What changed in this filing

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Item 1A. Risk Factors

2022-03-28 compared with 2021-03-31 · 916 added, 1047 removed, 166 unchanged (92% of the section changed)

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with all of the other information contained in this Annual Report, before deciding to invest in our securities.

If any of the

following risks materialize, our business, financial condition, results of operation and prospects will likely be materially and

adversely affected.

In that event, the market price of our common stock could decline, and you could lose all or part of your

If any of the following

risks materialize, our business, financial condition, results of operation and prospects will likely be materially and adversely affected.

In that event, the market price of our common stock could decline, and you could lose all or part of your investment.

risk factors described below are a summary of the principal risk factors associated with an investment in us.

These are not the

only risks we face.

You should carefully consider these risk factors and the other reports and documents filed by us with the

have incurred significant losses since our inception, expect to incur significant losses

in the future and may never achieve or sustain profitability;

currently depend entirely on the successful and timely regulatory approval and commercialization

of our two product candidates, which may not receive regulatory approval or, if any of

our product candidates do receive regulatory approval, we may not be able to successfully

commercialize them;

success of our products will be determined based on whether

surgeons and patients in our target markets accept our product candidates, if approved;

to scale up of the manufacturing process of our product candidates in a timely manner, or at all;

These are not the only

risks we face.

You should carefully consider these risk factors and the other reports and documents filed by us with the SEC.

have incurred significant losses since our inception, expect to incur significant losses in the future and may never achieve or sustain

profitability;

currently depend entirely on the successful and timely regulatory approval and commercialization of our current lead product candidate,

and any future product candidates, which may not receive regulatory approval or, if our current lead or any future product candidate

does receive regulatory approval, we may not be able to successfully commercialize them;

success of our current or future products, if approved, will be determined based on whether surgeons and patients in our target

markets accept them;

to scale up the manufacturing process of our current or future product candidates in a timely manner, or at all;

ability to retain and recruit key personnel, including the development of a sales and marketing infrastructure;

on third party suppliers for certain components of our product candidates;

we successfully develop our product candidates, our ability to sell or license our products to third parties and thereafter

our r eliance on

such third parties to commercialize and distribute our product candidates in the United States and internationally,

and if we are unable to sell or license our products to third parties, our ability to commercialize our products on our own,

in which case we would have to demonstrate the efficacy and financial viability of our products to doctors, hospitals, insurance

companies, and other stakeholders;

we successfully develop product candidates, our ability to commercialize and distribute our product candidates in the United States

and internationally, depends on our ability to demonstrate the efficacy and financial viability of our products to doctors,

hospitals, insurance companies, and other stakeholders;

in external competitive market factors;

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ability to obtain and maintain intellectual property protection for our product candidates;

liability lawsuits against us could cause us to incur substantial liabilities, limit sales of our existing product candidates

and limit commercialization of any products that we may develop;

ability to consummate future acquisitions or strategic transactions;

liability lawsuits against us could cause us to incur substantial liabilities, limit sales of our existing product candidates and

limit commercialization of any products that we may develop;

ability to maintain the listing of our securities on the Nasdaq Capital Market;

in our business strategy or an inability to execute our strategy due to unanticipated changes in the medical device industry.

in our business strategy or an inability to execute our strategy due to unanticipated changes in the medical device industry or

the impact of COVID-19 on our clinical trials.

Related to Our Business and Strategy

have incurred significant losses since our inception, expect to incur significant losses in the future and may never achieve or

sustain profitability.

have historically incurred substantial net losses, including net losses of $9,135,486, $7,625,397, $13,042,709, $7,791,469 and

$3,387,490 for the years ended December 31, 2020, 2019, 2018, 2017 and 2016, respectively.

As a result of our historical losses,

we had an accumulated deficit of $65,323,411 as of December 31, 2020.

Our losses have resulted primarily from costs related to

general and administrative expenses relating to our operations, as well as our research programs and the development of our product

Currently, we are not generating revenue from operations, and we expect to incur losses for the foreseeable future

as we seek to obtain regulatory approval for our product candidates.

Additionally, we expect that our general and administrative

expenses will increase due to the additional operational and reporting costs associated with being a public company as well as

the projected expansion of our operations.

We do not expect to generate significant revenue until any of our product candidates

are licensed or sold, if ever.

have incurred significant losses since our inception, expect to incur significant losses in the future and may never achieve or sustain

profitability.

have historically incurred substantial net losses, including net losses of $16.5 million and $9.1 million for the years ended December

31, 2021 and 2020, respectively.

As a result of our historical losses, we had an accumulated deficit of $81.9 million as of December

Our losses have resulted primarily from costs related to general and administrative expenses relating to our operations, as

well as our research programs and the development of our product candidates.

Currently, we are not generating revenue from operations,

and we expect to incur losses for the foreseeable future as we seek to obtain regulatory approval for our lead product candidate.

Additionally,

we expect that our general and administrative expenses will increase due to the additional operational costs associated with our SAVVE

study as well as the projected expansion of our operations.

We do not expect to generate significant revenue until any of our product

candidates are licensed or sold, if ever.

We may never generate significant revenue or become profitable.

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we may be unable to sustain or increase profitability on a quarterly or annual basis.

Our failure to achieve and subsequently

sustain profitability could harm our business, financial condition, results of operations and cash flows.

currently depend entirely on the successful and timely regulatory approval and commercialization of our two product candidates,

which may not receive regulatory approval or, if any of our product candidates do receive regulatory approval, we may not be able

to successfully commercialize them.

currently have two product candidates (the CoreoGraft and the VenoValve) and our business presently depends entirely on our success

with our product candidates.

In order for our product candidates to succeed the products need to be approved by regulatory

authorities, which may never happen.

Our product candidates are based on technologies that have not been used previously in the

manner we propose.

Market acceptance of our product candidates will largely depend on our ability to demonstrate their relative

safety, efficacy, cost-effectiveness and ease of use.

We may not be able to successfully develop and commercialize our product

If we fail to do so, we will not be able to generate substantial revenues, if any.

are subject to rigorous and extensive regulation by the FDA in the United States and by comparable agencies in other jurisdictions,

including the European Medicines Agency, or EMA, in the European Union, or EU.

Our product candidates are currently in development

and we have not received FDA approval for our product candidates.

Our product candidates may not be marketed in the United States

until they have been approved by the FDA and may not be marketed in other jurisdictions until they have received approval from

the appropriate foreign regulatory agencies.

Each product candidate requires significant research, development, preclinical testing

and extensive clinical investigation before submission of any regulatory application for marketing approval.

regulatory approval requires substantial time, effort and financial resources, and we may not be able to obtain approval of any

of our product candidates on a timely basis, or at all.

The number, size, design and focus of preclinical and clinical trials

that will be required for approval by the FDA, the EMA or any other foreign regulatory agency varies depending on the device,

the disease or condition that the product candidates are designed to address and the regulations applicable to any particular

Preclinical and clinical data can be interpreted in different ways, which could delay, limit or preclude regulatory

The FDA, the EMA and other foreign regulatory agencies can delay, limit or deny approval of a product for many reasons,

including, but not limited to:

Our failure to achieve and subsequently sustain

profitability could harm our business, financial condition, results of operations and cash flows.

currently depend entirely on the successful and timely regulatory approval and commercialization of our current lead product candidate,

and any future product candidates, which may not receive regulatory approval or, if any of our product candidates do receive regulatory

approval, we may not be able to successfully commercialize them.

currently have one product candidate, the VenoValve, and our business presently depends entirely on our success with this product candidate.

In order for our current lead and any future product candidates to succeed they need to be approved by regulatory authorities,

which may never happen.

Our product candidates are based on technologies that have not been used previously in the manner we propose.

Market acceptance of our product candidates will largely depend on our ability to demonstrate their relative safety, efficacy, cost-effectiveness

and ease of use.

We may not be able to successfully develop and commercialize our product candidates.

If we fail to do so, we will not

be able to generate substantial revenues, if any.

are subject to rigorous and extensive regulation by the FDA in the United States and by comparable agencies in other jurisdictions, including

the European Medicines Agency, or EMA, in the European Union, or EU.

Our lead product candidate is currently in development and we have

not received FDA approval for our product candidate.

Our product candidates may not be marketed in the United States until they have

been approved by the FDA and may not be marketed in other jurisdictions until they have received approval from the appropriate foreign

regulatory agencies.

Each product candidate requires significant research, development, preclinical testing and extensive clinical investigation

before submission of any regulatory application for marketing approval.

regulatory approval requires substantial time, effort and financial resources, and we may not be able to obtain approval of any of our

product candidates on a timely basis, or at all.

The number, size, design and focus of preclinical and clinical trials that will be required

for approval by the FDA, the EMA or any other foreign regulatory agency varies depending on the device, the disease or condition that

the product candidates are designed to address and the regulations applicable to particular products.

Preclinical and clinical data

can be interpreted in different ways, which could delay, limit or preclude regulatory approval.

The FDA, the EMA and other foreign regulatory

agencies can delay, limit or deny approval of a product for many reasons, including, but not limited to:

product candidate may not be shown to be safe or effective;

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agencies may interpret data from pre-clinical and clinical trials in different ways than we do;

agencies may not approve the manufacturing process or determine that the manufacturing is not in accordance with current good

manufacturing practices, or cGMPs;

agencies may not approve the manufacturing process or determine that the manufacturing is not in accordance with current good manufacturing

practices, or cGMPs;

product candidate may fail to comply with regulatory requirements;

agencies might change their approval policies or adopt new regulations.

our product candidates are not approved at all or quickly enough to provide net revenues to defray our operating expenses, our

business, financial condition, operating results and prospects could be harmed.

we are unable to successfully raise additional capital, our future clinical trials and product development could be limited and

our long-term viability may be threatened.

have experienced negative operating cash flows since our inception and have funded our operations primarily from proceeds received

from sales of our capital stock, the issuance of the convertible and non-convertible notes, and the sale of our products to larger

medical device companies.

We will need to seek additional funds in the future through equity or debt financings, or strategic

alliances with third parties, either alone or in combination with equity financings to complete our product development initiatives.

These financings could result in substantial dilution to the holders of our common stock, or require contractual or other restrictions

on our operations or on alternatives that may be available to us.

If we raise additional funds by issuing debt securities, these

debt securities could impose significant restrictions on our operations.

Any such required financing may not be available in amounts

or on terms acceptable to us, and the failure to procure such required financing could have a material and adverse effect on our

business, financial condition and results of operations, or threaten our ability to continue as a going concern.

our product candidates are not approved at all or quickly enough to provide net revenues to defray our operating expenses, our business,

financial condition, operating results and prospects could be harmed.

we are unable to successfully raise additional capital, our future clinical trials and product development could be limited and our long-term

viability may be threatened.

have experienced negative operating cash flows since our inception and have funded our operations primarily from proceeds received from

sales of our capital stock, the issuance of the convertible and non-convertible notes, and the sale of our products to larger medical

device companies.

We will need to seek additional funds in the future through equity or debt financings, or strategic alliances with

third parties, either alone or in combination with equity financings, to complete our product development initiatives.

These financings

could result in substantial dilution to the holders of our common stock, or require contractual or other restrictions on our operations

or on alternatives that may be available to us.

If we raise additional funds by issuing debt securities, these debt securities could

impose significant restrictions on our operations.

Any such required financing may not be available in amounts or on terms acceptable

to us, and the failure to procure such required financing could have a material and adverse effect on our business, financial condition

and results of operations, or threaten our ability to continue as a going concern.

present and future capital requirements will be significant and will depend on many factors, including:

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costs, timing and outcome of regulatory review of our product candidates;

costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property

rights and defending any intellectual property-related claims;

costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights

and defending any intellectual property-related claims;

effect of competing technological and market developments;

acceptance of our product candidates;

rate of progress in establishing coverage and reimbursement arrangements with domestic and international commercial third-party

payors and government payors;

rate of progress in establishing coverage and reimbursement arrangements with domestic and international commercial third-party payors

and government payors;

ability to achieve revenue growth and improve gross margins;

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may not be able to acquire additional funds on acceptable terms, or at all.

If we are unable to raise adequate funds, we may have

to liquidate some or all of our assets or delay, reduce the scope of or eliminate some or all of our development programs.

we do not have, or are not able to obtain, sufficient funds, we may be required to delay development or commercialization of our

product candidates.

If we are unable to raise adequate funds, we may have to

liquidate some or all of our assets or delay, reduce the scope of or eliminate some or all of our development programs.

we do not have, or are not able to obtain, sufficient funds, we may be required to delay development or commercialization of our product

We also may have to reduce the resources devoted to our product candidates or cease operations.

factors could harm our operating results.

Any of these factors could

harm our operating results.

COVID-19 pandemic has significantly negatively impacted our business.

COVID-19 pandemic has disrupted the global economy and has negatively impacted large populations including people and businesses

that may be directly or indirectly involved with the operation of our Company and the manufacturing, development, and testing

of our product candidates.

The full scope and economic impact of COVID-19 is still unknown and there are many risks from COVID-19

that could generally and negatively impact economies and healthcare providers in the countries where we do business, the medical

device industry as a whole, and development stage, pre-revenue companies such as HJLI.

The primary impacts of COVID-19 to our

operations were stay-at-home work requirements, travel restrictions limiting our ability to initiate and continue animal studies

and patient trials and disruptions to scheduled meetings with regulatory agencies such as the FDA.

Notwithstanding these impacts,

we were able to use remote work tools, communications solutions, and other methods to continue our trials and regulatory submissions

with minimal impact to our overall development timeline.

While many of these restrictions are currently relaxed, there can be

no assurance we will be able similarly adjust if they are put back in place in the future.

At this time, we have identified

the following COVID-19 related risks that we believe have a greater likelihood of negatively impacting our company specific, including,

but not limited to:

State and local shelter-in-place directives which limit our employees from accessing our facility to manufacture, develop

and test our product candidates;

restrictions and quarantine requirements which prevent us from initiating and continuing animal studies and patient trials

both inside and outside of the United States;

burden on hospitals and medical personnel resulting in the cancellation of non-essential medical procedures such as surgical

procedures needed to implant our product candidates for pre-clinical and clinical trials;

The COVID-19 pandemic has

disrupted the global economy and has negatively impacted large populations including people and businesses that may be directly or

indirectly involved with the operation of our Company, the manufacturing, development, and testing of our product candidate, and the

clinical trials for our product candidate.

The full scope and economic impact of COVID-19 is still unknown.

There are many risks

from COVID-19 that could generally and negatively impact economies and healthcare providers in the countries where we do business,

the medical device industry as a whole, and development stage, pre-revenue companies such as NVNO.

To-date, the primary impacts of

COVID-19 to our operations were stay-at-home work requirements, travel restrictions limiting our ability to initiate and continue

animal studies and patient trials, suspensions of elective surgeries at trial sites limiting our ability to enroll patients in

SAVVE, and disruptions to scheduled meetings with regulatory agencies such as the FDA.

Notwithstanding these impacts, we were able

to use remote work tools, communications solutions, and other methods to continue our trials and regulatory submissions.

resurgence of COVID and the Omicron variant caused several of our activated clinical sites to put elective surgeries on hold and

prohibit potential study subjects from coming to the hospital for screening.

Labor shortages due to Omicron have also negatively

impacted hospital staffing in all departments, including clinical research.

In addition to caring for the influx of COVID patients,

hospitals become short staffed due to their own employees’ COVID sicknesses, resulting in clinical staff being reassigned to

cover the shortfall.

The lack of available clinical personnel both slows enrollment and impacts the speed at which we can activate

clinical sites.

COVID also impacts our patient population.

Patients with COVID or who have had COVID within ninety (90) days of

their screening, are excluded from our study until after the ninety (90) day period has passed.

In addition, concerns about getting

COVID impact the patients’ willingness to undergo an elective surgical procedure with a one-night hospital stay.

the COVID resurgence has slowed patient enrollment for the SAVVE clinical trial and has resulted in delays in new clinical sites

being activated for enrollment.

We are increasing the number of SAVVE sites and ensuring they are geographically dispersed to attempt

to mitigate the impact of reductions in elective surgery schedules.

At this time, we have identified the following COVID-19

related risks that we believe have a greater likelihood of negatively impacting our Company, including, but not limited

State and local shelter-in-place directives which limit our employees from accessing our facility to manufacture, develop and test

our product candidates;

State and local shelter-in-place directives which limit our ability to enroll sites or patients in our SAVVE trial;

restrictions and quarantine requirements which prevent us from initiating and continuing animal studies and patient trials both inside

and outside of the United States;

burden on hospitals and medical personnel resulting in the cancellation of non-essential medical procedures such as surgical procedures

needed to implant our product candidates for pre-clinical and clinical trials;

in the procurement of certain supplies and equipment that are needed to develop and test our product candidates;

restrictions which prevent patients from participating and continuing the participation

in clinical trials.

may engage in future acquisitions or strategic transactions which may require us to seek additional financing or financial commitments,

increase our expenses and/or present significant distractions to our management.

the event we engage in an acquisition or strategic transaction, we may need to acquire additional financing (particularly, if

the acquired entity is not cash flow positive or does not have significant cash on hand).

Obtaining financing through the issuance

or sale of additional equity and/or debt securities, if possible, may not be at favorable terms and may result in additional dilution

to our current stockholders.

Additionally, any such transaction may require us to incur non-recurring or other charges, may increase

our near and long-term expenditures and may pose significant integration challenges or disrupt our management or business, which

could adversely affect our operations and financial results.

For example, an acquisition or strategic transaction may entail numerous

operational and financial risks, including the risks outlined above and additionally:

to unknown liabilities;

of our business and diversion of our management’s time and attention in order to develop acquired products or technologies;

than expected acquisition and integration costs;

of assets or goodwill or impairment charges;

amortization expenses;

and cost in combining the operations and personnel of any acquired businesses with our operations and personnel;

of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership;

to retain key employees of any acquired businesses.

although there can be no assurance that we will undertake or successfully complete any transactions of the nature described above,

and any transactions that we do complete could have a material adverse effect on our business, results of operations, financial

condition and prospects.

we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent

If we identify a material weakness in our internal control over financial reporting, our ability to meet our reporting

obligations and the trading price of our stock could be negatively affected.

described in our Quarterly Report on Form 10-Q filed with the SEC on August 14, 2020, in connection with our issuance of warrants

in a private placement offering in February 2020, we identified a material weakness in our internal control over financial reporting

with regard to our failure to record an associated derivative liability on a timely basis.

This deficiency did not result in the

revision of any of our issued financial statements.

internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud.

inability to provide reliable financial reports or prevent fraud could harm our business.

We regularly review and update our internal

controls, disclosure controls and procedures, and corporate governance policies.

In addition, we are required under the Sarbanes-Oxley

Act of 2002 to report annually on our internal control over financial reporting.

Any system of internal controls, however well

designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that

the objectives of the system are met.

A material weakness is a deficiency, or a combination of deficiencies, in internal control

over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial

statements will not be prevented or detected on a timely basis.

Accordingly, a material weakness increases the risk that the financial

information we report contains material errors.

remediate this weakness, we devoted resources, and will continue to devote resources to the remediation and improvement of our

internal control over financial reporting, in particular over handling of complex financial accounting issues.

As the Company

enters into transactions that involve complex accounting issues, it will consult with third party professionals with expertise

in these matters as necessary to ensure appropriate accounting treatment for such transactions.

Based on this assessment and our

remediation plan, our management concluded that our internal control over financial reporting were not effective as of December

our financial statements are not accurate, investors may not have a complete understanding of our operations or may lose confidence

in our reported financial information.

Likewise, if our financial statements are not filed on a timely basis as required by the

SEC and The Nasdaq Stock Market, we could face severe consequences from those authorities.

In either case, it could result in

a material adverse effect on our business or have a negative effect on the trading price of our common stock.

Further, if we fail

to remedy this deficiency (or any other future deficiencies) or maintain the adequacy of our internal controls, we could be subject

to regulatory scrutiny, civil or criminal penalties or shareholder litigation.

We can give no assurance that the measures we have

taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses

will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or

circumvention of those controls.

in the future, if we cannot conclude that we have effective internal control over our financial reporting, investors could lose

confidence in the reliability of our financial statements, which could lead to a decline in our stock price.

Failure to comply

with reporting requirements could also subject us to sanctions and/or investigations by the SEC, The Nasdaq Stock Market or other

regulatory authorities.

may never be able to generate sufficient revenue from the commercialization of our product candidates to achieve and maintain

profitability.

ability to operate profitably in the future will depend upon, among other items, our ability to (i) fully develop our product

candidates, (ii) scale up our business and operational structure, (iii) obtain regulatory approval of our product candidates from

the FDA, (iv) market and sell our product candidates to larger medical device companies, (v) successfully gain market acceptance

of our product candidates, and (vi) obtain sufficient and on-time supply of components from our third-party suppliers.

product candidates are never successfully commercialized, we may never receive a return on our investments in product development,

regulatory compliance, manufacturing and quality assurance, which may cause us to fail to generate revenue and gain economies

of scale from such investments.

only utilize a few suppliers for porcine and bovine tissue for our two product candidates and the loss of a supplier could have

an adverse impact on our business.

rely on one domestic and one international third-party vendors to supply porcine and bovine tissue for our two product candidates.

Our ability to supply our current and future product candidates, if approved, commercially depends, in part, on our ability to

obtain this porcine and bovine tissue in accordance with our specifications and with regulatory requirements and in sufficient

quantities to meet demand.

Our ability to obtain porcine and bovine tissue may be affected by matters outside our control, including

that these suppliers may cancel our arrangements on short notice or have disruptions to their operations.

we are required to establish additional or replacement suppliers for the porcine and bovine tissue, it may not be accomplished

quickly and our operations could be disrupted.

Even if we are able to find replacement suppliers, the replacement suppliers may

need to be qualified and may require additional regulatory authority approval, which could result in further delay.

of a supply disruption, our product inventories may be insufficient to supply our customers and the development of any future

product candidates would be delayed, limited or prevented, which could have an adverse impact on our business.

depend upon third-party suppliers for certain components of our product candidates, making us vulnerable to supply problems and

price fluctuations, which could harm our business.

rely on a number of third-party suppliers to provide certain components of our product candidates.

We do not have long-term supply

agreements with most of our suppliers, and, in many cases, we purchase goods on a purchase order basis.

Our suppliers may encounter

problems for a variety of reasons, including unanticipated demand from larger customers, failure to follow specific protocols

and procedures, failure to comply with applicable regulations, equipment malfunction, quality or yield problems and environmental

factors, any of which could delay or impede their ability to meet our demand.

Our reliance on these third-party suppliers also

subjects us to other risks that could harm our business, including:

of supply resulting from modifications to, or discontinuation of, a supplier’s operations;

restrictions which prevent patients from participating and continuing the participation in clinical trials.

may never be able to generate sufficient revenue from the commercialization of our product candidates to achieve and maintain profitability.

Our ability to operate profitably

in the future will depend upon, among other items, our ability to (i) fully develop product candidates, (ii) scale up our business and

operational structure, (iii) obtain regulatory approval of product candidates from the FDA, (iv) market and sell product candidates,

(v) successfully gain market acceptance of our product candidates, and (vi) obtain sufficient and on-time supply of components from our

third-party suppliers.

If our product candidates are never successfully commercialized, we may never receive a return on our investments

in product development, regulatory compliance, manufacturing, and quality assurance, which may cause us to fail to generate revenue

and gain economies of scale from such investments.

only utilize a few suppliers for porcine tissue for our product candidate and the loss of a supplier could have an adverse impact on

our business.

rely on one domestic third-party vendor to supply porcine tissue for our product candidate.

Our ability to supply our current

and future product candidates commercially, if approved, depends, in part, on our ability to obtain this porcine

tissue in accordance with our specifications and with regulatory requirements and in sufficient quantities to meet demand.

to obtain porcine tissue may be affected by matters outside our control, including that this supplier may cancel our arrangements

on short notice or have disruptions to their operations.

we are required to establish additional or replacement suppliers for the porcine tissue, it may not be accomplished quickly and our operations

could be disrupted.

Even if we are able to find replacement suppliers, the replacement suppliers may need to be qualified and may require

additional regulatory authority approval, which could result in further delay.

In the event of a supply disruption, our product inventories

may be insufficient to supply our customers and the development of any future product candidates would be delayed, limited or prevented,

which could have an adverse impact on our business.

depend upon third-party suppliers for certain components of our product candidate, making us vulnerable to supply problems and price

fluctuations, which could harm our business.

rely on a number of third-party suppliers to provide certain components of our product candidate.

We do not have long-term supply agreements

with most of our suppliers, and, in many cases, we purchase goods on a purchase order basis.

Our suppliers may encounter problems for

a variety of reasons, including unanticipated demand from larger customers, failure to follow specific protocols and procedures, failure

to comply with applicable regulations, equipment malfunction, quality or yield problems and environmental factors, any of which could

delay or impede their ability to meet our demand.

Our reliance on these third-party suppliers also subjects us to other risks that could

harm our business, including:

of supply resulting from modifications to, or discontinuation of, a supplier’s operations;

in product shipments resulting from defects, reliability issues or changes in components from suppliers;

fluctuations due to a lack of long-term supply arrangements for key components with our suppliers;

in manufacturing components, which could negatively impact the effectiveness or safety of our product candidates or cause

delays in shipment of our product candidates;

in manufacturing components, which could negatively impact the effectiveness or safety of our product candidates or cause delays

in shipment of our product candidates;

production of components, which could significantly delay our production and sales and impair operating margins;

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delivery of components due to our suppliers supplying products for a range of customers;

failure of our suppliers to comply with strictly enforced regulatory requirements, which could result in disruption of supply

or increased expenses;

failure of our suppliers to comply with strictly enforced regulatory requirements, which could result in disruption of supply or

increased expenses;

of suppliers to fulfill orders and meet requirements due to financial hardships.

addition, there are a limited number of suppliers and third-party manufacturers that operate under the FDA’s Quality System

Regulation, or QSR, requirements, maintain certifications from the International Organization for Standardization that are recognized

as harmonized standards in the European Economic Area, or EEA, and that have the necessary expertise and capacity to supply components

for our product candidates.

As a result, it may be difficult for us to locate manufacturers for our anticipated future needs,

and our anticipated growth may strain the ability of our current suppliers to deliver products, materials and components to us.

If we are unable to arrange for third-party manufacturing of components for our product candidates, or to do so on commercially

reasonable terms, we may not be able to complete development of, market and sell our current or new product candidates.

any supply interruption from our suppliers or failure to obtain additional suppliers for any of the components used in our product

candidates would limit our ability to manufacture our product candidates.

Failure to meet these commitments could result in legal

action by our customers, loss of customers or harm to our ability to attract new customers, any of which could have a material

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

we successfully develop our product candidates and are unable to sell or license them to larger medical device companies, we may

have to commercialize our products on our own, in which case we would have to demonstrate the efficacy and financial viability

of our products to doctors, hospitals, insurance companies, and other stakeholders.

addition, there are a limited number of suppliers and third-party manufacturers that operate under the FDA’s Quality System Regulation,

or QSR, requirements, maintain certifications from the International Organization for Standardization that are recognized as harmonized

standards in the European Economic Area, or EEA, and that have the necessary expertise and capacity to supply components for our product

As a result, it may be difficult for us to locate manufacturers for our anticipated future needs, and our anticipated growth

may strain the ability of our current suppliers to deliver products, materials and components to us.

If we are unable to arrange for

third-party manufacturing of components for our product candidates, or to do so on commercially reasonable terms, we may not be able

to complete development of, market and sell our current or new product candidates.

Further, any supply interruption from our suppliers

or failure to obtain additional suppliers for any of the components used in our product candidates would limit our ability to manufacture

our product candidates.

Failure to meet these commitments could result in legal action by our customers, loss of customers or harm to

our ability to attract new customers, any of which could have a material and adverse effect on our business, financial condition, results

of operations and growth.

If we successfully develop

product candidates, we will have to demonstrate the efficacy and financial viability of our products to doctors, hospitals,

insurance companies, and other stakeholders.

are multiple stakeholders that determine the success of a medical device, including doctors, hospitals, medical insurance companies,

Educating these stakeholders on the benefits of our product candidates will require a significant commitment by a

marketing team and sales organization.

Surgeons and hospitals may be slow to change their practices because of familiarity with

existing devices and/or treatments, perceived risks arising from the use of new devices, lack of experience using new devices,

lack of clinical data supporting the benefits of such devices or the cost of new devices.

There may never be widespread adoption

of our product candidates by surgeons and hospitals.

In addition, medical insurance companies would need to understand the costs

and benefits of our product candidates compared to the existing standards of care, if they are to provide reimbursement for the

cost of our product candidates and the procedures to implant our product candidates.

We may have difficulty and may never achieve

the market acceptance that we need from doctors, hospitals, medical insurance companies and others that are necessary for a successful

larger medical device companies purchase or license any of our product candidates and they are unable to convince hospital facilities

to approve the use of our product candidates, we may be unable to generate a substantial royalty income from our products.

the United States, in order for surgeons to use our product candidates, the hospital facilities where these surgeons treat patients

will typically require that the product candidates receive approval from the facility’s VAC.

VACs typically review the comparative

effectiveness and cost of medical devices used in the facility.

The makeup and evaluation processes for VACs vary considerably,

and it can be a lengthy, costly and time-consuming effort to obtain approval by the relevant VAC.

For example, even if the purchasers

or licensees of our product candidates have an agreement with a hospital system for purchase of our products, in most cases, they

must obtain VAC approval by each hospital within the system to sell at that particular hospital.

Additionally, hospitals typically

require separate VAC approval for each specialty in which our product is used, which may result in multiple VAC approval processes

within the same hospital even if such product has already been approved for use by a different specialty group.

VAC approval is

often needed for each different product to be used by the surgeons in that specialty.

In addition, hospital facilities and group

purchasing organizations, or GPOs, which manage purchasing for multiple facilities, may also require the purchasers of licensees

of our products to enter into a purchasing agreement and satisfy numerous elements of their administrative procurement process,

which can also be a lengthy, costly and time-consuming effort.

If our purchasers/licensees do not receive access to hospital facilities

in a timely manner, or at all, via these VAC and purchasing contract processes, or otherwise, or if they are unable to secure

contracts on commercially reasonable terms in a timely manner, or at all, their operating costs will increase, their sales may

decrease and their operating results may be harmed.

Educating these stakeholders on the benefits of product candidates will require a significant commitment by a marketing

team and sales organization.

Surgeons and hospitals may be slow to change their practices because of familiarity with existing devices

and/or treatments, perceived risks arising from the use of new devices, lack of experience using new devices, lack of clinical data supporting

the benefits of such devices or the cost of new devices.

There may never be widespread adoption of our product candidates by surgeons

and hospitals.

In addition, medical insurance companies would need to understand the costs and benefits of our product candidates compared

to the existing standards of care, if they are to provide reimbursement for the cost of our product candidates and the procedures to

implant our product candidates.

We may have difficulty and may never achieve the market acceptance that we need from doctors, hospitals,

medical insurance companies and others that are necessary for a successful product.

unable to convince hospital facilities to approve the use of our product candidates.

In the United States, in

order for surgeons to use our product candidates, the hospital facilities where these surgeons treat patients will typically require

that the product candidates receive approval from the facility’s VAC.

VACs typically review the comparative effectiveness and

cost of medical devices used in the facility.

The makeup and evaluation processes for VACs vary considerably, and it can be a

lengthy, costly and time-consuming effort to obtain approval by the relevant VAC.

For example, even if we have an agreement

with a hospital system for the purchase of a product, in most cases, they must obtain VAC approval by each hospital

within the system to sell at that particular hospital.

Additionally, hospitals typically require separate VAC approval for each

specialty in which a product is used, which may result in multiple VAC approval processes within the same hospital even if

such product has already been approved for use by a different specialty group.

VAC approval is often needed for each different

product to be used by the surgeons in that specialty.

In addition, hospital facilities and group purchasing organizations, or GPOs,

which manage purchasing for multiple facilities, may also require us to enter into a purchasing agreement and satisfy

numerous elements of their administrative procurement process, which can also be a lengthy, costly and time-consuming effort.

do not receive access to hospital facilities in a timely manner, or at all, via these VAC and purchasing contract processes, or

otherwise, or if we are unable to secure contracts on commercially reasonable terms in a timely manner, or at all, our

costs may increase, our sales may decrease and our operating results may be harmed.

long-term growth depends on our ability to develop and commercialize additional product candidates.

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to our business that we continue to enhance our product candidate offerings and introduce new product candidates.

Developing new

product candidates is expensive and time-consuming.

Even if we are successful in developing additional product candidates, the

success of any new product candidates or enhancements to existing product candidates will depend on several factors, including

our ability to:

Developing new product

candidates is expensive and time-consuming.

Even if we are successful in developing additional product candidates, the success of any

new product candidates or enhancements to existing product candidates will depend on several factors, including our ability to:

identify and anticipate surgeon and patient needs;

1 unchanged sentence

an effective and dedicated sales and marketing team;

infringing upon the intellectual property rights of third-parties;

infringing upon the intellectual property rights of others;

if required, the safety and efficacy of new product candidates with data from preclinical studies and clinical trials;

3 unchanged sentences

adequate coverage and reimbursement for procedures performed with our product candidates.

we are unsuccessful in developing and commercializing additional devices in other areas, our ability to increase our revenue may

technologies, techniques or products could emerge that might offer better combinations of price and performance than the products

and services that we plan to offer.

Existing markets for surgical devices are characterized by rapid technological change and

It is critical to our success that we anticipate changes in technology and customer requirements and physician, hospital

and healthcare provider practices.

It is also important that we successfully introduce new, enhanced and competitive product candidates

to meet our prospective customers’

needs on a timely and cost-effective basis.

At the same time, however, we must carefully

manage our introduction of new product candidates.

If potential customers believe that such product candidates will offer enhanced

features or be sold for a more attractive price, they may delay purchases until such product candidates are available.

also continue to offer older obsolete products as we transition to new product candidates, and we may not have sufficient experience

managing transitions.

If we do not successfully innovate and introduce new technology into our anticipated product lines or successfully

manage the transitions of our technology to new product offerings, our revenue, results of operations and business could be adversely

we are unsuccessful in developing and commercializing additional devices in other areas, our ability to realize our revenue may

technologies, techniques or products could emerge that might offer better combinations of price and performance than the products and

services that we plan to offer.

Existing markets for surgical devices are characterized by rapid technological change and innovation.

It is critical to our success that we anticipate changes in technology and customer requirements and physician, hospital and healthcare

provider practices.

It is also important that we successfully introduce new, enhanced and competitive product candidates to meet our

prospective customers’ needs on a timely and cost-effective basis.

At the same time, however, we must carefully manage our introduction

of new product candidates.

If potential customers believe that such product candidates will offer enhanced features or be sold for a

more attractive price, they may delay purchases until such product candidates are available.

We may also continue to offer older obsolete

products as we transition to new product candidates, and we may not have sufficient experience managing transitions.

If we do not successfully

innovate and introduce new technology into our anticipated product lines or successfully manage the transitions of our technology to

new product offerings, our revenue, results of operations and business could be adversely impacted.

competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, industry

standards, distribution reach or customer requirements.

We anticipate that we will face strong competition in the future as current

or future competitors develop new or improved product candidates and as new companies enter the market with novel technologies.

we are unable to produce an adequate supply of our product candidates for use in our current and planned clinical trials or for

commercialization because of our limited manufacturing resources or our facility is damaged or becomes inoperable, our regulatory,

development and commercialization efforts may be delayed.

We anticipate that we will face strong competition in the future as current or

future competitors develop new or improved product candidates and as new companies enter the market with novel technologies.

we are unable to produce an adequate supply of our product candidates for use in our current and planned clinical trials or for commercialization

because of our limited manufacturing resources or our facility is damaged or becomes inoperable, our regulatory, development and commercialization

efforts may be delayed.

manufacturing resources for our product candidates are limited.

We currently manufacture our product candidates for our research

and development purposes at our manufacturing facility in Irvine, California.

If our existing manufacturing facility experiences

a disruption, we would have no other means of manufacturing our product candidates until we are able to restore the manufacturing

We currently manufacture our product candidates for our research and

development and clinical trial purposes at our manufacturing facility in Irvine, California.

If our existing manufacturing facility

experiences a disruption, we would have no other means of manufacturing our product candidates until we are able to restore the manufacturing

capability at our current facility or develop alternative manufacturing facilities.

Additionally, any damage to or destruction

of our facilities or our equipment, prolonged power outage or contamination at our facilities would significantly impair our ability

to produce our product candidates and prepare our product candidates for clinical trials.

Additionally, any damage to or destruction of our

facilities or our equipment, prolonged power outage or contamination at our facilities would significantly impair our ability to produce

our product candidates and prepare our product candidates for clinical trials.

Additionally,

in order to produce our product candidates in the quantities that will be required for commercialization, we will have to increase

or “scale up”

our production process over the current level of production.

We may encounter difficulties in scaling

up our production, including issues involving yields, controlling and anticipating costs, quality control and assurance, supply

and shortages of qualified personnel.

If our scaled-up production process is not efficient or results in a product that does not

meet quality or other standards, we may be unable to meet market demand and our revenues, business and financial prospects would

be adversely affected.

Further, third parties with whom we may develop relationships may not have the ability to produce the quantities

of the materials we may require for clinical trials or commercial sales or may be unable to do so at prices that allow us to price

our products competitively.

in order to produce our product candidates in the quantities that will be required for commercialization, we will have to increase or

“scale up” our production process over the current level of production.

We may encounter difficulties in scaling up our production,

including issues involving yields, controlling and anticipating costs, quality control and assurance, supply and shortages of qualified

If our scaled-up production process is not efficient or results in a product that does not meet quality or other standards,

we may be unable to meet market demand and our revenues, business and financial prospects would be adversely affected.

Further, third

parties with whom we may develop relationships may not have the ability to produce the quantities of the materials we may require for

clinical trials or commercial sales or may be unable to do so at prices that allow us to price our products competitively.

facility and equipment would be costly to replace and could require substantial lead time to repair or replace.

The facility may

be harmed or rendered inoperable by natural or man-made disasters, including earthquakes, flooding, fire, vandalism and power

outages, which may render it difficult to operate our business for some period of time.

While we have taken precautions to safeguard

our facilities, any inability to operate our business during such periods could lead to the loss of customers or harm to our reputation.

We also possess insurance for damage to our property and the disruption of our business, but this insurance may not be sufficient

to cover all of our potential losses and this insurance may not continue to be available to us on acceptable terms, or at all.

currently have no sales and marketing infrastructure and if we are unable to successfully sell and/or license our product candidates

to larger medical device companies, we may need to commercialize our product candidates on our own, if approved, and may be unable

to do so or may never generate sufficient revenue to achieve or sustain profitability.

order to commercialize products that are approved by regulatory agencies, our current business model is to license or sell our

product candidates to large medical device companies.

We may not be able to enter into license or sale agreements on acceptable

terms or at all, which would leave us unable to progress our current business plan.

Our ability to reach a definitive agreement

for collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the

terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors.

we are unable to maintain or reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we

may have to curtail the development of our product candidates, reduce or delay development programs, delay potential commercialization

of our product candidates or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake

development or commercialization activities at our own expense.

even if we are able to maintain and/or enter into such collaborations, such collaborations may pose a number of risks, including

the following:

collaborators

may not perform their obligations as expected;

disagreements

with collaborators might cause delays or termination of the research, development or commercialization of our product candidates,

might lead to additional responsibilities for us with respect to such devices, or might result in litigation or arbitration,

any of which would be time-consuming and expensive;

collaborators

could independently develop or be associated with products that compete directly or indirectly with our product candidates;

collaborators

could have significant discretion in determining the efforts and resources that they will apply to our arrangements with them,

and thus we may have limited or no control over the sales, marketing and distribution activities;

any of our product candidates achieve regulatory approval, a collaborator with marketing and distribution rights to our product

candidates may not commit sufficient resources to the marketing and distribution of such product candidates;

collaborators

may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way

as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose

us to potential litigation;

collaborators

may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;

collaborations

may be terminated for the convenience of the collaborator and, if terminated, we could be required to either find alternative

collaborators (which we may be unable to do) or raise additional capital to pursue further development or commercialization

of our product candidates on our own.

business would be materially or perhaps significantly harmed if any of the foregoing or similar risks comes to pass with respect

to our key collaborations.

it becomes necessary for us to establish a sales and marketing infrastructure, we may not be able to do so or we may not realize

a positive return on this investment.

We would have to compete with established and well-funded medical device companies to recruit,

hire, train and retain sales and marketing personnel.

Once hired, the training process is lengthy because it requires significant

education of new sales representatives to achieve the level of clinical competency with our products expected by specialists.

Upon completion of the training, we expect our sales representatives would typically require lead time in the field to grow their

network of accounts and achieve the productivity levels we expect them to reach in any individual territory.

If we are unable

to attract, motivate, develop and retain a sufficient number of qualified sales personnel, or if our sales representatives do

not achieve the productivity levels in the time period we expect them to reach, our revenue will not grow at the rate we expect

and our business, results of operations and financial condition will suffer.

Also, to the extent we hire sales personnel from

our competitors, we may be required to wait until applicable non-competition provisions have expired before deploying such personnel

in restricted territories or incur costs to relocate personnel outside of such territories.

Any of these risks may adversely affect

our ability to increase sales of our product candidates.

If we are unable to expand our sales and marketing capabilities, we may

not be able to effectively commercialize our product candidates, which would adversely affect our business, results of operations

and financial condition.

liability lawsuits against us could cause us to incur substantial liabilities, limit sales of our existing product candidates

and limit commercialization of any products that we may develop.

business exposes us to the risk of product liability claims that are inherent in the manufacturing, distribution, and sale of

medical devices.

This risk exists even if a device is cleared or approved for commercial sale by the FDA and manufactured in facilities

licensed and regulated by the FDA or an applicable foreign regulatory authority.

Manufacturing and marketing of our commercial

devices and clinical testing of our product candidates under development, may expose us to product liability and other tort claims.

Furthermore, surgeons may misuse our product candidates or use improper techniques if they are not adequately trained, potentially

leading to injury and an increased risk of product liability.

If our product candidates are misused or used with improper technique,

we may become subject to costly litigation by our customers or their patients.

Regardless of the merit or eventual outcome, product

liability claims may result in:

The facility may be harmed

or rendered inoperable by natural or man-made disasters, including earthquakes, flooding, fire, vandalism and power outages, which may

render it difficult to operate our business for some period of time.

While we have taken precautions to safeguard our facilities, any

inability to operate our business during such periods could lead to the loss of customers or harm to our reputation.

We also possess

insurance for damage to our property and the disruption of our business, but this insurance may not be sufficient to cover all of our

potential losses and this insurance may not continue to be available to us on acceptable terms, or at all.

We currently have no

sales and marketing infrastructure and we may not be able to build a sales and marketing infrastructure sufficient for us to commercialize our current product candidate or future product candidates, if approved, and may be unable to do

so or may never generate sufficient revenue to achieve or sustain profitability.

In order to commercialize products

that are approved by regulatory agencies, we will have to increase our expenditures to undertake development or commercialization

If we are unable to successfully execute commercialization activities, we may have to curtail the development of our product

candidates, reduce or delay development programs, delay potential commercialization of our product candidates or reduce the scope of

any sales or marketing activities.

it becomes necessary for us to establish a sales and marketing infrastructure, we may not be able to do so or we may not realize a positive

return on this investment.

We would have to compete with established and well-funded medical device companies to recruit, hire, train

and retain sales and marketing personnel.

Once hired, the training process is lengthy because it requires significant education of new

sales representatives to achieve the level of clinical competency with our products expected by specialists.

Upon completion of the training,

we expect our sales representatives would typically require lead time in the field to grow their network of accounts and achieve the

productivity levels we expect them to reach in any individual territory.

If we are unable to attract, motivate, develop and retain a

sufficient number of qualified sales personnel, or if our sales representatives do not achieve the productivity levels in the time period

we expect them to, our revenue will not grow at the rate we expect and our business, results of operations and financial condition will

Also, to the extent we hire sales personnel from our competitors, we may be required to wait until applicable non-competition

provisions have expired before deploying such personnel in restricted territories or incur costs to relocate personnel outside of such

Any of these risks may adversely affect our ability to increase sales of our product candidates.

If we are unable to expand

our sales and marketing capabilities, we may not be able to effectively commercialize our product candidates, which would adversely affect

our business, results of operations and financial condition.

liability lawsuits against us could cause us to incur substantial liabilities, limit sales of our existing product candidates and limit

commercialization of any products that we may develop.

business exposes us to the risk of product liability claims that are inherent in the manufacturing, distribution, and sale of medical

This risk exists even if a device is cleared or approved for commercial sale by the FDA and manufactured in facilities licensed

and regulated by the FDA or an applicable foreign regulatory authority.

Manufacturing and marketing of our commercial devices and clinical

testing of our product candidates, may expose us to product liability and other tort claims.

Furthermore, surgeons may misuse our product

candidates or use improper techniques if they are not adequately trained, potentially leading to injury and an increased risk of product

If our product candidates are misused or used with improper technique, we may become subject to costly litigation by our customers

or their patients.

Regardless of the merit or eventual outcome, product liability claims may result in:

litigation costs;

4 unchanged sentences

inability to commercialize any product candidates that we may develop.

we intend to maintain liability insurance, the coverage limits of our insurance policies may not be adequate, and one or more

successful claims brought against us may have a material adverse effect on our business and results of operations.

If we are unable

to obtain insurance in the future at an acceptable cost or on acceptable terms with adequate coverage, we will be exposed to significant

we maintain liability insurance, the coverage limits of our insurance policies may not be adequate, and one or more successful claims

brought against us may have a material adverse effect on our business and results of operations.

If we are unable to obtain insurance

in the future at an acceptable cost or on acceptable terms with adequate coverage, we will be exposed to significant liabilities.

loss of our executive officers or our inability to attract and retain qualified personnel may adversely affect our business, financial

conditions and results of operations.

business and operations depend to a significant degree on the skills, efforts and continued services of our executive officers

who have critical industry experience and relationships.

Although we have entered into employment agreements with our executive

officers, they may terminate their employment with us at any time.

Accordingly, these executive officers may not remain associated

The efforts of these persons will be critical to us as we continue to develop our product candidates and business.

do not carry key person life insurance on any of our management, which would leave our company uncompensated for the loss of any

of our executive officers.

business and operations depend to a significant degree on the skills, efforts and continued services of our executive officers who have

critical industry experience and relationships.

Although we have entered into employment agreements with our executive officers, they

may terminate their employment with us at any time.

Accordingly, these executive officers may not remain associated with us.

of these persons will be critical to us as we continue to develop our product candidates and business.

We do not carry key person life

insurance on any of our management, which would leave our company uncompensated for the loss of any of our executive officers.

competition for highly-skilled and qualified personnel is intense.

As such, our future viability and ability to achieve sales

and profit will also depend on our ability to attract, train, retain and motivate highly qualified personnel in the diverse areas

required for continuing our operations.

If we were to lose the services one or more of our current executive officers or if we

are unable to attract, hire and retain qualified personnel, we may experience difficulties in competing effectively, developing

and commercializing our products and implementing our business strategies, which could have a material adverse effect on our business,

operations and financial condition.

As such, our future viability and ability to achieve sales and profit

will also depend on our ability to attract, train, retain and motivate highly qualified personnel in the diverse areas required for continuing

our operations.

If we were to lose the services one or more of our current executive officers or if we are unable to attract, hire and

retain qualified personnel, we may experience difficulties in competing effectively, developing and commercializing our products and

implementing our business strategies, which could have a material adverse effect on our business, operations and financial condition.

ability to use our net operating loss carry-forwards and certain other tax attributes may be limited.

of December 31, 2020 and 2019, we had available federal net operating loss carryforwards, or NOLs, of approximately $35.0

and $26.1 million.

Pre-2018 federal NOLs carryovers of $12.0 million may be carried forward for twenty years and begin

of December 31, 2021 and 2020, we had available federal net operating loss carryforwards, or NOLs, of approximately $45.7 million and

$35.0 million.

Pre-2018 federal NOLs carryovers of $12.0 million may be carried forward for twenty years and begin to expire in 2029.

Under the Tax Act, post-2017 federal NOLs can be carried forward indefinitely and the annual limit of deduction equals 80% of taxable

However, to the extent the Company utilizes its NOL carryforwards in the future, the tax years in which the attribute was generated

may still be adjusted upon examination by the Internal Revenue Service or state tax authorities of the future period tax return in which

the attribute is used.

As of December 31, 2021, and 2020, the Company had net operating loss carryforwards for state income tax purposes

of approximately $45.7 million and $35.0 million, respectively, which can be carried forward for twenty years and begin to expire in

of December 31, 2021, we also had federal research and development tax credit carryforwards of approximately $0.2 million which begin

to expire in 2027.

Under the Tax Act, post-2017 federal NOLs can be carried forward indefinitely and the annual limit of

deduction equals 80% of taxable income.

However, to the extent the Company utilizes its NOL carryforwards in the future, the

tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state

tax authorities of the future period tax return in which the attribute is used.

As of December 31, 2020, and 2019, the Company

had net operating loss carryforwards for state income tax purposes of approximately $35.0 million and $26.1 million, respectively,

which can be carried forward for twenty years and begin to expire in 2028.

of December 31, 2020, we also had federal research and development tax credit carryforwards of approximately $0.2 million

which begin to expire in 2027.

In general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the

Code, a corporation that undergoes an “ownership change”

(generally defined as a cumulative change in equity ownership

by “5% shareholders”

that exceeds 50 percentage points over a rolling three-year period) may be subject to limitations

on its ability to utilize its NOLs and certain credit carryforwards to offset future taxable income and taxes.

We are currently

analyzing the tax impacts of any potential ownership changes on our federal NOLs and credit carryforwards.

Future changes in our

stock ownership, as well as other changes that may be outside of our control, could result in ownership changes.

credit carryforwards may also be limited under similar provisions of state law.

We have recorded a full valuation allowance related

to our NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future tax benefits of such

In general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation

that undergoes an “ownership change” (generally defined as a cumulative change in equity ownership by “5% shareholders”

that exceeds 50 percentage points over a rolling three-year period) may be subject to limitations on its ability to utilize its NOLs

and certain credit carryforwards to offset future taxable income and taxes.

We have analyzed the tax impacts of ownership changes that

occurred in 2018 and in 2021.

While those ownership changes have resulted in limits to the amount of NOLs that may be used in a given

year, these are all post 2017 NOLs and are carried forward indefinitely.

Future changes in our stock ownership, as well as other changes

that may be outside of our control, could result in additional ownership changes.

Our NOLs and credit carryforwards may also be limited

under similar provisions of state law.

We have recorded a full valuation allowance related to our NOLs and other deferred tax assets

due to the uncertainty of the ultimate realization of the future tax benefits of such assets.

Related to Regulatory Approval and Other Governmental Regulations

business and product candidates are subject to extensive governmental regulation and oversight, and our failure to comply with

applicable regulatory requirements could harm our business.

product candidates and operations are subject to extensive regulation in the United States by the FDA and by regulatory agencies

in other countries where we anticipate conducting business activities.

The FDA regulates the development, testing, manufacturing,

labeling, storage, record-keeping, promotion, marketing, sales, distribution and post-market support and reporting of medical

devices in the United States.

business and product candidates are subject to extensive governmental regulation and oversight, and our failure to comply with applicable

regulatory requirements could harm our business.

product candidates and operations are subject to extensive regulation in the United States by the FDA and by regulatory agencies in other

countries where we anticipate conducting business activities.

The FDA regulates the development, testing, manufacturing, labeling, storage,

record-keeping, promotion, marketing, sales, distribution and post-market support and reporting of medical devices in the United States.

The regulations to which we are subject are complex and may become more stringent over time.

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

than anticipated sales.

order to conduct a clinical investigation involving human subjects for the purpose of demonstrating the safety and effectiveness

of a medical device, a company must, among other things, apply for and obtain Institutional Review Board, or IRB, approval of

the proposed investigation.

In addition, if the clinical study involves a “significant risk”

(as defined by the FDA)

to human health, the sponsor of the investigation must also submit and obtain FDA approval of an IDE application.

candidates are considered significant risk devices requiring IDE approval prior to investigational use.

We may not be able to

obtain FDA and/or IRB approval to undertake clinical trials in the United States for any new devices we intend to market in the

United States in the future.

If we obtain such approvals, we may not be able to conduct studies which comply with the IDE and

other regulations governing clinical investigations or the data from any such trials may not support clearance or approval of

the investigational device.

Failure to obtain such approvals or to comply with such regulations could have a material adverse

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

It is uncertain whether clinical trials will meet desired

endpoints, produce meaningful or useful data and be free of unexpected adverse effects, or that the FDA will accept the validity

of foreign clinical study data, and such uncertainty could preclude or delay market clearance or authorizations resulting in significant

financial costs and reduced revenue.

product candidates will be subject to extensive governmental regulation in foreign jurisdictions, such as the EEA, and

our failure to comply with applicable requirements could cause our business, results of operations and financial condition to

Regulatory changes could result in restrictions

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

order to conduct a clinical investigation involving human subjects for the purpose of demonstrating the safety and effectiveness of a

medical device, a company must, among other things, apply for and obtain Institutional Review Board, or IRB, approval of the proposed

investigation.

In addition, if the clinical study involves a “significant risk” (as defined by the FDA) to human health,

the sponsor of the investigation must also submit and obtain FDA approval of an IDE application.

Our product candidates are considered

significant risk devices requiring IDE approval prior to investigational use.

We may not be able to obtain FDA and/or IRB approval to

undertake clinical trials in the United States for any new devices we intend to market in the United States in the future.

such approvals, we may not be able to conduct studies which comply with the IDE and other regulations governing clinical investigations

or the data from any such trials may not support clearance or approval of the investigational device.

Failure to obtain such approvals

or to comply with such regulations could have a material adverse effect on our business, financial condition and results of operations.

It is uncertain whether clinical trials will meet desired endpoints, produce meaningful or useful data and be free of unexpected adverse

effects, or that the FDA will accept the validity of foreign clinical study data, and such uncertainty could preclude or delay market

clearance or authorizations resulting in significant financial costs and reduced revenue.

product candidates may be subject to extensive governmental regulation in foreign jurisdictions, such as the EEA, and our failure

to comply with applicable requirements could cause our business, results of operations and financial condition to suffer.

the EEA, our product candidates will need to comply with the Essential Requirements set forth in Medical Device Regulation.

with these requirements is a prerequisite to be able to affix a CE mark to a product, without which a product cannot be marketed

or sold in the EEA.

To demonstrate compliance with the Essential Requirements and obtain the right to affix the CE mark to our

product candidates, we must undergo a conformity assessment procedure, which varies according to the type of medical device and

its classification.

The conformity assessment procedure requires the involvement of a Notified Body, which is an organization

designated by a competent authority of an EEA country to conduct conformity assessments.

The Notified Body would audit and examine

the Technical File and the quality system for the manufacture, design and final inspection of our products.

The Notified Body

issues a CE Certificate of Conformity following successful completion of a conformity assessment procedure and quality management

system audit conducted in relation to the medical device and its manufacturer and their conformity with the Essential Requirements.

This Certificate entitles the manufacturer to affix the CE mark to its medical products after having prepared and signed a related

EC Declaration of Conformity.

a general rule, demonstration of conformity of medical products and their manufacturers with the Essential Requirements must be

based, among other things, on the evaluation of clinical 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 and 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 (e.g.,

product labeling and instructions for use) are supported by suitable evidence.

This assessment must be based on clinical data,

which can be obtained from (1) clinical studies conducted on the devices being assessed, (2) scientific literature from similar

devices whose equivalence with the assessed device can be demonstrated or (3) both clinical studies and scientific literature.

However, the pre-approval and post-market clinical requirements are much more rigorous.

The conduct of clinical studies in the

EEA is governed by detailed regulatory obligations.

These may include the requirement of prior authorization by the competent

authorities of the country in which the study takes place and the requirement to obtain a positive opinion from a competent Ethics

with these requirements is a prerequisite to be able to affix a CE mark to a product, without which a product cannot be marketed or sold

To demonstrate compliance with the Essential Requirements and obtain the right to affix the CE mark to our product candidates,

we must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.

The conformity

assessment procedure requires the involvement of a Notified Body, which is an organization designated by a competent authority of an

EEA country to conduct conformity assessments.

The Notified Body would audit and examine the Technical File and the quality system for

the manufacture, design and final inspection of our products.

The Notified Body issues a CE Certificate of Conformity following successful

completion of a conformity assessment procedure and quality management system audit conducted in relation to the medical device and its

manufacturer and their conformity with the Essential Requirements.

This Certificate entitles the manufacturer to affix the CE mark to

its medical products after having prepared and signed a related EC Declaration of Conformity.

a general rule, demonstration of conformity of medical products and their manufacturers with the Essential Requirements must be based,

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

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

and 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 (e.g., product labeling and instructions

for use) are supported by suitable evidence.

This assessment must be based on clinical data, which can be obtained from (1) clinical

studies conducted on the devices being assessed, (2) scientific literature from similar devices whose equivalence with the assessed device

can be demonstrated or (3) both clinical studies and scientific literature.

However, the pre-approval and post-market clinical requirements

are much more rigorous.

The conduct of clinical studies in the EEA is governed by detailed regulatory obligations.

These may include

the requirement of prior authorization by the competent authorities of the country in which the study takes place and the requirement

to obtain a positive opinion from a competent Ethics Committee.

This process can be expensive and time-consuming.

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may be marketed in the United States, we must submit, and the FDA must approve a PMA application.

For the PMA approval process,

the FDA must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data, including,

but not limited to, technical, pre-clinical, clinical trial, manufacturing and labeling data.

In addition, modifications to products

that are approved through a PMA application generally require FDA approval.

The time required to obtain approval, clearance or

license by the FDA to market a new therapy is unpredictable but typically takes many years and depends upon many factors, including

the substantial discretion of the FDA.

For the PMA approval process, the FDA

must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data, including, but not

limited to, technical, pre-clinical, clinical trial, manufacturing and labeling data.

In addition, modifications to products that are

approved through a PMA application generally require FDA approval.

The time required to obtain approval, clearance or license by the

FDA to market a new therapy is unpredictable but typically takes many years and depends upon many factors, including the substantial

discretion of the FDA.

product candidates could fail to receive regulatory approval, clearance or license for many reasons, including the following:

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indications or that our product candidates provide significant clinical benefits;

results of our clinical trials may not meet the level of statistical significance required by the FDA for approval, clearance

or license or may not support approval of a label that could command a price sufficient for us to be profitable;

results of our clinical trials may not meet the level of statistical significance required by the FDA for approval, clearance or

license or may not support approval of a label that could command a price sufficient for us to be profitable;

FDA may disagree with our interpretation of data from preclinical studies or clinical trials;

opportunity for bias in the clinical trials as a result of the open-label design may not be adequately handled and may cause

our trial to fail;

product candidates may be subject to an FDA advisory committee review, which may be requested at the sole discretion of the

FDA, and which may result in unexpected delays or hurdles to approval;

FDA may determine that the manufacturing processes at our facilities or facilities of third-party manufacturers with which

we contract for clinical and commercial supplies are inadequate;

FDA may determine we cannot continue our clinical trials due to adverse patient reactions including patient deaths for reasons

unrelated to our products;

approval, clearance or license policies or regulations of the FDA may significantly change in a manner rendering our clinical

data insufficient for approval.

if we were to obtain approval, clearance or license, the FDA may grant approval, clearance or license contingent on the performance

of costly post-marketing clinical trials or may approve our product candidates with a label that does not include the labeling

claims necessary or desirable for successful commercialization of our product candidates.

Any of the above could materially harm

our product candidates’

opportunity for bias in the clinical trials as a result of the open-label design may not be adequately handled and may cause our

trial to fail;

product candidates may be subject to an FDA advisory committee review, which may be requested at the sole discretion of the FDA,

and which may result in unexpected delays or hurdles to approval;

FDA may determine that the manufacturing processes at our facilities or facilities of third-party manufacturers with which we contract

for clinical and commercial supplies are inadequate;

FDA may determine we cannot continue our clinical trials due to adverse patient reactions including patient deaths for reasons unrelated

to our products;

approval, clearance or license policies or regulations of the FDA may significantly change in a manner rendering our clinical data

insufficient for approval.

if we were to obtain approval, clearance or license, the FDA may grant approval, clearance or license contingent on the performance of

costly post-marketing clinical trials or may approve our product candidates with a label that does not include the labeling claims necessary

or desirable for successful commercialization of our product candidates.

Any of the above could materially harm our product candidates’

commercial prospects.

if our product candidates are approved by regulatory authorities, if we fail to comply with ongoing regulatory requirements, or

if we experience unanticipated problems with our product candidates, our product candidates could be subject to restrictions or

withdrawal from the market.

manufacturing processes, post-approval clinical data and promotional activities of any product candidate for which we or our collaborators

obtain marketing approval will be subject to continual review and periodic inspections by the FDA and other regulatory bodies.

Even if regulatory approval of our product candidates is granted in the United States, the approval may be subject to limitations

on the indicated uses for which the product candidates may be marketed or contain requirements for costly post-marketing testing

and surveillance to monitor the safety or effectiveness of the product.

Later discovery of previously unknown and unanticipated

problems with our product candidates, including but not limited to unanticipated severity or frequency of adverse events, delays

or problems with the manufacturer or manufacturing processes, or failure to comply with regulatory requirements, may result in

restrictions on such product candidates or manufacturing processes, withdrawal of the product candidates from the market, voluntary

or mandatory recall, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal

are required to report certain malfunctions, deaths and serious injuries associated with our product once approved by regulatory

if our product candidates are approved by regulatory authorities, if we fail to comply with ongoing regulatory requirements, or if we

experience unanticipated problems with our product candidates, our product candidates could be subject to restrictions or withdrawal

from the market.

manufacturing processes, post-approval clinical data and promotional activities of any product candidate for which we obtain marketing approval will be subject to continual review and periodic inspections by the FDA and other regulatory bodies.

regulatory approval of our product candidates is granted in the United States, the approval may be subject to limitations on the indicated

uses for which the product candidates may be marketed or contain requirements for costly post-marketing testing and surveillance to monitor

the safety or effectiveness of the product.

Later discovery of previously unknown and unanticipated problems with our product candidates,

including but not limited to unanticipated severity or frequency of adverse events, delays or problems with the manufacturer or manufacturing

processes, or failure to comply with regulatory requirements, may result in restrictions on such product candidates or manufacturing

processes, withdrawal of the product candidates from the market, voluntary or mandatory recall, fines, suspension of regulatory approvals,

product seizures, injunctions or the imposition of civil or criminal penalties.

are required to report certain malfunctions, deaths and serious injuries associated with our products once approved by regulatory

bodies, which can result in voluntary corrective actions or agency enforcement actions.

manufacturers marketing medical devices in the EEA are legally bound to report incidents involving devices they produce or sell

to the regulatory agency, or competent authority, in whose jurisdiction the incident occurred.

Under the EU Medical Devices Directive

(Directive 93/42/EEC), an incident is defined as any malfunction or deterioration in the characteristics and/or performance of

a device, as well as any inadequacy in the labeling or the instructions for use which, directly or indirectly, might lead to or

might have led to the death of a patient, or user or of other persons or to a serious deterioration in their state of health.

In addition, under the EU MDR, the manufacturers are obligated to publish Periodic Safety Update Report (annually for high risk

devices) which will be uploaded to EUDAMED and require conformity assessment by Notified Bodies.

or misuse of our product candidates could result in future voluntary corrective actions, such as recalls, including corrections

(e.g., customer notifications), or agency action, such as inspection or enforcement actions.

If malfunctions or misuse do occur,

we may be unable to correct the malfunctions adequately or prevent further malfunctions or misuse, in which case we may need to

cease manufacture and distribution of the affected products, initiate voluntary recalls, and redesign the products or the instructions

for use for those products.

Regulatory authorities may also take actions against us, such as ordering recalls, imposing fines,

or seizing the affected products.

Any corrective action, whether voluntary or involuntary, will require the dedication of our

time and capital, may distract management from operating our business, and may harm our business, results of operations and financial

or regulatory reforms in the United States or the EU may make it more difficult and costly for us to obtain regulatory clearances

or approvals for our product candidates or to manufacture, market or distribute our product candidates after clearance or approval

manufacturers marketing medical devices in the EEA are legally bound to report incidents involving devices they produce or sell to the

regulatory agency, or competent authority, in whose jurisdiction the incident occurred.

Under the EU Medical Devices Directive (Directive

93/42/EEC), an incident is defined as any malfunction or deterioration in the characteristics and/or performance of a device, as well

as any inadequacy in the labeling or the instructions for use which, directly or indirectly, might lead to or might have led to the death

of a patient, or user or of other persons or to a serious deterioration in their state of health.

In addition, under the EU MDR, the

manufacturers are obligated to publish Periodic Safety Update Report (annually for high risk devices) which will be uploaded to EUDAMED

and require conformity assessment by Notified Bodies.

or misuse of our product candidates could result in future voluntary corrective actions, such as recalls, including corrections (e.g.,

customer notifications), or agency action, such as inspection or enforcement actions.

If malfunctions or misuse do occur, we may be unable

to correct the malfunctions adequately or prevent further malfunctions or misuse, in which case we may need to cease manufacture and

distribution of the affected products, initiate voluntary recalls, and redesign the products or the instructions for use for those products.

Regulatory authorities may also take actions against us, such as ordering recalls, imposing fines, or seizing the affected products.

Any corrective action, whether voluntary or involuntary, will require the dedication of our time and capital, may distract management

from operating our business, and may harm our business, results of operations and financial condition.

or regulatory reforms in the United States or the EU may make it more difficult and costly for us to obtain regulatory clearances or

approvals for product candidates or to manufacture, market or distribute product candidates after clearance or approval is obtained.

time to time, legislation is drafted and introduced in the U.S.

Congress that could significantly change the statutory provisions

governing the regulation of medical devices or the reimbursement thereof.

In addition, the FDA regulations and guidance are often

revised or reinterpreted by the FDA in ways that may significantly affect our business and our product candidates.

as part of the Food and Drug Administration Safety and Innovation Act, or FDASIA, Congress 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

Any new statutes, regulations or revisions or reinterpretations of existing regulations may impose additional costs

or lengthen review times of any future products or make it more difficult to manufacture, market or distribute our product candidates

or future products.

We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and

if promulgated, enacted or adopted may have on our business in the future.

Congress that could significantly change the statutory provisions governing

the regulation of medical devices or the reimbursement thereof.

In addition, the FDA regulations and guidance are often revised or reinterpreted

by the FDA in ways that may significantly affect our business and our product candidates.

For example, as part of the Food and Drug Administration

Safety and Innovation Act, or FDASIA, Congress 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 or approval.

Any new statutes, regulations or revisions

or reinterpretations of existing regulations may impose additional costs or lengthen review times of any future products or make it more

difficult to manufacture, market or distribute our product candidates or future products.

We cannot determine what effect changes in

regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the

Such changes could, among other things, require:

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of these changes could require substantial time and cost and could harm our business and our financial results.

highly publicized PIP scandal (use of non-medical grade silicone in breast implants) in 2010 led to publishing the first version

of EU Medical Device Regulation (MDR) by European Commission in 2012.

After 347 amendments by European Parliament in 2014, followed

by various versions, the final version of the new EU Medical Device Regulation (MDR 2017/745) was published on May 5, 2017.

official entry to force of the MDR started on May 26, 2017 with the transition period of 3 years.

The date of application of all

existing and new medical devices under MDR is May 26, 2020;

however, Notified Bodies are currently not accepted any new CE Mark

applications under MDD (Medical Device Directives).

highly publicized PIP scandal (use of non-medical grade silicone in breast implants) in 2010 led to publishing the first version of EU

Medical Device Regulation (MDR) by European Commission in 2012.

After 347 amendments by European Parliament in 2014, followed by various

versions, the final version of the new EU Medical Device Regulation (MDR 2017/745) was published on May 5, 2017.

The official entry to

force of the MDR started on May 26, 2017 with the transition period of 3 years.

The date of application of all existing and new medical

devices under MDR is May 26, 2020;

however, Notified Bodies are currently not accepting any new CE Mark applications under MDD

(Medical Device Directives).

All existing MDD CE certificates become void on May 26, 2024.

that all existing and new medical device undergo assessment under MDR as if they are new product application.

EU requires that all existing and new medical

device undergo assessment under MDR as if they are new product application.

changes from EU Medical Device Directives (MDD) to Medical Device Regulation (MDR) are significant, with stricter clinical requirements

and post-market surveillance, shift from pre-approval to Life-cycle approach, centralized EUDAMED database for public transparency

and post-market surveillance, shift from pre-approval to Life-cycle approach, centralized EUDAMED database for public transparency (e.g.

Periodic Safety Update Reports) and device registration, more device specific requirements (e.g.

Common Specifications),

legal liability for defective devices, etc.

The QMS audit under MDR will be much more rigorous, including audits and assessment

of suppliers and device testing.

In addition, EU MDR introduces new stakeholders participating during the application review process,

which will result in a longer and more burdensome assessment of our new products.

The new stakeholders will include Medical Device

Coordination Group (MDCG) established by Member States and Expert Panels appointed by European Union.

under the FDA’s Medical Device Reporting or MDR regulations, we are required to report to the FDA any incident in which

our product candidates may have caused or contributed to a death or serious injury or in which our product malfunctioned and,

if the malfunction were to recur, would likely cause or contribute to death or serious injury.

Any adverse event involving our

products could result in future voluntary corrective actions, such as product actions or customer notifications, or regulatory

authority actions, such as inspection, mandatory recall or other enforcement action.

Repeated product malfunctions may result

in a voluntary or involuntary product recall, which could divert managerial and financial resources, impair our ability to manufacture

our product candidates in a cost-effective and timely manner and have an adverse effect on our reputation, financial condition

and operating results.

depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA may require, or we may

decide, that we will need to obtain new approvals or clearances for the device before we may market or distribute the corrected

Seeking such approvals or clearances may delay our ability to replace the recalled devices in a timely manner.

if we do not adequately address problems associated with our product candidates, we may face additional regulatory enforcement

action, including FDA warning letters, product seizure, injunctions, administrative penalties, withdrawals or clearances or approvals

or civil or criminal fines.

We may also be required to bear other costs or take other actions that may have a negative impact

on our sales as well as face significant adverse publicity or regulatory consequences, which could harm our business, including

our ability to market our product candidates in the future.

are subject to federal, state and foreign healthcare laws and regulations, and a finding of failure to comply with such laws and

regulations could have a material and adverse effect on our business.

operations are, and will continue to be, directly and indirectly affected by various federal, state or foreign healthcare laws,

including, but not limited to, those described below.

Common Specifications), legal liability

for defective devices, etc.

The QMS audit under MDR will be much more rigorous, including audits and assessment of suppliers and device

In addition, EU MDR introduces new stakeholders participating during the application review process, which will result in a

longer and more burdensome assessment of our new products.

The new stakeholders will include Medical Device Coordination Group (MDCG)

established by Member States and Expert Panels appointed by European Union.

under the FDA’s Medical Device Reporting or MDR regulations, we are required to report to the FDA any incident in which our product

candidates may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction

were to recur, would likely cause or contribute to death or serious injury.

Any adverse event involving our products could result in

future voluntary corrective actions, such as product actions or customer notifications, or regulatory authority actions, such as inspection,

mandatory recall or other enforcement action.

Repeated product malfunctions may result in a voluntary or involuntary product recall,

which could divert managerial and financial resources, impair our ability to manufacture our product candidates in a cost-effective and

timely manner and have an adverse effect on our reputation, financial condition and operating results.

depending on the corrective action we take to redress a product’s deficiencies or defects, the FDA may require, or we may decide,

that we will need to obtain new approvals or clearances for the device before we may market or distribute the corrected device.

such approvals or clearances may delay our ability to replace the recalled devices in a timely manner.

Moreover, if we do not adequately

address problems associated with our product candidates, we may face additional regulatory enforcement action, including FDA warning

letters, product seizure, injunctions, administrative penalties, withdrawals or clearances or approvals or civil or criminal fines.

may also be required to bear other costs or take other actions that may have a negative impact on our sales as well as face significant

adverse publicity or regulatory consequences, which could harm our business, including our ability to market our product candidates in

are subject to federal, state and foreign healthcare laws and regulations, and a finding of failure to comply with such laws and regulations

could have a material and adverse effect on our business.

operations are, and will continue to be, directly and indirectly affected by various federal, state or foreign healthcare laws, including,

but not limited to, those described below.

These laws include:

federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving,

offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual

for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare

programs, such as the Medicare and Medicaid programs.

A person or entity does not need to have actual knowledge of the federal

Anti-Kickback Statute or specific intent to violate it to have committed a violation.

In addition, the government may assert

that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false

or fraudulent claim for purposes of the False Claims Act.

Violations of the federal Anti-kickback Statute may result in substantial

civil or criminal penalties, including criminal fines of up to $25,000, imprisonment of up to five years, civil penalties

under the Civil Monetary Penalties Law of up to $50,000 for each violation, plus three times the remuneration involved, civil

penalties under the federal False Claims Act of up to $11,000 for each claim submitted, plus three times the amounts paid

for such claims and exclusion from participation in the Medicare and Medicaid programs;

federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing

to be presented, claims for payment from Medicare, Medicaid or other federal third-party payors that are false or fraudulent.

Suits filed under the False Claims Act, known as “qui tam”

actions, can be brought by any individual on behalf

of the government and such individuals, commonly known as “whistleblowers,”

may share in any amounts paid by the

entity to the government in fines or settlement.

When an entity is determined to have violated the False Claims Act, the government

may impose penalties of not less than $5,500 and not more than $11,000, plus three times the amount of the damages that the

government sustains due to the submission of a false claim and exclude the entity from participation in Medicare, Medicaid

and other federal healthcare programs;

federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal

healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order

or receive items or services reimbursable by the government from a particular provider or supplier;

as amended by the HITECH Act, and their respective implementing regulations, which governs the conduct of certain electronic

healthcare transactions and protects the security and privacy of protected health information.

Failure to comply with the

HIPAA privacy and security standards can result in civil monetary penalties up to $50,000 per violation, not to exceed $1.5

million per calendar year for non-compliance of an identical provision, and, in certain circumstances, criminal penalties

with fines up to $250,000 per violation and/or imprisonment.

State attorneys general can bring a civil action to enjoin a

HIPAA violation or to obtain statutory damages up to $25,000 per violation on behalf of residents of his or her state.

also imposes criminal penalties for fraud against any healthcare benefit program and for obtaining money or property from

a healthcare benefit program through false pretenses and provides for broad prosecutorial subpoena authority and authorizes

certain property forfeiture upon conviction of a federal healthcare offense.

Significantly, the HIPAA provisions apply not

only to federal programs, but also to private health benefit programs.

HIPAA also broadened the authority of the U.S.

of Inspector General of the U.S.

Department of Health and Human Services to exclude participants from federal healthcare programs;

federal physician sunshine requirements under the Patient Protection and Affordable Care Act, or PPACA, which requires certain

manufacturers of drugs, devices, biologics and medical supplies to report annually to the U.S.

Department of Health and Human

Services information related to payments and other transfers of value to physicians, which is defined broadly to include other

healthcare providers and teaching hospitals and ownership and investment interests held by physicians and their immediate

family members.

Manufacturers are required to submit reports to CMS by the 90th day of each calendar year.

Failure to submit

the required information may result in civil monetary penalties up to an aggregate of $150,000 per year (and up to an aggregate

of $1 million per year for “knowing failures”) for all payments, transfers of value or ownership or investment

interests not reported in an annual submission, and may result in liability under other federal laws or regulations;

state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may

apply to items or services reimbursed by any third- party payor, including commercial insurers;

state laws that require device

companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated

by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral

state laws that require device manufacturers to report information related to payments and other transfers of value

to physicians and other healthcare providers or marketing expenditures;

and state laws governing the privacy and security

of health information in certain circumstances, many of which differ from each other in significant ways and may not have

the same effect, thus complicating compliance efforts.

Any failure by us to ensure that our employees and agents comply with

applicable state and foreign laws and regulations could result in substantial penalties or restrictions on our ability to

conduct business in those jurisdictions, and our results of operations and financial condition could be materially and adversely

risk of our being found in violation of these laws is increased by the fact that many of them have not been fully interpreted

by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations.

Because of the breadth

of these laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible that some

of our business activities, including our relationships with surgeons and other healthcare providers, some of whom recommend,

purchase and/or prescribe our product candidates, and our distributors, could be subject to challenge under one or more of such

our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply

to us now or in the future, we may be subject to penalties, including civil and criminal penalties, damages, fines, disgorgement,

exclusion from governmental health care programs and the curtailment or restructuring of our operations, any of which could adversely

affect our ability to operate our business and our financial results.

Any action against us for violation of these laws, even

if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention

from the operation of our business.

healthcare reform measures and other legislative changes may have a material and adverse effect on business, results of operations

and financial condition.

regulations and guidance are often revised or reinterpreted by FDA and such actions may significantly affect our business and

our product candidates.

Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs

or lengthen review times for our product candidates.

Delays in receipt of, or failure to receive, regulatory approvals for our

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

March 2010, the PPACA was signed into law, which includes a deductible 2.3% excise tax on any entity that manufactures or imports

medical devices offered for sale in the United States, with limited exceptions, that began on January 1, 2013.

Although a two

year moratorium was placed on the medical device excise tax in 2016 and extended through December 31, 2019, it was permanently

repealed on December 20, 2019.

Other elements of the PPACA, including comparative effectiveness research, an independent payment

advisory board and payment system reforms, including shared savings pilots and other provisions, may significantly affect the

payment for, and the availability of, healthcare services and result in fundamental changes to federal healthcare reimbursement

programs, any of which may materially affect numerous aspects of our business, results of operations and financial condition.

federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering

or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase,

order or recommendation of, any good or service for which payment may be made under federal healthcare programs, such as the Medicare

and Medicaid programs.

A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific

intent to violate it to have committed a violation.

In addition, the government may assert that a claim including items or services

resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False

Violations of the federal Anti-kickback Statute may result in substantial civil or criminal penalties, including criminal

fines of up to $25,000, imprisonment of up to five years, civil penalties under the Civil Monetary Penalties Law of up to $50,000

for each violation, plus three times the remuneration involved, civil penalties under the federal False Claims Act of up to $11,000

for each claim submitted, plus three times the amounts paid for such claims and exclusion from participation in the Medicare and

Medicaid programs;

federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be

presented, claims for payment from Medicare, Medicaid or other federal third-party payors that are false or fraudulent.

under the False Claims Act, known as “qui tam” actions, can be brought by any individual on behalf of the government

and such individuals, commonly known as “whistleblowers,” may share in any amounts paid by the entity to the government

in fines or settlement.

When an entity is determined to have violated the False Claims Act, the government may impose penalties of

not less than $5,500 and not more than $11,000, plus three times the amount of the damages that the government sustains due to the

submission of a false claim and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs;

federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare

beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items

or services reimbursable by the government from a particular provider or supplier;

as amended by the HITECH Act, and their respective implementing regulations, which governs the conduct of certain electronic healthcare

transactions and protects the security and privacy of protected health information.

Failure to comply with the HIPAA privacy and

security standards can result in civil monetary penalties up to $50,000 per violation, not to exceed $1.5 million per calendar year

for non-compliance of an identical provision, and, in certain circumstances, criminal penalties with fines up to $250,000 per violation

and/or imprisonment.

State attorneys general can bring a civil action to enjoin a HIPAA violation or to obtain statutory damages

up to $25,000 per violation on behalf of residents of his or her state.

HIPAA also imposes criminal penalties for fraud against any

healthcare benefit program and for obtaining money or property from a healthcare benefit program through false pretenses and provides

for broad prosecutorial subpoena authority and authorizes certain property forfeiture upon conviction of a federal healthcare offense.

Significantly, the HIPAA provisions apply not only to federal programs, but also to private health benefit programs.

HIPAA also broadened

the authority of the U.S.

Office of Inspector General of the U.S.

Department of Health and Human Services to exclude participants

from federal healthcare programs;

federal physician sunshine requirements under the Patient Protection and Affordable Care Act, or PPACA, which requires certain manufacturers

of drugs, devices, biologics and medical supplies to report annually to the U.S.

Department of Health and Human Services information

related to payments and other transfers of value to physicians, which is defined broadly to include other healthcare providers and

teaching hospitals and ownership and investment interests held by physicians and their immediate family members.

Manufacturers are

required to submit reports to CMS by the 90 th day of each calendar year.

Failure to submit the required information may

result in civil monetary penalties up to an aggregate of $150,000 per year (and up to an aggregate of $1 million per year for “knowing

failures”) for all payments, transfers of value or ownership or investment interests not reported in an annual submission,

and may result in liability under other federal laws or regulations;

state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply

to items or services reimbursed by any third- party payor, including commercial insurers;

state laws that require device companies

to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal

government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;

that require device manufacturers to report information related to payments and other transfers of value to physicians and other

healthcare providers or marketing expenditures;

and state laws governing the privacy and security of health information in certain

circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance

Any failure by us to ensure that our employees and agents comply with applicable state and foreign laws and regulations

could result in substantial penalties or restrictions on our ability to conduct business in those jurisdictions, and our results

of operations and financial condition could be materially and adversely affected.

risk of our being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the

regulatory authorities or the courts, and their provisions are open to a variety of interpretations.

Because of the breadth of these

laws and the narrowness of the statutory exceptions and safe harbors available under such laws, it is possible that some of our business

activities, including our relationships with surgeons and other healthcare providers, some of whom recommend, purchase and/or prescribe

our product candidates, and our distributors, could be subject to challenge under one or more of such laws.

our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us

now or in the future, we may be subject to penalties, including civil and criminal penalties, damages, fines, disgorgement, exclusion

from governmental health care programs and the curtailment or restructuring of our operations, any of which could adversely affect our

ability to operate our business and our financial results.

Any action against us for violation of these laws, even if we successfully

defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation

of our business.

healthcare reform measures and other legislative changes may have a material and adverse effect on business, results of operations and

financial condition.

regulations and guidance are often revised or reinterpreted by FDA and such actions may significantly affect our business and our product

Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review

times for our product candidates.

Delays in receipt of, or failure to receive, regulatory approvals for our product candidates would

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

March 2010, the PPACA was signed into law, which includes a deductible 2.3% excise tax on any entity that manufactures or imports medical

devices offered for sale in the United States, with limited exceptions, that began on January 1, 2013.

Although a two year moratorium

was placed on the medical device excise tax in 2016 and extended through December 31, 2019, it was permanently repealed on December 20,

Other elements of the PPACA, including comparative effectiveness research, an independent payment advisory board and payment system

reforms, including shared savings pilots and other provisions, may significantly affect the payment for, and the availability of, healthcare

services and result in fundamental changes to federal healthcare reimbursement programs, any of which may materially affect numerous

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

addition, other legislative changes have been proposed and adopted in the United States since the PPACA was enacted.

On August 2, 2011,

the Budget Control Act of 2011 created measures for spending reductions by Congress.

A Joint Select Committee on Deficit

Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was

unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.

This includes aggregate reductions of Medicare payments to providers up to 2% per fiscal year, which went into effect on April

1, 2013, and will remain in effect through 2024 unless additional Congressional action is taken.

On January 2, 2013, the American

Taxpayer Relief Act of 2012, or the ATRA, was signed into law which further reduced Medicare payments to certain providers, including

expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the

amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand

for our product candidates, if approved, and services or additional pricing pressures.

relationships with physician consultants, owners and investors could be subject to additional scrutiny from regulatory enforcement

authorities and could subject us to possible administrative, civil or criminal sanctions.

A Joint Select Committee on Deficit Reduction, tasked

with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required

goals, thereby triggering the legislation’s automatic reduction to several government programs.

This includes aggregate reductions

of Medicare payments to providers up to 2% per fiscal year, which went into effect on April 1, 2013, and will remain in effect through

2024 unless additional Congressional action is taken.

On January 2, 2013, the American Taxpayer Relief Act of 2012, or the ATRA, was

signed into law which further reduced Medicare payments to certain providers, including hospitals.

expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts

that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product

candidates, if approved, and services or additional pricing pressures.

relationships with physician consultants, owners and investors could be subject to additional scrutiny from regulatory enforcement authorities

and could subject us to possible administrative, civil or criminal sanctions.

and state laws and regulations impose restrictions on our relationships with physicians who are consultants, owners and investors.

We may enter into consulting agreements, license agreements and other agreements with physicians in which we provide cash as compensation.

We have or may have other written and oral arrangements with physicians, including for research and development grants and for

other purposes as well.

could be adversely affected if regulatory agencies were to interpret our financial relationships with these physicians, who may

be in a position to influence the ordering of and use of our product candidates for which governmental reimbursement may be available,

as being in violation of applicable laws.

If our relationships with physicians are found to be in violation of the laws and regulations

that apply to us, we may be required to restructure the arrangements and could be subject to administrative, civil and criminal

penalties, including exclusion from participation in government healthcare programs, imprisonment, and the curtailment or restructuring

of our operations, any of which could negatively impact our ability to operate our business and our results of operations.

may enter into consulting agreements, license agreements and other agreements with physicians in which we provide cash as compensation.

We have or may have other written and oral arrangements with physicians, including for research and development grants and for other

purposes as well.

could be adversely affected if regulatory agencies were to interpret our financial relationships with these physicians, who may be in

a position to influence the ordering of and use of our product candidates for which governmental reimbursement may be available, as being

in violation of applicable laws.

If our relationships with physicians are found to be in violation of the laws and regulations that apply

to us, we may be required to restructure the arrangements and could be subject to administrative, civil and criminal penalties, including

exclusion from participation in government healthcare programs, imprisonment, and the curtailment or restructuring of our operations,

any of which could negatively impact our ability to operate our business and our results of operations.

company and many of our collaborators and potential collaborators are required to comply with the Federal Health Insurance Portability

and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act and implementing regulation

affecting the transmission, security and privacy of health information, and failure to comply could result in significant penalties.

federal and state laws and regulations, including the Health Insurance Portability and Accountability Act of 1996, or HIPAA, and

the Health Information Technology for Economic and Clinical Health Act, or the HITECH Act, govern the collection, dissemination,

security, use and confidentiality of health information that identifies specific patients.

HIPAA and the HITECH Act require our

surgeon and hospital customers and potential customers to comply with certain standards for the use and disclosure of health information

within their companies and with third parties.

The Privacy Standards and Security Standards under HIPAA establish a set of standards

for the protection of individually identifiable health information by health plans, health care clearinghouses and certain health

care providers, referred to as Covered Entities, and the business associates with whom Covered Entities enter into service relationships

pursuant to which individually identifiable health information may be exchanged.

Notably, whereas HIPAA previously directly regulated

only these Covered Entities, the HITECH Act makes certain of HIPAA’s privacy and security standards also directly applicable

to Covered Entities’

business associates.

As a result, both Covered Entities and business associates are now subject to

significant civil and criminal penalties for failure to comply with Privacy Standards and Security Standards.

requires Covered Entities (like many of our customers and potential customers) and business associates to develop and maintain

policies and procedures with respect to protected health information that is used or disclosed, including the adoption of administrative,

physical and technical safeguards to protect such information.

The HITECH Act expands the notification requirement for breaches

of patient-identifiable health information, restricts certain disclosures and sales of patient-identifiable health information

and provides for civil monetary penalties for HIPAA violations.

The HITECH Act also increased the civil and criminal penalties

that may be imposed against Covered Entities and business associates and gave state attorneys general new authority to file civil

actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney fees and costs associated

with pursuing federal civil actions.

Additionally, certain states have adopted comparable privacy and security laws and regulations,

some of which may be more stringent than HIPAA.

new legislation or regulation in the area of privacy and security of personal information, including personal health information,

could also adversely affect our business operations.

If we do not comply with existing or new applicable federal or state laws

and regulations related to patient health information, we could be subject to criminal or civil sanctions and any resulting liability

could adversely affect our financial condition.

and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act and implementing regulation affecting

the transmission, security and privacy of health information, and failure to comply could result in significant penalties.

federal and state laws and regulations, including the Health Insurance Portability and Accountability Act of 1996, or HIPAA, and the

Health Information Technology for Economic and Clinical Health Act, or the HITECH Act, govern the collection, dissemination, security,

use and confidentiality of health information that identifies specific patients.

HIPAA and the HITECH Act require our surgeon and hospital

customers and potential customers to comply with certain standards for the use and disclosure of health information within their companies

and with third parties.

The Privacy Standards and Security Standards under HIPAA establish a set of standards for the protection of individually

identifiable health information by health plans, health care clearinghouses and certain health care providers, referred to as Covered

Entities, and the business associates with whom Covered Entities enter into service relationships pursuant to which individually identifiable

health information may be exchanged.

Notably, whereas HIPAA previously directly regulated only these Covered Entities, the HITECH Act

makes certain of HIPAA’s privacy and security standards also directly applicable to Covered Entities’ business associates.

As a result, both Covered Entities and business associates are now subject to significant civil and criminal penalties for failure to

comply with Privacy Standards and Security Standards.

requires Covered Entities (like many of our customers and potential customers) and business associates to develop and maintain policies

and procedures with respect to protected health information that is used or disclosed, including the adoption of administrative, physical

and technical safeguards to protect such information.

The HITECH Act expands the notification requirement for breaches of patient-identifiable

health information, restricts certain disclosures and sales of patient-identifiable health information and provides for civil monetary

penalties for HIPAA violations.

The HITECH Act also increased the civil and criminal penalties that may be imposed against Covered Entities

and business associates and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts

to enforce the federal HIPAA laws and seek attorney fees and costs associated with pursuing federal civil actions.

Additionally, certain

states have adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA.

new legislation or regulation in the area of privacy and security of personal information, including personal health information, could

also adversely affect our business operations.

If we do not comply with existing or new applicable federal or state laws and regulations

related to patient health information, we could be subject to criminal or civil sanctions and any resulting liability could adversely

affect our financial condition.

addition, countries around the world have passed or are considering legislation that would impose data breach notification requirements

and/or require that companies adopt specific data security requirements.

If we experience a data breach that triggers one or more

of these laws, we may be subject to breach notification obligations, civil liability and litigation, all of which could also generate

negative publicity and have a negative impact on our business.

are currently, and in the future may be, subject to various governmental regulations related to the manufacturing of our product

candidates, and we may incur significant expenses to comply with, experience delays in our product commercialization as a result

of, and be subject to material sanctions if we or our contract manufacturers violate these regulations.

manufacturing processes and facility are required to comply with the FDA’s QSR, which covers the procedures and documentation

of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage, and shipping of our

product candidates.

Although we believe we are compliant with the QSRs, the FDA enforces the QSR through periodic announced or

unannounced inspections of manufacturing facilities.

We have been, and anticipate in the future being, subject to such inspections,

as well as to inspections by other federal and state regulatory agencies.

We are required to register our manufacturing facility

with the FDA and list all devices that are manufactured.

We also operate an International Organization for Standards, or ISO,

13485 certified facility and annual audits are required to maintain that certification.

The suppliers of our components are also

required to comply with the QSR and are subject to inspections.

We have limited ability to ensure that any such third-party manufacturers

will take the necessary steps to comply with applicable regulations, which could cause delays in the delivery of our products.

Failure to comply with applicable FDA requirements, or later discovery of previously unknown problems with our products or manufacturing

processes, including our failure or the failure of one of our third-party manufacturers to take satisfactory corrective action

in response to an adverse QSR inspection, can result in, among other things:

If we experience a data breach that triggers one or more of

these laws, we may be subject to breach notification obligations, civil liability and litigation, all of which could also generate negative

publicity and have a negative impact on our business.

are currently, and in the future may be, subject to various governmental regulations related to the manufacturing of product candidates,

and we may incur significant expenses to comply with, experience delays in our product commercialization as a result of, and be subject

to material sanctions if we or our contract manufacturers violate these regulations.

manufacturing processes and facility are required to comply with the FDA’s QSR, which covers the procedures and documentation of

the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage, and shipping of product

Although we believe we are compliant with the QSRs, the FDA enforces the QSR through periodic announced or unannounced inspections

of manufacturing facilities.

We have been, and anticipate in the future being, subject to such inspections, as well as to inspections

by other federal and state regulatory agencies.

We are required to register our manufacturing facility with the FDA and list all devices

that are manufactured.

We also operate an International Organization for Standards, or ISO, 13485 certified facility and annual audits

are required to maintain that certification.

The suppliers of our components are also required to comply with the QSR and are subject

to inspections.

We have limited ability to ensure that any such third-party manufacturers will take the necessary steps to comply with

applicable regulations, which could cause delays in the delivery of our products.

Failure to comply with applicable FDA requirements,

or later discovery of previously unknown problems with our products or manufacturing processes, including our failure or the failure

of one of our third-party manufacturers to take satisfactory corrective action in response to an adverse QSR inspection, can result in,

among other things:

administrative

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or partial suspension of production or distribution;

FDA’s refusal to grant future clearance or pre-market approval for our product candidates;

or suspension of marketing clearances or approvals;

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prosecution of us or our employees.

of these actions, in combination or alone, could prevent us from marketing, distributing, or selling our products and would likely

harm our business.

In addition, a product defect or regulatory violation could lead to a government-mandated or voluntary recall

Regulatory agencies in other countries have similar authority to recall devices because of material deficiencies or defects

in design or manufacture that could endanger health.

Any recall would divert management attention and financial resources, could

expose us to product liability or other claims, including contractual claims from parties to whom we sold products and harm our

reputation with customers.

A recall involving any of our product candidates would be particularly harmful to our business and

financial results and, even if we remedied a particular problem, would have a lasting negative effect on our reputation and demand

for our products.

of these actions, in combination or alone, could prevent us from marketing, distributing, or selling our products and would likely harm

our business.

In addition, a product defect or regulatory violation could lead to a government-mandated or voluntary recall by us.

agencies in other countries have similar authority to recall devices because of material deficiencies or defects in design or manufacture

that could endanger health.

Any recall would divert management attention and financial resources, could expose us to product liability

or other claims, including contractual claims from parties to whom we sold products and harm our reputation with customers.

involving any of our product candidates would be particularly harmful to our business and financial results and, even if we remedied

a particular problem, would have a lasting negative effect on our reputation and demand for our products.

Related to Our Intellectual Property

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candidates, others could compete against us more directly, which could harm our business, financial condition and results of operations.

success may depend in part on our success in obtaining and maintaining issued patents and other intellectual property rights in

the United States and elsewhere and protecting our proprietary technologies.

If we do not adequately protect our intellectual

property and proprietary technologies, competitors may be able to use our technologies and erode or negate any competitive advantage

we may have, which could harm our business and ability to achieve profitability.

success may depend in part on our success in obtaining and maintaining issued patents and other intellectual property rights in the United

States and elsewhere and protecting our proprietary technologies.

If we do not adequately protect our intellectual property and proprietary

technologies, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could

harm our business and ability to achieve profitability.

have filed patent applications for our VenoValve product and Implantable Vein Frame Two product with the U.S.

Patent and Trademark

Office but there are no assurances that patents will be issued.

We also are working on new developments for our CoreoGraft product

and expect to be filing for patent protection on that product as well.

patents may not have, or our pending patent applications that mature into issued patents may not include, claims with a scope

sufficient to protect our products, any additional features we develop for our current products or any new products.

Other parties

may have developed technologies that may be related or competitive to our products, may have filed or may file patent applications

and may have received or may receive patents that overlap or conflict with our patent applications, either by claiming the same

methods or devices or by claiming subject matter that could dominate our patent position.

The patent positions of medical device

companies, including our patent position, may involve complex legal and factual questions, and, therefore, the scope, validity

and enforceability of any patent claims that we may obtain cannot be predicted with certainty.

Patents, if issued, may be challenged,

deemed unenforceable, invalidated or circumvented.

Proceedings challenging our patents could result in either loss of the patent

or denial of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application.

Patent and Trademark Office

but there are no assurances that patents will be issued.

patents may not have, or our pending patent applications that mature into issued patents may not include, claims with a scope sufficient

to protect our products, any additional features we develop for our current products or any new products.

Other parties may have developed

technologies that may be related or competitive to our products, may have filed or may file patent applications and may have received

or may receive patents that overlap or conflict with our patent applications, either by claiming the same methods or devices or by claiming

subject matter that could dominate our patent position.

The patent positions of medical device companies, including our patent position,

may involve complex legal and factual questions, and, therefore, the scope, validity and enforceability of any patent claims that we

may obtain cannot be predicted with certainty.

Patents, if issued, may be challenged, deemed unenforceable, invalidated or circumvented.

Proceedings challenging our patents could result in either loss of the patent or denial of the patent application or loss or reduction

in the scope of one or more of the claims of the patent or patent application.

In addition, such proceedings may be costly.

Thus, any patents that we may own may not provide any protection against competitors.

Furthermore, an adverse decision in an interference proceeding can result in a third party receiving the patent right sought by

us, which in turn could affect our ability to commercialize our implant systems.

though an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability

and it may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products.

Competitors may also be able to design around our patents.

Other parties may develop and obtain patent protection for more effective

technologies, designs or methods.

We may not be able to prevent the unauthorized disclosure or use of our technical knowledge

or trade secrets by consultants, suppliers, vendors, former employees and current employees.

The laws of some foreign countries

do not protect our proprietary rights to the same extent as the laws of the United States, and we may encounter significant problems

in protecting our proprietary rights in these countries.

If any of these developments were to occur, they each could have a negative

impact on our business and competitive position.

patents that we may own may not provide any protection against competitors.

Furthermore, an adverse decision in an interference proceeding

can result in a third party receiving the patent right sought by us, which in turn could affect our ability to commercialize our implant

though an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability and

it may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products.

may also be able to design around our patents.

Other parties may develop and obtain patent protection for more effective technologies,

designs or methods.

We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets by consultants,

suppliers, vendors, former employees and current employees.

The laws of some foreign countries do not protect our proprietary rights

to the same extent as the laws of the United States, and we may encounter significant problems in protecting our proprietary rights in

these countries.

If any of these developments were to occur, they each could have a negative impact on our business and competitive position.

ability to enforce our patent rights depends on our ability to detect infringement.

It may be difficult to detect infringers who

do not advertise the components that are used in their products.

Moreover, it may be difficult or impossible to obtain evidence

of infringement in a competitor’s or potential competitor’s product.

We may not prevail in any lawsuits that we initiate

and the damages or other remedies awarded if we were to prevail may not be commercially meaningful.

addition, proceedings to enforce or defend our patents could put our patents at risk of being invalidated, held unenforceable

or interpreted narrowly.

Such proceedings could also provoke third parties to assert claims against us, including that some or

all of the claims in one or more of our patents are invalid or otherwise unenforceable.

If any of our patents covering our products

are invalidated or found unenforceable, our financial position and results of operations could be negatively impacted.

if a court found that valid, enforceable patents held by third parties covered one or more of our products, our financial position

and results of operations could be harmed.

It may be difficult to detect infringers who do not

advertise the components that are used in their products.

Moreover, it may be difficult or impossible to obtain evidence of infringement

in a competitor’s or potential competitor’s product.

We may not prevail in any lawsuits that we initiate and the damages

or other remedies awarded if we were to prevail may not be commercially meaningful.

addition, proceedings to enforce or defend our patents could put our patents at risk of being invalidated, held unenforceable or interpreted

Such proceedings could also provoke third parties to assert claims against us, including that some or all of the claims in

one or more of our patents are invalid or otherwise unenforceable.

If any of our patents covering our products are invalidated or found

unenforceable, our financial position and results of operations could be negatively impacted.

In addition, if a court found that valid,

enforceable patents held by third parties covered one or more of our products, our financial position and results of operations could

rely upon unpatented trade secrets, unpatented know-how and continuing technological innovation to develop and maintain our competitive

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and consultants.

We also have agreements with our employees and selected consultants that obligate them to assign their inventions

to us and have non-compete agreements with some, but not all, of our consultants.

It is possible that technology relevant to our

business will be independently developed by a person that is not a party to such an agreement.

Furthermore, if the employees and

consultants who are parties to these agreements breach or violate the terms of these agreements, we may not have adequate remedies

for any such breach or violation, and we could lose our trade secrets through such breaches or violations.

Further, our trade

secrets could otherwise become known or be independently discovered by our competitors.

and maintaining our patent protection depends on compliance with various procedures, document submission requirements, fee payments

and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance

We also have agreements with our employees and selected consultants that obligate them to assign their inventions to

us and have non-compete agreements with some, but not all, of our consultants.

It is possible that technology relevant to our business

will be independently developed by a person that is not a party to such an agreement.

Furthermore, if the employees and consultants who

are parties to these agreements breach or violate the terms of these agreements, we may not have adequate remedies for any such breach

or violation, and we could lose our trade secrets through such breaches or violations.

Further, our trade secrets could otherwise become

known or be independently discovered by our competitors.

and maintaining our patent protection depends on compliance with various procedures, document submission requirements, fee payments and

other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance

with these requirements.

Patent and Trademark Office, or USPTO, and various foreign governmental patent agencies require compliance with a number

of procedural, documentary, fee payments such as maintenance and annuity fee payments and other provisions during the patent procurement

process as well as over the life span of an issued patent.

There are situations in which noncompliance can result in abandonment

or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

In such an event, competitors might be able to enter the market earlier than would otherwise have been the case.

may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property

rights and we may be unable to protect our rights to, or use, our technology.

success will depend in part on our ability to operate without infringing the intellectual property and proprietary rights of third

Our business, product candidates and methods could infringe the patents or other intellectual property rights of third

medical device industry is characterized by frequent and extensive litigation regarding patents and other intellectual property

Many medical device companies with substantially greater resources than us have employed intellectual property litigation

as a way to gain a competitive advantage.

We may become involved in litigation, interference proceedings, oppositions, reexamination,

protest or other potentially adverse intellectual property proceedings as a result of alleged infringement by us of the rights

of others or as a result of priority of invention disputes with third parties, either in the United States or internationally.

We may also become a party to patent infringement claims and litigation or interference proceedings declared by the USPTO to determine

the priority of inventions.

Third parties may also challenge the validity of any of our issued patents and we may initiate proceedings

to enforce our patent rights and prevent others from infringing on our intellectual property rights.

Any claims relating to the

infringement of third-party proprietary rights or proprietary determinations, even if not meritorious, could result in costly

litigation, lengthy governmental proceedings, diversion of our management’s attention and resources, or entrance into royalty

or license agreements that are not advantageous to us.

In any of these circumstances, we may need to spend significant amounts

of money, time and effort defending our position.

Some of our competitors may be able to sustain the costs of complex patent litigation

more effectively than we can because they have substantially greater resources.

In addition, any uncertainties resulting from

the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary

to continue our operations.

if we are successful in these proceedings, we may incur substantial costs and divert management time and attention in pursuing

these proceedings, which could have a material and adverse effect on us.

If we are unable to avoid infringing the intellectual

property rights of others, we may be required to seek a license, defend an infringement action or challenge the validity of intellectual

property in court or redesign our product candidates.

Patent and Trademark Office, or USPTO, and various foreign governmental patent agencies require compliance with a number of procedural,

documentary, fee payments such as maintenance and annuity fee payments and other provisions during the patent procurement process as

well as over the life span of an issued patent.

There are situations in which noncompliance can result in abandonment or lapse of a patent

or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

In such an event, competitors

might be able to enter the market earlier than would otherwise have been the case.

may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights

and we may be unable to protect our rights to, or use, our technology.

success will depend in part on our ability to operate without infringing the intellectual property and proprietary rights of third parties.

Our business, product candidates and methods could infringe the patents or other intellectual property rights of third parties.

medical device industry is characterized by frequent and extensive litigation regarding patents and other intellectual property rights.

Many medical device companies with substantially greater resources than us have employed intellectual property litigation as a way to

gain a competitive advantage.

We may become involved in litigation, interference proceedings, oppositions, reexamination, protest or

other potentially adverse intellectual property proceedings as a result of alleged infringement by us of the rights of others or as a

result of priority of invention disputes with third parties, either in the United States or internationally.

We may also become a party

to patent infringement claims and litigation or interference proceedings declared by the USPTO to determine the priority of inventions.

Third parties may also challenge the validity of any of our issued patents and we may initiate proceedings to enforce our patent rights

and prevent others from infringing on our intellectual property rights.

Any claims relating to the infringement of third-party proprietary

rights or proprietary determinations, even if not meritorious, could result in costly litigation, lengthy governmental proceedings, diversion

of our management’s attention and resources, or entrance into royalty or license agreements that are not advantageous to us.

any of these circumstances, we may need to spend significant amounts of money, time and effort defending our position.

Some of our competitors

may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources.

In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect

on our ability to raise the funds necessary to continue our operations.

if we are successful in these proceedings, we may incur substantial costs and divert management time and attention in pursuing these

proceedings, which could have a material and adverse effect on us.

If we are unable to avoid infringing the intellectual property rights

of others, we may be required to seek a license, defend an infringement action or challenge the validity of intellectual property in

court or redesign our product candidates.

Related to Ownership of Our Securities

trading price of our securities is likely to be volatile and could be subject to wide fluctuations in response to a variety of

factors, which include:

trading price of our securities is likely to be volatile and could be subject to wide fluctuations in response to a variety of factors.

trading price of our securities is likely to be volatile and could be subject to wide fluctuations in response to a variety of factors,

which include:

we achieve our anticipated corporate objectives;

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economic or political conditions in the United States or elsewhere.

addition, the stock market in general, and the stock of medical device companies like ours, in particular, have experienced extreme

price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the issuer.

market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.

addition, the stock market in general, and the stock of medical device companies like ours in particular, have experienced extreme price

and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the issuer.

These market and

industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.

have issued a significant number of options and warrants and may continue to do so in the future.

The vesting and, if applicable,

exercise of these securities and the sale of the shares of common stock issuable thereunder may dilute your percentage ownership

interest and may also result in downward pressure on the price of our common stock.

The vesting and, if applicable, exercise

of these securities and the sale of the shares of common stock issuable thereunder may dilute your percentage ownership interest and

may also result in downward pressure on the price of our common stock.

of the date of this Annual Report, we have issued and outstanding options to purchase 3,463,107 shares of our common stock with

a weighted average exercise price of $10.51 (including 1,888,000 options that may only become exercisable following receipt by

the Company of stockholder approval to increase the size of the 2016 Plan sufficiently to permit the exercise in full of such

stock options under the 2016 Plan (if the Company’s stockholders do not approve an increase in the size of the 2016 Plan,

the options will be void)), 4,942 restricted stock units subject to vesting, and warrants to purchase 4,405,659 shares

of our common stock with a weighted average exercise price of $12.39.

a weighted average exercise price of $9.14, 402,082 restricted stock units subject to vesting, and warrants to purchase 6,311,705

shares of our common stock with a weighted average exercise price of $8.81.

Further, we have 619,087 shares available for issuance

under our Amended and Restated 2016 Omnibus Incentive Plan, the number of shares available under the plan will be increased January

1 st (and each January 1 st thereafter) by an amount equal to 3% of the total issued and outstanding shares

of our common stock as of such anniversary (or such lesser number of shares as may be approved by our Board of Directors).

the market for our common stock is thinly traded, the sales and/or the perception that those sales may occur, could adversely

affect the market price of our common stock.

Furthermore, the mere existence of a significant number of shares of common stock

issuable upon vesting and, if applicable, exercise of these securities may be perceived by the market as having a potential dilutive

effect, which could lead to a decrease in the price of our common stock.

will need to raise additional capital to meet our business requirements in the future, and such capital raising may be costly

or difficult to obtain and can be expected to dilute current stockholders’

ownership interests .

Notwithstanding

that we have raised approximately $50,400,000 in aggregate net proceeds since January 1, 2020, we

under our Amended and Restated 2016 Omnibus Incentive Plan.

The number of shares subject to the Plan may be adjusted from time to time

such that shares authorized under the plan shall at all times be equal to at least 20% of the issued and

outstanding shares of the Company on a fully diluted basis.

Because the market for our common stock is thinly traded, the sales and/or

the perception that those sales may occur, could adversely affect the market price of our common stock.

Furthermore, the mere existence

of a significant number of shares of common stock issuable upon vesting and, if applicable, exercise of these securities may be perceived

by the market as having a potential dilutive effect, which could lead to a decrease in the price of our common stock.

will need to raise additional capital to meet our business requirements in the future, and such capital raising may be costly or difficult

to obtain and can be expected to dilute current stockholders’ ownership interests .

will need to raise additional capital in the future.

Such additional capital may not be available on reasonable terms or at all.

Any future issuance of our equity or equity-backed securities may dilute then-current stockholders’

ownership percentages.

If we are unable to obtain required additional capital, we may have to curtail our growth plans or cut back on existing business.

may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees,

securities law compliance fees, printing and distribution expenses and other costs.

We may also be required to recognize non-cash

expenses in connection with certain securities we may issue, such as convertible notes, restricted stock, stock options and warrants,

which may adversely impact our financial condition.

Any future issuance of our equity or equity-backed securities

may dilute then-current stockholders’ ownership percentages.

If we are unable to obtain required additional capital, we may have

to curtail our growth plans or cut back on existing business.

may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities

law compliance fees, printing and distribution expenses and other costs.

We may also be required to recognize non-cash expenses in connection

with certain securities we may issue, such as convertible notes, restricted stock, stock options and warrants, which may adversely impact

our financial condition.

sales or issuances of substantial amounts of our common stock could result in significant dilution.

future issuance of our equity or equity-backed securities, including, potentially, the issuance of securities in connection with

a merger transaction, may dilute then-current stockholders’

ownership percentages and could also result in a decrease in

the fair market value of our equity securities, because our assets would be owned by a larger pool of outstanding equity.

above, we intend to conduct additional rounds of financing in the future and we may need to raise additional capital through public

or private offerings of our common stock or other securities that are convertible into or exercisable for our common stock.

may also issue securities in connection with hiring or retaining employees and consultants (including stock options issued under

an equity incentive plan), as payment to providers of goods and services, in connection with future acquisitions or for other

business purposes.

Our Board of Directors may at any time authorize the issuance of additional common stock without stockholder

approval, subject only to the total number of authorized shares of common stock set forth in our articles of incorporation.

terms of equity securities issued by us in future transactions may be more favorable to new investors, and may include dividend

and/or liquidation preferences, superior voting rights and the issuance of warrants or other derivative securities, which may

have a further dilutive effect.

Also, the future issuance of any such additional shares of common stock or other securities may

create downward pressure on the trading price of the common stock.

There can be no assurance that any such future issuances will

not be at a price (or exercise prices) below the price at which shares of the common stock are then traded on Nasdaq or other

then-applicable over-the-counter quotation system or exchange.

future issuance of our equity or equity-backed securities, including, potentially, the issuance of securities in connection with a merger

transaction, may dilute then-current stockholders’ ownership percentages and could also result in a decrease in the fair market

value of our equity securities, because our assets would be owned by a larger pool of outstanding equity.

As stated above, we intend

to conduct additional rounds of financing in the future and we may need to raise additional capital through public or private offerings

of our common stock or other securities that are convertible into or exercisable for our common stock.

We may also issue securities in

connection with hiring or retaining employees and consultants (including stock options issued under an equity incentive plan), as payment

to providers of goods and services, in connection with future acquisitions or for other business purposes.

Our Board of Directors may

at any time authorize the issuance of additional common stock without stockholder approval, subject only to the total number of authorized

shares of common stock set forth in our articles of incorporation.

The terms of equity securities issued by us in future transactions

may be more favorable to new investors, and may include dividend and/or liquidation preferences, superior voting rights and the issuance

of warrants or other derivative securities, which may have a further dilutive effect.

Also, the future issuance of any such additional

shares of common stock or other securities may create downward pressure on the trading price of the common stock.

There can be no assurance

that any such future issuances will not be at a price (or exercise prices) below the price at which shares of the common stock are then

traded on Nasdaq or other then-applicable over-the-counter quotation system or exchange.

failure to meet the continued listing requirements of Nasdaq could result in a de-listing of our Common Stock.

we are currently in compliance with Nasdaq’s continued listing requirements, we have received deficiency notices in the

past and there is no guarantee that we will be able to continue to meet the continued listing requirements of Nasdaq.

we are unable to do so, our securities may be delisted from The Nasdaq Stock Market.

Such a delisting would likely have a negative

effect on the price of our Common Stock and would impair your ability to sell or purchase our Common Stock when you wish to do

In the event of a delisting, we would expect to take actions to restore our compliance with Nasdaq Marketplace Rules, but

our common stock may not be listed again, stabilize the market price or improve the liquidity of our common stock, prevent our

common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with the Nasdaq Marketplace

are an “emerging growth company”

and the reduced disclosure requirements applicable to emerging growth companies could

make our common stock less attractive to investors.

are an “emerging growth company,”

as defined in the JOBS Act.

We may remain an emerging growth company until as late

as December 2023 (the fiscal year-end following the fifth anniversary of the completion of our initial public offering), though

we may cease to be an emerging growth company earlier under certain circumstances, including (1) if the market value of our common

stock that is held by non-affiliates exceeds $700 million as of any June 30, in which case we would cease to be an emerging growth

company as of the following December 31, or (2) if our gross revenue exceeds $1.07 billion in any fiscal year.

Emerging growth

companies may take advantage of certain exemptions from various reporting requirements that are applicable to other public 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 our periodic reports and proxy statements and exemptions from the requirements

of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not

previously approved.

Investors could find our common stock less attractive because we may rely on these exemptions.

If some investors

find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock

price may be more volatile.

addition, Section 102 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition

period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new

or revised accounting standards.

An emerging growth company can therefore delay the adoption of certain accounting standards until

those standards would otherwise apply to private companies.

We have irrevocably elected not to avail ourselves of this exemption

from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as

other public companies that are not emerging growth companies.

of our charter documents or Delaware law could delay or prevent an acquisition of us, even if the acquisition would be beneficial

to our stockholders, which could make it more difficult for you to change management.

in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent

a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders

might otherwise receive a premium for their shares.

In addition, these provisions may frustrate or prevent any attempt by our

stockholders to replace or remove our current management by making it more difficult to replace or remove our board of directors.

These provisions include, but are not limited to:

we are currently in compliance with Nasdaq’s continued listing requirements, we have received deficiency notices in the past and

there is no guarantee that we will be able to continue to meet the continued listing requirements of Nasdaq.

In the event we are unable

to do so, our securities may be delisted from The Nasdaq Stock Market.

Such a delisting would likely have a negative effect on the price

of our Common Stock and would impair your ability to sell or purchase our Common Stock when you wish to do so.

In the event of a delisting,

we would expect to take actions to restore our compliance with Nasdaq Marketplace Rules, but our common stock may not be listed again,

stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum

bid price requirement or prevent future non-compliance with the Nasdaq Marketplace Rules.

are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies could make

our common stock less attractive to investors.

are an “emerging growth company,” as defined in the JOBS Act.

We may remain an emerging growth company until as late as December

2023 (the fiscal year-end following the fifth anniversary of the completion of our initial public offering), though we may cease to be

an emerging growth company earlier under certain circumstances, including (1) if the market value of our common stock that is held by

non-affiliates exceeds $700 million as of any June 30, in which case we would cease to be an emerging growth company as of the following

December 31, or (2) if our gross revenue exceeds $1.07 billion in any fiscal year.

Emerging growth companies may take advantage of certain

exemptions from various reporting requirements that are applicable to other public 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 our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote

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

Investors could find our

common stock less attractive because we may rely on these exemptions.

If some investors find our common stock less attractive as a result,

there may be a less active trading market for our common stock and our stock price may be more volatile.

addition, Section 102 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period

provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting

An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise

apply to private companies.

We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards

and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth

of our charter documents or Delaware law could delay or prevent an acquisition of us, even if the acquisition would be beneficial to

our stockholders, which could make it more difficult for you to change management.

in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger,

acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise

receive a premium for their shares.

In addition, these provisions may frustrate or prevent any attempt by our stockholders to replace

or remove our current management by making it more difficult to replace or remove our board of directors.

These provisions include, but

are not limited to:

classified board of directors so that not all directors are elected at one time;

3 unchanged sentences

or the resignation, death or removal of a director;

requirement that special meetings of the stockholders may be called only by our chairman of the board, chief executive officer

or president, or by a resolution adopted by a majority of our board of directors;

requirement that special meetings of the stockholders may be called only by our chairman of the board, chief executive officer or

president, or by a resolution adopted by a majority of our board of directors;

advance notice requirement for stockholder proposals and nominations;

authority of our board of directors to issue preferred stock with such terms as our board of directors may determine;

requirement of approval of not less than 66 2/3% of all outstanding shares of our capital stock entitled to vote to amend

any bylaws by stockholder action, or to amend specific provisions of our amended and restated certificate of incorporation.

addition, the Delaware General Corporate Law, or DGCL, prohibits a publicly held Delaware corporation from engaging in a business

combination with an interested stockholder, generally a person who, together with its affiliates, owns, or within the last three

years has owned, 15% or more of our voting stock, for a period of three years after the date of the transaction in which the person

became an interested stockholder, unless the business combination is approved in a prescribed manner.

Accordingly, the DGCL may

discourage, delay or prevent a change in control of our company.

our amended and restated certificate of incorporation specifies that the Court of Chancery of the State of Delaware will be the

sole and exclusive forum for most legal actions involving actions brought against us by stockholders.

We believe this provision

benefits us by providing increased consistency in the application of the DGCL by chancellors particularly experienced in resolving

corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against

the burdens of multi-forum litigation.

However, the provision may have the effect of discouraging lawsuits against our directors

and officers.

do not anticipate paying any cash dividends on our common stock in the foreseeable future and, as such, capital appreciation,

if any, of our common stock will be your sole source of gain for the foreseeable future.

requirement of approval of not less than 50% of all outstanding shares of our capital stock entitled to vote to amend any bylaws

by stockholder action, or to amend specific provisions of our amended and restated certificate of incorporation.

addition, the Delaware General Corporate Law, or DGCL, prohibits a publicly held Delaware corporation from engaging in a business combination

with an interested stockholder, generally a person who, together with its affiliates, owns, or within the last three years has owned,

15% or more of our voting stock, for a period of three years after the date of the transaction in which the person became an interested

stockholder, unless the business combination is approved in a prescribed manner.

Accordingly, the DGCL may discourage, delay,

or prevent a change in control of our company.

our amended and restated certificate of incorporation specifies that the Court of Chancery of the State of Delaware will be the sole

and exclusive forum for most legal actions involving actions brought against us by stockholders.

We believe this provision benefits us

by providing increased consistency in the application of the DGCL by chancellors particularly experienced in resolving corporate disputes,

efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum

However, the provision may have the effect of discouraging lawsuits against our directors and officers.

do not anticipate paying any cash dividends on our common stock in the foreseeable future and, as such, capital appreciation, if any,

of our common stock will be your sole source of gain for the foreseeable future.

have never declared or paid cash dividends on our common stock.

We do not anticipate paying any cash dividends on our common stock

in the foreseeable future.

We currently intend to retain all available funds and any future earnings to fund the development and

growth of our business.

In addition, and any future loan arrangements we enter into may contain, terms prohibiting or limiting

the amount of dividends that may be declared or paid on our common stock.

As a result, capital appreciation, if any, of our common

stock will be your sole source of gain for the foreseeable future.

We do not anticipate paying any cash dividends on our common stock in

the foreseeable future.

We currently intend to retain all available funds and any future earnings to fund the development and growth

of our business.

In addition, and any future loan arrangements we enter into may contain, terms prohibiting or limiting the amount of

dividends that may be declared or paid on our common stock.

As a result, capital appreciation, if any, of our common stock will be your

sole source of gain for the foreseeable future.

Staff Comments

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

What changed 10-K

Item 1A. Risk Factors