What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2022-03-31 compared with 2021-03-25 · 26 added, 568 removed, 9 unchanged (99% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

common stock began trading on Nasdaq under the symbol “VVOS”

on December 11, 2020.

Prior to that date, there was no

established public trading market for our common stock.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

common stock began trading on Nasdaq under the symbol “VVOS” on December 11, 2020.

Prior to that date, there was no established

public trading market for our common stock.

of March 23, 2022, there were approximately 5,400 holders of record of our common stock.

This number does not include stockholders

who are beneficial owners, but whose shares are held in street name by brokers and other nominees.

This number of holders of record

also does not include stockholders whose shares may be held in trust by other entities.

This number does not include stockholders who

are beneficial owners, but whose shares are held in street name by brokers and other nominees.

This number of holders of record also

does not include stockholders whose shares may be held in trust by other entities.

Sales of Unregistered Securities

Authorized for Issuance under Equity Compensation Plans

following table provides information as of December 31, 2020, regarding our common stock that may be issued under the Company’s

2017 stock and option award plan (the “2017 Plan”), and the 2019 stock and option award plan (the “2019 Plan”).

following table provides information as of December 31, 2021, regarding our common stock that may be issued under our 2017 stock

and option award plan (the “2017 Plan”), and our 2019 stock and option award plan (the “2019 Plan”).

be Issued Upon

Weighted Average

Plan Category:

Number of Securities to be issued Upon Exercise of Outstanding Options, Warrants, and Rights (a)

Weighted Average Exercise Price of Outstanding Options (b)

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in column (a)) (c)

Equity compensation plans approved by stockholders

2017 Plan (1)

2019 Plan (2)

Equity compensation plans not approved by stockholders (3)

2017 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors.

of directors and shareholders have approved a total reserve of 1,333,333 shares for issuance under the 2017 Plan.

2019 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors.

of directors and shareholders have approved a total reserve of 333,334 shares for issuance under the 2019 Plan.

2020, our shareholders approved an amendment and restatement of the 2019 Plan to increase the number shares or our common

stock available for issuance thereunder by 833,333 share of common stock such that, after amendment and restatement of the

2019 Plan, and prior to any grants, 1,166,667 shares of common stock were available under the 2019 Plan.

options granted to officers and employees prior to the approval by our stockholders of the 2017 Plan.

of the date of this Annual Report on Form 10-K, we have not paid any cash dividends to stockholders.

The declaration of any future

cash dividend will be at the discretion of our board of directors and will depend upon our earnings, if any, our capital requirements

and financial position, the general economic conditions, and other pertinent conditions.

It is our present intention not to pay

any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.

of Proceeds from Initial Public Offering

December 11, 2020, we completed our initial public offering by issuing 4,025,000 common shares at a price of $6.00 per share,

for net proceeds of approximately $21.6 million, after deducting underwriter discounts and commissions and offering expenses payable

Following our initial public offering, we made payments of $2.0 million to our founder and Chief Medical Officer, Dr.

Singh to redeem a portion of our then outstanding Series A Preferred Stock held by Dr.

In early January 2021, we paid an additional

$1.5 million to Dr.

Singh to redeem all remaining outstanding shares of Series A Preferred Stock.

Additionally, we plan to spend approximately

$3.95 million for working capital and general corporate purposes, $3.3 million on settlement expense (see “October 2020 Derivative

Demand and Settlement”), $0.9 million for sales and support staff, $0.3 for sales and marketing expenses and $0.1 million for

software development including enterprise resource planning implementation.

proceeds used in working capital and general corporate purposes, include payments to investment banking firms we previously had

engagements with, comprised of $175,000 to Weild & Co., a FINRA member broker-dealer and $30,000 to Maxim Group, LLC, a FINRA

member broker-dealer.

foregoing expected use of net proceeds from our initial public offering represents our intentions based upon our current plans

and business conditions.

However, the nature, amounts and timing of our actual expenditures may vary significantly depending on

numerous factors.

For example, we may also elect to use proceeds from this offering to acquire complimentary technologies, products

or businesses, although we are not a party to any letters of intent or definitive agreements for any such acquisition.

our management has and will retain broad discretion over the allocation of the net proceeds.

We may find it necessary or advisable

to use the net proceeds for other purposes, and we will have broad discretion in the application of net proceeds.

Additionally,

we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment-grade,

interest-bearing instruments and U.S.

government securities.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

following discussion and analysis of our financial condition and results of operations should be read in conjunction with our

financial statements and the related notes to those statements included elsewhere in this Annual Report on Form 10-K.

to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks,

uncertainties, and assumptions.

Some of the numbers included herein have been rounded for the convenience of presentation.

actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including

those discussed under Part I.

“Item 1A.

Risk Factors’’

and elsewhere in this Annual Report on Form 10-K.

are a revenue stage medical technology company focused on the development and commercialization of a highly differentiated technology

offering a clinically effective non-surgical, non-invasive, non-pharmaceutical, and low-cost solution for patients with SDB, including

mild-to-moderate OSA.

We offer novel and proprietary alternatives for treating mild-to-moderate OSA as well as certain craniofacial

and anatomical anomalies known to be associated with OSA.

We believe our products and technology represent a significant improvement

in the treatment of mild-to-moderate OSA versus other treatments such as CPAP.

treatment for mild-to-moderate OSA involves specially designed and customized oral appliances and treatment protocols that we

call the Vivos System .

We believe the Vivos System technology represents the first non-surgical, non-invasive and

cost-effective solution that normally does not require lifetime use of intervention for the hundreds of millions of people globally

who suffer from mild-to-moderate OSA.

We intend to more rapidly expand the use of the Vivos System by actively recruiting dentists

and training them about OSA and the use and application of our products and technology to treat mild-to-moderate OSA.

appliances have proven effective (within the scope of the U.S.

Food and Drug Administration (or FDA) cleared uses as described

below) in over 15,000 patients treated worldwide by more than 1,200 trained dentists.

December 11, 2020, we completed our initial public offering by issuing 4,025,000 shares of common stock, at a public offering price of

$6.00 per share, for net proceeds of approximately $21.6 million after deducting underwriting discounts and commissions and offering

expenses payable by us.

early 2020 outbreak of COVID-19 and its development into a pandemic in March 2020 has resulted in significant economic disruption

Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread

of COVID-19 through social distancing have restricted travel, many business operations, public gatherings and the overall level

of individual movement and in-person interaction across the globe.

This has significantly reduced global economic activity and

resulted in a decline in demand across many industries.

of our VIPs and potential VIPs closed their offices for periods of time during 2020 as a result of COVID-19, although some remained

open to specifically provide patients with our appliances and VIPs were deemed an essential business for health considerations

in many jurisdictions.

In the face of the pandemic and the potential for revenue reduction, we worked diligently to reduce expenses

and maintain revenues during 2020.

While revenue growth flattened in March and April 2020, expenses were reduced, and we aggressively

expanded our network of healthcare providers familiar with our products by offering online continuing education courses which

introduced many in the medical and dental communities to our product line.

As a result, we determined no triggering events had

occurred indicating no impairment needed as of December 31, 2020.

However, even as we take action to face the challenges of the

pandemic, since the situation with COVID-19 remains uncertain, we cannot predict with certainty the impact of the pandemic or

local outbreaks thereof will have on our near- and longer-term results of operations.

of Operations

Ended December 31, 2020 Compared to Year Ended December 31, 2019

Product revenue

Service revenue

Total revenue

Cost of sales

Gross profit %

Operating expenses

General and administrative

(16,090,049 )

(16,172,505 )

Sales and marketing

Settlement expense

Depreciation and amortization

Operating loss

(12,039,808 )

(10,577,233 )

Interest expense

Interest income

Loss on sale of business

$ (12,056,877 )

$ (10,754,319 )

$ (1,302,558 )

increased $1.7 million, or 15%, to $13.1 million for the year ended December 31, 2020 compared to the year ended December 31,

This increase was related to revenue from our VIP program along with the increase in the number of oral appliances sold.

During the year ended December 31, 2020, we enrolled 248 VIPs for a total of $7,540,718.

During the year ended December 31, 2019,

we enrolled 204 VIPs for a total of $6,742,283.

Additionally, BIS service revenues increased from $256,415 for the year ended

December 31, 2019 to $620,094 for the year ended December 31, 2020.

During the year ended December 31, 2020 we sold 8,135 total

oral appliance arches for a total of $4,547,883 and for the year ended December 31, 2019 we sold 4,696 total oral appliance arches

for a total of $2,917,095.

The increase in appliance revenue is due to both volume and price increases.

of Goods Sold and Gross Margin

of goods sold decreased $0.1 million, on increased sales of $1.7 million.

COVID-19 impacted our sales mix as many dental offices

were closed for a good portion of April and May, resulting in having higher margin service revenues represent a larger portion

of our overall revenues than our product revenues for the year ended December 31, 2020 as compared to the year ended December

and Administrative Expenses

and administrative expenses decreased $0.1 million, for the year ended December 31, 2020 as compared to the year ended December

As a percentage of revenues, general and administrative expenses decreased to 123% of revenues for the year ended December

31, 2020 from 143% of revenues for the year ended December 31, 2019.

This decrease as a percent of revenues was achieved as a

result of scaling operations as our revenues grew and reducing payroll and travel expenses during the COVID-19 outbreak.

and Marketing

and marketing expense was flat for the year ended December 31, 2020 as compared to the year ended December 31, 2019.

reason for this decrease was the postponement until 2021 of our annual conference for VIPs due to the COVID-19 outbreak combined

with the increase in revenues that drives sales and marketing expenses.

expense in 2020 resulted from the settlement of a shareholder demand in the fourth quarter of 2020.

We issued 300,000 shares of

common stock and 325,000 warrants to purchase common shares as a result of this settlement.

and Amortization

and amortization expense decreased approximately $33,000 for the year ended December 31, 2020 as compared to the year ended December

31, 2019, due primarily to the sale of one of our Vivos Centers in the fourth quarter of 2019.

expense decreased by approximately $41,000, for the year ended December 31, 2020 as compared to the year ended December 31, 2019

as a result of the convertible notes being exchanged into Series B Preferred Stock throughout 2020.

income increased by approximately $58,000 for the year ended December 31, 2020 as compared to the year ended December 31, 2019

primarily due to interest on our note receivable related to the sale of one of our Vivos Centers in the fourth quarter of 2019.

incurred a net loss of $12.1 million during the year ended December 31, 2020 as compared to a net loss of $10.8 million for the

year ended December 31, 2019.

The $1.3 million additional loss was primarily due to the settlement expense of $3.3 million offset

by $1.8 million higher gross margin in 2020.

Ended December 31, 2019 Compared to the Year Ended December 31, 2018

Product revenue

Service revenue

Total revenue

Cost of sales

Gross profit %

Operating expenses

General and administrative

(16,172,505 )

Sales and marketing

Depreciation and amortization

Operating loss

(10,577,233 )

Interest expense

Interest income

Loss on sale of business

$ (10,754,319 )

$ (8,439,156 )

$ (2,315,163 )

revenue for the year ended December 31, 2019 increased $7,601,016, or 200%, to $11,393,277 from $3,792,261 for the year ended

December 31, 2018.

This increase was related to revenue from our VIP program that began during 2019 along with the increase in

the number of oral appliances sold.

During the year ended December 31, 2019, we enrolled 204 VIPs for a total of $6,742,283.

the year ended December 31, 2018, we enrolled 67 VIPs for a total of $1,251,679.

During the year ended December 31, 2019 we sold

4,696 total oral appliance arches for a total of $2,917,095 and for the year ended December 31, 2018 we sold 2,201 total oral

appliance arches for a total of $695,250.

The increase in appliance revenue is due to both volume and price increases.

of sales for the year ended December 31, 2019 increased $1,654,393, or 153%, to $2,736,034 from $1,081,641 for the year ended

December 31, 2018 due to the relative increase in revenue.

As a percentage of revenue, cost of sales was 24% for the year ended

December 31, 2019 and 29% for the year ended December 31, 2018.

The decrease in cost as percentage of revenue was due to a greater

mix of higher margin VIP program revenue during the year ended December 31, 2019 over year ended December 31, 2018.

and Administrative

and administrative expenses increased $6,899,615, or 74%, for the year ended December 31, 2019 as compared to the year ended December

This increase relates primarily to payroll and benefits, consultants, travel and other costs associated with the growth

of our business.

and Marketing

and marketing increased $1,147,504, or 99%, for the year ended December 31, 2019 as compared to the year ended December 31, 2018.

The primary reason for this increase were additional commissions related to the increased service and product revenues, which

increased 200%.

and Amortization

and amortization expense increased $140,555 for the year ended December 31, 2019 as compared to the year ended December 31, 2018,

due almost entirely to the full year’s depreciation on furniture and equipment and leasehold improvements at the Vivos Centers

in 2019 versus a partial year in 2018.

expense increased $34,902 for the year ended December 31, 2019 compared to the year ended December 31, 2018, primarily as a result

of a convertible note offering that commenced in April 2019.

incurred a net loss of $10,754,319 during the year ended December 31, 2019 as compared to $8,439,156 of net loss for the year

ended December 31, 2018.

A higher gross margin of $5,946,623 was offset by higher sales and marketing expenses and general and

administrative expenses.

and Capital Resources

of December 31, 2020, we had cash and cash equivalents of $18,205,860 compared to cash and cash equivalents of $469,353 at December 31,

In January 2020, we commenced a private placement offering that authorized the issuance of up to $15,000,000 of newly designated

Series B Preferred Stock to accredited investors.

As of October 1, 2020, we closed our Series B Preferred Stock offering after having

received approximately $2,450,000 from the issuance of Series B Preferred Stock and exchanging approximately $2,944,000 in accrued

principal and interest from our 2019 convertible notes into Series B Preferred Stock, whereas other 2019 convertible note holders elected

to convert their notes into common stock.

All Series B Preferred Stock converted into common stock in December 2020 in connection with

the initial public offering.

May 2020, we secured funding of $1,265,067 under the Paycheck Protection Program that was signed into law as part of the Coronavirus

Aid, Relief and Economic Security (CARES) Act as a result of the COVID-19 pandemic.

The promissory note contains an interest rate

of 1.0% per year.

Payments will be deferred for the first six months of the loan, then we must pay principal and interest monthly

based on the unforgiven portion of the loan balance plus all accrued interest, beginning seven months from the month the note

We anticipate seeking forgiveness of a significant portion of the loan amount under the provisions of the program as

the amount borrowed has been used to pay compensation, rent and utilities.

While we believe that our use of the loan proceeds

will meet the conditions for forgiveness of the loan, there is a risk that the loan will not be forgiven or that we will take

actions that could cause us to be ineligible for forgiveness of the loan, in whole or in part.

December 11, 2020, we completed our initial public offering by issuing 4,025,000 common shares at a price of $6.00 per share, for net

proceeds of approximately $21.6 million, after deducting underwriter discounts and commissions and offering expenses payable by

Following our initial public offering, we made payments of $2.0 million to our founder and chief medical officer to redeem a portion

of the outstanding Series A Preferred Stock.

In early January, we paid an additional $1.5 million to our founder and chief medical officer

to redeem all outstanding remaining Series A Preferred Stock.

believe that our existing cash resources will be sufficient to meet our capital requirements and fund our operations for at least

the next 12 months.

We may also seek liquidity through additional securities offerings or through borrowings under a new credit

following table presents a summary of our cash flow for the periods indicated:

Net cash provided by (used in):

Operating activities

Equity compensation plans approved by security

1,333,333 (1)

1,018,000 (2)

Investing activities

Financing activities

Increase (Decrease) in cash and cash equivalents

cash used in operations was $5,680,294 for the year ended December 31, 2020 compared to net cash used of $5,340,480 for the year

ended December 31, 2019.

The increase in cash used from operating activities was primarily driven by the increase in our net loss

of $1.2 million.

Net cash used in investing activities

consists of capital expenditures for property, plant and equipment and increased by approximately $206,000 from the year ended

December 31, 2020 compared to cash provided by investing activities for the year ended December 31, 2019.

For the year ended December

31, 2019, $250,000 in proceeds from the sale of a business were included in investing activities.

cash provided by financing activities for the year ended December 31, 2020 consisted of the more than $22.3 million in net proceeds

from our initial public offering plus $2.5 million in proceeds from the sale of Series B Preferred Stock and $1.3 million in proceeds

from the PPP loan offset by $2.2 million in redemptions on the Series A Preferred Stock.

For the year ended December 31, 2019,

$1.2 million was received from the issuance of common stock and $3.8 million was received from the proceeds of our convertible

debt offering that was offset by $0.4 million in redemptions on Series A Preferred Stock.

Sheet Arrangements

do not have any off-balance sheet arrangements, as defined by applicable regulations of the SEC, that are reasonably likely to

have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or

capital resources.

Accounting Policies Involving Management Estimates and Assumptions

of Presentation and Consolidation

consolidated financial statements included as part of this Annual Report on Form 10-K, which include the accounts of our company

and our wholly owned subsidiaries (BMS and First Vivos), are prepared in conformity with U.S.

GAAP and the rules and regulations

of the SEC related to annual and quarterly reports.

All significant intercompany balances and transactions have been eliminated

in consolidation.

Certain information and note disclosures normally included in annual financial statements prepared in accordance

GAAP have been condensed or omitted pursuant to those rules and regulations.

The consolidated balance sheet as of December

31, 2019 included in this report has been derived from our audited consolidated financial statements.

The unaudited interim condensed

consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements

and, in the opinion of management, reflect all material adjustments (consisting of normal recurring accruals) necessary for a

fair presentation of the unaudited interim condensed consolidated financial statements.

The information presented throughout this

report, as of and for the periods ended December 31, 2020 and 2019, is unaudited.

prepare financial statements in conformity with U.S.

GAAP, management must make estimates and assumptions that affect the amounts

reported in the financial statements and accompanying notes.

Actual results could differ from those estimates.

Concentration

of Credit Risk and Significant Customers

instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents and

accounts receivable.

We limit our exposure to credit loss by placing our cash with high credit quality financial institutions.

Additionally, we have a diverse customer base and no single customer represented greater than ten percent of sales or accounts

receivable for the years ended December 31, 2020 and December 31, 2019.

Receivable, Net

accounts receivable in the accompanying consolidated financial statements are stated at the amounts management expects to collect.

We perform credit evaluations of our customers’

financial condition and may require a prepayment for a portion of the services

to be performed.

We reduce accounts receivable by estimating an allowance that may become uncollectible in the future.

determines the estimated allowance for uncollectible amounts based on its judgements in evaluating the aging of the receivables

and the financial condition of our clients.

Allowance for uncollectible receivables was $507,347 and $180,852 as of December 31,

2020 and 2019, respectively.

assets consist of assets acquired from First Vivos and costs paid to third parties for work related to our patents.

The identified

intangible assets acquired from First Vivos are amortized using the straight-line method over the estimated life of the assets,

which approximates 5 years.

The costs paid to third parties for our assets are amortized using the straight-line method over the

life of the underlying patents, which approximates 15 years commencing at which time the patent has been granted.

We determined

the fair value of the intangible assets using a discounted cash flow approach.

is the excess of acquisition cost of an acquired entity over the fair value of the identifiable net assets acquired.

is not amortized, but tested for impairment annually or whenever indicators of impairment exist.

These indicators may include

a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition

of a significant portion of the business or other factors.

We test for impairment annually after the close of the year.

was no impairment of goodwill recognized at December 31, 2020 or 2019.

review and evaluate the recoverability of long-lived assets whenever events or changes in circumstances indicate that an asset’s

carrying amount may not be recoverable.

Such circumstances could include, but are not limited to (1) a significant decrease in

the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an adverse

action or assessment by a regulator.

We measure the carrying amount of the asset against the estimated undiscounted future cash

flows associated with it.

Should the sum of the expected future net cash flows be less than the carrying value of the asset being

evaluated, an impairment loss would be recognized.

The impairment loss would be calculated as the amount by which the carrying

value of the asset exceeds its fair value.

The fair value is measured based on quoted market prices, if available.

If quoted market

prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted value

of estimated future cash flows.

The evaluation of asset impairment requires us to make assumptions about future cash flows over

the life of the asset being evaluated.

These assumptions require significant judgment and actual results may differ from assumed

and estimated amounts.

Our evaluation of long-lived assets completed for the years ended December 31, 2020 and 2019 resulted in

no impairment loss.

Receivable, Net

notes receivable in the accompanying financial statements are stated at the amount management expects to collect.

portion is what the Company expects to collect in the next twelve months and the long-term portion consists of the portion the

Company expects to collect beyond twelve months.

Periodically throughout the year, management evaluates the collectability of

the note receivable based on its judgements of the operations and financial strength of underlying practice.

The Company reduced

notes receivable by estimating a discount based on market rates.

The discount on notes receivable was $68,101 and $93,421 as of

December 31, 2020 and 2019, respectively.

Accretion on the discount and interest on the note is recorded in interest income.

adopted Accounting Standards Update No.

2014-09 (Topic 606) titled, “Revenue from Contracts with Customers”

January 1, 2019 and relied upon transitional guidance provided for in 606-10- 65-1(f)(3) and do not disclose the transaction price

allocated to the remaining performance obligations or an explanation of when we expect to recognize that amount as revenue.

generate revenue from the sale of products and services.

Revenue is recognized when control of the products or services is transferred

to our customers in a way that reflects the consideration we expect to be entitled to in exchange for those products and services.

determine revenue recognition through the following five-step model, which entails:

identification

of the promised goods or services in the contract;

determination

of whether the promised goods or services are performance obligations, including whether they are distinct in the context

of the contract;

of the transaction price, including the constraint on variable consideration;

of the transaction price to the performance obligations;

of revenue when, or as the Company satisfies each performance obligation.

revenue is recognized when the underlying training or other services are performed.

Unearned revenue reported on the balance sheet

as contract liability represents the portion of fees paid by customers for services that have not yet been performed as of the

reporting date and are recorded as the service is rendered.

We recognize this revenue over the twelve-month life of the contract.

Provisions for discounts are provided in the same period that the related revenue from the products and/or services is recorded.

enter into programs that may provide for multiple element deliverables.

Commencing in 2018, we began enrolling medical and dental

professionals in a one-year program which includes training in a highly personalized, deep immersion workshop format which provides

the dentist access to an onboarding team who is dedicated to creating a successful integrated practice.

The key topics covered

in training include case selection, clinical diagnosis, appliance design, adjunctive therapies, instructions on ordering our products,

guidance on pricing, instruction on insurance reimbursement protocols and interacting with our proprietary software system and

the many features on our website.

The initial training and educational workshop is typically provided in the first month that

a VIP enrolls.

Since VIPs are able to begin generating revenue after the first training workshop, we recognize 50% of the service

revenue in the second month of enrollment and the remaining 50% pro-rata throughout the following eleven months of the service

Ongoing support and additional training are provided throughout the year and include access to our proprietary Airway

Intelligence Service (or AIS) which provides VIPs with resources to help simplify the diagnostic and treatment planning process.

AIS is provided as part of the price of each appliance and is not a separate revenue stream.

Following the year of training and

support, a VIP may pay for seminars and training courses that meet the VIP’s needs on a subscription or a course by course

In addition to enrollment service revenue, we have more recently launched an additional service on a monthly subscription

Billing Intelligence Service (or BIS).

Revenue for this service is recognized monthly during the month the service is rendered.

identify all goods and services that are delivered separately under a sales arrangement and allocates revenue to each deliverable

based on relative fair values.

Fair values are generally established based on the relevant service period which approximates the

prices for relevant training that would be charged if those services were sold separately.

In general, revenues are separated

between durable medical equipment (product revenue) and education and training services (service revenue).

The allocated revenue

for each deliverable is then recognized ratably based on relative fair values of the components of the sale.

Revenue from training

is recognized over the relevant service period (i.e., as we satisfy our performance obligations and creates value for the VIP).

We also evaluate the impact of undelivered items on the functionality of delivered items for each sales transaction and, where

appropriate, defer revenue on delivered items when that functionality has been affected.

Functionality is determined to be met

if the delivered products or services represent a separate earnings process.

time to time we offer various discounts to our customers.

These include the following:

for cash pay in full

or trade show incentives

concessions on annual enrollment fee

amount of the discount is determined up front prior to the sale.

Accordingly, measurement is determined before the sale occurs

and revenue is recognized based on the terms agreed upon between us and the VIP over the performance period.

In rare circumstances,

a discount has been given after the sale during a conference which is offering a discount to full price.

In this situation revenue

is measured and the change in transaction price is allocated over the remaining performance obligation.

amount of consideration can vary by customer due to promotions and discounts authorized to incentivize a sale.

Prior to the sale,

the customer and us agree upon the amount of consideration that the customer will pay in exchange for the services we provide.

The net consideration that the customer has agreed to pay is the expected value that is recognized as revenue over the service

Any overpayments are refunded during the reporting period so that no refund liability is recognized.

At the end of each

reporting period, we update the transaction price to represent the circumstances present at the end of the reporting period and

any changes in circumstances during the reporting period.

addition to revenue from services, we also generate revenue from the sale of our patented oral devices and preformed guides, known

as appliances or systems to our customer, the VIP.

Revenue from the appliance sale is recognized when control of product is transferred

to the VIP in an amount that reflects the consideration we expect to be entitled to in exchange for those products.

turn charges the VIP’s patient and/or patient’s insurance a fee for the appliance and for his or her professional

services in measuring, fitting, installing the appliance and educating the patient as to its use.

We are contracted with the VIP

for the sale of the appliance and are not involved in the sale of the products and services from the VIP to the VIP’s patient.

appliances are visually similar to a retainer that is worn after braces are removed.

Each appliance is specifically fitted to

each patient.

We utilize our network of certified VIPs throughout the country to sell the appliances to their customers as well

as in two centers that we operate.

We utilize third party contract manufacturers or labs to produce each appliance and preformed

The manufacturer designated by us (of which there are several) produces the appliance in strict adherence to our patents,

design files, protocols, processes and procedures and under the direction and specific instruction of us.

The manufacturer then

ships the appliance to the VIP who ordered the appliance from us.

All of our contract manufacturers are required to follow our

master design files in production of appliances or the lab will be in violation of the FDA’s rules and regulations.

an analysis under ASC Topic 606-10-55-36 through 55-40 and concluded it is the principal in the transaction and is reporting revenue

We bill the VIP provider the contracted price for the appliance which is recorded as product revenue.

Product revenue is

recognized once the appliance ships to the VIP provider under our direction.

in 2018, we operated three centers in Colorado and Utah.

Effective October 1, 2019, we sold our center in Utah (see Note 4 to

the financial statements included as part of this Annual Report on Form 10-K).

Within each center, we utilize a team of medical

professionals to measure, order and fit each appliance.

Upon scheduling the patient (which is our customer in this case), the

center takes a deposit and reviews the patient’s insurance coverage.

Revenue is recognized differently for our owned centers

than for our VIPs.

We recognize revenue in the centers after the appliance is received from the manufacturer and once the appliance

is fitted and provided to the patient.

offer our clinical advisors (who help our VIPs with technical aspects of our products) discounts from our standard VIP pricing.

This is done to help encourage our clinical advisors to purchase our products for their own practices.

In addition, from time

to time, we offer buy one, get one offers and other credits to incentivize our VIPs to embrace our products and increase volume

within their practices.

board of directors (or the compensation committee thereof) grants share-based payments to employees under our equity incentive

plans described below.

Historically, this is has come in the form of options to purchase shares of our common stock.

Since November

2018, all stock options have been granted with an exercise price of $7.50 per share on post-reverse split basis.

Exercise price

of such stock options has been consistent with the price offered to private investors in the Company’s private placements

during this period, which our board of directors or its compensation committee deemed to be the fair value of the underlying common

an accounting perspective, we account for share-based payments to employees by recognizing compensation expense based upon the

estimated fair value of the awards on the date of grant.

Absent a publicly traded market for our stock, we use the price paid

for our stock in the most recent sales to third parties as the stock price input into our valuation model as of the date of grant.

We determine the estimated grant fair value using the Black-Scholes option pricing model and recognize compensation costs ratably

over the requisite service period which approximates the vesting period using the straight-line method.

options issued to consultants, we recognize the estimated fair value of options issued using the Black-Scholes option pricing

model at the time the services are rendered.

Black-Scholes model requires the input of certain subjective assumptions and the application of judgment in determining the fair

value of the awards.

The most significant assumptions and judgments include the expected volatility, risk-free interest rate,

the expected dividend yield, and the expected term of the awards.

The Company accounts for forfeitures as they occur.

assumptions used in our option pricing model represent management’s best estimates.

If factors change and different assumptions

are used, our equity-based compensation expense could be materially different in the future.

The key assumptions included in the

model are as follows:

Price –

We use the price of our stock sold to third parties in our offerings as the most available representation of

fair value per share of common stock on date of grant.

volatility —

We determine the expected price volatility based on the historical volatilities of our peer group as we

do not have a sufficient trading history for our common stock.

Industry peers consist of several public companies in the bio-tech

industry similar to us in size, stage of life cycle and financial leverage.

We intend to continue to consistently apply this

process using the same or similar public companies until a sufficient amount of historical information regarding the volatility

of our own stock price becomes available, or unless circumstances change such that the identified companies are no longer

similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.

interest rate —

The risk free rate was determined based on yields of U.S.

Treasury Bonds of comparable terms.

The volatility

is based on analyzing the stock price and implied volatility of guideline companies.

dividend yield —

We have not previously issued dividends and do not anticipate paying dividends in the foreseeable future.

Therefore, we used a dividend rate of zero based on our expectation of additional dividends.

We estimate the expected term using the simplified method which is the average of the vesting term and the contractual

term of the options.

2017, our board of directors and shareholders approved the adoption of a stock and option award plan (the “2017 Plan”),

under which shares were reserved for future issuance for options, restricted stock awards and other equity awards.

The 2017 Plan

permits grants of equity awards to employees, directors, consultants and other independent contractors.

Equity compensation

plans not approved by stockholders:

2017 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors.

Our board of directors

and shareholders have approved a total reserve of 1,333,333 shares for issuance under the 2017 Plan.

2019, our board of directors and shareholders approved the adoption of a stock and option award plan (the “2019 Plan”),

under which shares were reserved for future issuance for options, restricted stock awards and other equity awards.

The 2019 Plan

permits grants of equity awards to employees, directors, consultants and other independent contractors.

2019 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors.

Our board of directors

and shareholders have approved a total reserve of 333,334 shares for issuance under the 2019 Plan.

On June 18, 2020, our shareholders

approved an amendment and restatement of the 2019 Plan to increase the number shares or our common stock available for issuance

thereunder by 833,333 share of common stock such that, after amendment and restatement of the 2019 Plan, and prior to any grants,

1,166,667 shares of common stock were available under the 2019 Plan.

and Diluted Net Loss Per Share

net loss per share is computed using the weighted average number of common shares outstanding during the period.

Diluted net loss

per common share is computed using the weighted average number of common shares outstanding and the weighted average dilutive

potential common shares outstanding using the treasury stock method.

However, for the years ended December 31, 2020 and 2019,

diluted net loss per share is the same as basic net loss per share as the inclusion of weighted average shares of common stock

issuable upon the exercise of outstanding warrants and stock options would be anti-dilutive.

The numerator in the basic and diluted

net loss per share calculation is the net loss attributable to common stockholders, which is the net loss for the year increased

by the current year preferred stock dividends accrued.

holder of our outstanding Series A Preferred Stock (Dr.

Dave Singh, our founder and Chief Medical Officer) was entitled to

participate in common stock dividends, if and when declared, on a one-to-one per-share basis.

Accordingly, in periods in which

we have net income, earnings per share will be computed using the two-class method whereby the pro rata dividends distributable

to the holder of our Series A Preferred Stock will be deducted from earnings applicable to common stockholders, regardless of

whether a dividend is declared for such undistributed earnings.

For the years ended December 31, 2020 and 2019, we incurred a

net loss and, accordingly, there were no undistributed earnings to allocate under the two-class method.

following table summarizes outstanding common stock securities not included in the computation of diluted net loss per common

share as their inclusion would be anti-dilutive:

Common stock warrants

Common stock options

and shareholders have approved a total reserve of 2,366,667 shares for issuance out of which 250,000 shares have been exercised under

the 2019 Plan.

options granted to officers and employees prior to the approval by our stockholders of the 2017 Plan.

of the date of this Annual Report on Form 10-K, we have not paid any cash dividends to stockholders.

The declaration of any future cash

dividend will be at the discretion of our board of directors and will depend upon our earnings, if any, our capital requirements and

financial position, the general economic conditions, and other pertinent conditions.

It is our present intention not to pay any cash

dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.

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 5. Market for Registrant’s Common Equity