or safe harbor.

Our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability;

federal civil

False Claims Act, which prohibits any person from, among other things, knowingly presenting, or causing to be presented false or

fraudulent claims for payment of government funds;

knowingly making, using or causing to be made or used, a false record or statement

material to an obligation to pay money to the government or knowingly and improperly avoiding, decreasing or concealing an obligation

to pay money to the U.S.

federal government.

In addition, any claims submitted as a result of a violation of the federal Anti-Kickback Statute constitute false claims and are subject

to enforcement under the False Claims Act.

Actions under the False Claims Act may be brought by the government or as a qui tam action

by a private individual in the name of the government and to share in any monetary recovery.

Qui tam actions are filed under seal and

impose a mandatory duty on the U.S.

Department of Justice to investigate such allegations.

False Claims Act liability is potentially

significant in the healthcare industry because the statute provides for treble damages and significant mandatory penalties (adjusted

annually for inflation) per false claim or statement for violations.

Because of the potential for large monetary exposure, healthcare

companies often resolve allegations without admissions of liability for significant and sometimes large settlement amounts to avoid the

uncertainty of treble damages and per claim penalties that may be awarded in litigation proceedings.

Many device manufacturers have resolved

investigations of alleged improper activities, including causing false claims to be submitted as a result of the marketing of their products

for unapproved and thus non reimbursable uses, and other interactions with prescribers and others including those that may have affected

their billing or coding practices and submission to the federal government.

Moreover, to avoid the risk of exclusion from federal healthcare

programs as a result of a False Claims Act settlement, companies may enter into corporate integrity agreements with the government, which

may impose substantial costs on companies to ensure compliance.

There are also criminal penalties, including imprisonment and criminal

fines, for making or presenting a false or fictitious or fraudulent claim or statement to the federal government;

● criminal healthcare statutes that were added by the Health

Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its implementing regulations, which impose criminal

and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare

benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement,

in connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which includes

both government and privately funded benefits programs;

similar to the U.S.

federal Anti-Kickback Statute, a person or entity does

not need to have actual knowledge of the statute or specific intent to violate them in order to have committed a violation;

● the Eliminating Kickbacks in Recovery Act (“EKRA”),

§ 220, makes it a federal crime for anyone, with respect to services covered by a health care benefit program, to knowingly

and willfully solicit or receive any remuneration in return for referring a patient or patronage to a recovery home, clinical treatment

facility, or laboratory;

or to pay or offer any remuneration to induce a referral of an individual to a recovery home, clinical treatment

facility, or laboratory;

or in exchange for an individual using the services of that recovery home, clinical treatment facility, or laboratory.

EKRA applies more broadly than the federal Anti-Kickback Statute, as “health care benefit program” includes not only state

and federal health care programs, but also private health plans.

In addition, any claims submitted as a result of a violation of the federal Anti-Kickback

Statute constitute false claims and are subject to enforcement under the False Claims Act.

Actions under the False Claims Act may

be brought by the government or as a qui tam action by a private individual in the name of the government and to share in any monetary

Qui tam actions are filed under seal and impose a mandatory duty on the U.S.

Department of Justice to investigate

such allegations.

False Claims Act liability is potentially significant in the healthcare industry because the statute provides for

treble damages and significant mandatory penalties (adjusted annually for inflation) per false claim or statement for violations.

Because of the potential for large monetary exposure, healthcare companies often resolve allegations without admissions of liability

for significant and sometimes large settlement amounts to avoid the uncertainty of treble damages and per claim penalties that may

be awarded in litigation proceedings.

Many device manufacturers have resolved investigations of alleged improper activities, including

causing false claims to be submitted as a result of the marketing of their products for unapproved and thus non reimbursable uses,

and other interactions with prescribers and others including those that may have affected their billing or coding practices and submission

to the federal government.

Moreover, to avoid the risk of exclusion from federal healthcare programs as a result of a False Claims

Act settlement, companies may enter into corporate integrity agreements with the government, which may impose substantial costs on

companies to ensure compliance.

There are also criminal penalties, including imprisonment and criminal fines, for making or presenting

a false or fictitious or fraudulent claim or statement to the federal government;

criminal healthcare statutes

that were added by the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and its implementing

regulations, which impose criminal and civil liability for, among other things, knowingly and willfully executing, or attempting

to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up

a material fact or making any materially false statement, in connection with the delivery of, or payment for healthcare benefits,

items or services by a healthcare benefit program, which includes both government and privately funded benefits programs;

federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific

intent to violate them in order to have committed a violation;

the Eliminating Kickbacks

in Recovery Act (“EKRA”), 18 U.S.C.

§ 220, makes it a federal crime for anyone, with respect to services covered

by a health care benefit program, to knowingly and willfully solicit or receive any remuneration in return for referring a patient

or patronage to a recovery home, clinical treatment facility, or laboratory;

or to pay or offer any remuneration to induce a referral

of an individual to a recovery home, clinical treatment facility, or laboratory;

or in exchange for an individual using the services

of that recovery home, clinical treatment facility, or laboratory.

EKRA applies more broadly than the federal Anti-Kickback Statute,

as “health care benefit program” includes not only state and federal health care programs, but also private health plans.

EKRA also has fewer statutory safe harbors and no regulatory state harbors.

Violations of this provision may result in substantial fines and/or imprisonment.

Additional violations that may be imposed include sanctions,

licensure revocations, or the exclusion from participating in governmental healthcare programs;

● the Physician Payments Sunshine Act (the “Sunshine

Act”) and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies

that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the CMS information

related to certain payments made in the preceding calendar year and other transfers of value to physicians and teaching hospitals, as

well as ownership and investment interests held by physicians and their immediate family members.

Beginning January 1, 2022, manufacturers

will also be required to report payments and other transfers of value made during the prior calendar year to physician assistants, nurse

practitioners, clinical nurse specialists, certified nurse anesthetists, and anesthesiology assistants;

● foreign and state laws and regulations, including state payment

reporting, anti-kickback and false claims laws, that may apply to items or services reimbursed by any third-party payor, including private

foreign and state laws that require medical device companies to comply with the medical device industry’s voluntary compliance

guidelines and the relevant compliance guidance promulgated by the U.S.

federal government and other national governments, or otherwise

restrict payments that may be made to healthcare providers and other potential referral sources;

and foreign and state laws and regulations

that require drug and device manufacturers to report information related to payments and other transfers of value to dental practitioners

and other healthcare providers or marketing expenditures, many of which differ from each other in significant ways and may not have the

same effect, thus complicating compliance efforts.

The scope and enforcement of

these laws is substantial and subject to rapid change.

The shifting compliance environment and the need to build and maintain robust compliance

programs, systems, and processes to comply with different compliance and/or reporting requirements in multiple jurisdictions increase

the possibility that we may run afoul of one or more of the requirements or that federal or state regulatory authorities might challenge

our current or future activities under these laws.

Additionally, we cannot predict the impact of any changes in these laws, whether or

not retroactive.

Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions or safe harbors,

it is possible that some of our future activities could be subject to challenge under one or more of such laws.

Any government investigation,

even if we are able to successfully defend against it, will require the expenditure of significant resources, is likely to generate negative

publicity, harm our reputation and potentially our financial condition and divert the attention of our management.

Moreover, any investigation

into our practices could cause adverse publicity and require a costly and time-consuming response.

If our operations are found to be in

violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal

and administrative penalties, damages, fines, imprisonment of individuals, exclusion from government funded healthcare programs, such

as Medicare and Medicaid, imposition of compliance obligations and monitoring, and the curtailment or restructuring of our operations.

Violations of this provision may result in substantial

fines and/or imprisonment.

Additional violations that may be imposed include sanctions, licensure revocations, or the exclusion from

participating in governmental healthcare programs;

the Physician Payments

Sunshine Act (the “Sunshine Act”) and its implementing regulations, which requires certain manufacturers of drugs, devices,

biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to

report annually to the CMS information related to certain payments made in the preceding calendar year and other transfers of value

to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family

Beginning January 1, 2022, manufacturers will also be required to report payments and other transfers of value made

during the prior calendar year to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists,

and anesthesiology assistants;

foreign and state laws

and regulations, including state payment reporting, anti-kickback and false claims laws, that may apply to items or services reimbursed

by any third-party payor, including private insurers;

foreign and state laws that require medical device companies to comply with

the medical device industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S.

government and other national governments, or otherwise restrict payments that may be made to healthcare providers and other potential

referral sources;

and foreign and state laws and regulations that require drug and device manufacturers to report information related

to payments and other transfers of value to dental practitioners and other healthcare providers or marketing expenditures, many of

which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

The scope and enforcement

of these laws is substantial and subject to rapid change.

The shifting compliance environment and the need to build and maintain robust

compliance programs, systems, and processes to comply with different compliance and/or reporting requirements in multiple jurisdictions

increase the possibility that we may run afoul of one or more of the requirements or that federal or state regulatory authorities might

challenge our current or future activities under these laws.

Additionally, we cannot predict the impact of any changes in these laws,

whether or not retroactive.

Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions

or safe harbors, it is possible that some of our future activities could be subject to challenge under one or more of such laws.

government investigation, even if we are able to successfully defend against it, will require the expenditure of significant resources,

is likely to generate negative publicity, harm our reputation and potentially our financial condition and divert the attention of our

Moreover, any investigation into our practices could cause adverse publicity and require a costly and time-consuming response.

If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may

be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment of individuals, exclusion from government

funded healthcare programs, such as Medicare and Medicaid, imposition of compliance obligations and monitoring, and the curtailment or

restructuring of our operations.

Any of the foregoing consequences could seriously harm our business and our financial results.

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In the United States,

there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system in ways

that may harm our future revenues and profitability and the demand for our DeepView System, if it receives the necessary market authorization.

Federal and state lawmakers regularly propose and, at times, enact legislation that would result in significant changes to the healthcare

system, some of which are intended to contain or reduce the costs of medical products and services.

Current and future legislative and

regulatory proposals to further reform healthcare or reduce healthcare costs may limit coverage of or lower reimbursement for the procedures

associated with the use of our DeepView System.

The cost containment measures that payors and providers are instituting and the effect

of any healthcare reform initiative implemented in the future could impact our revenue from the sale of our DeepView System.

The continuing efforts of the

government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare

● our ability to set a price that we believe is fair for our

DeepView System;

● our ability to generate revenue and achieve or maintain profitability;

there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system in

ways that may harm our future revenues and profitability and the demand for our DeepView System, if it receives the necessary market

authorization.

Federal and state lawmakers regularly propose and, at times, enact legislation that would result in significant changes

to the healthcare system, some of which are intended to contain or reduce the costs of medical products and services.

Current and future

legislative and regulatory proposals to further reform healthcare or reduce healthcare costs may limit coverage of or lower reimbursement

for the procedures associated with the use of our DeepView System.

The cost containment measures that payors and providers are instituting

and the effect of any healthcare reform initiative implemented in the future could impact our revenue from the sale of our DeepView System.

The continuing efforts of

the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of

healthcare may harm:

our ability to set a price

that we believe is fair for our DeepView System;

our ability to generate

revenue and achieve or maintain profitability;

the availability of capital.

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or regulation in the United States on our business, financial condition, prospects and results of operations.

Future changes in healthcare

policy could increase our costs and subject us to additional requirements that may interrupt commercialization of our current and future

solutions, decrease our revenue and impact sales of and pricing for our current and future products.

Future changes in

healthcare policy could increase our costs and subject us to additional requirements that may interrupt commercialization of our current

and future solutions, decrease our revenue and impact sales of and pricing for our current and future products.

If our manufacturers fail to comply with

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We currently outsource all

of our manufacturing to a contract manufacturer and as such we are not in direct control of the manufacture of our products and are, therefore,

exposed to the risk of poor product quality, non-adherence to applicable standards, disruptions in supply chain, or other matters.

of our manufacturing to a contract manufacturer and as such we are not in direct control of the manufacture of our products and are,

therefore, exposed to the risk of poor product quality, non-adherence to applicable standards, disruptions in supply chain, or other

Our third-party manufacturers

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In order to mitigate these

risks, we perform regularly scheduled visits with our contract manufacturer and routinely inspect the quality and performance of the device

in accordance with federally mandated standards and certification standards of the International Organization for Standardization (“ISO”).

Our current contract manufacturer, Cobalt Product Solutions is located within a short driving distance from our headquarters and allows

our employees to have hands-on interaction and timely inspections of the device.

However, a future pandemic, epidemic or other infectious

disease outbreak could hinder or prevent continued hands-on and timely inspections of the device and the facilities.

risks, we perform regularly scheduled visits with our contract manufacturer and routinely inspect the quality and performance of the

device in accordance with federally mandated standards and certification standards of the International Organization for Standardization

Our current contract manufacturer, Cobalt Product Solutions, is located within a short driving distance from our

headquarters and allows our employees to have hands-on interaction and timely inspections of the device.

However, a future pandemic,

epidemic or other infectious disease outbreak could hinder or prevent continued hands-on and timely inspections of the device and the

Actual or perceived failure to comply with

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state, and foreign data protection laws and regulations ( i.e ., laws and regulations that address privacy and data security).

the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy

laws, and consumer protection laws and regulations that govern the collection, processing, use, disclosure, and protection of health-related

and other personal information could apply to our operations or the operations of our partners.

For example, HIPAA, as amended by the

Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and the regulations implemented

thereunder, or collectively, HIPAA, imposes obligations on “covered entities,” including certain health care providers, health

plans, and health care clearinghouses, and their respective “business associates” that create, receive, maintain or transmit

individually identifiable health information (“PHI”) for or on behalf of a covered entity, as well as their covered subcontractors

with respect to safeguarding the privacy, security and transmission of individually identifiable health information.

Entities that are

found to be in violation of HIPAA, whether as the result of a breach of unsecured PHI, a complaint about privacy practices, or an audit

by HHS may be subject to significant civil, criminal, and administrative fines and penalties and/or additional reporting and oversight

obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.

the United States, numerous federal and state laws and regulations, including data breach notification laws, health information

privacy laws, and consumer protection laws and regulations that govern the collection, processing, use, disclosure, and protection of

health-related and other personal information could apply to our operations or the operations of our partners.

For example, HIPAA, as

amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and the regulations

implemented thereunder, or collectively, HIPAA, imposes obligations on “covered entities,” including certain health care

providers, health plans, and health care clearinghouses, and their respective “business associates” that create, receive,

maintain or transmit individually identifiable health information (“PHI”) for or on behalf of a covered entity, as well as

their covered subcontractors with respect to safeguarding the privacy, security and transmission of individually identifiable health

Entities that are found to be in violation of HIPAA, whether as the result of a breach of unsecured PHI, a complaint about

privacy practices, or an audit by HHS may be subject to significant civil, criminal, and administrative fines and penalties and/or additional

reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations

of HIPAA non-compliance.

Depending on the facts and circumstances, we could be subject to penalties if we violate HIPAA.

Even when HIPAA does not apply,

according to the Federal Trade Commission (the “FTC”), failing to take appropriate steps to keep consumers’ personal

information secure may constitute unfair acts or practices in or affecting commerce in violation of the Federal Trade Commission Act.

The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer

information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

Even when HIPAA does not

apply, according to the Federal Trade Commission (the “FTC”), failing to take appropriate steps to keep consumers’

personal information secure may constitute unfair acts or practices in or affecting commerce in violation of the Federal Trade Commission

The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume

of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce

vulnerabilities.

Individually identifiable health information is considered sensitive data that merits stronger safeguards.

In addition, certain state

laws govern the privacy and security of health-related and other personal information in certain circumstances, some of which may be more

stringent, broader in scope or offer greater individual rights with respect to protected health information than HIPAA, many of which

may differ from each other, thus, complicating compliance efforts.

Such laws and regulations will be subject to interpretation by various

courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties

and private litigation.

Foreign data protection laws,

including the General Data Protection Regulation (the “GDPR”), which went into effect in May 2018, may also apply to

our processing of health-related and other personal data regardless of where the processing in question is carried out.

laws govern the privacy and security of health-related and other personal information in certain circumstances, some of which may be

more stringent, broader in scope or offer greater individual rights with respect to protected health information than HIPAA, many of

which may differ from each other, thus, complicating compliance efforts.

Such laws and regulations will be subject to interpretation

by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers

and strategic partners.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or

criminal penalties and private litigation.

Foreign data protection

laws, including the General Data Protection Regulation (the “GDPR”), which went into effect in May 2018, may also apply

to our processing of health-related and other personal data regardless of where the processing in question is carried out.

The GDPR imposes

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the information provided to the individuals, the transfer of personal data out of the EEA to jurisdictions deemed to have inadequate,

security breach notifications and confidentiality of the personal data and imposition of substantial potential fines for breaches of the

data protection obligations.

Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust

regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the

annual global revenues of the noncompliant company, whichever is greater.

Among other requirements, the

GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection

security breach notifications and confidentiality of the personal data and imposition of substantial potential fines for breaches of

the data protection obligations.

Companies that must comply with the GDPR face increased compliance obligations and risk, including more

robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or

4% of the annual global revenues of the noncompliant company, whichever is greater.

Among other requirements,

the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection

to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the EU

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Misconduct by these persons could include intentional, reckless and/or negligent conduct or unauthorized activity that

● FDA requirements, including those laws requiring the reporting

of true, complete and accurate information to the FDA authorities, such as reporting of UADEs during clinical investigations;

● GCP that relate to clinical investigations, including financial

disclosure, informed consent and protection of human subjects, and requirements that relate to investigational device exemptions;

● manufacturing standards, such as FDA’s Quality System

Regulation (“QSR”) requirements;

● federal and state healthcare fraud and abuse laws and regulations;

● laws that require the true, complete and accurate reporting

of financial information or data.

requirements, including those laws requiring the reporting of true, complete and accurate information to the FDA authorities, such as

reporting of UADEs during clinical investigations;

that relate to clinical investigations, including financial disclosure, informed consent and protection of human subjects, and requirements

that relate to investigational device exemptions;

● manufacturing

standards, such as FDA’s Quality System Regulation (“QSR”) requirements;

and state healthcare fraud and abuse laws and regulations;

that require the true, complete and accurate reporting of financial information or data.

In particular, sales, marketing

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from third parties, and severe reputational harm.

It is not always possible to

identify and deter misconduct by our employees and other agents, and the precautions we take to detect and prevent this activity may not

be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions

It is not always possible

to identify and deter misconduct by our employees and other agents, and the precautions we take to detect and prevent this activity may

not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions

or lawsuits stemming from a failure to be in compliance with such laws or regulations.

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would increase our operating expenses, which could adversely affect our business, financial condition and results of operation.

Any failure or perceived failure

by us to comply with AI technology-related laws, rules and regulations could result in proceedings or actions against us by individuals,

consumer rights groups, government agencies or others.

We could incur significant costs in investigating and defending such claims and,

if found liable, pay significant damages or fines or be required to make changes to our technology and business.

Further, any such proceedings

and any subsequent adverse outcomes may subject us to significant negative publicity.

If any of these events were to occur, our business,

results of operations and financial condition could be materially adversely affected.

Any failure or

perceived failure by us to comply with AI technology-related laws, rules and regulations could result in proceedings or actions

against us by individuals, consumer rights groups, government agencies or others.

We could incur significant costs in investigating

and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our technology

and business.

Further, any such proceedings and any subsequent adverse outcomes may subject us to significant negative publicity.

any of these events were to occur, our business, results of operations and financial condition could be materially adversely

We must comply with environmental and occupational

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System for any number of reasons, including:

● lack of experience with our DeepView System and concerns

that we are new to market;

● perceived liability risk generally associated with the use

of our device;

● lack or perceived lack of (i) sufficient clinical evidence

regarding our claims of superior diagnostic assessment and (ii) long-term data, supporting clinical benefits or the cost-effectiveness

of our device over existing diagnostic alternatives;

● the failure of key opinion leaders to provide recommendations

regarding our device, or to assure clinicians and healthcare payors of the benefits of our device as an attractive alternative to other

diagnostic options;

● long-standing relationships with companies and distributors

that sell other diagnostic products for wound care assessment;

● concerns over the capital investment required to purchase

our DeepView System and perform the DeepView procedure;

● lack of availability of adequate third-party payor coverage

or reimbursement;

● competitive response and negative selling efforts from providers

of alternative technologies;

● failure to obtain favorable coverage decisions from payors,

including, but not limited to, Medicare or Medicaid;

● limitations or warnings contained in the labeling cleared

or approved by the FDA, if approved, or approved or certified by other authorities or bodies.

We believe that educating notable

industry key opinion leaders and clinicians about the merits and benefits of our DeepView System, including safety, performance, ease

of use and efficiency will be critical for increasing the adoption of our device.

of experience with our DeepView System and concerns that we are new to market;

liability risk generally associated with the use of our device;

or perceived lack of (i) sufficient clinical evidence regarding our claims of superior diagnostic assessment and (ii) long-term

data, supporting clinical benefits or the cost-effectiveness of our device over existing diagnostic alternatives;

failure of key opinion leaders to provide recommendations regarding our device, or to assure clinicians and healthcare payors of the

benefits of our device as an attractive alternative to other diagnostic options;

● long-standing

relationships with companies and distributors that sell other diagnostic products for wound care assessment;

over the capital investment required to purchase our DeepView System and perform the DeepView procedure;

of availability of adequate third-party payor coverage or reimbursement;

● competitive

response and negative selling efforts from providers of alternative technologies;

to obtain favorable coverage decisions from payors, including, but not limited to, Medicare or Medicaid;

● limitations

or warnings contained in the labeling cleared or approved by the FDA, if approved, or approved or certified by other authorities or bodies.

We believe that educating

notable industry key opinion leaders and clinicians about the merits and benefits of our DeepView System, including safety, performance,

ease of use and efficiency will be critical for increasing the adoption of our device.

Widespread adoption of new medical device technologies

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The Company has enrolled subjects in its

DFU studies in clinical and academic sites across the US and the EU across well-known medical facilities.

The Company has also signed

with international partners, including well-respected institutions in the field.

We believe that we will be able to leverage these

relationships to access other institutions and individuals, which should increase awareness and early adoption of our technology in the

United States, UK and EU.

adoption will also benefit from the potential future BARDA funding of technology placement

for burns applications.

validation studies in clinical and academic sites across the US and the EU across well-known medical facilities.

The Company has also

signed with international partners, including well-respected institutions in the field.

We believe that we will be able to leverage

these relationships to access other institutions and individuals, which should increase awareness and early adoption of our technology

in the United States, UK and EU.

adoption will also benefit from the potential future BARDA funding of technology

placement for burns applications.

If clinicians do not adopt

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

If our DeepView System is approved

for commercialization, our ability to achieve broader market acceptance of our device will depend, to a significant extent, on our sales,

marketing and educational efforts.

If our DeepView System is

approved for commercialization, our ability to achieve broader market acceptance of our device will depend, to a significant extent, on

our sales, marketing and educational efforts.

We plan to dedicate significant resources to our sales, marketing and educational programs.

may be harmed if these efforts and expenditures do not generate sufficient revenue.

In addition, we believe that developing and maintaining

broad awareness of our DeepView System in a cost-effective manner is critical to achieving broad acceptance of our device.

and educational activities may not generate clinician awareness or generate sufficient revenue, and even if they do, any revenue generated

may not offset the costs and expenses we incur.

If we fail to successfully promote our DeepView System in a cost-effective manner, we

may fail to attract or retain the market acceptance necessary to realize a sufficient return on our promotional and educational efforts,

Our business may be harmed if these efforts and expenditures do not generate sufficient revenue.

In addition, we believe that developing

and maintaining broad awareness of our DeepView System in a cost-effective manner is critical to achieving broad acceptance of our device.

Promotional and educational activities may not generate clinician awareness or generate sufficient revenue, and even if they do, any revenue

generated may not offset the costs and expenses we incur.

If we fail to successfully promote our DeepView System in a cost-effective manner,

we may fail to attract or retain the market acceptance necessary to realize a sufficient return on our promotional and educational efforts,

or to achieve broad adoption of our products.

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be obtained, or maintained if obtained.

Further, future coverage and

reimbursement may be subject to increased restrictions, such as additional prior authorization requirements, both in the United States

Further, future coverage

and reimbursement may be subject to increased restrictions, such as additional prior authorization requirements, both in the United States

and in relevant international markets in which we plan to operate, assuming we receive the necessary approvals.

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satisfactory pricing and margins for our DeepView technology.

Manufacturers of medical devices

have a history of price competition, and we can give no assurance that we will be able to achieve satisfactory prices for our DeepView

System, if it is approved for commercialization.

We will be subject to a number of factors on our ability to maintain satisfactory pricing

and margins, including, but not limited to, payor reimbursement, sale pricing of our DeepView System, wide-spread adoption of the DeepView

System at hospitals, clinics and burn centers, as well as production cost increases from third party suppliers and our contract manufacturers.

For example, any decline in the amount that payors reimburse clinicians for our DeepView System could make it difficult for them to continue

using, or to adopt, our device and could create additional pricing pressure for us.

If we are forced to lower the price we charge for

our DeepView System, our revenue and gross margins will decrease, which will adversely affect our ability to invest in and grow our business.

If we are unable to maintain our sales or our prices, including during any international expansion, or if our costs increase and we are

unable to offset such increase with an increase in our prices, our margins could erode.

We will be subject to significant pricing pressure,

which could negatively affect our business, financial condition and results of operations.

Manufacturers of medical

devices have a history of price competition, and we can give no assurance that we will be able to achieve satisfactory prices for our

DeepView System, if it is approved for commercialization.

We will be subject to a number of factors on our ability to maintain satisfactory

pricing and margins, including, but not limited to, payor reimbursement, sale pricing of our DeepView System, wide-spread adoption of

the DeepView System at hospitals, clinics and burn centers, as well as production cost increases from third party suppliers and our contract

manufacturers.

For example, any decline in the amount that payors reimburse clinicians for our DeepView System could make it difficult

for them to continue using, or to adopt, our device and could create additional pricing pressure for us.

If we are forced to lower the

price we charge for our DeepView System, our revenue and gross margins will decrease, which will adversely affect our ability to invest

in and grow our business.

If we are unable to maintain our sales or our prices, including during any international expansion, or if our

costs increase and we are unable to offset such increase with an increase in our prices, our margins could erode.

We will be subject to

significant pricing pressure, which could negatively affect our business, financial condition and results of operations.

We will face competition from many sources,

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which will require education of clinicians and their referral sources.

We may also compete with additional

competitors and products outside the United States as well.

Among other competitive advantages, such companies may have more established

sales and marketing programs and networks, established relationships with clinicians and greater name recognition in such markets.

In addition, our current and

potential competitors have established, or may establish, financial and strategic relationships among themselves or with existing or potential

customers or other third parties to increase the ability of their products to address customer needs.

Accordingly, it is possible that

new competitors or alliances among competitors could emerge and acquire a significant market share.

Existing and/or increased competition

could, therefore, adversely affect our market share and/or force us to reduce the price of our products, which could have an adverse impact

on our business, prospects, results of operations and financial condition.

We may also compete with

additional competitors and products outside the United States as well.

Among other competitive advantages, such companies may have

more established sales and marketing programs and networks, established relationships with clinicians and greater name recognition in

such markets.

In addition, our current

and potential competitors have established, or may establish, financial and strategic relationships among themselves or with existing

or potential customers or other third parties to increase the ability of their products to address customer needs.

Accordingly, it is

possible that new competitors or alliances among competitors could emerge and acquire a significant market share.

Existing and/or increased

competition could, therefore, adversely affect our market share and/or force us to reduce the price of our products, which could have

an adverse impact on our business, prospects, results of operations and financial condition.

If we are unable to continue to innovate

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that we would need to manufacture and ship our products if our existing suppliers and providers were unable to satisfy our requirements.

To utilize other sources, we

would need to identify and qualify new providers to our quality standards and obtain any additional regulatory clearances or approvals

To utilize other sources,

we would need to identify and qualify new providers to our quality standards and obtain any additional regulatory clearances or approvals

required to change providers, which could result in manufacturing delays and increase our expenses.

Although we believe that we

have stable relationships with our existing suppliers, we cannot assure you that we will be able to secure a stable supply of components

Although we believe that

we have stable relationships with our existing suppliers, we cannot assure you that we will be able to secure a stable supply of components

or materials going forward.

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subjects us to a number of risks that could impact our ability to manufacture our products and harm our business, including:

● interruption of supply resulting from modifications to, or

discontinuation of, a third party’s operations;

● delays in product shipments resulting from uncorrected defects

or errors, reliability issues or a third party’s failure to produce components that consistently meet our quality specifications;

● price fluctuations due to a lack of long-term supply arrangements

with our third parties for key components;

● inability to obtain adequate supply or services in a timely

manner or on commercially reasonable terms;

● difficulty identifying and qualifying alternative third parties

for the supply of components of our products in a timely manner;

● inability of third parties to comply with applicable provisions

of the FDA’s QSR or other applicable laws or regulations enforced by the FDA, state, local and global regulatory authorities;

● inability to ensure the quality of products manufactured

by third parties;

● shipping and manufacture delays and interruptions caused

by the ongoing COVID-19 crisis that we are not able to address, prepare for, or prevent;

● production delays related to the evaluation and testing of

products and services from alternative third parties and corresponding regulatory qualifications;

● trends towards consolidation within the medical device manufacturing

supplier industry;

● delays in delivery by our suppliers and service providers.

In addition, quarantines, shelter-in-place

and similar government orders resulting from any future pandemic, epidemic or other infectious disease outbreak, or the perception that

such orders, shutdowns or other restrictions on the conduct of business operations could occur, could impact the suppliers upon which

we rely, or the availability or cost of materials, which could disrupt the supply chain for our products.

● interruption

of supply resulting from modifications to, or discontinuation of, a third party’s operations;

in product shipments resulting from uncorrected defects or errors, reliability issues or a third party’s failure to produce components

that consistently meet our quality specifications;

fluctuations due to a lack of long-term supply arrangements with our third parties for key components;

to obtain adequate supply or services in a timely manner or on commercially reasonable terms;

identifying and qualifying alternative third parties for the supply of components of our products in a timely manner;

of third parties to comply with applicable provisions of the FDA’s QSR or other applicable laws or regulations enforced by the

FDA, state, local and global regulatory authorities;

to ensure the quality of products manufactured by third parties;

and manufacture delays and interruptions caused by the ongoing COVID-19 crisis that we are not able to address, prepare for, or prevent;

delays related to the evaluation and testing of products and services from alternative third parties and corresponding regulatory qualifications;

towards consolidation within the medical device manufacturing supplier industry;

in delivery by our suppliers and service providers.

In addition, quarantines,

shelter-in-place and similar government orders resulting from any future pandemic, epidemic or other infectious disease outbreak, or the

perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, could impact the suppliers

upon which we rely, or the availability or cost of materials, which could disrupt the supply chain for our products.

Although we require our third-party

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our business and financial results will be adversely affected.

If our DeepView System is approved

for commercialization, we intend to warrant each DeepView system against defects in materials and workmanship.

We also expect to provide

technical and other services beyond the warranty period pursuant to a supplemental service plan that we sell for our DeepView system.

We have no history of commercial placements from which to judge our rate of warranty claims, and we expect that the number of warranty

claims we receive may increase as we scale our operations and as commercial placements age.

If product returns or warranty claims are

significant or exceed our expectations, we could incur unanticipated reductions in sales or additional operating expenditures for parts

In addition, our reputation could be damaged and our device may not achieve the level of market acceptance that we are targeting

in order to achieve and maintain profitability.

Unforeseen warranty exposure could negatively impact our business and financial results.

If our DeepView System is

approved for commercialization, we intend to warrant each DeepView System against defects in materials and workmanship.

We also expect

to provide technical and other services beyond the warranty period pursuant to a supplemental service plan that we sell for our DeepView

We have no history of commercial placements from which to judge our rate of warranty claims, and we expect that the number of

warranty claims we receive may increase as we scale our operations and as commercial placements age.

If product returns or warranty claims

are significant or exceed our expectations, we could incur unanticipated reductions in sales or additional operating expenditures for

parts and service.

In addition, our reputation could be damaged and our device may not achieve the level of market acceptance that we

are targeting in order to achieve and maintain profitability.

Unforeseen warranty exposure could negatively impact our business and financial

We need to ensure strong product performance

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our product offering.

Any of the foregoing could have a material adverse effect on our business, financial condition, prospects and results

of operations.

Any of the foregoing could have a material adverse

effect on our business, financial condition, prospects and results of operations.

Although we intend to test

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harmed if we are unable to accurately forecast demand for, and utilization of, our DeepView System and manage our inventory.

If our DeepView System is approved

for commercialization, we will be required to forecast inventory needs and manufacture our DeepView System based on our estimates of future

demand for, and utilization of, our device.

Our ability to accurately forecast demand and utilization could be negatively affected by

many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, an increase or

decrease in demand for our products or for products of our competitors, our failure to accurately forecast acceptance of new products,

If our DeepView System is

approved for commercialization, we will be required to forecast inventory needs and manufacture our DeepView System based on our estimates

of future demand for, and utilization of, our device.

Our ability to accurately forecast demand and utilization could be negatively affected

by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, an increase

or decrease in demand for our products or for products of our competitors, our failure to accurately forecast acceptance of new products,

unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in

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degree on the continued services of our senior management, directors and key personnel.

Their knowledge of both the market and their skills

and experience are critical elements to our success.

Our senior management team, directors and employees are engaged with us on an ‘at

will’ basis, meaning that both they and we are able to terminate the arrangement without notice.

The loss of key personnel could

have an adverse impact on our business, prospects, results of operations and financial condition.

Their knowledge of both the market and their

skills and experience are critical elements to our success.

Our senior management team, directors and employees are engaged with us on

an ‘at will’ basis, meaning that both they and we are able to terminate the arrangement without notice.

The loss of key personnel

could have an adverse impact on our business, prospects, results of operations and financial condition.

If we are not able to attract and retain

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to develop new products and manage our business effectively.

Our growth plans may place

a significant strain on our management and operational, financial and personnel resources.

In order to execute our strategy, we will need

to hire additional individuals.

These hires include product management, marketing and highly technical engineering roles.

some of these hires will be in the UK and/or Europe to support our European strategy.

Though we have never undertaken this level of growth,

our management, including our Human Resources Manager have instituted a long-term hiring plan with key dates that ensure the individual

is hired and trained months before the strategy must be executed.

Furthermore, our ability to implement our strategy requires effective

planning and management control systems.

Therefore, our future growth and prospects will depend on our ability to manage this growth.

Our growth plans may place a significant strain on our management and

operational, financial and personnel resources.

In order to execute our strategy, we will need to hire additional individuals.

include product management, marketing and highly technical engineering roles.

Furthermore, some of these hires will be in the UK and/or

Europe to support our European strategy.

Though we have never undertaken this level of growth, our management team has instituted a long-term

hiring plan with key dates that ensure the individual is hired and trained months before the strategy must be executed.

our ability to implement our strategy requires effective planning and management control systems.

Therefore, our future growth and prospects

will depend on our ability to manage this growth.

We expect to significantly increase the

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disrupt our operations and/or increase our net losses.

As of March 25, 2024, we had 80 employees.

Over the next several years,

we expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of

regulatory affairs, clinical and sales and marketing.

There are significant expenses and risks involved with establishing our own sales,

marketing and distribution capabilities.

Any failure or delay in the development of our internal sales, marketing, distribution and compliance

capabilities could delay any product launch, which would adversely impact the commercialization of our product.

We also intend to continue

to improve our operational, financial and management controls, reporting systems and procedures, which may require additional personnel.

Such growth could place a strain on our administrative and operational infrastructure, and/or our managerial abilities, and we may not

be able to make improvements to our management information and control systems in an efficient or timely manner.

We may discover deficiencies

in existing systems and controls.

As of March 25, 2025, we

had 76 employees.

Over the next several years, we expect to experience significant growth in the number of our employees and the

scope of our operations, particularly in the areas of regulatory affairs, clinical and sales and marketing.

There are significant expenses

and risks involved with establishing our own sales, marketing and distribution capabilities.

Any failure or delay in the development of

our internal sales, marketing, distribution and compliance capabilities could delay any product launch, which would adversely impact the

commercialization of our product.

We also intend to continue to improve our operational, financial and management controls, reporting

systems and procedures, which may require additional personnel.

Such growth could place a strain on our administrative and operational

infrastructure, and/or our managerial abilities, and we may not be able to make improvements to our management information and control

systems in an efficient or timely manner.

We may discover deficiencies in existing systems and controls.

Some of these employees will

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may fail and such failure could negatively affect our business, financial condition and results of operations.

The continued development,

maintenance and operation of our software and technologies are important factors impacting the success of our products and level of market

These efforts are expensive and complex and may involve unforeseen difficulties, including material performance problems and

undetected defects or other technical or human errors.

We may encounter technical obstacles, and it is possible that we may discover additional

problems that prevent our software and technologies from operating properly.

If our software or technologies, individually or collectively,

do not function reliably or fail to meet clinician or payor expectations of performance or outcomes, then clinicians may stop using our

products and payors could attempt to cancel their contracts with us.

The continued

development, maintenance and operation of our software and technologies are important factors impacting the success of our products

and level of market acceptance.

These efforts are expensive and complex and may involve unforeseen difficulties, including material

performance problems and undetected defects or other technical or human errors.

We may encounter technical obstacles, and it is

possible that we may discover additional problems that prevent our software and technologies from operating properly.

software or technologies, individually or collectively, do not function reliably or fail to meet clinician or payor expectations of

performance or outcomes, then clinicians may stop using our products and payors could attempt to cancel their contracts with us.

Proprietary software development

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health information.

While we believe that we have

taken appropriate steps to protect our systems, there can be no assurance that our efforts will prevent service interruptions or security

breaches in our systems or the unauthorized or inadvertent wrongful access or disclosure of confidential information that could have an

adverse impact on our business, prospects, results of operations and financial condition or result in the loss, dissemination, or misuse

of critical or sensitive information.

While we believe that we

have taken appropriate steps to protect our systems, there can be no assurance that our efforts will prevent service interruptions or

security breaches in our systems or the unauthorized or inadvertent wrongful access or disclosure of confidential information that could

have an adverse impact on our business, prospects, results of operations and financial condition or result in the loss, dissemination,

or misuse of critical or sensitive information.

If we suffer from a cyber-attack, whether by a third party or insider, we may incur significant

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to potential financial and reputational harm if we experience a cyber-attack.

Because the techniques used

to obtain unauthorized access to, or to sabotage, systems change frequently and often were not recognized until launched against a target,

we may be unable to anticipate these techniques or implement adequate preventative measures.

We may also experience security breaches

that may remain undetected for an extended period.

If our systems are damaged or cease to function properly due to any number of causes,

ranging from catastrophic events to power outages to security breaches, and our business continuity plans do not effectively compensate

timely, we may suffer interruptions in our ability to manage operations, and would also be exposed to a risk of loss, including financial

assets or litigation and potential liability.

To the extent that any disruption or security breach were to result in a loss of, or damage

to, our data or systems or data or systems of our commercial partners, or inappropriate or unauthorized access to or disclosure or use

of confidential, proprietary, or other sensitive, personal, or health information, we could incur liability and suffer reputational harm.

Failure to maintain or protect our information technology systems effectively could negatively affect our business, financial condition

and results of operations.

Because the techniques

used to obtain unauthorized access to, or to sabotage, systems change frequently and often were not recognized until launched

against a target, we may be unable to anticipate these techniques or implement adequate preventative measures.

experience security breaches that may remain undetected for an extended period.

If our systems are damaged or cease to function

properly due to any number of causes, ranging from catastrophic events to power outages to security breaches, and our business

continuity plans do not effectively compensate timely, we may suffer interruptions in our ability to manage operations, and would

also be exposed to a risk of loss, including financial assets or litigation and potential liability.

To the extent that any

disruption or security breach were to result in a loss of, or damage to, our data or systems or data or systems of our commercial

partners, or inappropriate or unauthorized access to or disclosure or use of confidential, proprietary, or other sensitive,

personal, or health information, we could incur liability and suffer reputational harm.

Failure to maintain or protect our

information technology systems effectively could negatively affect our business, financial condition and results of operations.

There has been a developing

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cash flows, reputation or competitive position.

While we maintain certain insurance

coverage, our insurance may be insufficient or may not cover all liabilities incurred by such attacks.

We also cannot be certain that

our insurance coverage will be adequate for data handling or data security liabilities actually incurred, that insurance will continue

While we maintain certain

insurance coverage, our insurance may be insufficient or may not cover all liabilities incurred by such attacks.

We also cannot be certain

that our insurance coverage will be adequate for data handling or data security liabilities actually incurred, that insurance will continue

to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.

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result in expensive and time-consuming litigation, payment of substantial damages, and an increase in our insurance rates.

If we supply products or services

that are defectively designed or manufactured, or our products contain defective components or are misused, or if someone claims any of

the foregoing, whether or not meritorious, we may become subject to substantial and costly litigation.

Misusing our technology or failing

to adhere to the operating guidelines or our device producing inaccurate or unreliable readings could cause significant harm to patients.

If we supply products or

services that are defectively designed or manufactured, or our products contain defective components or are misused, or if someone claims

any of the foregoing, whether or not meritorious, we may become subject to substantial and costly litigation.

Misusing our technology

or failing to adhere to the operating guidelines or our device producing inaccurate or unreliable readings could cause significant harm

In addition, if our operating guidelines are found to be inadequate, we may be subject to liability.

Product liability claims could divert

management’s attention from our core business, be expensive to defend and result in sizable damage awards against us.

While we maintain

product liability insurance, we may not have sufficient insurance coverage for all future claims.

Any product liability claims brought

against us, with or without merit, could increase our product liability insurance rates or prevent us from securing continuing coverage,

could harm our reputation in the industry and could reduce revenue.

Product liability claims in excess of our insurance coverage would

be paid out of cash reserves harming our financial condition and adversely affecting our results of operations.

To the extent that a claim

or claims of a significant nature were made against us, we may be required to expend substantial management resources and litigation costs

in defending such claim(s) and such claim(s), if successful, could reduce margins, harm our reputation in the market, and increase

future insurance premiums, the occurrence of each of which could have an adverse impact on our business, prospects, results of operations

and financial condition.

Product liability claims

could divert management’s attention from our core business, be expensive to defend and result in sizable damage awards against us.

While we maintain product liability insurance, we may not have sufficient insurance coverage for all future claims.

Any product liability

claims brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing continuing

coverage, could harm our reputation in the industry and could reduce revenue.

Product liability claims in excess of our insurance coverage

would be paid out of cash reserves harming our financial condition and adversely affecting our results of operations.

To the extent that

a claim or claims of a significant nature were made against us, we may be required to expend substantial management resources and litigation

costs in defending such claim(s) and such claim(s), if successful, could reduce margins, harm our reputation in the market, and

increase future insurance premiums, the occurrence of each of which could have an adverse impact on our business, prospects, results

of operations and financial condition.

Our insurance policies are expensive and

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The success of our algorithms depends on

our significant repository of proprietary DFU and burn data.

our significant repository of proprietary image data.

As of December 31, 2024,

approximately 340 billion pixels of proprietary DFU and burn data have been acquired and utilized for the deep learning algorithms

approximately 340 billion pixels of proprietary image data have been acquired and utilized for the deep learning algorithms training.

We believe this presents a significant barrier to entry to would-be competitors in wound care healing assessments.

collection to clinical output, the flow, quality and control of the data pipeline is managed entirely by us.

Our DeepView System uses

deep learning on its wound data repository to recognize patterns and correlations of injured tissue spectral signatures to produce reliable

and reasonable assessment for clinicians to make accurate and efficient treatment decisions.

The data collection

to clinical output, the flow, quality and control of the data pipeline is managed entirely by us.

Our DeepView System uses deep learning

on its wound data repository to recognize patterns and correlations of injured tissue spectral signatures to produce reliable and reasonable

assessment for clinicians to make accurate and efficient treatment decisions.

We have developed strategic

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The depth and quality of our proprietary data is critical to developing a leading wound assessment technology with demonstrated clinical

need across burn, DFU and other indications with a positive impact on health economics and patient outcomes, while safeguarding patient

data and privacy.

need across burn and other indications with a positive impact on health economics and patient outcomes, while safeguarding patient data

If we were no longer able to access or receive this data, it would have a material adverse effect on our business, prospects,

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so, and even if we are, we may not realize the benefits or costs of such relationships.

We have developed strategic

partnerships with multiple clinical and academic partners and, in the future, we may further form or seek strategic alliances, create

joint ventures or collaborations or enter into licensing or partnership arrangements with third parties that we believe will complement

or augment our sales and marketing efforts with respect to our DeepView System or future products.

We may not be successful in our efforts

to establish such collaborations, and we may not achieve the benefits expected from our current strategic partnerships or future collaborations.

Any of these relationships may require us to incur non-recurring and other charges, indemnify the counterparty, increase our near and

long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business.

In addition, we

face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex.

we may not be successful in our efforts to establish a strategic alliance or other alternative arrangements for our products.

be certain that, following a strategic alliance or similar arrangement, we will achieve the revenue or specific net income that justifies

such transaction.

In addition, any potential future collaborations may be terminable by our collaborators, and we may not be able to adequately

protect our rights under these agreements.

Any termination of collaborations we enter into in the future, or delays in entering into new

strategic partnership agreements could delay tour sales and marketing efforts, which would harm our business prospects, financial condition

and results of operations.

Additionally, we may not have

sole decision-making authority with respect to any such collaboration or arrangement, which could create the potential risk of creating

We have developed

strategic partnerships with multiple clinical and academic partners and, in the future, we may further form or seek strategic

alliances, create joint ventures or collaborations or enter into licensing or partnership arrangements with third parties that we

believe will complement or augment our sales and marketing efforts with respect to our DeepView System or future products.

not be successful in our efforts to establish such collaborations, and we may not achieve the benefits expected from our current

strategic partnerships or future collaborations.

Any of these relationships may require us to incur non-recurring and other charges,

indemnify the counterparty, increase our near and long-term expenditures, issue securities that dilute our existing stockholders or

disrupt our management and business.

In addition, we face significant competition in seeking appropriate strategic partners and the

negotiation process is time-consuming and complex.

Moreover, we may not be successful in our efforts to establish a strategic

alliance or other alternative arrangements for our products.

We cannot be certain that, following a strategic alliance or similar

arrangement, we will achieve the revenue or specific net income that justifies such transaction.

In addition, any potential future

collaborations may be terminable by our collaborators, and we may not be able to adequately protect our rights under these

Any termination of collaborations we enter into in the future, or delays in entering into new strategic partnership

agreements could delay tour sales and marketing efforts, which would harm our business prospects, financial condition and results of

Additionally, we may not

have sole decision-making authority with respect to any such collaboration or arrangement, which could create the potential risk of creating

impasses on decisions, and our collaborators may have economic or business interests or goals that are, or that may become, inconsistent

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Doing business internationally involves a number of risks, including:

● difficulties in staffing and managing our international operations;

● multiple, conflicting and changing laws and regulations such

as tax laws, privacy laws, export and import restrictions, employment laws, regulatory requirements and other governmental clearances,

approvals, permits and licenses;

● reduced or varied protection for intellectual property rights

in some countries;

● obtaining regulatory clearance, approval or certification

where required for our products in various countries;

● requirements to maintain data and the processing of that

data on servers located within such countries;

● complexities associated with managing multiple payor reimbursement

regimes, government payors or patient self-pay systems;

● limits on our ability to penetrate international markets

if we are required to manufacture our products locally;

● financial risks, such as longer payment cycles, difficulty

collecting accounts receivable, foreign tax laws and complexities of foreign value-added tax systems, the effect of local and regional

financial pressures on demand and payment for our products and exposure to foreign currency exchange rate fluctuations;

● restrictions on the site-of-service for use of our products

and the economics related thereto for clinicians, providers and payors;

● natural disasters, political and economic instability, including

wars, terrorism, political unrest, outbreak of disease, boycotts, curtailment of trade and other market restrictions;

● regulatory and compliance risks that relate to maintaining

accurate information and control over activities subject to regulation under the United States Foreign Corrupt Practices Act of 1977,

or FCPA, U.K.

● difficulties

in staffing and managing our international operations;

conflicting and changing laws and regulations such as tax laws, privacy laws, export and import restrictions, employment laws, regulatory

requirements and other governmental clearances, approvals, permits and licenses;

or varied protection for intellectual property rights in some countries;

regulatory clearance, approval or certification where required for our products in various countries;

● requirements

to maintain data and the processing of that data on servers located within such countries;

● complexities

associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems;

on our ability to penetrate international markets if we are required to manufacture our products locally;

risks, such as longer payment cycles, difficulty collecting accounts receivable, foreign tax laws and complexities of foreign value-added

tax systems, the effect of local and regional financial pressures on demand and payment for our products and exposure to foreign currency

exchange rate fluctuations;

● restrictions

on the site-of-service for use of our products and the economics related thereto for clinicians, providers and payors;

disasters, political and economic instability, including wars, terrorism, political unrest, outbreak of disease, boycotts, curtailment

of trade and other market restrictions;

regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the United States Foreign Corrupt Practices Act of 1977, or FCPA, U.K.

Bribery Act of 2010 and comparable laws and regulations in other countries.

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and (ix) Topological characterization and assessment of tissues using MSI and ML.

As of the date of this annual

report, we have 10 issued and allowed U.S.

patents with five U.S.

As of the date of this annual report, we have 12 issued and allowed

patents with 6 U.S.

patent applications pending.

We have 10 issued and allowed

international patents with 29 foreign and international patent applications pending.

We protect our DeepView System trademarks primarily

in four classes:

pre-recorded/downloadable software, surgical, medical apparatus, computer and scientific services and medical and healthcare

As of December 31, 2023, we maintain a portfolio of 64 trademarks and nine trademark applications pending relating to our DeepView

and SnapShot product offerings.

Our trademarks and pending trademark applications are spread over nine jurisdictions mostly in China,

the UK and the EU.

It is our intention to maintain these registrations indefinitely and to expand the number of jurisdictions in

which we have registered trademarks as deemed necessary to protect our freedom to use the marks and/or block competitors in additional

We will continue to primarily focus on protecting our intellectual property in the United States, UK and the EU as those

are the first commercial markets for our products.

We cannot assure you that our

intellectual property position will not be challenged or that all patents for which we have applied will be granted.

As with other medical

device companies, our success depends, in part, on our ability to obtain, maintain, expand, enforce, and defend the scope of our intellectual

property portfolio or other proprietary rights, including the amount and timing of any payments we may be required to make in connection

with the licensing, filing, maintaining, defense and enforcement of any patents or other intellectual property rights.

The process of

applying for and obtaining a patent is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, enforce,

or license all necessary or desirable patents or patent applications at a reasonable cost, in a timely manner, or in all jurisdictions

We have 18 issued and allowed international patents with 29 foreign and international

patent applications pending.

We protect our DeepView System trademarks primarily in four classes:

pre-recorded/downloadable software,

surgical, medical apparatus, computer and scientific services and medical and healthcare services.

As of December 31, 2024, we maintain

a portfolio of 68 trademarks and nine trademark applications pending relating to our DeepView and SnapShot product offerings.

Our trademarks

and pending trademark applications are spread over nine jurisdictions mostly in China, the UK and the EU.

It is our intention to

maintain these registrations indefinitely and to expand the number of jurisdictions in which we have registered trademarks as deemed necessary

to protect our freedom to use the marks and/or block competitors in additional markets.

We will continue to primarily focus on protecting

our intellectual property in the United States, UK and the EU as those represent the first significant commercial markets for our

We cannot assure you that

our intellectual property position will not be challenged or that all patents for which we have applied will be granted.

As with other

medical device companies, our success depends, in part, on our ability to obtain, maintain, expand, enforce, and defend the scope of our

intellectual property portfolio or other proprietary rights, including the amount and timing of any payments we may be required to make

in connection with the licensing, filing, maintaining, defense and enforcement of any patents or other intellectual property rights.

process of applying for and obtaining a patent is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain,

enforce, or license all necessary or desirable patents or patent applications at a reasonable cost, in a timely manner, or in all jurisdictions

where protection may be commercially advantageous, or we may not be able to protect our proprietary rights at all.

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our ability to seek and obtain patent protection.

We may choose not to seek patent

protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions, and under the laws of certain

jurisdictions, patents or other intellectual property rights may be unavailable or limited in scope.

It is also possible that we will

fail to identify patentable aspects of our products or research and development results before it is too late to obtain patent protection.

While the imaging modality — SnapShot MSI system and proprietary illumination system — are patent protected,

our AI algorithm used in the system is not patent protected.

The device performance is supported by the proprietary clinical data owned

The loss or disclosure of both the data and the algorithm could be detrimental to the future development and competitive

advantage of our DeepView System.

In addition, our ability to

obtain and maintain valid and enforceable patents depends in part on whether the differences between our inventions and the prior art

We may choose not to seek

patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions, and under the laws

of certain jurisdictions, patents or other intellectual property rights may be unavailable or limited in scope.

It is also possible that

we will fail to identify patentable aspects of our products or research and development results before it is too late to obtain patent

While the imaging modality — SnapShot MSI system and proprietary illumination system — are

patent protected, our AI algorithm used in the system is not patent protected.

The device performance is supported by the proprietary

clinical data owned by Spectral.

The loss or disclosure of both the data and the algorithm could be detrimental to the future development

and competitive advantage of our DeepView System.

In addition, our ability

to obtain and maintain valid and enforceable patents depends in part on whether the differences between our inventions and the prior art

allow our inventions to be patentable over the prior art.

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jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors or other third parties.

Moreover, even if we are able

to obtain patent protection, such patent protection may be of insufficient scope to achieve our business objectives.

The strength of patent

rights generally, and particularly the patent position of medical device companies, involves complex legal, factual and scientific questions

and can be uncertain, and has been the subject of much litigation in recent years.

This uncertainty includes changes to the patent

laws through either legislative action to change statutory patent law or court action that may reinterpret existing law or rules in ways

affecting the scope or validity of issued patents.

Even if patents do successfully issue from our patent applications, third parties may

challenge the validity, enforceability, or scope of such patents, which may result in such patents being narrowed, invalidated, or held

unenforceable.

Decisions by courts and governmental patent agencies may introduce uncertainty in the enforceability or scope of patents

owned by or licensed to us.

Moreover, even if we are

able to obtain patent protection, such patent protection may be of insufficient scope to achieve our business objectives.

of patent rights generally, and particularly the patent position of medical device companies, involves complex legal, factual and scientific

questions and can be uncertain, and has been the subject of much litigation in recent years.

This uncertainty includes changes to

the patent laws through either legislative action to change statutory patent law or court action that may reinterpret existing law or

rules in ways affecting the scope or validity of issued patents.

Even if patents do successfully issue from our patent applications, third

parties may challenge the validity, enforceability, or scope of such patents, which may result in such patents being narrowed, invalidated,

or held unenforceable.

Decisions by courts and governmental patent agencies may introduce uncertainty in the enforceability or scope of

patents owned by or licensed to us.

Furthermore, the issuance of a patent does not give us the right to practice the patented invention.

parties may also have blocking patents that could prevent us from marketing our own products and practicing our own technology.

not be aware of all third-party intellectual property rights (for example, not be aware of a patent or not be aware of a patent’s

Third parties may also have blocking patents that could prevent us from marketing our own products and practicing our own technology.

We may not be aware of all third-party intellectual property rights (for example, not be aware of a patent or not be aware of a patent’s

scope) potentially relating to our products, product candidates or their intended uses, and as a result the impact of such third-party

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and distribution of those products.

Litigation may also be necessary

to defend infringement claims of third parties or to enforce patent rights we hold or protect trade secrets or techniques we own.

third parties may seek approval to market their own products similar to or otherwise competitive with our products.

In these circumstances,

we may need to defend and/or assert our patents, including by filing lawsuits alleging patent infringement.

In any of these types of proceedings,

a court or agency with jurisdiction may find our patents invalid, unenforceable, or not infringed;

competitors may then be able to market

products and use manufacturing and analytical processes that are substantially similar to ours.

Even if we have valid and enforceable

patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives.

Litigation may also be

necessary to defend infringement claims of third parties or to enforce patent rights we hold or protect trade secrets or techniques

Further, third parties may seek approval to market their own products similar to or otherwise competitive with our products.

In these circumstances, we may need to defend and/or assert our patents, including by filing lawsuits alleging patent infringement.

In any of these types of proceedings, a court or agency with jurisdiction may find our patents invalid, unenforceable, or not

competitors may then be able to market products and use manufacturing and analytical processes that are substantially

similar to ours.

Even if we have valid and enforceable patents, these patents still may not provide protection against competing

products or processes sufficient to achieve our business objectives.

Our success will also depend,

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and may not provide an adequate remedy if our intellectual property rights are infringed, misappropriated, or otherwise violated.

Additionally, we may find it

necessary or prudent to acquire or obtain licenses from third-party intellectual property holders.

Additionally, we may find

it necessary or prudent to acquire or obtain licenses from third-party intellectual property holders.

However, we may be unable to acquire

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our technologies or our product names.

Third parties, including our

competitors, may currently have patents or obtain patents in the future and claim that the manufacture, use or sale of our products infringes

these patents.

We have not conducted an extensive search of patents issued or assigned to other parties, including our competitors, and

no assurance can be given that patents containing claims relating to our products, parts of our products, technology or methods do not

exist, have not been filed or could not be filed or issued.

Third parties, including

our competitors, may currently have patents or obtain patents in the future and claim that the manufacture, use or sale of our products

infringes these patents.

We have not conducted an extensive search of patents issued or assigned to other parties, including our competitors,

and no assurance can be given that patents containing claims relating to our products, parts of our products, technology or methods do

not exist, have not been filed or could not be filed or issued.

In addition, because patent applications can take many years to issue

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and results of operations.

Similarly, interference, derivation,

cancellation, and opposition proceedings provoked by third parties or brought by the U.S.

Patent and Trademark Office (USPTO) may

be necessary to determine priority with respect to our patents, patent applications, trademarks, or trademark applications.

become involved in other proceedings, such as reexamination, inter partes review, post-grant review, derivation, interference, supplemental

examination, cancellation or opposition proceedings before the USPTO or other jurisdictional body relating to our intellectual property

rights or the intellectual property rights of others.

Such challenges may result in loss of exclusivity or ability to make, use, and sell

our products without infringing third-party intellectual property rights, or in patent claims being narrowed, invalidated or held unenforceable,

in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical products and techniques

without payment to us, or limit the duration of the patent protection of our technology.

Adverse determinations in a judicial or administrative

proceeding or failure to obtain necessary licenses or rights could prevent us from using, selling, manufacturing, or importing our products

or using product names, which would have a significant adverse impact on our business, financial condition, prospects and results of operations.

Additionally, we may file lawsuits

or initiate other proceedings to protect or enforce our patents, trademarks, or other intellectual property rights, which could be expensive,

time consuming and unsuccessful.

Former, current, or future licensees may violate the terms of their licenses and thereby infringe our

intellectual property.

interference, derivation, cancellation, and opposition proceedings provoked by third parties or brought by the U.S.

Trademark Office (USPTO) may be necessary to determine priority with respect to our patents, patent applications, trademarks, or

trademark applications.

We may also become involved in other proceedings, such as reexamination, inter partes review, post-grant

review, derivation, interference, supplemental examination, cancellation or opposition proceedings before the USPTO or other

jurisdictional body relating to our intellectual property rights or the intellectual property rights of others.

Such challenges may

result in loss of exclusivity or ability to make, use, and sell our products without infringing third-party intellectual property

rights, or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to

stop others from using or commercializing similar or identical products and techniques without payment to us, or limit the duration

of the patent protection of our technology.

Adverse determinations in a judicial or administrative proceeding or failure to obtain

necessary licenses or rights could prevent us from using, selling, manufacturing, or importing our products or using product names,

which would have a significant adverse impact on our business, financial condition, prospects and results of operations.

Additionally, we may file

lawsuits or initiate other proceedings to protect or enforce our patents, trademarks, or other intellectual property rights, which could

be expensive, time consuming and unsuccessful.

Former, current, or future licensees may violate the terms of their licenses and thereby

infringe our intellectual property.

Competitors may infringe our issued patents, trademarks, or other intellectual property.

To counter infringement

or unauthorized use by licensees, competitors, or other parties, we may be required to file infringement or misuse claims, which can be

expensive and time-consuming.

Any claims we assert against perceived infringers could provoke these parties to assert counterclaims or

file administrative actions against us alleging that we infringe their intellectual property.

In addition, in a patent infringement proceeding,

a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly

or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.

Furthermore, even if our patents or trademarks are found to be valid and infringed, a court may refuse to grant injunctive relief against

the infringer and instead grant us monetary damages and/or ongoing royalties.

Such monetary compensation may be insufficient to adequately

offset the damage to our business caused by the infringer’s competition in the market, and an adverse result in any litigation proceeding

or administrative action could put one or more of our patents at risk of being invalidated or interpreted narrowly, which could adversely

affect our competitive business position, financial condition, and results of operations.

In addition, although we make efforts to comply

with the patent marking provisions of 35 U.S.C.

§ 287(a), a court may decide that we have not met the requirements of the patent

marking statute, which may prevent us from obtaining monetary damages that would otherwise have been due to us if we had complied with

the marking statute.

Even if we are successful in

defending against intellectual property claims, litigation or other legal proceedings relating to such claims may cause us to incur significant

expenses and could distract our technical and management personnel from their normal responsibilities.

Protracted litigation to defend

or prosecute our intellectual property rights could also result in our customers or potential customers deferring or limiting their purchase

or use of the affected products until resolution of the litigation.

In addition, there could be public announcements of the results of

hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative,

it could have a substantial negative impact on the price of our common stock.

Such litigation or proceedings could substantially increase

our operating losses and reduce our resources available for development activities.

We may not have sufficient financial or other resources

to adequately conduct such litigation or proceedings.

Some of our competitors may be able to sustain the costs of such litigation or proceedings

more effectively than we can because of their substantially greater financial resources.

Uncertainties resulting from the initiation and

continuation of litigation or other intellectual property related proceedings could harm our business, financial condition, prospects

and results of operations.

infringement or unauthorized use by licensees, competitors, or other parties, we may be required to file infringement or misuse claims,

which can be expensive and time-consuming.

Any claims we assert against perceived infringers could provoke these parties to assert counterclaims

or file administrative actions against us alleging that we infringe their intellectual property.

In addition, in a patent infringement

proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims

narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology

Furthermore, even if our patents or trademarks are found to be valid and infringed, a court may refuse to grant injunctive

relief against the infringer and instead grant us monetary damages and/or ongoing royalties.

Such monetary compensation may be insufficient

to adequately offset the damage to our business caused by the infringer’s competition in the market, and an adverse result in any

litigation proceeding or administrative action could put one or more of our patents at risk of being invalidated or interpreted narrowly,

which could adversely affect our competitive business position, financial condition, and results of operations.

In addition, although

we make efforts to comply with the patent marking provisions of 35 U.S.C.

§ 287(a), a court may decide that we have not met the requirements

of the patent marking statute, which may prevent us from obtaining monetary damages that would otherwise have been due to us if we had

complied with the marking statute.

Even if we are successful

in defending against intellectual property claims, litigation or other legal proceedings relating to such claims may cause us to incur

significant expenses and could distract our technical and management personnel from their normal responsibilities.

Protracted litigation

to defend or prosecute our intellectual property rights could also result in our customers or potential customers deferring or limiting

their purchase or use of the affected products until resolution of the litigation.

In addition, there could be public announcements of

the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results

to be negative, it could have a substantial negative impact on the price of our common stock.

Such litigation or proceedings could substantially

increase our operating losses and reduce our resources available for development activities.

We may not have sufficient financial or other

resources to adequately conduct such litigation or proceedings.

Some of our competitors may be able to sustain the costs of such litigation

or proceedings more effectively than we can because of their substantially greater financial resources.

Uncertainties resulting from the

initiation and continuation of litigation or other intellectual property related proceedings could harm our business, financial condition,

prospects and results of operations.

In addition, third parties

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with these requirements.

The USPTO, United States

Copyright Office (USCO) and various foreign governmental agencies require compliance with a number of procedural, documentary, fee payment

and other similar provisions during the application process.

In addition, periodic maintenance fees, renewal fees, annuity fees and various

other government fees often must be paid to the USPTO, USCO and foreign agencies over the lifetime of any registered or applied-for intellectual

property rights we may obtain in the future.

While an unintentional lapse of an intellectual property registration or application can

in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which

noncompliance can result in abandonment or lapse of the registration or application, resulting in partial or complete loss of intellectual

property rights in the relevant jurisdiction.

Non-compliance events that could result in abandonment or lapse of a registration or application

include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure

to properly legalize and submit formal documents.

If we fail to maintain the intellectual property registrations and applications covering

our products, we may not be able to stop a competitor from developing or marketing products that are the same as or similar to our products,

which would have a material adverse effect on our business.

United States Copyright Office (USCO) and various foreign governmental agencies require compliance with a number of procedural,

documentary, fee payment and other similar provisions during the application process.

In addition, periodic maintenance fees,

renewal fees, annuity fees and various other government fees often must be paid to the USPTO, USCO and foreign agencies over the

lifetime of any registered or applied-for intellectual property rights we may obtain in the future.

While an unintentional lapse of

an intellectual property registration or application can in many cases be cured by payment of a late fee or by other means in

accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the

registration or application, resulting in partial or complete loss of intellectual property rights in the relevant jurisdiction.

Non-compliance events that could result in abandonment or lapse of a registration or application include, but are not limited to,

failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and

submit formal documents.

If we fail to maintain the intellectual property registrations and applications covering our products, we

may not be able to stop a competitor from developing or marketing products that are the same as or similar to our products, which

would have a material adverse effect on our business.

We also have a duty to disclose to the USPTO any prior art known to us that

may be material to the patentability of our patents.

If we failed to submit any such material prior art, a court or administrative agency

may deem one or more of our patents unenforceable.

Additionally, certain of our

patent applications relate to software inventions.

Software-related patents in general are susceptible to validity or patentability challenges

before the USPTO or in other judicial or quasi-judicial proceedings for being directed to non-statutory subject matter under 35 U.S.C.

If we failed to submit any such material prior art, a court or administrative

agency may deem one or more of our patents unenforceable.

Additionally, certain of our patent applications relate to software

Software-related patents in general are susceptible to validity or patentability challenges before the USPTO or in other judicial

or quasi-judicial proceedings for being directed to non-statutory subject matter under 35 U.S.C.

Patent terms may be inadequate to protect

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could diminish the value of patents in general, thereby impairing our ability to protect our existing and future products.

Patent reform legislation could

increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents.

Patent reform

legislation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or

defense of issued patents.

In 2011, the Leahy-Smith America Invents Act (the Leahy-Smith Act) was signed into law.

The Leahy-Smith Act includes a number of significant

changes to U.S.

These include provisions that affect the way patent applications are prosecuted and also may affect patent

These also include provisions that switched the United States from a “first-to-invent” system to a “first-to-file”

system, allow third-party submission of prior art to the USPTO during patent prosecution and set forth additional procedures to attack

the validity of a patent by the USPTO administered post-grant proceedings.

Under a first-to-file system, assuming the other requirements

for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless

of whether another inventor had made the invention earlier.

The USPTO recently developed new regulations and procedures to govern administration

of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the

first to file provisions, only became effective in 2013.

A third-party that files a patent application in the USPTO after March 2013,

but before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by

such third-party.

This will require us to be cognizant of the time from invention to filing of a patent application.

Since patent applications

in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be

certain that we were the first to file any patent application related to our products or invent any of the inventions claimed in our patents

or patent applications.

The Leahy-Smith Act also includes

a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation.

include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity

of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review and derivation proceedings.

The Leahy-Smith

Act includes a number of significant changes to U.S.

These include provisions that affect the way patent

applications are prosecuted and also may affect patent litigation.

These also include provisions that switched the

United States from a “first-to-invent” system to a “first-to-file” system, allow third-party submission

of prior art to the USPTO during patent prosecution and set forth additional procedures to attack the validity of a patent by the

USPTO administered post-grant proceedings.

Under a first-to-file system, assuming the other requirements for patentability are met,

the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether

another inventor had made the invention earlier.

The USPTO recently developed new regulations and procedures to govern

administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in

particular, the first to file provisions, only became effective in 2013.

A third-party that files a patent application in the USPTO

after March 2013, but before us could therefore be awarded a patent covering an invention of ours even if we had made the

invention before it was made by such third-party.

This will require us to be cognizant of the time from invention to filing of a

patent application.

Since patent applications in the United States and most other countries are confidential for a period of

time after filing or until issuance, we cannot be certain that we were the first to file any patent application related to our

products or invent any of the inventions claimed in our patents or patent applications.

The Leahy-Smith Act also

includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation.

These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack

the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review and derivation

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S.

federal courts necessary

to invalidate a patent claim, a third-party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold

a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.

federal courts

necessary to invalidate a patent claim, a third-party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO

to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court

Accordingly, a third-party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated

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property may be subject to priority, ownership or inventorship disputes, interferences, and similar proceedings.

We may also be subject to claims

that former employees, collaborators, or other third parties have an interest in our patents and patent applications or other intellectual

We may also be subject to

claims that former employees, collaborators, or other third parties have an interest in our patents and patent applications or other intellectual

property as an inventor or co-inventor.

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Litigation may be necessary to defend against claims, and it may be necessary or we may desire to enter into a license to settle any such

If we or our licensors are

unsuccessful in any priority, validity (including any patent oppositions), ownership or inventorship disputes to which we or they are

subject, we may lose valuable intellectual property rights through the loss of one or more of our patents, or such patent claims may be

narrowed, invalidated, or held unenforceable, or through loss of exclusive ownership of or the exclusive right to use our owned or in-licensed

In the event of loss of patent rights as a result of any of these disputes, we may be required to obtain and maintain licenses

from third parties, including parties involved in any such interference proceedings or other priority or inventorship disputes.

Such licenses

may not be available on commercially reasonable terms or at all or may be non-exclusive.

If we are unable to obtain and maintain such

licenses, we may need to cease the development, manufacture, and commercialization of one or more of the product candidates we may develop.

An inability to incorporate technologies, features or other intellectual property that are important or essential to our products could

have a material adverse effect on our business and competitive position.

The loss of exclusivity or the narrowing of our patent claims

could limit our ability to stop others from using or commercializing similar or identical technology and product candidates.

are successful in priority, inventorship or ownership disputes, it could result in substantial costs and be a distraction to management

and other employees.

Any litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent

sales representatives.

Any of the foregoing could result in a material adverse effect on our business, financial condition, prospects

and results of operations.

If we or our licensors

are unsuccessful in any priority, validity (including any patent oppositions), ownership or inventorship disputes to which we or

they are subject, we may lose valuable intellectual property rights through the loss of one or more of our patents, or such patent

claims may be narrowed, invalidated, or held unenforceable, or through loss of exclusive ownership of or the exclusive right to use

our owned or in-licensed patents.

In the event of loss of patent rights as a result of any of these disputes, we may be required to

obtain and maintain licenses from third parties, including parties involved in any such interference proceedings or other priority

or inventorship disputes.

Such licenses may not be available on commercially reasonable terms or at all or may be non-exclusive.

we are unable to obtain and maintain such licenses, we may need to cease the development, manufacture, and commercialization of one

or more of the product candidates we may develop.

An inability to incorporate technologies, features or other intellectual property

that are important or essential to our products could have a material adverse effect on our business and competitive position.

loss of exclusivity or the narrowing of our patent claims could limit our ability to stop others from using or commercializing

similar or identical technology and product candidates.

Even if we are successful in priority, inventorship or ownership disputes,

it could result in substantial costs and be a distraction to management and other employees.

Any litigation or the threat thereof

may adversely affect our ability to hire employees or contract with independent sales representatives.

Any of the foregoing could

result in a material adverse effect on our business, financial condition, prospects and results of operations.

We may be subject to claims that our employees,

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in defending against such claims, litigation could result in substantial costs and be a distraction to management.

In addition, while it is our

policy to require our employees, vendors, and contractors who may be involved in the conception or development of intellectual property

In addition, while it is

our policy to require our employees, vendors, and contractors who may be involved in the conception or development of intellectual property

to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party

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may be harmed.

In addition to patent protection,

we also rely on other proprietary rights, including protection of trade secrets, know-how, and other confidential and proprietary information

that is not patentable or that we elect not to patent.

However, trade secrets can be difficult to protect, and some courts are less willing

or unwilling to protect trade secrets.

To maintain the confidentiality of our trade secrets and proprietary information, we generally

have confidentiality and invention assignment provisions in contracts with our employees, consultants, suppliers, contract manufacturers,

collaborators, and others upon the commencement of their relationship with us.

However, we may not enter into such agreements with each

party that may have or have had access to our trade secrets or proprietary technology and processes.

We may not be able to prevent the

unauthorized disclosure or use of our technical knowledge or other trade secrets by such third parties, despite the existence generally

of these confidentiality restrictions.

These contracts may not provide meaningful protection for our trade secrets, know-how, or other

proprietary information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how, or other

confidential or proprietary information.

There can be no assurance that such third parties will not breach their agreements with us, that

we will have adequate remedies for any breach, or that our trade secrets or proprietary technology and processes will not otherwise become

known or independently developed by competitors.

We may need to share our proprietary information, including trade secrets, with future

business partners, collaborators, contractors, and others located in countries at heightened risk of theft of trade secrets, including

through direct intrusion by private parties or foreign actors, and those affiliated with or controlled by state actors.

Despite the protections

we do place on our intellectual property or other confidential and proprietary rights, monitoring unauthorized use and disclosure of our

intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property or other proprietary

rights will be adequate.

In addition, the laws of many foreign countries will not protect our intellectual property or other proprietary

rights to the same extent as the laws of the United States.

Consequently, we may be unable to prevent our proprietary technology

from being exploited abroad, which could affect our ability to expand to international markets or require costly efforts to protect our

In addition to patent

protection, we also rely on other proprietary rights, including protection of trade secrets, know-how, and other confidential and

proprietary information that is not patentable or that we elect not to patent.

However, trade secrets can be difficult to protect,

and some courts are less willing or unwilling to protect trade secrets.

To maintain the confidentiality of our trade secrets and

proprietary information, we generally have confidentiality and invention assignment provisions in contracts with our employees,

consultants, suppliers, contract manufacturers, collaborators, and others upon the commencement of their relationship with us.

However, we may not enter into such agreements with each party that may have or have had access to our trade secrets or proprietary

technology and processes.

We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or other trade

secrets by such third parties, despite the existence generally of these confidentiality restrictions.

These contracts may not

provide meaningful protection for our trade secrets, know-how, or other proprietary information in the event of any unauthorized

use, misappropriation, or disclosure of such trade secrets, know-how, or other confidential or proprietary information.

no assurance that such third parties will not breach their agreements with us, that we will have adequate remedies for any breach,

or that our trade secrets or proprietary technology and processes will not otherwise become known or independently developed by

We may need to share our proprietary information, including trade secrets, with future business partners,

collaborators, contractors, and others located in countries at heightened risk of theft of trade secrets, including through direct

intrusion by private parties or foreign actors, and those affiliated with or controlled by state actors.

Despite the protections we

do place on our intellectual property or other confidential and proprietary rights, monitoring unauthorized use and disclosure of

our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property or

other proprietary rights will be adequate.

In addition, the laws of many foreign countries will not protect our intellectual

property or other proprietary rights to the same extent as the laws of the United States.

Consequently, we may be unable to

prevent our proprietary technology from being exploited abroad, which could affect our ability to expand to international markets or

require costly efforts to protect our technology.

To the extent our intellectual

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law, and the criteria for protection of trade secrets can vary among different jurisdictions.

We also seek to preserve the

integrity and confidentiality of our data and other confidential information by maintaining physical security of our premises and physical

and electronic security of our information technology systems.

While we have confidence in these individuals, organizations and systems,

agreements or security measures may be breached and detecting the disclosure or misappropriation of confidential information and enforcing

a claim that a party illegally disclosed or misappropriated confidential information is difficult, expensive, and time-consuming, and

the outcome is unpredictable.

We also seek to preserve

the integrity and confidentiality of our data and other confidential information by maintaining physical security of our premises and

physical and electronic security of our information technology systems.

While we have confidence in these individuals, organizations and

systems, agreements or security measures may be breached and detecting the disclosure or misappropriation of confidential information

and enforcing a claim that a party illegally disclosed or misappropriated confidential information is difficult, expensive, and time-consuming,

and the outcome is unpredictable.

Further, we may not be able to obtain adequate remedies for any such breach.

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property rights throughout the world.

Filing, prosecuting, and defending

patents or trademarks on our current and future products in all countries throughout the world would be prohibitively expensive.

The requirements

for patentability and trademarking may differ in certain countries, particularly developing countries.

The laws of some foreign countries

do not protect intellectual property rights to the same extent as laws in the United States.

Consequently, we may not be able to

prevent third parties from utilizing our inventions and trademarks in all countries outside the United States.

Competitors may use

our technologies or trademarks in jurisdictions where we have not obtained patent or trademark protection to develop or market their own

products and further, may export otherwise infringing products to territories where we have patent and trademark protection, but enforcement

on infringing activities is inadequate.

These products or trademarks may compete with our current or future products or trademarks, and

our patents, trademarks or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered

significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions.

The legal systems of certain

countries, particularly certain developing countries, may not favor the enforcement of patents, trademarks, and other intellectual property

protection, which could make it difficult for us to stop the infringement of our patents and trademarks or marketing of competing products

in violation of our proprietary rights generally.

Proceedings to enforce our patent and trademark rights in foreign jurisdictions could

result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents and trademarks

at risk of being invalidated or interpreted narrowly, and could provoke third parties to assert claims against us.

We may not prevail

in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful.

certain countries in Europe and many other countries, including India and China, have compulsory licensing laws under which a patent owner

may be compelled to grant licenses to third parties.

In those countries, we may have limited remedies if our patents are infringed or

if we are compelled to grant a license to our patents to a third party, which could materially diminish the value of those patents.

could limit our potential revenue opportunities.

Accordingly, our efforts to enforce our intellectual property rights around the world

may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license.

Finally, our ability

to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property

Filing, prosecuting, and

defending patents or trademarks on our current and future products in all countries throughout the world would be prohibitively expensive.

The requirements for patentability and trademarking may differ in certain countries, particularly developing countries.

The laws of some

foreign countries do not protect intellectual property rights to the same extent as laws in the United States.

Consequently, we may

not be able to prevent third parties from utilizing our inventions and trademarks in all countries outside the United States.

may use our technologies or trademarks in jurisdictions where we have not obtained patent or trademark protection to develop or market

their own products and further, may export otherwise infringing products to territories where we have patent and trademark protection,

but enforcement on infringing activities is inadequate.

These products or trademarks may compete with our current or future products or

trademarks, and our patents, trademarks or other intellectual property rights may not be effective or sufficient to prevent them from

Many companies have

encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions.

legal systems of certain countries, particularly certain developing countries, may not favor the enforcement of patents, trademarks,

and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents and

trademarks or marketing of competing products in violation of our proprietary rights generally.

Proceedings to enforce our patent

and trademark rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other

aspects of our business, could put our patents and trademarks at risk of being invalidated or interpreted narrowly, and could

provoke third parties to assert claims against us.

We may not prevail in any lawsuits that we initiate, and the damages or other

remedies awarded, if any, may not be commercially meaningful.

In addition, certain countries in Europe and many other countries,

including India and China, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third

In those countries, we may have limited remedies if our patents are infringed or if we are compelled to grant a license to

our patents to a third party, which could materially diminish the value of those patents.

This could limit our potential revenue

opportunities.

Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a

significant commercial advantage from the intellectual property that we own or license.

Finally, our ability to protect and enforce

our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws.

If our trademarks and trade names are not

adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

We rely on trademarks and trade

names to build brand recognition and to promote, distinguish and market our products and services.

Our current or future registered and

unregistered trademarks or trade names may be challenged, opposed, infringed, circumvented or declared generic or descriptive, determined

We rely on trademarks and

trade names to build brand recognition and to promote, distinguish and market our products and services.

Our current or future registered

and unregistered trademarks or trade names may be challenged, opposed, infringed, circumvented or declared generic or descriptive, determined

to be not entitled to registration, or determined to be infringing other marks.

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or results of operations.

Trademark litigation can be

expensive, and the outcome can be highly uncertain.

Furthermore, in many countries, owning and maintaining a trademark registration may

not provide an adequate defense against a subsequent infringement claim asserted by the owner of a senior trademark.

Trademark litigation can

be expensive, and the outcome can be highly uncertain.

Furthermore, in many countries, owning and maintaining a trademark registration

may not provide an adequate defense against a subsequent infringement claim asserted by the owner of a senior trademark.

At times, competitors

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third parties on commercially reasonable terms or fail to comply with our obligations under such agreements, our business could be harmed.

It may be necessary for us

to use the patented or proprietary technology of third parties to commercialize our products, in which case we would be required to obtain

a license from these third parties.

The licensing or acquisition of third-party intellectual property rights is a competitive area, and

several more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider

attractive or necessary.

These established companies may have a competitive advantage over us due to their size, capital resources and

greater clinical development and commercialization capabilities.

In addition, companies that perceive us to be a competitor may be unwilling

to assign or license rights to us.

If we are unable to license such technology, or if we are forced to license such technology, on unfavorable

terms, our business could be harmed.

If we are unable to obtain a necessary license, we may be unable to develop or commercialize the

affected product candidates, which could harm our business, and the third parties owning such intellectual property rights could seek

either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms

of compensation.

Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies

licensed to us.

It may be necessary for

us to use the patented or proprietary technology of third parties to commercialize our products, in which case we would be required

to obtain a license from these third parties.

The licensing or acquisition of third-party intellectual property rights is a

competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual

property rights that we may consider attractive or necessary.

These established companies may have a competitive advantage over us

due to their size, capital resources and greater clinical development and commercialization capabilities.

In addition, companies

that perceive us to be a competitor may be unwilling to assign or license rights to us.

If we are unable to license such technology,

or if we are forced to license such technology, on unfavorable terms, our business could be harmed.

If we are unable to obtain a

necessary license, we may be unable to develop or commercialize the affected product candidates, which could harm our business, and

the third parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, with respect

to our sales, an obligation on our part to pay royalties and/or other forms of compensation.

Even if we are able to obtain a

license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us.

Moreover, some of our patents

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protect our business or permit us to maintain our competitive advantage.

● others may be able to make products that are similar to our

products or utilize similar technology but that are not covered by the claims of our patents or that incorporate certain technology in

our products that is in the public domain;

● we, or our future licensors or collaborators, might not have

been the first to make the inventions covered by the applicable issued patent or pending patent application that we own now or may own

or license in the future;

● we, or our future licensors or collaborators, might not have

been the first to file patent applications covering certain of our or their inventions;

● we, or our future licensors or collaborators, may fail to

meet our obligations to the U.S.

government regarding any future patents and patent applications funded by U.S.

grants, leading to the loss or unenforceability of patent rights;

● others may independently develop similar or alternative technologies

or duplicate any of our technologies without infringing our intellectual property rights;

● it is possible that our patents or patent applications omit

individuals who should be listed as inventors or include individuals that should not be listed as inventors, which may cause these patents

or patents issuing from these patent applications to be held invalid or unenforceable;

● claims of our patents or patent applications, if and when

issued, may not cover our products or technologies or competitive products or technologies;

● the inventors of our patents or patent applications may become

involved with competitors, develop products or processes that design around our patents, or become hostile to us or the patents or patent

applications on which they are named as inventors;

● our competitors or other third parties might conduct research

and development activities in countries where we do not have patent rights and then use the information learned from such activities

to develop competitive products for sale in our major commercial markets;

● we have engaged in scientific collaborations in the past

and will continue to do so in the future and our collaborators may develop adjacent or competing products that are outside the scope

of our patents;

● we may not develop additional proprietary technologies that

are patentable;

● the patents of others may harm our business;

● we may choose not to file a patent in order to maintain certain

trade secrets or know-how, and a third-party may subsequently file a patent covering such intellectual property.

may be able to make products that are similar to our products or utilize similar technology but that are not covered by the claims of

our patents or that incorporate certain technology in our products that is in the public domain;

or our future licensors or collaborators, might not have been the first to make the inventions covered by the applicable issued patent

or pending patent application that we own now or may own or license in the future;

or our future licensors or collaborators, might not have been the first to file patent applications covering certain of our or their

or our future licensors or collaborators, may fail to meet our obligations to the U.S.

government regarding any future patents and

patent applications funded by U.S.

government grants, leading to the loss or unenforceability of patent rights;

may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual

property rights;

is possible that our patents or patent applications omit individuals who should be listed as inventors or include individuals that should

not be listed as inventors, which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable;

claims of our patents or patent applications, if and when issued, may not cover our products or technologies or competitive products or technologies;

the inventors of our patents or patent applications may become involved with competitors, develop products or processes that design around our patents, or become hostile to us or the patents or patent applications on which they are named as inventors;

our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

we have engaged in scientific collaborations in the past and will continue to do so in the future and our collaborators may develop adjacent or competing products that are outside the scope of our patents;

may not develop additional proprietary technologies that are patentable;

patents of others may harm our business;

may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third-party may subsequently file a patent

covering such intellectual property.

Any of the foregoing could

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our intellectual property rights.

Our contracts with BARDA and

DHA include provisions that implement the Bayh-Dole Act of 1980 relating to a uniform patent policy among the many federal agencies

funding research, which grants the U.S.

government certain rights in inventions that may be conceived or first actually reduced to

practice under the contract.

In particular, pursuant to the Federal Acquisition Regulations which governs executive agencies acquisition

of services with appropriated funds, the U.S.

government is granted a nonexclusive, nontransferable, irrevocable, paid-up, worldwide

license to practice such inventions or have such inventions practiced for or on behalf of the U.S.

In addition to our

intellectual property rights, the BARDA and DHA contracts each provide certain data rights to the U.S.

Our contracts with BARDA

and DHA include provisions that implement the Bayh-Dole Act of 1980 relating to a uniform patent policy among the many federal

agencies funding research, which grants the U.S.

government certain rights in inventions that may be conceived or first actually

reduced to practice under the contract.

In particular, pursuant to the Federal Acquisition Regulations which governs executive agencies

acquisition of services with appropriated funds, the U.S.

government is granted a nonexclusive, nontransferable, irrevocable, paid-up,

worldwide license to practice such inventions or have such inventions practiced for or on behalf of the U.S.

to our intellectual property rights, the BARDA and DHA contracts each provide certain data rights to the U.S.

government with unlimited

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restrictions.

We cannot assure you that our

securities will continue to be listed on Nasdaq.

If any of our securities are delisted from trading on its exchange and we are not able

to list our securities on another national securities exchange, we expect such securities could be quoted on an over-the-counter market.

We cannot assure you that

our securities will continue to be listed on Nasdaq.

If any of our securities are delisted from trading on its exchange and we are not

able to list our securities on another national securities exchange, we expect such securities could be quoted on an over-the-counter

If this were to occur, we could face significant material adverse consequences, including:

● a limited availability of market quotations for our securities;

● reduced liquidity for our securities;

● a determination that our Common Stock are a “penny

stock” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced

level of trading activity in the secondary trading market for our securities;

● a limited amount of news and analyst coverage;

● a decreased ability to issue additional securities or obtain

additional financing in the future.

limited availability of market quotations for our securities;

liquidity for our securities;

determination that our Common Stock are a “penny stock” which will require brokers trading in our Common Stock to adhere

to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

limited amount of news and analyst coverage;

decreased ability to issue additional securities or obtain additional financing in the future.

The listing of our securities on Nasdaq

did not benefit from the process undertaken in connection with an underwritten initial public offering.

Our Common Stock and our Warrants

are listed on the Nasdaq under the symbols “MDAI” and “MDAIW,” respectively.

Unlike an underwritten initial public

offering of our securities, the initial listing of our securities as a result of the Business Combination did not benefit from the following:

● the book-building process undertaken by underwriters that

helps to inform efficient price discovery with respect to opening trades of newly listed securities;

● underwriter support to help stabilize, maintain or affect

the public price of the new issue immediately after listing;

● potential underwriter liability for material misstatements

or omissions of fact in a prospectus used in connection with the securities being offered or for statements made by the underwriters’

securities analysts or other personnel.

September 12, 2023, following completion of the Company’s business combination with Rosecliff Acquisition Corp I (the “Business

Combination”) our Common Stock and our Warrants were listed on the Nasdaq under the symbols “MDAI” and “MDAIW,”

respectively.

Unlike an underwritten initial public offering of our securities, the initial listing of our securities as a result of the

Business Combination did not benefit from the following:

book-building process undertaken by underwriters that helps to inform efficient price discovery with respect to opening trades of newly

listed securities;

● underwriter

support to help stabilize, maintain or affect the public price of the new issue immediately after listing;

underwriter liability for material misstatements or omissions of fact in a prospectus used in connection with the securities being offered

or for statements made by the underwriters’ securities analysts or other personnel.

The lack of such a process

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public price for our securities in the near future than in connection with an underwritten initial public offering.

We have incurred increased costs as a result

of operating as a U.S.

public company, and the Company’s management is required to devote substantial time to new compliance

and investor relations initiatives.

public company,

the Company has and will continue to incur significant legal, accounting and other expenses.

The Company is subject to the reporting requirements

of the Exchange Act and the Sarbanes-Oxley Act.

The Exchange Act requires the filing of annual, quarterly and current reports

with respect to a public company’s business and financial condition.

The Sarbanes-Oxley Act, as well as rules subsequently adopted

by the SEC and Nasdaq to implement provisions of the Sarbanes-Oxley Act, require, among other things, that a public company establish

and maintain effective disclosure and financial controls.

As a result, the Company has and will continue to incur significant legal, accounting

and other expenses.

The Company’s entire management team and many of its other employees need to devote substantial time to compliance.

Further, pursuant to the Dodd-Frank

Wall Street Reform and Consumer Protection Act of 2010, the SEC has adopted additional rules and regulations in these areas,

such as mandatory “say on pay” voting requirements that will apply to the Company when the Company ceases to be an emerging

growth company.

Stockholder activism, the current political environment and the current high level of government intervention and regulatory

reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the

manner in which the Company operates its business in ways it cannot currently anticipate.

If these requirements divert

the attention of the Company’s management and personnel from other business concerns, they could have a material adverse effect

on the Company’s business, financial condition and results of operations.

The increased costs will decrease the Company’s

net income or increase the Company’s net loss and may require the Company to reduce costs in other areas of the Company’s

business or increase the prices of the Company’s services.

The Company cannot predict or estimate the amount or timing of additional

costs it may incur to respond to these requirements.

The impact of these requirements could also make it more difficult for the Company

to attract and retain qualified persons to serve on its board of directors, board committees or as executive officers.

The Charter provides that the Court of Chancery

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limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

The Charter provides that unless

we consent in writing to the selection of an alternative forum, the Court of Chancery (the “Chancery Court”) of the State

of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware

or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for:

derivative action or proceeding brought on behalf of the Company, (ii) any action, suit or proceeding asserting a claim of breach

of a fiduciary duty owed by any current or former director, officer or other employee, agent or stockholder of the Company to the Company

or to the Company’s stockholders, (iii) any action, suit or proceeding asserting a claim against the Company, its current or

former directors, officers, or employees, agents or stockholders arising pursuant to any provision of the DGCL or our Charter or Bylaws,

or (iv) any action, suit or proceeding asserting a claim against the Company, its current or former directors, officers, or employees,

agents or stockholders governed by the internal affairs doctrine.

The Charter provides that

unless we consent in writing to the selection of an alternative forum, the Court of Chancery (the “Chancery Court”) of the

State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of

Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum

(i) any derivative action or proceeding brought on behalf of the Company, (ii) any action, suit or proceeding asserting

a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee, agent or stockholder of the Company

to the Company or to the Company’s stockholders, (iii) any action, suit or proceeding asserting a claim against the Company,

its current or former directors, officers, or employees, agents or stockholders arising pursuant to any provision of the DGCL or our Charter

or Bylaws, or (iv) any action, suit or proceeding asserting a claim against the Company, its current or former directors, officers,

or employees, agents or stockholders governed by the internal affairs doctrine.

The exclusive forum provision

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The price of Common Stock and Warrants may

Fluctuations in the price of

the Company’s securities could contribute to the loss of all or part of your investment.

The valuation ascribed to the Company in

the Business Combination may not be indicative of the price that will prevail in the trading market.

Fluctuations in the price

of the Company’s securities could contribute to the loss of all or part of your investment.

The valuation ascribed to the Company

in the Business Combination may not be indicative of the price that will prevail in the trading market.

If an active market for our securities

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price of the Company’s securities may include:

● actual or anticipated fluctuations in our quarterly financial

results or the quarterly financial results of companies perceived to be similar to us;

● changes in the market’s expectations about the Company’s

operating results;

● success of competitors;

● the public’s reaction to our press releases, other

public announcements and filings with the SEC,

● operating results failing to meet the expectations of securities

analysts or investors in a particular period;

● changes in financial estimates and recommendations by securities

analysts concerning the Company or the industry in which the Company operates in general;

● operating and stock price performance of other companies

that investors deem comparable to the Company;

● ability to market new and enhanced products and services

on a timely basis;

● changes in laws and regulations affecting our business;

● commencement of, or involvement in, litigation involving

● changes in the Company’s capital structure, such as

future issuances of securities or the incurrence of additional debt;

● the volume of shares of the Company’s common stock

available for public sale;

● any major change in the Company’s board or management;

● sales of substantial amounts of the Company’s common

stock by our directors, executive officers or significant stockholders or the perception that such sales could occur;

● general economic and political conditions such as recessions,

changes in interest rates, changes in fuel prices, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors

may materially harm the market price of our securities irrespective of our operating performance.

The stock market in general, and Nasdaq

specifically, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

As a result of this volatility, our investors may not be able to sell your securities at or above the price at which they were acquired.

A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to the Company could

depress our stock price regardless of our business, prospects, financial conditions or results of operations.

A decline in the market

price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing

in the future.

or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar

in the market’s expectations about the Company’s operating results;

of competitors;

public’s reaction to our press releases, other public announcements and filings with the SEC,

results failing to meet the expectations of securities analysts or investors in a particular period;

in financial estimates and recommendations by securities analysts concerning the Company or the industry in which the Company operates

and stock price performance of other companies that investors deem comparable to the Company;

to market new and enhanced products and services on a timely basis;

in laws and regulations affecting our business;

● commencement

of, or involvement in, litigation involving the Company;

in the Company’s capital structure, such as future issuances of securities or the incurrence of additional debt;

volume of shares of the Company’s common stock available for public sale;

major change in the Company’s board or management;

of substantial amounts of the Company’s common stock by our directors, executive officers or significant stockholders or the perception

that such sales could occur;

economic and political conditions such as recessions, changes in interest rates, changes in fuel prices, international currency fluctuations

and acts of war or terrorism.

Broad market and industry

factors may materially harm the market price of our securities irrespective of our operating performance.

The stock market in general,

and Nasdaq specifically, have experienced extreme volatility that has often been unrelated to the operating performance of particular

As a result of this volatility, our investors may not be able to sell your securities at or above the price at which they were

A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to the

Company could depress our stock price regardless of our business, prospects, financial conditions or results of operations.

in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain

additional financing in the future.

The Company amended the exercise

price of the Company’s publicly-traded warrants from $11.50 to $2.75 per share in November 2024.

The change in the exercise price

may provide incentive to investors to exercise the public warrants.

There can be no assurance that the public warrants will be exercised

in part or in full, nor can there be any assurance that the change in exercise price has any positive impact on the Company’s stock

price or will contribute in any meaningful way in the raising of additional operating capital for the Company from the aggregate exercise

price from the exercise by holders of the public warrants.

Changes in laws, regulations or rules, or

a failure to comply with any laws, regulations or rules, may adversely affect our business, investments and results of operations.

The Company is subject to laws,

regulations and rules enacted by national, regional and local governments and the Nasdaq.

In particular, Company is required to comply

with certain SEC, Nasdaq and other legal or regulatory requirements.

The Company is subject to

laws, regulations and rules enacted by national, regional and local governments and the Nasdaq.

In particular, Company is required to

comply with certain SEC, Nasdaq and other legal or regulatory requirements.

Compliance with, and monitoring of, applicable laws, regulations

26 unchanged sentences

consolidated financial statements and require the Company to incur the expense of remediation.

If the Company is not able

to comply with the requirements of Section 404 in a timely manner or it is unable to maintain proper and effective internal controls

over financial reporting may not be able to produce timely and accurate consolidated financial statements.

As a result, the Company’s

investors could lose confidence in its reported financial information, the market price of the Common Stock could decline and the Company

could be subject to sanctions or investigations by the SEC or other regulatory authorities.

If the Company is not

able to comply with the requirements of Section 404 in a timely manner or it is unable to maintain proper and effective

internal controls over financial reporting may not be able to produce timely and accurate consolidated financial statements.

result, the Company’s investors could lose confidence in its reported financial information, the market price of the Common

Stock could decline and the Company could be subject to sanctions or investigations by the SEC or other regulatory authorities.

Our internal controls over financial reporting

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we or our independent registered public accounting firm report a material weakness in our internal controls over financial reporting.

In connection with the preparation of our consolidated financial statements for the year ended December 31, 2023, we identified the following

material weaknesses:(i) there was a lack of communication within management and internal departments regarding complex and unusual arrangements;

(ii) the Company did not maintain adequately designed controls to ensure the proper recording of operating expenses, related accruals

and unbilled revenue in the correct period;

and (iii) our financial statement close process controls which relate to all financial statement

accounts, did not consistently operate effectively or lacked appropriate evidence, to ensure account reconciliations, transactions, and

journal entries were performed or reviewed at the appropriate level of precision and on a timely basis.

In connection with the preparation of our consolidated financial statements for the year ended December 31, 2024, we identified a material

weakness in our internal control over financial reporting related to deficiencies in our controls over the accounting for complex equity

arrangements, financial statement close process and in the design and operation of internal controls involving accruals and unbilled revenue.

We have implemented, and are continuing to implement, measures designed

to improve our internal control over financial reporting to remediate these material weaknesses.

These measures include formalizing our

processes and internal control documentation, strengthening supervisory reviews by our financial management, engaging financial consultants

to enable the implementation of internal control over financial reporting, and enhancing the functionality of our enterprise resource

planning system to support certain key financial processes and controls and enforce certain segregation of duties through automation and

approval workflows.

We expect to incur additional costs to remediate the control deficiencies identified, though there can be no assurance

that our efforts will be successful or avoid potential future material weaknesses.

If we are unable to successfully remediate our existing

or any future material weaknesses in our internal control over financial reporting, or if we identify any additional material weaknesses,

the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities

law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors

may lose confidence in our financial reporting, and our stock price may decline as a result.

We also could become subject to investigations

by Nasdaq, the SEC or other regulatory authorities.

Our internal resources and personnel may in the future be insufficient to avoid accounting

errors and there can be no assurance that we will not have additional material weaknesses in the future.

Any failure to develop or maintain

effective controls or any difficulties encountered implementing required new or improved controls could harm our operating results or

cause us to fail to meet our reporting obligations and may result in a restatement of our consolidated financial statements for prior

Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results

of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness

of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed

with the SEC.

Ineffective disclosure controls, procedures, and internal control over financial reporting could also cause investors to

lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our

common stock.

to improve our internal control over financial reporting to remediate this material weakness.

These measures include formalizing our processes

and internal control documentation, strengthening supervisory reviews by our financial management, engaging financial consultants to enable

the implementation of internal control over financial reporting, and enhancing the functionality of our enterprise resource planning system

to support certain key financial processes and controls and enforce certain segregation of duties through automation and approval workflows.

We expect to incur additional costs to remediate the control deficiencies identified, though there can be no assurance that our efforts

will be successful or avoid potential future material weaknesses.

If we are unable to successfully remediate our existing or any future

material weaknesses in our internal control over financial reporting, or if we identify any additional material weaknesses, the accuracy

and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements

regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence

in our financial reporting, and our stock price may decline as a result.

We also could become subject to investigations by Nasdaq, the

SEC or other regulatory authorities.

Our internal resources and personnel may in the future be insufficient to avoid accounting errors

and there can be no assurance that we will not have additional material weaknesses in the future.

Any failure to develop or maintain effective

controls or any difficulties encountered implementing required new or improved controls could harm our operating results or cause us to

fail to meet our reporting obligations and may result in a restatement of our consolidated financial statements for prior periods.

failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic

management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our

internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with

Ineffective disclosure controls, procedures, and internal control over financial reporting could also cause investors to lose

confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common

In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq.

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in which we operate.

We may be unable or slow to attract new research coverage and if one or more analysts cease coverage of us, the price

and trading volume of our securities would likely be negatively impacted.

If any of the analysts that may cover us change their recommendation

regarding our securities adversely, or provide more favorable relative recommendations about our competitors, the price of our securities

would likely decline.

If any analyst that may cover us ceases covering us or fails to regularly publish reports on us, we could lose visibility

in the financial markets, which could cause the price or trading volume of our securities to decline.

Moreover, if one or more of the

analysts who cover us downgrades our Common Stock, or if our reporting results do not meet their expectations, the market price of our

Common Stock could decline.

We may be unable or slow to attract new research coverage and if one or more analysts cease coverage of us, the

price and trading volume of our securities would likely be negatively impacted.

If any of the analysts that may cover us change their

recommendation regarding our securities adversely, or provide more favorable relative recommendations about our competitors, the price

of our securities would likely decline.

If any analyst that may cover us ceases covering us or fails to regularly publish reports on

us, we could lose visibility in the financial markets, which could cause the price or trading volume of our securities to decline.

if one or more of the analysts who cover us downgrades our Common Stock, or if our reporting results do not meet their expectations,

the market price of our Common Stock could decline.

Sales, or the perception of sales, of our

common stock by us or our existing stockholders in the public market could cause the market price for our common stock to decline.

The sale of substantial amounts

of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price

of shares of our Common Stock.

These sales, or the possibility that these sales may occur, also might make it more difficult for us to

sell equity securities in the future at a time and at a price that we deem appropriate.

The sale of substantial

amounts of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing

market price of shares of our Common Stock.

These sales, or the possibility that these sales may occur, also might make it more difficult

for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon the expiration or waiver

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As restrictions on resale end, the market price of shares

of our Common Stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell

These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Common

Stock or other securities.

In addition, the shares of our Common Stock reserved for future issuance

under the Spectral AI, Inc.

2023 Equity Incentive Plan, which will be approved and adopted by the Company at its first annual meeting

following the Business Combination (“Equity Incentive Plan”) will become eligible for sale in the public market once those

shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and, in some cases, limitations on

volume and manner of sale by affiliates under Rule 144, as applicable.

The number of shares to be reserved for future issuance under

the Equity Incentive Plan is expected to equal approximately 8,000,000 shares.

of our Common Stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to

These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of

Common Stock or other securities.

In addition, the shares

of our Common Stock reserved for future issuance under the Spectral AI, Inc.

2023 Equity Incentive Plan, which was approved and adopted

by the Company at its first annual meeting following the Business Combination (“Equity Incentive Plan”) in May 2024, will

become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements,

lock-up agreements and, in some cases, limitations on volume and manner of sale by affiliates under Rule 144, as applicable.

number of shares to be reserved for future issuance under the Equity Incentive Plan is expected to equal approximately 8,000,000 shares.

We have filed a registration

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common stock, which would increase the number of shares eligible for resale in the public market and result in dilution to our stockholders.

Outstanding warrants to purchase an aggregate of 8,433,333 shares of

Common Stock will become exercisable in accordance with the terms of the Warrant Agreement governing those securities.

Each warrant entitles

the registered holder to purchase one share of Common Stock at a price of $11.50 per full share.

Pursuant to the Warrant Agreement, a

holder of Warrants may exercise its Warrants only for a whole number of shares.

This means that only a whole warrant may be exercised

at any given time by a holder of Warrants.

To the extent such warrants are exercised, additional shares of the Common Stock will be issued,

which will result in dilution to the holders of the Common Stock and increase the number of shares eligible for resale in the public market.

Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect

the market price of the Common Stock.

The Company maintains a redemption right with respect to the warrants in that the Company can redeem

some or all of the warrants for $0.10 per warrant based on certain market conditions and the market price of the Common Stock.

Outstanding warrants to

purchase an aggregate of 8,433,333 shares of Common Stock will become exercisable in accordance with the terms of the Warrant Agreement

governing those securities.

Each warrant originally entitled the registered holder to purchase one share of Common Stock at a price of

$11.50 per full share.

As noted above, in November 2024, the Company reduced the exercise price from $11.50 per full share to $2.75 per

Pursuant to the Warrant Agreement, a holder of Warrants may exercise its Warrants only for a whole number of shares.

means that only a whole warrant may be exercised at any given time by a holder of Warrants.

To the extent such warrants are exercised,

additional shares of the Common Stock will be issued, which will result in dilution to the holders of the Common Stock and increase the

number of shares eligible for resale in the public market.

Sales of substantial numbers of such shares in the public market or the fact

that such warrants may be exercised could adversely affect the market price of the Common Stock.

Unresolved Staff Comments.

Cybersecurity

Management and Strategy

Company manages cybersecurity risk as part of our overall enterprise risk management strategy, which is overseen by the Audit Committee

and the Board.

The Company employs robust cybersecurity and data privacy programs to assess, identify and manage material risks from cybersecurity

are constantly evolving our cyber defenses to minimize impacts from cyber threats by using a multi-pronged approach that helps safeguard

our assets and data.

We are particularly focused on addressing emerging cybersecurity risks, including human risk, as phishing attacks

remain one of the most common causes of data breaches;

third-party supply chain risks, as threat actors continue to target supply chains

to compromise a greater number of victims;

and geopolitical risk, as tensions and conflicts around the world are often accompanied by

an increase in sabotage, espionage and cyber-attacks.

As threat actors frequently target employees to gain access to information and systems,

we have a comprehensive human risk management program that educates our workforce on threats they face as a first line of defense, and

includes elements addressing phishing, malware, data handling, device security, cybersecurity education, password security, internet browsing

and defenses to physical threats.

Our employees are exposed to cybersecurity awareness training and training to keep pace with industry

standards, evolving challenges and innovative solutions with respect to information security, data privacy, and cybersecurity risks to

the organization.

Additionally, we employ a multi-layered approach in our application of cybersecurity technologies to help safeguard

our systems, networks, and data from potential cybersecurity threats.

support our preparedness, we have a cybersecurity incident response plan (“CIRP”) that we regularly update as business needs

and the security landscapes change.

In the event of a cybersecurity incident, our incident response team refers to our CIRP and existing

management internal controls and disclosure processes.

Pursuant to this process, designated personnel are responsible for assessing the

severity of the incident and any associated threats, containing and resolving the incident as quickly as possible, managing any damage

to the Company’s systems and networks, minimizing the impact on the Company’s stakeholders, analyzing and executing upon internal

reporting obligations, escalating information about the incident to senior management, as appropriate, and performing post-incident analysis

and program enhancements, as needed.

We perform periodic tabletop exercises annually to test our incident response procedures, identify

gaps and improvement opportunities and exercise team preparedness.

recognize that third parties that provide services to the Company can be subject to cybersecurity incidents that could impact the Company.

To manage third-party risk, we maintain a third-party risk management program, which is designed to assess the security controls of our

third parties.

The assessment methodology is based on risk and relies on the data, access, connectivity, and criticality of the services

that the third-party offers.

maintain relationships with legal counsel to inform our cybersecurity and data privacy programs.

of December 31, 2023, and through the date of this filing, we are not aware of any material cybersecurity incidents that have impacted

We face risks of incidents, whether through cyber attacks or cyber intrusions through the Cloud, the Internet, phishing attempts,

ransomware and other forms of malware, computer viruses, email attachments, extortion, and other scams.

Although we make efforts to maintain

the security and integrity of our information technology systems, these systems and the proprietary, confidential and personal information

Risk Management and Strategy

The Company manages cybersecurity

risk as part of our overall enterprise risk management strategy, which is overseen by the Audit Committee and the Board.

employs robust cybersecurity and data privacy programs to assess, identify and manage material risks from cybersecurity threats.

We are constantly evolving

our cyber defenses to minimize impacts from cyber threats by using a multi-pronged approach that helps safeguard our assets and data.

We are particularly focused on addressing emerging cybersecurity risks, including human risk, as phishing attacks remain one of the most

common causes of data breaches;

third-party supply chain risks, as threat actors continue to target supply chains to compromise a greater

number of victims;

and geopolitical risk, as tensions and conflicts around the world are often accompanied by an increase in sabotage,

espionage and cyber-attacks.

As threat actors frequently target employees to gain access to information and systems, we have a comprehensive

human risk management program that educates our workforce on threats they face as a first line of defense, and includes elements addressing

phishing, malware, data handling, device security, cybersecurity education, password security, internet browsing and defenses to physical

Our employees are exposed to cybersecurity awareness training and training to keep pace with industry standards, evolving challenges

and innovative solutions with respect to information security, data privacy, and cybersecurity risks to the organization.

Additionally,

we employ a multi-layered approach in our application of cybersecurity technologies to help safeguard our systems, networks, and data

from potential cybersecurity threats.

To support our preparedness,

we have a cybersecurity incident response plan (“CIRP”) that we regularly update as business needs and the security landscapes

In the event of a cybersecurity incident, our incident response team refers to our CIRP and existing management internal controls

and disclosure processes.

Pursuant to this process, designated personnel are responsible for assessing the severity of the incident and

any associated threats, containing and resolving the incident as quickly as possible, managing any damage to the Company’s systems

and networks, minimizing the impact on the Company’s stakeholders, analyzing and executing upon internal reporting obligations,

escalating information about the incident to senior management, as appropriate, and performing post-incident analysis and program enhancements,

We perform periodic tabletop exercises annually to test our incident response procedures, identify gaps and improvement opportunities

and exercise team preparedness.

We recognize that third

parties that provide services to the Company can be subject to cybersecurity incidents that could impact the Company.

To manage third-party

risk, we maintain a third-party risk management program,which is designed to assess the security controls of our third parties.

The assessment

methodology is based on risk and relies on the data, access, connectivity, and criticality of the services that the third-party offers.

We maintain relationships

with legal counsel to inform our cybersecurity and data privacy programs.

As of December 31, 2024,

and through the date of this filing, we are not aware of any material cybersecurity incidents that have impacted the Company.

risks of incidents, whether through cyber attacks or cyber intrusions through the Cloud, the Internet, phishing attempts, ransomware

and other forms of malware, computer viruses, email attachments, extortion, and other scams.

Although we make efforts to maintain the

security and integrity of our information technology systems, these systems and the proprietary, confidential and personal information

that resides on or is transmitted through them, are subject to the risk of a cybersecurity incident or disruption, and there can be no

1 unchanged sentence

our third-party vendors’ systems that could adversely affect our business.

Company’s cybersecurity and data privacy programs are implemented and overseen by the Company’s designated director of information

systems (“IT Director”) and senior management.

The information security team responsible for managing and implementing the

Company’s cybersecurity and data privacy programs has many years of valuable business experience managing risks from cybersecurity

threats and data privacy breaches and developing and implementing cybersecurity and data privacy policies and procedures.

Audit Committee, which consists solely of independent directors, oversees the Company’s overall enterprise risk assessment and risk

management policies and guidelines, including risks related to cybersecurity matters.

Our Audit Committee reviews, discusses with management

and oversees the Company’s information security and data protection programs.

In particular, the Audit Committee receives periodic

updates from the IT Director, internal audit function and other members of management on significant cybersecurity and data privacy threats

to our systems and the potential impact on the Company’s business, financial results, operations, and reputation, risk management

strategies, including information governance and security policies and programs, program assessments, planned improvements, major legislative

and regulatory developments that could materially impact the Company’s cybersecurity and data privacy policies and programs, and

status of information security initiatives, including an appropriate threat assessment relating to information technology risks.

also receives similar cybersecurity updates directly from the IT Director and other members of management at least annually, and as needed

The Company’s cybersecurity

and data privacy programs are implemented and overseen by the Company’s designated director of information systems (“IT Director”)

and senior management.

The information security team responsible for managing and implementing the Company’s cybersecurity and

data privacy programs has many years of valuable business experience managing risks from cybersecurity threats and data privacy breaches

and developing and implementing cybersecurity and data privacy policies and procedures.

Our Audit Committee, which

consists solely of independent directors, oversees the Company’s overall enterprise risk assessment and risk management policies

and guidelines, including risks related to cybersecurity matters.

Our Audit Committee reviews, discusses with management and oversees

the Company’s information security and data protection programs.

In particular, the Audit Committee receives periodic updates from

the IT Director, internal audit function and other members of management on significant cybersecurity and data privacy threats to our

systems and the potential impact on the Company’s business, financial results, operations, and reputation, risk management strategies,

including information governance and security policies and programs, program assessments, planned improvements, major legislative and

regulatory developments that could materially impact the Company’s cybersecurity and data privacy policies and programs, and status

of information security initiatives, including an appropriate threat assessment relating to information technology risks.

The Board also

receives similar cybersecurity updates directly from the IT Director and other members of management at least annually, and as needed

from time to time.

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 1. Business