What changed in this filing

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Item 1A. Risk Factors

2022-06-28 compared with 2021-06-29 · 749 added, 809 removed, 52 unchanged (97% of the section changed)

a developmental stage medical device company and have a history of significant operating losses;

we expect to continue to incur

operating losses, and we may never achieve or maintain profitability.

are a developmental stage medical device company and have a history of significant operating losses;

we expect to continue to incur operating

losses, and we may never achieve or maintain profitability.

As a development-stage

enterprise, we do not currently have revenues to generate cash flows to cover operating expenses.

Since our inception, we have

incurred operating losses in each year due to costs incurred in connection with research and development activities and general

and administrative expenses associated with our operations.

For the years ended March 31, 2021 and 2020, we incurred net losses

of approximately $7.4 million and $5.3 million, respectively.

At March 31, 2021, we had an accumulated deficit of approximately

$15.9 million.

As a result, we will need to raise additional capital in the future, which may or may not be available to us at

all or only on unfavorable terms.

incur losses for the foreseeable future, as we continue the development of, and seek regulatory clearance and approvals for, our

insulin pump.

As our prototype insulin pump is currently our only product, if it fails to gain regulatory approval and market

acceptance, we will not be able to generate any revenue, or explore other opportunities to enhance shareholder value, such as

through a sale.

If we fail to generate revenue and eventually become profitable, or if we are unable to fund our continuing losses,

our shareholders could lose all or a substantial part of their investment.

not be able to continue as a going concern which would likely cause our stockholders to lose most or all of their investment.

financial statements for the year ended March 31, 2021 were prepared under the assumption that we would continue as a going concern.

However, our independent registered public accounting firm included a “going concern”

explanatory paragraph in its

report on our financial statements for the year ended March 31, 2021, indicating that, without additional sources of funding,

our cash at March 31, 2021 is not sufficient for us to operate as a going concern for a period of at least one year from the date

that the financial statements included in this Report are issued.

Management’s plans concerning these matters, including

our need to raise additional capital, are described in Management’s Discussion and Analysis of Financial Conditions and

Results of Operations included in Item 7 of this Report and in Note 1 to our consolidated financial statements included in Item

8 of this Report.

However, we cannot assure you that our plans will be successful.

In light of the foregoing, there is substantial

doubt about our ability to continue as a going concern.

If we cannot continue as a viable entity, our stockholders would likely

lose most or all of their investment in us.

We have no revenues and substantial

indebtedness, which could adversely affect our business and financial position and, among other things, our ability to raise additional

capital and our ability to satisfy our financial obligations.

Because we are

a development stage company, we have not and do not anticipate generating any revenues for the foreseeable future.

we are dependent upon our ability to raise capital through sales of our debt and equity securities.

In connection

with our private placement completed in May 2021 (the 2021 Placement), we issued $6,560,000 aggregate principal amount of our

12% unsecured convertible promissory notes (the 2021 Notes), with each 2021 Note due 12 months from the issuance date.

we have substantial outstanding debt, which could adversely affect our business and financial position, and, among other things,

our ability to raise additional capital and our ability to satisfy our financial obligations, including interest and principal

payments on the 2021 Notes.

The impact of the indebtedness may include, but may not be limited to, the following:

our ability to borrow additional funds for working capital, capital expenditures, acquisitions,

or other general business purposes;

us to use a substantial portion of any future cash flow from operations and/or capital

raised to make debt service payments instead of other business purposes, thereby reducing

the amount of any future cash flow and/or capital raised available for future working

capital, capital expenditures, acquisitions, or other general business purposes;

our flexibility to plan for, or react to, changes in our business and industry;

us at a competitive disadvantage compared with our less-leveraged competitors;

our vulnerability to the impact of adverse economic, competitive, and industry conditions;

our cost of borrowing.

full effects of COVID-19 and other potential future public health crises, epidemics, pandemics or similar events are uncertain

and could have a material and adverse effect on our business, financial condition, operating results and cash flows.

outbreak of the coronavirus disease 2019, or COVID-19, was declared a pandemic by the World Health Organization and a national

emergency by the U.S.

Since our inception, we have incurred

operating losses in each year due to costs incurred in connection with research and development activities and general and administrative

expenses associated with our operations.

For the years ended March 31, 2022 and 2021, we incurred net losses of approximately $18.6 million

and $7.4 million, respectively.

At March 31, 2022, we had an accumulated deficit of approximately $34.6 million.

As a result, we will

need to raise additional capital in the future, which may or may not be available to us at all or only on unfavorable terms.

We expect to incur

losses for the foreseeable future, as we continue the development of, and seek regulatory clearance and approvals for, our insulin pump.

As our prototype insulin pump is currently our only product, if it fails to gain regulatory approval and market acceptance, we will not

be able to generate any revenue, or explore other opportunities to enhance shareholder value, such as through a sale.

If we fail to generate

revenue and eventually become profitable, or if we are unable to fund our continuing losses, our shareholders could lose all or a substantial

part of their investment.

full effects of COVID-19 and other potential future public health crises, epidemics, pandemics or similar events are uncertain and could

have a material and adverse effect on our business, financial condition, operating results and cash flows.

The global outbreak

of the coronavirus disease 2019, or COVID-19, was declared a pandemic by the World Health Organization and a national emergency by the

government in March 2020.

This has negatively affected the world economy, disrupted global supply chains,

significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place”

and created significant disruption of the financial markets.

The extent of the impact on our operational and financial performance

will depend on future developments, including the duration and spread of the pandemic and related actions taken by U.S.

and foreign government agencies to prevent disease spread, all of which are uncertain, out of our control and cannot be predicted.

been complying with county and state orders and, until May 2021, had implemented a teleworking policy for our employees and contractors

and significantly minimized the number of employees who visit our office.

However, a facility closure, work slowdowns or temporary

stoppage at one of our manufacturing suppliers could occur, which could have a longer-term impact and could delay our prototype

production and ability to conduct business.

workforce is unable to work effectively, including because of illness, quarantines, absenteeism, government actions, facility

closures, travel restrictions or other restrictions in connection with the COVID-19 pandemic, our operations will be negatively

We may be unable to develop our product, and our costs may increase as a result of the COVID-19 outbreak.

could worsen if there is an extended duration of any COVID-19 outbreak or a resurgence of COVID-19 infection in affected regions

after they have begun to experience improvement.

on other companies to provide components and to perform services for us.

An extended period of supply chain disruption caused

by the response to COVID-19 could impact our ability to produce our initial product quantities, and, if we are not able to implement

alternatives or other mitigations, product deliveries would be adversely impacted and negatively impact our business, financial

condition, operating results and cash flows.

Limitations on government operations can also impact regulatory approvals that are

necessary for us to operate our business.

This has negatively affected the world economy, disrupted global supply chains, significantly restricted

travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created significant disruption

of the financial markets.

The extent of the impact on our operational and financial performance will depend on future developments, including

the duration and spread of the pandemic and related actions taken by U.S.

and foreign government agencies to prevent

disease spread, all of which are uncertain, out of our control and cannot be predicted.

complying with county and state orders and, until May 2021, had implemented a teleworking policy for our employees and contractors and

significantly minimized the number of employees who visit our office.

However, a facility closure, work slowdowns or temporary stoppage

at one of our suppliers could occur, which could have a longer-term impact and could delay our prototype production and ability to conduct

If our workforce

is unable to work effectively, including because of illness, quarantines, absenteeism, government actions, facility closures, travel

restrictions or other restrictions in connection with the COVID-19 pandemic, our operations will be negatively impacted.

We may be unable

to develop our product candidate, and our costs may increase as a result of the COVID-19 outbreak.

The impacts could worsen if there

is an extended duration of any COVID-19 outbreak or a resurgence of COVID-19 infection in affected regions after they have begun to experience

We rely on other

companies to provide components and to perform services for us.

An extended period of supply chain disruption caused by the response

to COVID-19 could impact our ability to produce our initial product quantities, and, if we are not able to implement alternatives or

other mitigations, product deliveries would be adversely impacted and negatively impact our business, financial condition, operating

results and cash flows.

Limitations on government operations can also impact regulatory approvals that are necessary for us to operate

our business.

The continued

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We were recently able to raise additional

capital in a private placement that commenced in February 2021, however, we will need to raise additional capital to support our

operations in the future.

We may be unable to access the capital markets, and additional capital may only be available to us on

terms that could be significantly detrimental to our existing stockholders and to our business.

need substantial additional funding to complete subsequent phases of our insulin pump product and to operate our business and

such funding may not be available or, if it is available, such financing is likely to substantially dilute our existing shareholders.

The discovery,

development, and commercialization of new medical devices, such as our insulin pump, entails significant costs.

While we believe

that we have generally completed the engineering and mechanical aspects of our insulin pump prototype, we still must modify, refine

and finalize our insulin pump to, among other things, meet the general needs and preferences of the almost pumper marketplace

and the guidelines of third-party payors.

To enable us to accomplish these and other related items and continue to operate our

business, we will need to raise substantial additional capital and/or enter into strategic partnerships or joint ventures to enable

· fund clinical studies and

seek regulatory approvals;

· build or access manufacturing

and commercialization capabilities;

· develop, test, and, if approved,

market our product;

· acquire or license additional

internal systems and other infrastructure;

· hire and support additional

management, engineering and scientific personnel.

generate a sufficient amount of product revenue to finance our cash requirements, which we may never achieve, we expect to finance

our cash needs primarily through public or private equity offerings, debt financings or through the establishment of possible

strategic alliances.

We cannot be certain that additional funding will be available on acceptable terms, or at all.

not able to secure additional equity funding when needed, we may have to delay, reduce the scope of, or eliminate one or more

of our clinical studies, development programs or future commercialization initiatives.

In addition, any additional equity funding

that we do obtain will dilute the ownership held by our existing equity holders.

The amount of this dilution may be substantially

increased if the trading price of our common stock is lower at the time of any financing.

Regardless, the economic dilution to

shareholders will be significant if our stock price does not increase significantly, or if the effective price of any sale is

below the price paid by a particular shareholder.

Any debt financing that we obtain in the future could involve substantial restrictions

on activities and creditors could seek a pledge of some or all of our assets.

We have not identified potential sources for such

financing that we will require, and we do not have commitments from any third parties to provide any future debt financing.

we fail to obtain funding as needed, we may be forced to cease or scale back operations, and our results, financial condition

and stock price would be adversely affected.

We have a limited operating

history and historical financial information upon which you may evaluate our performance.

capital through equity offerings in February 2022 and May 2022, however, we will need to raise additional capital to support our operations

in the future.

We may be unable to access the capital markets, and additional capital may only be available to us on terms that could

be significantly detrimental to our existing stockholders and to our business.

will need substantial additional funding to complete subsequent phases of our insulin pump product and to operate our business and such

funding may not be available or, if it is available, such financing is likely to substantially dilute our existing shareholders.

The discovery, development,

and commercialization of new medical devices, such as our insulin pump, entails significant costs.

While we believe that we have generally

completed the engineering and mechanical aspects of our insulin pump prototype, we still must modify, refine and finalize our insulin

pump to, among other things, meet the general needs and preferences of the almost pumper marketplace and the guidelines of third-party

To enable us to accomplish these and other related items and continue to operate our business, we will need to raise substantial

additional capital and/or enter into strategic partnerships or joint ventures to enable us to:

clinical studies and seek regulatory approvals;

or access manufacturing and commercialization capabilities;

test, and, if approved, market our product candidate;

or license additional internal systems and other infrastructure;

and support additional management, engineering and scientific personnel.

Until we can generate

a sufficient amount of product revenue to finance our cash requirements, which we may never achieve, we expect to finance our cash needs

primarily through public or private equity offerings, debt financings or through the establishment of possible strategic alliances.

may in the future seek additional capital from public or private offerings of our capital stock or borrow additional amounts under new

credit lines or from other sources.

If we issue equity or debt securities to raise additional funds, our existing stockholders may experience

dilution, we may incur significant financing costs, and the new equity or debt securities may have rights, preferences and privileges

senior to those of our existing stockholders.

In addition, if we raise additional funds through collaborations, licensing, joint ventures,

strategic alliances, partnership arrangements or other similar arrangements, it may be necessary to relinquish valuable rights to our

potential future products or proprietary technologies or grant licenses on terms that are not favorable to us.

We cannot be certain

that additional funding will be available on acceptable terms, or at all.

If we are not able to secure additional equity funding when

needed, we may have to delay, reduce the scope of, or eliminate one or more of our clinical studies, development programs or future commercialization

In addition, any additional equity funding that we do obtain will dilute the ownership held by our existing equity holders.

The amount of this dilution may be substantially increased if the trading price of our common stock is lower at the time of any financing.

Regardless, the economic dilution to shareholders will be significant if our stock price does not increase significantly, or if the effective

price of any sale is below the price paid by a particular shareholder.

Any debt financing that we obtain in the future could involve

substantial restrictions on activities and creditors could seek a pledge of some or all of our assets.

We have not identified potential

sources for such financing that we will require, and we do not have commitments from any third parties to provide any future debt financing.

If we fail to obtain funding as needed, we may be forced to cease or scale back operations, and our results, financial condition and

stock price would be adversely affected.

have a limited operating history and historical financial information upon which you may evaluate our performance.

You should consider,

among other factors, our prospects for success in light of the risks and uncertainties encountered by companies that, like us,

are in their early stages of development.

We may not successfully address these risks and uncertainties or successfully complete

our studies and/or implement our existing and new products.

If we fail to do so, it could materially harm our business and impair

the value of our common stock.

Unanticipated problems, expenses and delays are frequently encountered in establishing a new business,

conducting research, and developing new products.

These include, but are not limited to, inadequate funding, failure to obtain

regulatory approval, unforeseen research issues, lack of consumer acceptance, competition, sluggish product development, and inadequate

sales and marketing.

The failure by us to meet any of these conditions would have a materially adverse effect upon us and may

force us to reduce or curtail operations.

among other factors, our prospects for success in light of the risks and uncertainties encountered by companies that, like us, are in

their early stages of development.

We may not successfully address these risks and uncertainties or successfully complete our studies

and/or implement our existing and new products.

If we fail to do so, it could materially harm our business and impair the value of our

common stock.

Unanticipated problems, expenses and delays are frequently encountered in establishing a new business, conducting research,

and developing new products.

These include, but are not limited to, inadequate funding, failure to obtain regulatory approval, unforeseen

research issues, lack of consumer acceptance, competition, sluggish product development, and inadequate sales and marketing.

by us to meet any of these conditions would have a materially adverse effect upon us and may force us to reduce or curtail operations.

No assurance can be given that we can or will ever operate profitably.

not be able to meet our future capital needs.

have no revenue and we have limited cash liquidity and capital resources.

We will need additional capital in the near future.

Any equity financings will result in dilution and may contain other terms that are not favorable to our then-existing stockholders.

We currently have debt financing, and any additional sources of debt financing that we may obtain in the future may result in

a high interest expense.

Any financing, if available, may be on unfavorable terms.

If adequate funds are not obtained, we will

be required to reduce or curtail operations.

of financing we require will depend on a number of factors, many of which are beyond our control.

amount of financing we require will depend on a number of factors, many of which are beyond our control.

Our results of operations, financial

condition and stock price are likely to be adversely affected if our funding requirements increase or are otherwise greater than

condition and stock price are likely to be adversely affected if our funding requirements increase or are otherwise greater than we expect.

Our future funding

requirements will depend on many factors, including, but not limited to:

· the testing costs for our

insulin pump product and other development activities conducted by us directly, and our ability to successfully conclude the studies

and activities and achieve favorable results;

· our ability to attract future

strategic partners to pay for or share costs related to our product development efforts;

· the costs and timing of seeking

and obtaining regulatory clearance and approvals for our product;

· the costs of filing, prosecuting,

maintaining and enforcing any patents and other intellectual property rights that we may have and defending against potential

claims of infringement;

· decisions to hire additional

scientific, engineering or administrative personnel or consultants;

· our ability to manage administrative

and other costs of our operations;

· the presence or absence of

adverse developments in our research program.

If any of these

factors cause our funding needs to be greater than expected, our operations, financial condition, ability to continue operations

and stock price may be adversely affected.

cash requirements may differ significantly from our current estimates.

testing costs for our insulin pump product and other development activities conducted by

us directly, and our ability to successfully conclude the studies and activities and achieve

favorable results;

ability to attract future strategic partners to pay for or share costs related to our product

development efforts;

costs and timing of seeking and obtaining regulatory clearance and approvals for our product

costs of filing, prosecuting, maintaining and enforcing any patents and other intellectual

property rights that we may have and defending against potential claims of infringement;

to hire additional scientific, engineering or administrative personnel or consultants;

ability to manage administrative and other costs of our operations;

presence or absence of adverse developments in our research program.

If any of these factors

cause our funding needs to be greater than expected, our operations, financial condition, ability to continue operations and stock price

may be adversely affected.

future cash requirements may differ significantly from our current estimates.

Our cash requirements

may differ significantly from our estimates from time to time, depending on a number of factors, including:

costs and results of our clinical studies regarding our insulin pump product;

costs and results of our clinical studies regarding our insulin pump product candidate;

time and costs involved in obtaining regulatory clearance and approvals;

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costs of compliance with laws, regulations, or judicial decisions applicable to us;

the costs of general and

administrative infrastructure required to manage our business and protect corporate assets and shareholder interests.

If we fail to

raise additional funds on a timely basis, we will need to scale back our business plans, which would adversely affect our business,

financial condition, and stock price, and we may even be forced to discontinue our operations and liquidate our assets.

costs of general and administrative infrastructure required to manage our business and protect

corporate assets and shareholder interests.

If we fail to raise

additional funds on a timely basis, we will need to scale back our business plans, which would adversely affect our business, financial

condition, and stock price, and we may even be forced to discontinue our operations and liquidate our assets.

Technological

breakthroughs in diabetes monitoring, treatment or prevention could render our insulin pump obsolete.

treatment market is subject to rapid technological change and product innovation.

Our insulin pump is based on our proprietary

technology, but a number of companies, medical researchers and existing pharmaceutical companies are pursuing new delivery devices,

delivery technologies, sensing technologies, procedures, drugs and other therapeutics for the monitoring, treatment and/or prevention

of insulin-dependent diabetes.

Any technological breakthroughs in diabetes monitoring, treatment or prevention could render our

insulin pump obsolete, which, since our insulin pump is our only product, would have a material adverse effect on our business,

financial condition and results of operations and could result in shareholders losing their entire investment.

to attract and retain skilled directors, executives, employees and consultants could impair our product development and commercialization

depends on the skills, performance, and dedication of our directors, executive officers and key engineering, scientific and technical

Many of our current engineering or scientific advisors are independent contractors and are either self-employed or employed

by other organizations.

As a result, they may have conflicts of interest or other commitments, such as consulting or advisory

contracts with other organizations, which may affect their ability to provide services to us in a timely manner.

to recruit additional directors, executive management employees, and advisers, particularly engineering, scientific and technical

personnel, which will require additional financial resources.

In addition, there is currently intense competition for skilled

directors, executives and employees with relevant engineering, scientific and technical expertise, and this competition is likely

If we are unable to attract and retain persons with sufficient engineering, scientific, technical and managerial

experience, we may be forced to limit or delay our product development activities or may experience difficulties in successfully

conducting our business, which would adversely affect our operations and financial condition.

limited internal research and development personnel, making us dependent on consulting relationships.

research and development to be an important part of the process of designing, developing, obtaining regulatory required approvals

and the eventual commercialization of our insulin pump.

We continue to incur increased research and development expenditures,

which are attributable to effort and expenses incurred in designing and developing our innovative insulin pump.

We expect to continue

to incur substantial costs related to research and development.

have a limited number of research and development personnel, and rely and expect for the foreseeable future to continue to rely,

on consultants, whom are not our employees, to perform significant functions for us.

As a result, we are and expect to continue

for the foreseeable future to be dependent on such third parties.

Such third parties may be able to terminate their contractual

relationships with us quickly and with little, if any, notice.

Although we believe there is a relatively large and readily accessible

network of third parties that we can draw from to replace any of our third-party consultants, no assurances can be given that

we would be able to quickly and seamlessly find and hire suitable replacements.

Any material interruption or delay in our research

and development activities performed by our consultants could impair our ability to meet any deadlines and materially impair our

then product design and development, regulatory approval and/or commercialization activities which could have a material adverse

effect on our business, financial condition and stock price.

In addition, if we do not appropriately manage our relationships

with our consultants, we may not be able to efficiently manage the development, testing, regulatory approval and eventual commercialization

of our insulin pump, which also could have a material and adverse effect on our business, financial condition and stock price.

need to outsource and rely on third parties for various aspects relating to the development, manufacture, sales and marketing

of our insulin pump as well as in connection with assisting us in the preparation and filing of our FDA submission, and our future

success will be dependent on the timeliness and effectiveness of the efforts of these third parties.

We are dependent

on consultants for important aspects of our product development strategy.

We do not have the required financial resources and

personnel to carry out independently the development of our product, and do not have the capability or resources to manufacture,

market or sell our current product.

As a result, we contract with and rely on third parties for important functions, including

in connection with the development and finalization of our insulin pump, the preparation and filing of our FDA submission and

eventual manufacturing and commercialization of our product.

We have recently entered into several agreements with third parties

for such services.

If problems develop in our relationships with third parties, or if such parties fail to perform as expected,

it could lead to delays or lack of progress in obtaining FDA clearance, significant cost increases, changes in our strategies,

and even failure of our product initiatives.

not be able to identify, negotiate and maintain the strategic alliances necessary to develop and commercialize our products and

technologies, and we will be dependent on our corporate partners if we do.

to enter into a strategic alliance with a diabetes related service providing company for the further development and approval

of our insulin pump product.

The diabetes treatment

market is subject to rapid technological change and product innovation.

Our insulin pump is based on our proprietary technology, but

a number of companies, medical researchers and existing pharmaceutical companies are pursuing new delivery devices, delivery technologies,

sensing technologies, procedures, drugs and other therapeutics for the monitoring, treatment and/or prevention of insulin-dependent diabetes.

Any technological breakthroughs in diabetes monitoring, treatment or prevention could render our insulin pump obsolete, which, since

our insulin pump is our only product, would have a material adverse effect on our business, financial condition and results of operations

and could result in shareholders losing their entire investment.

failure to attract and retain skilled directors, executives, employees and consultants could impair our product development and commercialization

Our business depends

on the skills, performance, and dedication of our directors, executive officers and key engineering, scientific and technical advisors.

Many of our current engineering or scientific advisors are independent contractors and are either self-employed or employed by other

organizations.

As a result, they may have conflicts of interest or other commitments, such as consulting or advisory contracts with other

organizations, which may affect their ability to provide services to us in a timely manner.

We will need to recruit additional directors,

executive management employees, and advisers, particularly engineering, scientific and technical personnel, which will require additional

financial resources.

In addition, there is currently intense competition for skilled directors, executives and employees with relevant

engineering, scientific and technical expertise, and this competition is likely to continue.

If we are unable to attract and retain persons

with sufficient engineering, scientific, technical and managerial experience, we may be forced to limit or delay our product development

activities or may experience difficulties in successfully conducting our business, which would adversely affect our operations and financial

have limited internal research and development personnel, making us dependent on consulting relationships.

We consider research

and development to be an important part of the process of designing, developing, obtaining regulatory required approvals and the eventual

commercialization of our insulin pump.

We continue to incur increased research and development expenditures, which are attributable to

effort and expenses incurred in designing and developing our innovative insulin pump.

We expect to continue to incur substantial costs

related to research and development.

will need to outsource and rely on third parties for various aspects relating to the development, manufacture, sales and marketing of

our insulin pump as well as in connection with assisting us in the preparation and filing of our FDA submission, and our future success

will be dependent on the timeliness and effectiveness of the efforts of these third parties.

We are dependent on

consultants for important aspects of our product development strategy.

We do not have the required financial resources and personnel

to carry out independently the development of our product candidate, and do not have the capability or resources to manufacture, market

or sell our current product candidate.

As a result, we contract with and rely on third parties for important functions, including in

connection with the development and finalization of our insulin pump, the preparation and filing of our FDA submission and eventual manufacturing

and commercialization of our product candidate.

We have recently entered into several agreements with third parties for such services.

If problems develop in our relationships with third parties, or if such parties fail to perform as expected, it could lead to delays

or lack of progress in obtaining FDA clearance, significant cost increases, changes in our strategies, and even failure of our product

may not be able to identify, negotiate and maintain the strategic alliances necessary to develop and commercialize our products and technologies,

and we will be dependent on our corporate partners if we do.

We may seek to enter

into a strategic alliance with a diabetes related service providing company for the further development and approval of our insulin pump

product candidate.

At this time, we have not entered into any such strategic alliance.

Strategic alliances, if entered

into, could potentially provide us with additional funds, expertise, access, and other resources in exchange for exclusive or

non-exclusive licenses or other rights to the product that we are currently developing or a product we may explore in the future.

We cannot give any assurance that we will be able to enter into strategic relationships with a diabetes related service providing

company or others in the near future or at all.

In addition, we cannot assure you that any agreements that we do reach will achieve

our goals or be on terms that prove to be economically beneficial to us.

When we do enter into strategic or contractual relationships,

we become dependent on the successful performance of our partners or counter-parties.

If they fail to perform as expected, such

failure could adversely affect our financial condition, lead to increases in our capital needs, or hinder or delay our development

See “Our Business –

Number of Total Employees”

not receive the necessary regulatory clearance or approvals for our insulin pump, and failure to timely obtain necessary clearances

and/or approvals could harm our then operations, including our ability to commercialize our product.

Before we can

market a new medical device, such as our insulin pump, we must first receive clearance under Section 510(k) of the Federal Food,

Drug, and Cosmetic Act, or the FDCA.

In the 510(k) clearance process, before a device may be marketed, the FDA must determine

that such proposed device is “substantially equivalent”

to a legally-marketed “predicate”

device, which

includes a device that has been previously cleared through the 510(k) process, a device that was legally marketed prior to May

28, 1976 (pre-amendments device), a device that was originally on the U.S.

market pursuant to an approved pre-market approval

(PMA) and later down-classified, or a 510(k)-exempt device.

To be “substantially equivalent,”

the proposed device

must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate

device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate

Certain future

modifications made to our product, which we currently expect to be cleared through 510(k), may require a new 510(k) clearance.

The 510(k) clearance process can be expensive, lengthy and uncertain.

The FDA’s 510(k) clearance process usually takes from

three to 12 months, but can last longer.

Strategic alliances, if entered into, could potentially

provide us with additional funds, expertise, access, and other resources in exchange for exclusive or non-exclusive licenses or other

rights to the product that we are currently developing or a product we may explore in the future.

We cannot give any assurance that we

will be able to enter into strategic relationships with a diabetes related service providing company or others in the near future or

In addition, we cannot assure you that any agreements that we do reach will achieve our goals or be on terms that prove to be

economically beneficial to us.

When we do enter into strategic or contractual relationships, we become dependent on the successful performance

of our partners or counter-parties.

If they fail to perform as expected, such failure could adversely affect our financial condition,

lead to increases in our capital needs, or hinder or delay our development efforts.

may not receive the necessary regulatory clearance or approvals for our insulin pump, and failure to timely obtain necessary clearances

and/or approvals could harm our then operations, including our ability to commercialize our product candidate.

Before we can market

a new medical device, such as our insulin pump, we must first receive clearance under Section 510(k) of the Federal Food, Drug, and Cosmetic

Act, or the FDCA.

In the 510(k) clearance process, before a device may be marketed, the FDA must determine that such proposed device

is “substantially equivalent” to a legally-marketed “predicate” device, which includes a device that has been

previously cleared through the 510(k) process, a device that was legally marketed prior to May 28, 1976 (pre-amendments device), a device

that was originally on the U.S.

market pursuant to an approved pre-market approval (PMA) and later down-classified, or a 510(k)-exempt

To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and

either have the same technological characteristics as the predicate device or have different technological characteristics and not raise

different questions of safety or effectiveness than the predicate device.

Certain future modifications

made to our product, which we currently expect to be cleared through 510(k), may require a new 510(k) clearance.

The 510(k) clearance

process can be expensive, lengthy and uncertain.

The FDA’s 510(k) clearance process usually takes from three to 12 months, but

can last longer.

Despite the time, effort and cost, a device may not be approved or cleared by the FDA.

Any delay or failure to obtain necessary regulatory approvals could harm our business, including our ability to commercialize

our product and our shareholders could lose their entire investment.

Furthermore, even if we are granted the required regulatory

clearances, such clearances may be subject to significant limitations on the indicated uses for the device, which may limit the

market for our product.

Any delay or failure to obtain

necessary regulatory authorizations could harm our business, including our ability to commercialize our product candidate and our shareholders

could lose their entire investment.

Furthermore, even if we are granted the required regulatory authorizations, such authorizations may

be subject to significant limitations on the indicated uses for the device, which may limit the market for our product candidate.

If the FDA requires

us to go through a lengthier, more rigorous examination for our product than we had expected, product introductions or modifications

us to go through a lengthier, more rigorous examination for our product candidate than we had expected, product introductions or modifications

could be delayed or canceled, which could adversely affect our ability to grow our business.

delay, limit or deny clearance or approval for our insulin pump medical device for many reasons, including:

· our inability to demonstrate

to the satisfaction of the FDA that our product is safe or effective for its intended use;

· the disagreement of the FDA

with the design or implementation of our clinical studies or the interpretation of data from our clinical studies;

· serious and unexpected adverse

device effects experienced by participants in our clinical studies;

· the data from clinical studies

may be insufficient to support clearance or approval, where required;

· our inability to demonstrate

that the benefits of our pump outweigh the risks;

· the manufacturing process

or facilities we intend to use may not meet applicable requirements;

· the potential for approval

policies or regulations of the FDA to change significantly in a manner rendering our data or regulatory filings insufficient for

clearance or approval.

the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other

actions, which may prevent or delay approval or clearance of our product or impact our ability to modify our product after clearance

The FDA can delay,

limit or deny clearance or approval for our insulin pump medical device for many reasons, including:

inability to demonstrate to the satisfaction of the FDA that our product candidate is substantially

equivalent to the proposed predicate device;

disagreement of the FDA with the design or implementation of our performance testing protocols

or the interpretation of data from our performance testing;

data from performance testing may be insufficient to support a determination of substantial

equivalence or that our device meets required special controls or applicable performance

inability to demonstrate that the benefits of our pump outweigh the risks;

manufacturing process or facilities we intend to use may not meet applicable requirements;

potential for approval policies or regulations of the FDA to change significantly in a manner

rendering our data or regulatory filings insufficient for clearance or approval.

In addition, the FDA

may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions, which

may prevent or delay approval or clearance of our product candidate or impact our ability to modify our product candidate after clearance

on a timely basis.

Such policy or regulatory changes could impose additional requirements upon us that could delay our ability

to obtain clearance for our pump, increase the costs of compliance or restrict our ability to maintain our current approval.

example, as part of the Food and Drug Administration Safety and Innovation Act, or FDASIA, enacted in 2012, the U.S.

reauthorized the Medical Device User Fee Amendments with various FDA performance goal commitments and enacted several “Medical

Device Regulatory Improvements”

and miscellaneous reforms, which are further intended to clarify and improve medical device

regulation both pre- and post-clearance and approval.

Some of these proposals and reforms could impose additional regulatory requirements

upon us that could delay our ability to obtain new clearance, increase the costs of compliance or restrict our ability to maintain

any clearance or approval we are able to obtain.

rule, demonstration of conformity of medical devices and their manufacturers with the essential requirements must be based, among

other things, on the evaluation of data supporting the safety and performance of the products during normal conditions of use.

Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use,

that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of

its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence.

Our competitors

may develop products that are more effective, safer and less expensive than ours.

Existing insulin

pumps are expensive, with the more popular models having purchase prices exceeding $4,000 for individuals without health insurance

and often require significant patient copays.

Others have daily use costs that exceed the reimbursement rates of many health insurance

plans, forcing some users to spend thousands of dollars a year in copays.

We believe this makes insurers hesitant to pay for any

pumps, except their most technologically proficient and compliant patients and places pumps out of reach for many patients whom

cannot afford such out of pocket expenses.

We are engaged

in the diabetes treatment sector of the healthcare marketplace, which is intensely competitive.

There are current products that

are quite effective at addressing the effects of diabetes, and we expect that new developments by other companies and academic

institutions in the areas of diabetes treatment will continue.

If approved for marketing by the FDA, depending on the approved

clinical indication, our product will be competing with existing and future products related to treatments for diabetes.

Our competitors

· develop product candidates

and market products that increase the levels of safety or efficacy that our product candidates will need to show in order to obtain

regulatory approval;

· develop product candidates

and market products that are less expensive or more effective than ours;

· commercialize competing products

before we can launch any products we are working to develop;

· hold or obtain proprietary

rights that could prevent us from commercializing our products;

· introduce therapies or market

medical products that render our potential product candidates obsolete.

Such policy or regulatory changes could impose additional requirements upon us that could delay our ability to obtain

clearance for our pump, increase the costs of compliance or restrict our ability to maintain our current approval.

As a general rule,

demonstration of conformity of medical devices and their manufacturers with the essential requirements must be based, among other things,

on the evaluation of data supporting the safety and performance of the product candidates during normal conditions of use.

Specifically,

a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and

foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance,

and that any claims made about the performance and safety of the device are supported by suitable evidence.

marketing authorization in the United States will not obviate the need to obtain marketing authorization in other jurisdictions We must

obtain approval from foreign regulatory authorities before we can market and sell any of our product candidates in countries outside

the United States.

We will incur additional costs in seeking such approvals, may experience delays in obtaining such approvals and cannot

be certain that such approvals will be granted.

The development, manufacture,

and marketing of our product candidates outside the United States is subject to government regulation.

In most foreign countries, we

must complete rigorous pre-clinical testing and extensive human clinical trials that demonstrate the safety and efficacy of a product

in order to apply for regulatory approval to market the product.

If foreign regulatory authorities grant regulatory approval of a product,

the approval may be limited to specific indications or limited with respect to its distribution.

Expanded or additional indications for

approved devices may not be approved, which could limit our potential revenues.

Foreign regulatory authorities may refuse to grant any

Consequently, even if we believe that pre-clinical and clinical data are sufficient to support regulatory approval for our

products, foreign regulatory authorities may not ultimately grant approval for commercial sale in any jurisdiction.

If our product candidates

are not approved in such jurisdictions, our ability to generate revenues will be limited and our business will be adversely affected.

competitors may develop products that are more effective, safer and less expensive than ours.

Existing insulin pumps

are expensive, with the more popular models having purchase prices exceeding $4,000 for individuals without health insurance and often

require significant patient copays.

Others have daily use costs that exceed the reimbursement rates of many health insurance plans, forcing

some users to spend thousands of dollars a year in copays.

We believe this makes insurers hesitant to pay for any pumps and places pumps

out of reach for many patients whom cannot afford such out of pocket expenses.

We are engaged in the

diabetes treatment sector of the healthcare marketplace, which is intensely competitive.

There are current products that are quite effective

at addressing the effects of diabetes, and we expect that new developments by other companies and academic institutions in the areas

of diabetes treatment will continue.

If approved for marketing by the FDA, depending on the approved clinical indication, our product

will be competing with existing and future products related to treatments for diabetes.

Our competitors may:

product candidates and market products that increase the levels of safety or efficacy that

our product candidates will need to show in order to obtain regulatory approval;

product candidates and market products that are less expensive or more effective than ours;

· commercialize

competing products before we can launch any products we are working to develop;

or obtain proprietary rights that could prevent us from commercializing our products;

therapies or market medical products that render our potential product candidates obsolete.

compete against large medical device companies, such as Medtronic, Inc., Tandem Diabetes Care, Inc.

and Insulet Corporation and

smaller companies that are collaborating with larger medical device companies, new companies, academic institutions, government

agencies and other public and private research organizations.

These competitors, in nearly all cases, produce similar products

relative to the treatment of diabetes that have substantially greater financial resources than we do.

Our competitors also have

significantly greater experience in:

· developing medical device

and other product candidates;

· undertaking testing and clinical

· building relationships with

key customers and opinion-leading physicians;

· obtaining and maintaining

FDA and other regulatory approvals;

· formulating and manufacturing

medical devices;

· launching, marketing and

selling medical devices;

· providing management oversight

for all of the above-listed operational functions.

If we fail to

achieve superiority over other existing or newly developed products, we may be unable to obtain regulatory approval.

If our competitors’

market medical devices that are less expensive, safer or more effective than our insulin pump, or that gain or maintain greater

market acceptance, we may not be able to compete effectively.

See “Our Business –

Competition”

to rely on third-party manufacturers and will be dependent on their quality and effectiveness.

pump requires precise, high-quality manufacturing.

The failure to achieve and maintain high manufacturing standards, including

failure to detect or control anticipated or unanticipated manufacturing errors or the frequent occurrence of such errors, could

result in patient injury or death, discontinuance or delay of ongoing or planned clinical studies, delays or failures in product

testing or delivery, cost overruns, product recalls or withdrawals and other problems that could seriously hurt our business.

Contract medical device manufacturers often encounter difficulties involving production yields, quality control and quality assurance

and shortages of qualified personnel.

These manufacturers are subject to stringent regulatory requirements, including the FDA’s

current good-manufacturing-practices regulations.

If our contract manufacturers fail to maintain ongoing compliance at any time,

the production of our product could be interrupted, resulting in delays or discontinuance of our clinical studies, additional

costs and loss of potential revenues.

not be able to successfully scale-up manufacturing of our product in sufficient quality and quantity, which would delay or prevent

us from developing our product and commercializing our product.

conduct larger-scale or late-stage clinical studies and for commercialization of our insulin pump, if 510(k) clearance is granted,

we will need to manufacture it in larger quantities.

We may not be able to successfully increase the manufacturing capacity for

our product in a timely or cost-effective manner, or at all.

and Insulet Corporation and smaller

companies that are collaborating with larger medical device companies, new companies, academic institutions, government agencies and

other public and private research organizations.

These competitors, in nearly all cases, produce similar products relative to the treatment

of diabetes that have substantially greater financial resources than we do.

Our competitors also have significantly greater experience

medical device and other product candidates;

· undertaking

testing and clinical studies;

relationships with key customers and opinion-leading physicians;

and maintaining FDA and other regulatory approvals;

· formulating

and manufacturing medical devices;

marketing and selling medical devices;

management oversight for all of the above-listed operational functions.

If we fail to achieve

superiority over other existing or newly developed products, we may be unable to obtain regulatory approval.

If our competitors’

market medical devices that are less expensive, safer or more effective than our insulin pump, or that gain or maintain greater market

acceptance, we may not be able to compete effectively.

See “Our Business – Competition” below.

expect to rely on third-party manufacturers and will be dependent on their quality and effectiveness.

Our insulin pump requires

precise, high-quality manufacturing.

The failure to achieve and maintain high manufacturing standards, including failure to detect or

control anticipated or unanticipated manufacturing errors or the frequent occurrence of such errors, could result in patient injury or

death, discontinuance or delay of ongoing or planned clinical studies, delays or failures in product testing or delivery, cost overruns,

product recalls or withdrawals and other problems that could seriously hurt our business.

Contract medical device manufacturers often

encounter difficulties involving production yields, quality control and quality assurance and shortages of qualified personnel.

manufacturers are subject to stringent regulatory requirements, including the FDA’s current good-manufacturing-practices regulations.

If our contract manufacturers fail to maintain ongoing compliance at any time, the production of our product could be interrupted, resulting

in delays or discontinuance of our clinical studies, additional costs and loss of potential revenues.

may not be able to successfully scale-up manufacturing of our product candidate in sufficient quality and quantity, which would delay

or prevent us from developing our product candidate and commercializing our product candidate.

In order to conduct

larger-scale or late-stage clinical studies and for commercialization of our insulin pump, if 510(k) clearance is granted, we will need

to manufacture it in larger quantities.

We may not be able to successfully increase the manufacturing capacity for our product in a timely

or cost-effective manner, or at all.

In addition, quality issues may arise during scale-up activities.

If we are unable to successfully scale up the manufacture of our product in sufficient quality and quantity, the development and

testing of our product and regulatory approval or commercial launch may be delayed, which could significantly harm our business.

be subject to potential product liability and other claims that could materially impact our business and financial condition.

The development

and sale of our insulin pump exposes us to the risk of significant damages from product liability and other claims, and the use

of our product in clinical studies may result in adverse effects.

We cannot predict all the possible harms or adverse effects

that may result.

If we are unable to successfully

scale up the manufacture of our product in sufficient quality and quantity, the development and testing of our product candidate and

regulatory approval or commercial launch may be delayed, which could significantly harm our business.

may be subject to potential product liability and other claims that could materially impact our business and financial condition.

The development and

sale of our insulin pump exposes us to the risk of significant damages from product liability and other claims, and the use of our product

candidate in clinical studies may result in adverse effects.

We cannot predict all the possible harms or adverse effects that may result.

We maintain a modest amount of product liability insurance to provide some protection from claims.

we may not have sufficient resources to pay for any liabilities resulting from a personal injury or other claim, even if it is

partially covered by insurance.

In addition to the possibility of direct claims, we may be required to indemnify third parties

against damages and other liabilities arising out of our development, commercialization and other business activities, which would

increase our liability exposure.

If third parties that have agreed to indemnify us fail to do so, we may be held responsible for

those damages and other liabilities as well.

Nonetheless, we may not have sufficient

resources to pay for any liabilities resulting from a personal injury or other claim, even if it is partially covered by insurance.

addition to the possibility of direct claims, we may be required to indemnify third parties against damages and other liabilities arising

out of our development, commercialization and other business activities, which would increase our liability exposure.

If third parties

that have agreed to indemnify us fail to do so, we may be held responsible for those damages and other liabilities as well.

regulatory, or medical cost reimbursement changes may adversely impact our business.

New laws, regulations

and judicial decisions, or new interpretations of existing laws, regulations and decisions, that relate to the health care system

and in other jurisdictions may change the nature of and regulatory requirements relating to innovations in medical

devices, testing and regulatory approvals, limit or eliminate payments for medical procedures and treatments, or subject the pricing

of medical devices to government control.

and judicial decisions, or new interpretations of existing laws, regulations and decisions, that relate to the health care system in

and in other jurisdictions may change the nature of and regulatory requirements relating to innovations in medical devices,

testing and regulatory approvals, limit or eliminate payments for medical procedures and treatments, or subject the pricing of medical

devices to government control.

In addition, third-party payors in the U.S.

are increasingly attempting to contain health

care costs by limiting both coverage and the level of reimbursement of new products.

Consequently, significant uncertainty exists

as to the reimbursement status of newly approved health care products.

are increasingly attempting to contain health care costs by

limiting both coverage and the level of reimbursement of new products.

Consequently, significant uncertainty exists as to the reimbursement

status of newly approved health care products.

Significant changes in the health care system in the U.S.

or elsewhere, including changes resulting from adverse trends in third-party reimbursement programs, could have a material adverse

effect on our projected future operating results and our ability to raise capital, commercialize products, and remain in business.

subject to extensive regulation by the U.S.

Food and Drug Administration, which could restrict the sales and marketing of our

insulin pump and could cause us to incur significant costs.

pump is subject to extensive regulation by the FDA.

These regulations relate to manufacturing, labeling, sale, promotion, distribution

and shipping.

Before a new medical device, or a new use of or claim for an existing product, can be marketed in the United States,

it must first receive either 510(k) clearance or PMA from the FDA, unless an exemption applies.

We may be required to obtain a

new 510(k) clearance for significant post-market modifications to our insulin pump.

Each of these processes can be expensive and

lengthy, and entail significant user fees, unless exempt.

Medical devices

may be marketed only for the indications for which they are approved or cleared.

Further, 510(k) clearances can be revoked if

safety or effectiveness problems develop.

regulatory requirements to which we are subject may change in the future in a way that adversely affects us.

If we fail to comply

with present or future regulatory requirements that are applicable to us, we may be subject to enforcement action by the FDA,

which may include any of the following sanctions:

· untitled letters, warning

letters, fines, injunctions, consent decrees and civil penalties;

· customer notification, or

orders for repair, replacement or refunds

· voluntary or mandatory recall

or seizure of our current or future products;

· administrative detention

by the FDA of medical devices believed to be adulterated or misbranded;

· imposing operating restrictions,

suspension or shutdown of production;

· refusing our requests for

510(k) clearance or pre-market approval of any new products, new intended uses or modifications to our insulin pump;

· rescinding 510(k) clearance

that has already been granted;

· criminal prosecution.

The occurrence

of any of these events would have a material adverse effect on our business, financial condition and results of operations and

could result in shareholders losing their entire investment.

depends substantially upon our ability to obtain and maintain intellectual property protection relating to our product and research

or elsewhere, including changes

resulting from adverse trends in third-party reimbursement programs, could have a material adverse effect on our projected future operating

results and our ability to raise capital, commercialize products, and remain in business.

are subject to extensive regulation by the FDA, which could restrict the sales and marketing of our insulin pump and could cause us to

incur significant costs.

Our insulin pump is

subject to extensive regulation by the FDA.

These regulations relate to manufacturing, labeling, sale, promotion, distribution and shipping.

Before a new medical device, or a new intended use of a legally marketed device, can be marketed in the United States, it must be cleared

or approved by FDA through the applicable premarket review process (510(k), PMA, or de

novo classification), unless an exemption applies.

If we receive 510(k) clearance for our insulin pump, we may be required

to obtain a new 510(k) clearance for significant post-market modifications to the pump.

Each premarket submission and review process

can be expensive and lengthy, and entail significant user fees, unless exempt.

Medical devices may

be marketed only for the indications for which they are approved or cleared.

Further, 510(k) clearances can be revoked if safety or effectiveness

problems develop once the device is on the market.

The current regulatory

requirements to which we are subject may change in the future in a way that adversely affects us.

If we fail to comply with present or

future regulatory requirements that are applicable to us, we may be subject to enforcement action by the FDA, which may include any of

the following sanctions:

letters, warning letters, fines, injunctions, consent decrees and civil penalties;

notification, or orders for repair, replacement or refunds

or mandatory recall or seizure of our current or future products;

· administrative

detention by the FDA of medical devices believed to be adulterated or misbranded;

operating restrictions, suspension or shutdown of production;

our requests for 510(k) clearance, PMA, or de novo classification any new products,

new intended uses or modifications to our insulin pump;

510(k) clearance that has already been granted;

The occurrence of any

of these events would have a material adverse effect on our business, financial condition and results of operations and could result

in shareholders losing their entire investment.

our system does not presently require clinical trials to apply to the FDA for clearance and even if a clinical trial is completed, the

results of our clinical testing may not demonstrate the safety and efficacy of the device or may be equivocal or otherwise not be sufficient

for us to obtain approval of our product candidate.

Clinical trials are

almost always required to support a PMA application and may also be required to support 510(k) submissions although at this time ours

does not require a PMA.

If the device presents a “significant risk” to human health as defined by the FDA, the FDA requires

the study sponsor to submit an investigational device exemption (“IDE”) application and obtain IDE approval prior to commencing

human clinical trials.

The IDE must be supported by appropriate data, such as animal and laboratory testing results, showing that it

is safe to test the device in humans and that the testing protocol is scientifically sound.

An IDE will automatically become effective

30 days after receipt by the FDA, unless the FDA denies the application or notifies the sponsor that the investigation is on hold and

may not begin until the sponsor provides supplemental information about the investigation that satisfies the agency’s concerns.

The FDA may also notify the sponsor that the study is approved as proposed.

If the FDA determines that there are deficiencies or other

concerns with an IDE that require modification of the study, the FDA may permit a clinical trial to proceed under a conditional approval.

Furthermore, the agency may withdraw approval of an IDE under certain circumstances.

Clinical trials for a significant risk device may

begin once an IDE is approved by the FDA and the appropriate Institutional Review Board (“IRB”) at each clinical trial site.

If the product is deemed a “non-significant risk” device, IDE approval from the FDA would not be required, but the clinical

trial would need to meet other requirements including IRB approval.

Our clinical trials must be conducted in accordance with FDA regulations

and federal and state regulations concerning human subject protection, including informed consent and healthcare privacy.

trial may be suspended by the FDA or at a specific site by the relevant IRB at any time for various reasons, including a determination

that the risks to the trial participants outweigh the benefits of participation in the clinical trial.

Even if a clinical trial is completed,

the results of our clinical testing may not demonstrate the safety and efficacy of the device or may be equivocal or otherwise not be

sufficient for us to obtain approval of our product.

success depends substantially upon our ability to obtain and maintain intellectual property protection relating to our product and research

technologies.

We have applied

Patent and Trademark Office for patents on our proprietary fluid movement technology and the configuration of our

insulin pump.

There is no assurance that these patents will be issued, and no assurance that they will prevent other companies

from competing with us.

We will continue to attempt to patent our innovations as appropriate to help ensure a sustainable competitive

Due to evolving

legal standards relating to the patentability, validity and enforceability of patents covering health care product inventions,

our ability to enforce our existing patents and to obtain and enforce patents that may issue from any pending or future patent

applications is uncertain and involves complex legal, scientific and factual questions.

To date, no consistent policy has emerged

regarding the breadth of claims allowed in medical device patents.

Thus, we cannot be sure that any patents will issue from any

pending or future patent applications owned by or licensed to us.

Even if patents do issue, we cannot be sure that the claims

of these patents will be held valid or enforceable by a court of law, will provide us with any significant protection against

competing products, or will afford us a commercial advantage over competitive products.

If, at some point in the future, one or

more products resulting from our product candidates is approved for sale by the FDA and we do not have adequate intellectual property

protection for those products, competitors could duplicate them for approval and sale in the United States without repeating the

extensive testing required of us to obtain FDA approval.

are sued for infringing on third-party intellectual property rights, it will be costly and time-consuming, and an unfavorable

outcome would have a significant adverse effect on our business.

to commercialize our product depends on our ability to use, manufacture and sell our product without infringing the patents or

other proprietary rights of third parties.

We have applied to

Patent and Trademark Office for patents on our proprietary fluid movement technology and the configuration of our insulin pump.

There is no assurance that these patents will be issued, and no assurance that they will prevent other companies from competing with

We will continue to attempt to patent our innovations as appropriate to help ensure a sustainable competitive advantage.

Due to evolving legal

standards relating to the patentability, validity and enforceability of patents covering health care product inventions, our ability

to enforce our existing patents and to obtain and enforce patents that may issue from any pending or future patent applications is uncertain

and involves complex legal, scientific and factual questions.

To date, no consistent policy has emerged regarding the breadth of claims

allowed in medical device patents.

Thus, we cannot be sure that any patents will issue from any pending or future patent applications

owned by or licensed to us.

Even if patents do issue, we cannot be sure that the claims of these patents will be held valid or enforceable

by a court of law, will provide us with any significant protection against competing products, or will afford us a commercial advantage

over competitive products.

If, at some point in the future, one or more products resulting from our product candidates is approved for

sale by the FDA and we do not have adequate intellectual property protection for those products, competitors could duplicate them for

approval and sale in the United States without repeating the extensive testing required of us to obtain FDA approval.

we are sued for infringing on third-party intellectual property rights, it will be costly and time-consuming, and an unfavorable outcome

would have a significant adverse effect on our business.

Our ability to commercialize

our product candidate depends on our ability to use, manufacture and sell our product candidate without infringing the patents or other

proprietary rights of third parties.

Numerous U.S.

and foreign issued patents and pending patent applications owned by third

parties exist in the diabetes medical device area.

There may be existing patents, unknown to us, on which our activities with

our insulin pump candidate could infringe.

If a third party

claims that our actions infringe on its patents or other proprietary rights, we could face a number of issues that could seriously

harm our competitive position, including, but not limited to:

· infringement and other intellectual

property claims that, even if meritless, can be costly and time-consuming, delay the regulatory approval process and divert management’s

attention from our core business operations;

· substantial damages for infringement,

including consequential damages for lost of profits or market share, if a court determines that our products or technologies infringe

on a third party’s patent or other proprietary rights;

· a court prohibiting us from

selling or licensing our products or technologies unless the holder licenses the patent or other proprietary rights to us, which

it is not required to do;

· even if a license is available

from a holder, we may have to pay substantial royalties or grant cross-licenses to our patents or other proprietary rights.

If any of these

events occur, it could significantly harm our operations and financial condition and negatively affect our stock price.

reform laws could adversely affect our product and financial condition.

During the past

several years, the U.S.

healthcare industry has been subject to an increase in governmental regulation at both the federal and

state levels.

Efforts to control healthcare costs, including limiting access to care, alternative delivery models and changes

in the methods used to determine reimbursement scenarios and rates, are ongoing at the federal and state government levels.

are provisions of law that provide for the creation of a new public-private Patient-Centered Outcomes Research Institute tasked

with identifying comparative effectiveness research priorities.

For example, establishing a research project agenda and contracting

with entities to conduct the research in accordance with the agenda.

Research findings published by this institute are publicly

disseminated.

It is difficult at this time to determine whether a comparative effectiveness analysis impacting our business will

be done, and assuming one is, what impact that analysis will have on our insulin pump or our future financial results.

the Affordable Care Act, or the ACA, and related healthcare reform laws, regulations and initiatives have significantly increased

regulation of managed care plans and decreased reimbursement to Medicare managed care.

Some of these initiatives purport to, among

other things, require that health plan members have greater access to drugs not included on a plan’s formulary.

to alleviate budget shortfalls, states have reduced or frozen payments to Medicaid managed care plans.

We cannot accurately predict

the complete impact of these healthcare reform initiatives, but they could lead to a decreased demand for medical devices such

as our insulin pump and other outcomes that could adversely.

provisions of the ACA have yet to be fully implemented, and certain provisions have been subject to judicial and Congressional

In addition, there have been efforts by the Trump administration to repeal or replace certain aspects of the ACA and

to alter the implementation of the ACA and related laws.

For example, the Tax Cuts and Jobs Act enacted on December 22, 2017,

eliminated the shared responsibility payment for individuals who fail to maintain minimum essential coverage under section 5000A

of the Internal Revenue Code of 1986, commonly referred to as the “individual mandate,”

effective January 1, 2019.

Further, the Bipartisan Budget Act of 2018 among other things, amended the Medicare statute, effective January 1, 2019, to reduce

the coverage gap in most Medicare drug plans, commonly known as the “donut hole,”

by raising the manufacturer discount

under the Medicare Part D coverage gap discount program to 70%.

It is unclear how the ACA and its implementation, as well as efforts

to repeal or replace, or invalidate, the ACA, or portions thereof, will affect our insulin pump or our business.

Additional legislative

changes, regulatory changes, and judicial challenges related to the ACA remain possible.

It is possible that the ACA, as currently

enacted or as it may be amended in the future, and other healthcare reform measures that may be adopted in the future, could have

an adverse effect on our industry generally and on our ability to commercialize our insulin pump and achieve profitability.

are able to obtain all regulatory approvals and have completed all other steps needed to be taken to commercialize our insulin

pump, if we or any contract manufacturers we select fails to comply with the FDA’s quality system regulations, the manufacturing

and distribution of our product could be interrupted, and our product sales and operating results could suffer.

A material step

in the process of the commercialization of our product will involve selecting a manufacturer or manufacturers for our pump.

and any future contract manufacturers of our insulin pump will be required to comply with the FDA’s quality system regulations,

and foreign issued patents and pending patent applications owned by third parties

exist in the diabetes medical device area.

There may be existing patents, unknown to us, on which our activities with our insulin pump

candidate could infringe.

If a third-party claims

that our actions infringe on its patents or other proprietary rights, we could face a number of issues that could seriously harm our

competitive position, including, but not limited to:

· infringement

and other intellectual property claims that, even if meritless, can be costly and time-consuming,

delay the regulatory approval process and divert management’s attention from our core

business operations;

· substantial

damages for infringement, including consequential damages for lost of profits or market share,

if a court determines that our products or technologies infringe on a third party’s

patent or other proprietary rights;

court prohibiting us from selling or licensing our products or technologies unless the holder

licenses the patent or other proprietary rights to us, which it is not required to do;

if a license is available from a holder, we may have to pay substantial royalties or grant

cross-licenses to our patents or other proprietary rights.

If any of these events

occur, it could significantly harm our operations and financial condition and negatively affect our stock price.

we are unable to protect the confidentiality of our proprietary information, the value of our technology and products could be adversely

In addition to patented

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

We generally seek to protect this information by confidentiality,

non-disclosure and assignment of invention agreements with our officers, employees, contractors and other service providers and with

parties with which we do business.

These agreements may be breached, which breach may result in the misappropriation of such information,

and we may not have adequate remedies for any such breach.

We cannot be certain that the steps we have taken will prevent unauthorized

use or reverse engineering of our technology.

Moreover, our trade

secrets may be disclosed to or otherwise become known or be independently developed by competitors.

To the extent that our officers,

employees, contractors, other service providers, or other third parties with whom we do business use intellectual property owned by others

in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

If, for any of the above reasons,

our intellectual property is disclosed or misappropriated, it would harm our ability to protect our rights and have a material adverse

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

property rights do not necessarily address all potential threats to our competitive advantage.

The degree of future

protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not

adequately protect our business, or permit us to gain and maintain a competitive advantage.

The following examples are illustrative:

may be able to make devices that are similar to our insulin pump but that are not covered

by the claims of the patents that we own;

or any collaborators might not have been the first to make the inventions covered by the

issued patents or pending patent applications that we own;

might not have been the first to file patent applications covering certain of our inventions;

may independently develop similar or alternative technologies or duplicate any of our technologies

without infringing our intellectual property rights;

is possible that our pending patent applications will not lead to issued patents;

patents that we own may not provide us with any competitive advantages, or may be held invalid

or unenforceable as a result of legal challenges;

competitors might conduct research and development activities in the U.S.

and other countries

that provide a safe harbor from patent infringement claims for certain research and development

activities, as well as 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;

may not develop additional proprietary technologies that are patentable.

reform laws could adversely affect our product candidate and financial condition.

In the United States,

there have been, and continue to be, a number of legislative initiatives to contain healthcare costs.

In March 2010, the Patient Protection

and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (ACA), was enacted in the United

States, which made a number of substantial changes in the way healthcare is financed by both governmental and private insurers.

other ways in which it may affect our business, the ACA implemented payment system reforms, including a national pilot program on payment

bundling to encourage hospitals, physicians, and other providers to improve the coordination, quality, and efficiency of certain healthcare

services through bundled payment models and expanded the eligibility criteria for Medicaid programs.

Since its enactment,

there have been judicial, executive, and Congressional challenges to certain aspects of the ACA.

On June 17, 2021, the U.S.

Supreme Court

dismissed the most recent judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA.

Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021

through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructed

certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among

others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary

barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

It is unclear how other healthcare reform measures

of the Biden administration or other efforts, if any, to challenge, repeal, or replace the ACA will impact the ACA or our business.

In addition, other

legislative changes have been proposed and adopted since the ACA was enacted.

On August 2, 2011, the Budget Control Act of 2011 was signed

into law, which, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due

to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension

implemented under various COVID-19 relief legislation from May 1, 2020 through the end of 2021, unless additional Congressional action

On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced

Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover

overpayments to providers from three to five years.

Further, the Bipartisan

Budget Act of 2018 among other things, amended the Medicare statute, effective January 1, 2019, to reduce the coverage gap in most Medicare

drug plans, commonly known as the “donut hole,” by raising the manufacturer discount under the Medicare Part D coverage gap

discount program to 70%.

It is unclear how the ACA and its implementation, as well as efforts to repeal or replace, or invalidate, the

ACA, or portions thereof, will affect our insulin pump or our business.

Additional legislative changes, regulatory changes, and judicial

challenges related to the ACA remain possible.

It is possible that the ACA, as currently enacted or as it may be amended in the future,

and other healthcare reform measures that may be adopted in the future, could have an adverse effect on our industry generally and on

our ability to commercialize our insulin pump and achieve profitability.

if we are able to obtain all regulatory approvals and have completed all other steps needed to be taken to commercialize our insulin

pump, if we or any contract manufacturers we select fails to comply with the FDA’s quality system regulations, the manufacturing

and distribution of our product candidate could be interrupted, and our product sales and operating results could suffer.

A material step in

the process of the commercialization of our product candidate will involve selecting a manufacturer or manufacturers for our pump.

and any future contract manufacturers of our insulin pump will be required to comply with the FDA’s quality system regulations,

which impose a complex regulatory framework that covers the procedures and documentation of the design, testing, production, control,

quality assurance, labeling, packaging, sterilization, storage and shipping of medical devices.

The FDA enforces its quality system

regulations through periodic unannounced inspections.

We cannot assure you that, in the future, any manufacturing facilities owned

by us or any contract manufacturer will pass any quality system inspection.

In the event that our or any contract manufacturer’s

facilities fails a quality system inspection, the manufacturing or distribution of our product could be interrupted and our operations

Failure to take adequate and timely corrective action in response to an adverse quality system inspection could force

a suspension or shutdown of any packaging and labeling operations or then manufacturing operations of any contract manufacturers,

or a recall of our insulin pump.

If any of these events were to occur, we at such time would not be able to provide our customers

with the quantity of insulin pumps that they require on a timely basis, our reputation could be harmed and we could lose any customers

we then have, any or all of which could have a material adverse effect on our business, financial condition and results of operations.

undertake infringement or other legal proceedings against third parties, causing us to spend substantial resources on litigation

The FDA enforces its quality system regulations

through periodic unannounced inspections.

We cannot assure you that, in the future, any manufacturing facilities owned by us or any contract

manufacturer will pass any quality system inspection.

In the event that our or any contract manufacturer’s facilities fails a quality

system inspection, the manufacturing or distribution of our product candidate could be interrupted and our operations disrupted.

to take adequate and timely corrective action in response to an adverse quality system inspection could force a suspension or shutdown

of any packaging and labeling operations or then manufacturing operations of any contract manufacturers, or a recall of our insulin pump.

If any of these events were to occur, we at such time would not be able to provide our customers with the quantity of insulin pumps that

they require on a timely basis, our reputation could be harmed and we could lose any customers we then have, any or all of which could

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

may undertake infringement or other legal proceedings against third parties, causing us to spend substantial resources on litigation

and exposing our own intellectual property portfolio to challenge.

to believe that third parties are infringing on our patents or other proprietary rights.

To prevent infringement or unauthorized

use, we may need to file infringement and/or misappropriation suits, which are very expensive and time-consuming, could result

in meritorious counterclaims against us and would distract management’s attention.

Also, in an infringement or misappropriation

proceeding, a court may decide that one or more of our patents is invalid, unenforceable, or both, in which case third parties

may be able to use our technology without paying license fees or royalties.

Even if the validity of our patents is upheld, a court

may refuse to stop the other party from using the technology at issue on the grounds that the other party’s activities are

not covered by our patents.

See “Our Business –

Patents,”

become involved in disputes with our present or future contract partners over intellectual property ownership or other matters,

which would have a significant effect on our business.

We may come to believe

that third parties are infringing on our patents or other proprietary rights.

To prevent infringement or unauthorized use, we may need

to file infringement and/or misappropriation suits, which are very expensive and time-consuming, could result in meritorious counterclaims

against us and would distract management’s attention.

Also, in an infringement or misappropriation proceeding, a court may decide

that one or more of our patents is invalid, unenforceable, or both, in which case third parties may be able to use our technology without

paying license fees or royalties.

Even if the validity of our patents is upheld, a court may refuse to stop the other party from using

the technology at issue on the grounds that the other party’s activities are not covered by our patents.

See “Our Business

– Patents,” below.

may become involved in disputes with our present or future contract partners over intellectual property ownership or other matters, which

would have a significant effect on our business.

Inventions discovered

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and us, in some cases, and the exclusive property of one of us, in other cases.

Under some circumstances, it may be difficult

to determine who owns a particular invention or whether it is jointly owned, and disputes could arise regarding ownership or use

of those inventions or jointly developed improvements thereto.

Other disputes may also arise relating to the performance or alleged

breach of our agreements with third parties.

Any disputes could be costly and time-consuming, and an unfavorable outcome could

have a significant adverse effect on our business.

See “Our Business –Use of Proprietary Technology,”

Under some circumstances, it may be difficult to determine

who owns a particular invention or whether it is jointly owned, and disputes could arise regarding ownership or use of those inventions

or jointly developed improvements thereto.

Other disputes may also arise relating to the performance or alleged breach of our agreements

with third parties.

Any disputes could be costly and time-consuming, and an unfavorable outcome could have a significant adverse effect

on our business.

our insulin pump receives FDA clearance or approval, our insulin pump will still be subject to recalls, which would harm our reputation,

business operations and financial results.

Even assuming

we obtain FDA approval or clearance with regard to our insulin pump, the FDA has the authority to require the recall of our pump

if we commence manufacturing of our insulin pump and we or any contract manufacturers we retain fail to comply with relevant regulations

pertaining to manufacturing practices, labeling, advertising or promotional activities, or if new information is obtained concerning

the safety or efficacy of the product.

A government-mandated recall could occur if the FDA finds that there is a reasonable probability

that our product would cause serious, adverse health consequences or death.

A voluntary recall by us could occur as a result of

manufacturing defects, labeling deficiencies, packaging defects or other failures to comply with applicable regulations.

would divert management’s attention and financial resources and harm our reputation with customers.

A recall involving our

insulin pump would be particularly harmful to our business, financial condition and results of operations because it is currently

our only product.

Any disruption

and/or instability in economic conditions and capital markets could adversely affect our ability to access the capital markets,

Even assuming we obtain

FDA approval or clearance with regard to our insulin pump, the FDA has the authority to require the recall of our pump if we commence

manufacturing of our insulin pump and we or any contract manufacturers we retain fail to comply with relevant regulations pertaining

to manufacturing practices, labeling, advertising or promotional activities, or if new information is obtained concerning the safety

or efficacy of the device.

A government-mandated recall could occur if the FDA finds that there is a reasonable probability that our

device would cause serious, adverse health consequences or death.

A voluntary recall by us could occur as a result of manufacturing defects,

labeling deficiencies, packaging defects or other failures to comply with applicable regulations.

Any recall would divert management’s

attention and financial resources and harm our reputation with customers.

A recall involving our insulin pump would be particularly harmful

to our business, financial condition and results of operations because it is currently our only product.

disruption and/or instability in economic conditions and capital markets could adversely affect our ability to access the capital markets,

and thus adversely affect our business and liquidity.

Negative economic

conditions and issues with regard to the financial markets, could have a negative impact on our ability to access the capital

markets, and thus have a negative impact on our then operations and liquidity.

A general shortage of liquidity and credit combined

with the substantial losses in worldwide equity markets could lead to an extended worldwide recession in the future.

If such occurred,

we would face significant challenges if conditions in the capital markets did not improve.

Our ability to access the capital markets

under such circumstances could be severely restricted at a time when we need to access such markets, which could have a negative

impact on our business plans.

Even if we are able to raise capital under such circumstances, it may not be at a price or on terms

that are favorable to us.

We cannot predict the occurrence of future disruptions or how long such negative conditions might continue.

Negative economic conditions

and issues with regard to the financial markets, could have a negative impact on our ability to access the capital markets, and thus

have a negative impact on our then operations and liquidity.

A general shortage of liquidity and credit combined with the substantial

losses in worldwide equity markets could lead to an extended worldwide recession in the future.

If such occurred, we would face significant

challenges if conditions in the capital markets did not improve.

Our ability to access the capital markets under such circumstances could

be severely restricted at a time when we need to access such markets, which could have a negative impact on our business plans.

if we are able to raise capital under such circumstances, it may not be at a price or on terms that are favorable to us.

We cannot predict

the occurrence of future disruptions or how long such negative conditions might continue.

our current insulin pump prototype is still in the development stage, it does not have reimbursement and is not approved for insurance

If in the future we are approved for and are otherwise able to commercialize our insulin pump, but are unable to obtain

adequate reimbursement or insurance coverage for such product from third-party payors, we will be unable to generate significant

current insulin pump prototype is still in the development stage, it does not have reimbursement and is not approved for insurance

If in the future we are approved for and are otherwise able to commercialize our insulin pump, but are unable to obtain adequate

reimbursement or insurance coverage for such product from third-party payors, we will be unable to generate significant revenue.

Because our current

insulin pump prototype is still in the development stage, it does not have reimbursement and is not approved for insurance coverage.

The future availability of insurance coverage and reimbursement for newly approved medical devices is highly uncertain.

In the United States, patients using insulin pumps are generally reimbursed for all or part of the product cost by Medicare or

other third-party payors.

Any future commercial success of our insulin pump will be substantially dependent on whether third-party

coverage and reimbursement is available for future customers.

Medicare, Medicaid, health maintenance organizations and other third-party

payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of new

medical devices, and, as a result, they may not cover or provide adequate reimbursement for our insulin pump, assuming we are

able to fully develop and obtain all regulatory approval to market it in the United States.

Accordingly, unless government and

other third- party payors provide coverage and reimbursement for our insulin pump, patients may not use it, which would cause

investors to lose their entire investment.

subject to the oversight of the SEC and other regulatory agencies.

Investigations by those agencies could divert management’s

In the United

States, patients using insulin pumps are generally reimbursed for all or part of the product cost by Medicare or other third-party payors.

Any future commercial success of our insulin pump will be substantially dependent on whether third-party coverage and reimbursement is

available for future customers.

Medicare, Medicaid, health maintenance organizations and other third-party payors are increasingly attempting

to contain healthcare costs by limiting both coverage and the level of reimbursement of new medical devices, and, as a result, they may

not cover or provide adequate reimbursement for our insulin pump, assuming we are able to fully develop and obtain all regulatory approval

to market it in the United States.

In addition, in certain countries, no uniform policy of coverage and reimbursement for medical device

products and services exists among third-party payors.

Therefore, coverage and reimbursement for medical device products and services

can differ significantly from payor to payor.

In addition, payors continually review new technologies for possible coverage and can,

without notice, deny coverage for these new products and procedures.

As a result, the coverage determination process is often a time-consuming

and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately,

with no assurance that coverage and adequate reimbursement will be obtained, or maintained if obtained.

Reimbursement systems in international

markets vary significantly by country and by region within some countries, and reimbursement approvals must be obtained on a country-by-country

In many international markets, a product must be approved for reimbursement before it can be approved for sale in that country.

Further, many international markets have government-managed healthcare systems that control reimbursement for new devices and procedures.

Accordingly, unless government and other third-party payors provide coverage and reimbursement for our insulin pump, patients may not

use it, which would cause investors to lose their entire investment.

are subject to the oversight of the SEC and other regulatory agencies.

Investigations by those agencies could divert management’s

focus and could have a material adverse effect on our reputation and financial condition.

We are subject

to the regulation and oversight of the SEC and state regulatory agencies, in addition to the FDA.

As a result, we may face legal

or administrative proceedings by these agencies.

We are unable to predict the effect of any investigations on our business, financial

condition or reputation.

In addition, publicity surrounding any investigation, even if ultimately resolved in our favor, could

have a material adverse effect on our business.

a “smaller reporting company”

and, as a result of the reduced disclosure and governance requirements applicable to

smaller reporting companies, our common stock may be less attractive to investors.

We are a “smaller

reporting company,”

and are subject to lesser disclosure obligations in our SEC filings compared to other issuers.

We are subject to the

regulation and oversight of the SEC and state regulatory agencies, in addition to the FDA.

As a result, we may face legal or administrative

proceedings by these agencies.

We are unable to predict the effect of any investigations on our business, financial condition or reputation.

In addition, publicity surrounding any investigation, even if ultimately resolved in our favor, could have a material adverse effect

on our business.

are a “smaller reporting company” and, as a result of the reduced disclosure and governance requirements applicable to smaller

reporting companies, our Common Stock may be less attractive to investors.

We are a “smaller

reporting company,” and are subject to lesser disclosure obligations in our SEC filings compared to other issuers.

Specifically,

“smaller reporting companies”

are able to provide simplified executive compensation disclosures in their filings,

are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting

firms provide an attestation report on the effectiveness of internal control over financial reporting and have certain other decreased

disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited

financial statements in annual reports.

Decreased disclosures in our SEC filings due to our status as a “smaller reporting

company”

may make it harder for investors to analyze our operating results and financial prospects.

of common stock are quoted on the OTCQB Venture Market, and the trading market for our common stock is limited.

Our shares of

common stock are traded on the OTCQB Venture Market.

There is currently a limited trading market for our common stock, and, prior

to 2021, there had been no active trading market for our common stock.

While we believe an active trading market for our common

stock is developing, there can be no assurance that an active trading market for our common stock will develop, or, even if one

develops, it will be sustained.

not expect any cash dividends to be paid on our shares of common stock for the foreseeable future.

We have never

declared or paid a cash dividend and we do not anticipate declaring or paying dividends on our common stock for the foreseeable

We expect to use future financing proceeds and earnings, if any, to fund operating expenses.

Consequently, shareholders’

only opportunity to achieve a return on their investment is if the price of our stock appreciates and they sell their shares at

We cannot assure shareholders of a positive return on their investment when they sell their shares or that shareholders

will not lose the entire amount of their investment.

beneficial ownership of our common stock continues to be highly concentrated, it may prevent our shareholders from influencing

significant corporate decisions.

31, 2021, our executive officers, directors and certain persons who may be deemed their affiliates beneficially owned substantially

in excess of 50.1% of our issued and outstanding common stock.

As a result, such persons may exercise substantial influence over

the outcome of corporate actions requiring shareholder approval including, without limitation, the election of directors, certain

mergers, consolidations and sales of all or substantially all of our assets or any other significant corporate transactions.

persons may also vote against a change of control, even if such a change of control would benefit our other shareholders.

of our common stock by shareholders could encourage short sales by third parties, which could contribute to the further decline

of our stock price.

The significant

downward pressure on the price of our common stock that would be caused by the sale of material amounts of our common stock could

encourage short sales by third parties.

“smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings, are exempt

from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide

an attestation report on the effectiveness of internal control over financial reporting and have certain other decreased disclosure obligations

in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual

Decreased disclosures in our SEC filings due to our status as a “smaller reporting company” may make it harder for

investors to analyze our operating results and financial prospects.

do not expect any cash dividends to be paid on our shares of Common Stock for the foreseeable future.

We have never declared

or paid a cash dividend and we do not anticipate declaring or paying dividends on our Common Stock for the foreseeable future.

to use future financing proceeds and earnings, if any, to fund operating expenses.

Consequently, shareholders’ only opportunity

to achieve a return on their investment is if the price of our stock appreciates and they sell their shares at a profit.

We cannot assure

shareholders of a positive return on their investment when they sell their shares or that shareholders will not lose the entire amount

of their investment.

the beneficial ownership of our Common Stock continues to be highly concentrated, it may prevent our shareholders from influencing significant

corporate decisions.

As of March 31, 2022,

our executive officers, directors and certain persons who may be deemed affiliates beneficially own in excess of 50.1% of our issued

and outstanding Common Stock.

As a result, such persons may exercise substantial influence over the outcome of corporate actions requiring

shareholder approval including, without limitation, the election of directors, certain mergers, consolidations and sales of all or substantially

all of our assets or any other significant corporate transactions.

Such persons may also vote against a change of control, even if such

a change of control would benefit our other shareholders.

of our Common Stock by shareholders could encourage short sales by third parties, which could contribute to the further decline of our

The significant downward

pressure on the price of our Common Stock that would be caused by the sale of material amounts of our Common Stock could encourage short

sales by third parties.

Such an event could place further downward pressure on the price of our Common Stock.

1 unchanged sentence

will make our Common Stock less attractive to investors.

“emerging growth company,”

as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act).

as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that

are applicable to other public companies that are not emerging growth companies, including not being required to comply with the

auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive

compensation in this prospectus and our periodic reports and proxy statements and exemptions from the requirements of holding

nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We could be an emerging growth company for up to five years following the year in which we complete this offering, although circumstances

could cause us to lose that status earlier.

We will remain an emerging growth company until the earlier of (i) the last day of

the fiscal year (a) following the fifth anniversary of the completion of the first sale of shares covered by this prospectus,

(b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated

filer, which requires the market value of our common stock that is held by non-affiliates to exceed $700.0 million as of the prior

September 30 th , and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the

prior three-year period.

common stock may be classified as “penny stock”

and trading of our shares may be restricted by the SEC’s penny

stock regulations.

stock is traded on the OTCQB Venture Market.

Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act impose sales

practice and disclosure requirements on certain brokers-dealers who engage in transactions involving a “penny stock.”

The SEC has adopted regulations which generally define “penny stock”

to be any equity security that has a market price

of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions.

Our common shares

may be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons

other than established customers and “accredited investors.”

The penny stock rules require a broker-dealer, prior

to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a

form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market.

The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of

the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny

stock held in the customer’s account.

In addition, the penny stock rules require that, prior to a transaction in a penny

stock that is not otherwise exempt, the broker-dealer must make a special written determination that the penny stock is a suitable

investment for the purchaser and receive the purchaser’s written agreement to the transaction.

These disclosure requirements

may have the effect of reducing the level of trading activity in the secondary market for stock that is subject to these penny

Consequently, these penny stock rules may affect the ability of broker-dealers to trade our common stock.

that the penny stock rules may discourage investor interest in and limit the marketability and reduce the level of trading activity

of our common shares.

The market price of our common stock may suffer as a result.

sales of our securities could adversely affect the market price of our common stock and our future capital-raising activities

could involve the issuance of equity securities, which would dilute your investment and could result in a decline in the trading

price of our common stock.

securities in the public or private equity markets at prices per share below the current market price of our common stock, even

if we do not have an immediate need for additional capital at that time.

Sales of substantial amounts of shares of our common

stock, or the perception that such sales could occur, could adversely affect the prevailing market price of our shares and our

ability to raise capital.

We may issue additional shares of common stock in future financing transactions or as incentive compensation

for our executive management and other key personnel, consultants and advisors.

Issuing any equity securities would be dilutive

to the equity interests represented by our then-outstanding shares of common stock.

Moreover, sales of substantial amounts of

shares in the public market, or the perception that such sales could occur, may adversely affect the prevailing market price of

our common stock and make it more difficult for us to raise additional capital.

certificate of incorporation allows for our board of directors to create new series of preferred stock without further approval

by our shareholders, which could adversely affect the rights of the holders of our common stock.

of directors has the authority to fix and determine the relative rights and preferences of preferred stock.

Currently, our board

of directors has the authority to designate and issue up to 5,000,000 shares of our preferred stock without further shareholder

In the future, our board of directors could authorize the issuance of one or more series of preferred stock that would

grant to holders, among other rights, the preferred right to our assets upon liquidation, the right to receive dividend payments

before dividends are distributed to the holders of common stock and the right to the redemption of our preferred shares acquired

by such persons, together with a premium, prior to the redemption of our common stock.

In addition, our board of directors could

authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible

into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing

shareholders.

have not held regular annual meetings of shareholders in the past, and if we are required by the Nevada District Court to hold

an annual meeting pursuant to Nevada Revised Statutes §78.345(1), it could result in the unanticipated expenditure of funds,

time and other Company resources.

2.01 of our Amended Bylaws provides that an annual meeting of shareholders shall be held each year on a date and at a time designated

by our board of directors.

Section 78.345(1) of the Nevada Revised Statutes provides that, if there is a failure to hold the annual

meeting for a period of 18 months after the last election of directors, shareholders owning at least 15% of the voting power of

the outstanding common stock may apply to the Nevada district court to order the election of directors.

We have not held regular

annual meetings of shareholders in the past because approximately 75% of our voting stock is owned by our largest shareholders,

thereby making it easy to obtain written consent in lieu of a meeting when necessary.

Moreover, handling matters by written consent

allows us to save on financial and administrative resources required to prepare for and hold such annual meetings.

To our knowledge,

no shareholder or director has requested our management to hold such an annual meeting and no shareholder or director has applied

to the Nevada district court seeking an order directing us to hold such an annual meeting of shareholders.

However, if one or

more shareholders or directors were to apply to the Nevada district court seeking such an order, and if the Nevada district court

were to order an annual meeting before we were prepared to hold one, the preparation for an annual meeting of shareholders and

the meeting itself could result in the unanticipated expenditure of funds, time, and other resources of ours.

we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results

accurately or prevent fraud.

Any inability to report and file our financial results accurately and timely could harm our reputation

and adversely affect the trading price of our common stock.

We are an “emerging

growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act).

For as long as we continue to be

an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public

companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of

Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in this prospectus and our periodic

reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and

stockholder approval of any golden parachute payments not previously approved.

We will remain an emerging growth company until the earlier

of (i) the last day of the fiscal year (a) following the fifth anniversary of the completion of the first sale of shares covered by this

prospectus, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated

filer, which requires the market value of our common stock that is held by non-affiliates to exceed $700.0 million as of the prior September

30 th , and (ii) the date on which we have issued more than

$1.0 billion in non-convertible debt during the prior three-year period.

sales of our securities could adversely affect the market price of our Common Stock and our future capital-raising activities could involve

the issuance of equity securities, which would dilute your investment and could result in a decline in the trading price of our Common

We may sell securities

in the public or private equity markets at prices per share below the current market price of our Common Stock, even if we do not have

an immediate need for additional capital at that time.

Sales of substantial amounts of shares of our Common Stock, or the perception

that such sales could occur, could adversely affect the prevailing market price of our shares and our ability to raise capital.

issue additional shares of Common Stock in future financing transactions or as incentive compensation for our executive management and

other key personnel, consultants and advisors.

Issuing any equity securities would be dilutive to the equity interests represented by

our then-outstanding shares of Common Stock.

Moreover, sales of substantial amounts of shares in the public market, or the perception

that such sales could occur, may adversely affect the prevailing market price of our Common Stock and make it more difficult for us to

raise additional capital.

articles of incorporation allows for our board of directors to create new series of preferred stock without further approval by our shareholders,

which could adversely affect the rights of the holders of our Common Stock.

Our board of directors

has the authority to fix and determine the relative rights and preferences of preferred stock.

Currently, our board of directors has

the authority to designate and issue up to 5,000,000 shares of our preferred stock without further shareholder approval.

In the future,

our board of directors could authorize the issuance of one or more series of preferred stock that would grant to holders, among other

rights, the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to

the holders of Common Stock and the right to the redemption of our preferred shares acquired by such persons, together with a premium,

prior to the redemption of our Common Stock.

In addition, our board of directors could authorize the issuance of a series of preferred

stock that has greater voting power than our Common Stock or that is convertible into our Common Stock, which could decrease the relative

voting power of our Common Stock or result in dilution to our existing shareholders.

we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately

or prevent fraud.

Any inability to report and file our financial results accurately and timely could harm our reputation and adversely

affect the trading price of our Common Stock.

internal controls are necessary for us to provide reliable financial reports and prevent fraud.

If we cannot provide reliable

financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control

environment existed, and our business and reputation with investors may be harmed.

If we are unable to maintain effective internal controls, we may not have adequate, accurate or timely financial information,

and we may be unable to meet our reporting obligations as a public company, including the requirements of the Sarbanes-Oxley

Act of 2002 (the Sarbanes-Oxley Act).

In addition, we may be unable to accurately report our financial results in future periods,

or report them within the timeframes required by the requirements of the SEC or the Sarbanes-Oxley Act.

Failure to comply

with the Sarbanes-Oxley Act, when and as applicable, could also potentially subject us to sanctions or investigations by

the SEC or other regulatory authorities.

If we cannot provide reliable financial

reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed,

and our business and reputation with investors may be harmed.

If we are unable to maintain effective internal controls, we may not have

adequate, accurate or timely financial information, and we may be unable to meet our reporting obligations as a public company, including

the requirements of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act).

In addition, we may be unable to accurately report

our financial results in future periods, or report them within the timeframes required by the requirements of the SEC or the Sarbanes-Oxley

Failure to comply with the Sarbanes-Oxley Act, when and as applicable, could also potentially subject us to sanctions or investigations

by the SEC or other regulatory authorities.

Any failure to maintain or implement required new or improved controls, or any difficulties

we encounter in their implementation, could result in identification of additional material weaknesses or significant deficiencies,

cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements.

Section 404 of the Sarbanes-Oxley Act and related regulations require our management to evaluate the effectiveness of our internal

control over financial reporting as of the end of each fiscal year.

Based on its evaluation, our management concluded that our

internal controls over financial reporting were effective as of March 31, 2021.

We cannot provide assurance that, in the future,

a material weakness or significant deficiency will not exist or otherwise be discovered.

If that were to happen, it could harm

our operating results and cause shareholders to lose confidence in our reported financial information.

Any such loss of confidence

would have a negative effect on the trading price of our securities.

board of directors is able to adopt recapitalizations through forward or reverse splits of our outstanding shares of common stock

without shareholder approval.

to our amended and restated articles of incorporation, our board of directors has the power, without obtaining shareholder approval,

to effectuate recapitalizations of the Company through forward or reverse splits of our outstanding common stock.

of such provision, our board of directors can implement recapitalizations of the Company by effectuating a forward or reverse

stock split of our outstanding common stock, which would increase or decrease each of our shareholder’s number of shares

owned, and our shareholders will have no right to approve or disapprove any such action even if such actions have a material adverse

effect on them.

we encounter in their implementation, could result in identification of additional material weaknesses or significant deficiencies, cause

us to fail to meet our reporting obligations or result in material misstatements in our financial statements.

Section 404 of the Sarbanes-Oxley Act and related regulations require our management to evaluate the effectiveness of our internal control

over financial reporting as of the end of each fiscal year.

Based on its evaluation, our management concluded that our internal controls

over financial reporting were effective as of March 31, 2022.

We cannot provide assurance that, in the future, a material weakness or

significant deficiency will not exist or otherwise be discovered.

If that were to happen, it could harm our operating results and cause

shareholders to lose confidence in our reported financial information.

Any such loss of confidence would have a negative effect on the

trading price of our securities.

board of directors is able to adopt recapitalizations through forward or reverse splits of our outstanding shares of Common Stock without

shareholder approval.

Pursuant to our amended

and restated articles of incorporation, our board of directors has the power, without obtaining shareholder approval, to effectuate recapitalizations

of us through forward or reverse splits of our outstanding Common Stock.

As a result of such provision, our board of directors can implement

recapitalizations of us by effectuating a forward or reverse stock split of our outstanding Common Stock, which would increase or decrease

each of our shareholder’s number of shares owned, and our shareholders will have no right to approve or disapprove any such action

even if such actions have a material adverse effect on them.

UNRESOLVED STAFF COMMENTS

Our principal

administrative and research and development functions are located in a leased facility in San Diego, California.

occupy approximately 7,300 square feet of space in the San Diego facility, and the lease extends through June 2023.

that our existing facility is adequate to meet our current needs.

Our principal administrative

and research and development functions are located in a leased facility in San Diego, California.

We currently occupy approximately 7,300

square feet of space in the San Diego facility, and the lease extends through June 2023.

We believe that our existing facility is adequate

to meet our current needs.

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

What changed 10-K

Item 1A. Risk Factors