What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-30 compared with 2022-03-31 · 592 added, 558 removed, 110 unchanged (91% of the section changed)

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are a revenue stage medical technology company focused on the development and commercialization of innovative treatment alternatives

for patients with dentofacial abnormalities and/or patients diagnosed with mild to moderate obstructive sleep apnea (OSA) and snoring

We believe our technologies and protocols represent a significant improvement in the treatment of mild to moderate OSA versus

other treatments such as continuous positive airway pressure (or CPAP) or palliative oral appliance therapies.

We call our alternative

treatment protocol The Vivos Method .

for patients with cranial and/or dentofacial abnormalities and/or patients diagnosed with mild to moderate obstructive sleep apnea (“OSA”)

and snoring in adults.

We believe our technologies and conventions represent a significant improvement in the treatment of mild to moderate

OSA versus other treatments such as continuous positive airway pressure (“CPAP”) or palliative oral appliance therapies.

Our alternative

treatments are part of The Vivos Method .

Vivos Method is an advanced therapeutic protocol, which often combines the use of customized oral appliance specifications and

proprietary clinical protocols developed by our company and prescribed by specially trained dentists in cooperation with their

proprietary clinical treatments developed by our company and prescribed by specially trained dentists in cooperation with their

medical colleagues.

Published studies have shown that using our customized appliances and clinical protocols led to

significantly lower Apnea Hypopnea Index scores and improve other conditions associated with OSA.

Our patented oral appliances have

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

Food and Drug Administration (or FDA) cleared uses) in approximately 25,000 patients

treated worldwide by more than 1,450 trained dentists.

business model is focused around dentists, and our program to train independent dentists and offer them other value-added services

in connection with their ordering and use of The Vivos Method for patients is called the Vivos Integrated Practice (“VIP”)

December 11, 2020, we completed our initial public offering by issuing 4,025,000 shares of our 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.

May 11, 2021, we completed a follow-on underwritten public offering of 4,600,000 shares of our common stock at a price of $6.00 per share,

for net proceeds of approximately $25.4 million after deducting underwriting discounts and commissions and offering expenses payable

Published studies have shown that using our customized appliances and clinical treatments led to significantly

lower Apnea Hypopnea Index scores and improve other conditions associated with OSA.

Our patented oral appliances have proven

effective (within the scope of the FDA cleared uses) in over 33,000 patients treated worldwide by more than 1,700 trained

business model is focused around dentists, and our program to train independent dentists and offer them other value-added services in

connection with their ordering and use of The Vivos Method for patients is called the Vivos Integrated Practice (“VIP”)

December 2019, a novel strain of coronavirus known as COVID-19 was reported to have surfaced in China, and by March 2020 the spread of

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economy had been largely shut down by mass quarantines and government

mandated stay-in-place orders (the “Orders”) to halt the spread of the virus.

Many of these Orders have been relaxed or lifted

in jurisdictions where large portions of the population have been vaccinated, but there is considerable uncertainty about whether the

Orders will need to be reinstated due to the ongoing spread of new variants of COVID-19.

A significant portion of the worldwide population

remains unvaccinated, and uncertainty also exists about whether existing vaccines will be effective as new variants of COVID-19 emerge.

Accordingly, the overall impact of COVID-19 continues to have an adverse impact on global business activities.

of our VIPs and potential VIPs closed their offices during 2020 as a result of COVID-19, although some remained open to specifically

provide patients our products as our appliances and VIPs were deemed an essential business for health considerations in many jurisdictions.

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

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 businesses continued to reopen through 2021, the impact of COVID-19 on our company began

to diminish, although we continue to closely monitor the potential impact of COVID-19 variants on our business.

Of note, during the second

half of 2021, many of our Canadian VIPs have not traveled to the U.S.

for training in light of travel restrictions.

As of August 9, 2021,

the Government of Canada imposed further restrictions on unvaccinated travelers, which has caused delays with some of our Canadian VIPs

receiving required training and commencing Vivos Method cases.

addition, our fourth quarter 2021 revenue growth was impacted by lower VIP enrollments due largely to the COVID-19 Omicron variant resurgence.

We achieved sales growth despite seeing significant headwinds throughout our core customer base, mostly driven by COVID-19 Delta and

Omicron variant resurgences in the middle and latter part of the year.

In December 2021, the American Dental Association reported that

just 60% of dental practices were open and operating with business as usual.

Another industry source reported 92% of dental practices

were struggling to hire or replace hygienists, and 77% reported difficulty hiring front desk positions.

These challenges across the dental

community have impacted both VIP enrollments and patient case starts, as replacement dental personnel must be trained in the proper use

of The Vivos Method.

The world-wide response to the pandemic resulted in a significant downturn in economic activity, which we believe

has continued to some degree into 2022 as a new variant (called B.A.2) has emerged.

There is no assurance that government stimulus programs

will successfully restore the economy to the levels that existed before the pandemic and there is a risk that new variant outbreaks will

cause additional disruptions and slowdowns in the economy.

addition, worldwide supply chain constraints and inflation, as well as Russia’s invasion of Ukraine in February 2022, have emerged

as new barriers to long-term economic recovery.

If an economic recession or depression commences and is sustained, it could have a material

adverse effect on our business as demand for our products could decrease.

such, the long-term financial impact on our business of COVID-19 as well as these other matters cannot reasonably be fully estimated

at this time.

January 2022, we announced the filing of a U.S.

patent application related to certain new and enhanced clinical methods and proprietary

protocols developed within The Vivos Method treatment for dentofacial abnormalities and/or OSA.

This new patent application

was based on early field data which revealed an additional 58% average improvement in AHI score reductions in OSA patients who had received

treatment with The Vivos Method where the revised clinical protocols were implemented.

December 2021, we announced that we received acceptance from a Centers for Medicare & Medicaid Services Pricing, Data Analysis and

Coding (or PDAC) contractor for our mmRNA device for treating mild to moderate OSA and snoring in adults.

This acceptance places the

mmRNA device on the PDAC list of oral appliances covered by and billable to Medicare.

This development makes benefits of the mmRNA device

available to millions of Medicare beneficiaries who seek effective treatment for mild to moderate OSA.

in December 2021 , we announced our official registration with Health Canada, the Ministry of Health department responsible for

helping Canadians maintain and improve their health through services and resources.

The official registration of our products

will aim to provide patients with a comprehensive, end-to-end solution for OSA patients, which incorporates clinical screening, medical

diagnosis and therapy using Vivos products.

At the core of this development, we will offer our comprehensive line of highly effective

oral appliances and proprietary clinical protocols to approximately 25,000 dentists across Canada who have millions of patients in search

of an alternative treatment for dentofacial abnormalities and/or mild to moderate OSA and snoring.

Items and Trends Impacting Our Business

mandated stay-in-place orders (the “Orders”) to halt the spread of the virus, now widely acknowledged to have been generally

ineffective, and in many ways, harmful.

As a result, nearly all of these Orders have been relaxed or lifted, but there is considerable

uncertainty about whether the Orders will be reinstated should a new COVID-19 variant or entirely new virus emerge.

business was materially impacted by COVID-19 in 2020 and to some extent in 2021due to the actions of governmental bodies that mandated

quarantines and lockdowns that resulted in many of our VIPs and potential VIPs having to close their offices.

The impact of COVID-19

on our business diminished somewhat as 2022 progressed.

However, it appears that the latest COVID-19 subvariants evoke generally milder

symptoms and do not pose the same health or economic threat as previous strains.

However, the residual effects of the pandemic on dental

workforce availability as well as patient precautionary measures continued to negatively impact our VIP dental practices and our revenue

across the U.S.

and Canada during 2022.

We believe new enrollments during the fourth quarter of 2022 were negatively impacted by the

ongoing overall workforce uncertainties in the dental market.

As such, the long-term financial impact on our business of COVID-19 as

well as these other matters cannot reasonably be fully estimated at this time.

Items, Trends and Risks Impacting Our Business

believe that the following items and trends may be useful in better understanding our results of operations.

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part of the VIP enrollment fee, we enter into a service contract with VIPs under which they receive training on the use of the Vivos

treatment protocol.

treatment modalities.

VIPs have the ability to start generating revenue for us and themselves after this training.

To entice dentists to

enroll as VIPs, we have worked with different marketing programs (which we generally call a “discovery track”) with respect

To entice dentists

to enroll as VIPs, we have worked with different marketing programs (which we generally call a “discovery track”) with respect

to the payment of VIPs enrollment fee, including discounts and payment plans.

Once VIPs execute their VIP enrollment agreement,

the discovery track allows the VIP 45 to 60 days to obtain financing and pay the enrollment fee.

In general, however, we recognize 50%

of the service revenue associated with enrollment fees in the second month of enrollment and the remaining 50% pro rata throughout the

following eleven months of the enrollment service contract.

Ongoing support and additional training is provided throughout the year under

the services contract, which includes access to our proprietary Airway Intelligence Services, which provides the VIP with resources to

help simplify the sleep apnea diagnostic and Vivos treatment planning process.

addition to enrollment service revenue, we offer additional services, such as our Billing Intelligence Services offering,

and MyoCorrect orofacial myofunctional therapy services, which was introduced in April 2021.

Revenue for these services is recognized

monthly during the month the services are rendered.

are also engaging in strategic collaborations to market the benefits of the Vivos treatment protocol and VIP enrollment to dentists,

including our August 2021 cooperative relationship with Empower Sleep to provide diagnostic and medical consultation services to people

across North America who suffer from OSA and our October 2021 cross marketing collaboration with Candid Care, the maker of the CandidPro

clear aligner for straightening teeth.

the VIP program has matured, we have noted that approximately forty percent (40%) of dentists on average during 2021 (almost exclusively

on a VIP discovery track) who enroll as VIPs later decide to cancel participation in the VIP program (although the percentage has varied

from quarter to quarter).

In order to properly reflect this occurrence in the discussion of our results of operations below, for the

period ended December 31, 2021 we have shown new VIP enrollments for the period on a “net of cancellations” basis.

Once VIPs execute their VIP enrollment agreement, the discovery

track allows the VIP 45 to 60 days to obtain financing and pay the enrollment fee.

Ongoing support and additional training is provided

throughout the year under the services contract, which includes access to our proprietary Airway Intelligence Services, which provides

the VIP with resources to help simplify the sleep apnea diagnostic and Vivos treatment planning process.

addition to enrollment service revenue, we offer additional services, such as our Billing Intelligence Services offering, and MyoCorrect

orofacial myofunctional therapy services, which was introduced in April 2021.

Revenue for these services is recognized as the Company’s

performance obligations are satisfied in accordance with ASC 606.

are also engaging in strategic collaborations to market the benefits of the Vivos treatment modalities and VIP enrollment to dentists,

including our cooperative relationships with various medical providers to deliver diagnostic and medical consultation services to people

across North America who suffer from OSA.

recognize revenue on VIP enrollments once the contract is executed, payment is received, and as the Company’s performance

obligations are satisfied in accordance with ASC 606.

VIP Case Starts (Product Revenue).

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trained, we encourage them to start cases.

However, our experience has been that VIPs typically start slowly as they introduce The

Vivos Method into their practices.

While we work with VIPs to screen their patients for OSA with our SleepImage home sleep apnea

ring test (which we expect will encourage Vivos Method case starts), not all VIPs incorporate our The Vivos Method

into their practices at the same rate.

We utilize Practice Advisors to help VIPs with onboarding and starting and increasing case starts

We believe VIPs can recoup their investment in VIP enrollment with approximately eight Vivos Method case starts, but

as noted above, many VIPs start and also maintain their case starts at a significantly slower rate.

We presently have a concentration

of active VIPs who regularly start new Vivos Method treatment cases, with approximately thirty percent (30%) of VIPs accounting for all

new case starts during the quarter ended December 31, 2021.

We are working not only to increase the number of VIPs overall, but the number

of active VIPs in terms of case starts.

More active VIPs are also more likely to take advantage of our other service revenue generating

offerings such as MyoCorrect orofacial myofunctional therapy and medical Billing Intelligence Services.

During the second half of 2021, we increased our efforts to market The Vivos Method and related products and services

to larger dental service organizations (“DSOs”).

Marketing to DSOs creates an opportunity to enroll and onboard multiple

dental practices as VIPs under one common ownership structure.

This would allow us to leverage training and support across multiple VIP

practices and gain economies of scale with the goal of faster growth, both in VIP enrollments and in Vivos case starts.

dentist enrollment program, which we refer to as the Airway Alliance Program (“AAP”), was also established in the fourth

quarter of 2021 and launched in the first quarter of 2022.

This program is designed to attract the vast majority of the estimated 200,000

and Canadian dentists who are being strongly encouraged by the American Dental Association to screen their patients for sleep apnea.

The AAP gives these dentists the simple yet profitable way to screen their patients for mild to moderate OSA using the SleepImage HST.

Patients with mild to moderate OSA can be referred to a fully trained local VIP dentist for treatment.

However, our experience has been that VIPs typically start slowly as they introduce The Vivos

Method into their practices.

While we work with VIPs to screen their patients for OSA with our SleepImage ® home sleep

apnea ring test (which we expect will encourage Vivos Method case starts), not all VIPs incorporate our The Vivos Method into their practices

at the same rate.

We utilize Practice Advisors to help VIPs with onboarding and starting and increasing case starts over time.

VIPs can recoup their investment in VIP enrollment with approximately eight Vivos Method case starts, but as noted above, many VIPs start

and also maintain their case starts at a significantly slower rate.

We presently have a concentration of active VIPs who regularly start

new Vivos Method treatment cases, with approximately forty-eight percent (48%) of VIPs accounting for all new case starts during the year

ended December 31, 2022.

We are working not only to increase the number of VIPs overall, but the number of active VIPs in terms of case

More active VIPs are also more likely to take advantage of our other service revenue generating offerings such as MyoCorrect

orofacial myofunctional therapy and medical Billing Intelligence Services.

During the second half of 2021, we increased our efforts to market The Vivos Method and related products and services to

larger dental support organizations (“DSOs”).

Marketing to DSOs creates an opportunity to enroll and onboard multiple dental

practices as VIPs under one common ownership structure.

This would allow us to leverage training and support across multiple VIP practices

and gain economies of scale with the goal of faster growth, both in VIP enrollments and in Vivos case starts.

As of the end of 2022,

we believe we have made important progress in penetrating this market, but as we cautioned previously, DSOs tend to move slowly when

adopting new technologies or programs.

Our other dentist enrollment program, which we refer to as the Airway Alliance Program (“AAP”),

was also established in the fourth quarter of 2021 and launched in the first quarter of 2022.

This program is designed to attract the

vast majority of the estimated 200,000 U.S.

and Canadian dentists who are being strongly encouraged by the American Dental Association

to screen their patients for sleep apnea.

The AAP gives these dentists the simple yet profitable way to screen their patients for mild

to moderate OSA using the SleepImage ® home sleep test.

Patients with mild to moderate OSA can be referred to a fully trained

local VIP dentist for treatment.

The AAP program did not contribute meaningfully to revenue during 2022.

We believe the U.S.

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impact on our business or results of operations.

However, we anticipate that inflationary pressures will make it necessary for us to

adjust our standard pricing for our appliance products effective second quarter of 2022.

The full impact of such price adjustments on

sales or demand for our products is not fully known at this time and may require us to adjust other aspects of our business as we seek

to grow revenue and, ultimately, achieve profitability and positive cash flow from operations.

However, inflationary pressures (including increases in the price of raw material components

of our appliances) made it necessary for us to adjust our standard pricing for our appliance products effective May 1, 2022.

impact of such price adjustments on sales or demand for our products is not fully known at this time and may require us to adjust other

aspects of our business as we seek to grow revenue and, ultimately, achieve profitability and positive cash flow from operations.

the fourth quarter of 2022, we rolled back a portion of the pricing increase of May in order to stimulate demand.

additional inflation-related risk is the Federal Reserve’s response, which up to this point has been to raise interest rates.

actions have, in times past, created unintended consequences in terms of the impact on housing starts, overall manufacturing, capital

markets, and banking.

If such disruptions become systemic, as occurred in the 2008 Great Recession, then the impact on our Revenue, Earnings

and access to Capital Markets of both inflation and inflation-fighting responses would be impossible to know or calculate.

From time to time, we may experience supply chain challenges due to forces beyond our control.

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blockage earlier in 2021 caused some delay in shipments of SleepImage ® rings from China.

Overall, however, as our appliances are made

in the U.S., we have not experienced significant supply chain issues as a result of COVID-19 or otherwise, although this may change in

future periods.

Overall, however, as our appliances

are made in the U.S., we have not experienced significant supply chain issues as a result of COVID-19 or otherwise, although this may

change in future periods.

Seasonality .

We believe that the patient volumes of our VIPs will be sensitive to seasonal fluctuations in urgent care and primary care activity.

Typically, winter months see a higher occurrence of influenza, bronchitis, pneumonia and similar illnesses;

however, the timing and severity

of these outbreaks vary dramatically.

Additionally, as consumers shift toward high deductible insurance plans, they are responsible for

a greater percentage of their bill, particularly in the early months of the year before other healthcare spending has occurred, which

may lead to lower than expected patient volume or an increase in bad debt expense during that period.

Our quarterly operating results

may fluctuate significantly in the future depending on these and other factors.

Typically, the fourth quarter tends to be one where we see higher enrollment levels for new VIP dentists, however, as previously mentioned,

in Q4 of 2022 we did not see that same pattern emerge.

The first quarter of each year tends to be our weakest quarter of the year for

new enrollments, and to a certain extent, appliance sales as well.

Winter months see a higher occurrence of influenza, bronchitis, pneumonia

and similar illnesses;

however, the timing and severity of these outbreaks vary dramatically.

Additionally, as consumers shift toward

high deductible insurance plans, they are responsible for a greater percentage of their bill, particularly in the early months of the

year before other healthcare spending has occurred, which may lead to lower than expected patient volume or an increase in bad debt expense

during that period.

Our quarterly operating results may fluctuate in the future depending on these and other factors.

Cybersecurity .

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our operations and that timely public disclosure is made, as appropriate.

In addition, worldwide supply chain constraints and economic and capital markets uncertainty arising out of Russia’s

invasion of Ukraine in February 2022 have emerged as new barriers to long-term economic recovery.

If an economic recession or depression

commences and is sustained, it could have a material adverse effect on our business as demand for our products could decrease.

markets uncertainty, with public stock price decreases and volatility, could make it more difficult for us to raise needed capital at

the appropriate time.

Components of Consolidated Statements of Operations

We recognize revenue when we satisfy our performance obligations over time as our customer receive the benefit of

training and/or we transfer control of the promised products to our customers, which generally occurs over a very short period of

Performance obligations are typically satisfied by shipping or delivering products to customers, or customers receiving training,

which is also the point when title transfers and/or training occurs.

Revenue consists of the gross sales price, net of estimated

allowances, discounts, and personal rebates that are accounted for as a reduction from the gross sale price.

We recognize revenue when we satisfy our performance obligations over time as our customers receive the benefit of the

promised goods and services, which generally occurs over a short period of time.

Performance obligations with respect to appliance sales

are typically satisfied by shipping or delivering products to our VIPs or, in the case of enrollment or service revenue, upon our satisfaction

of performance obligations associated with VIP enrollments.

Revenue consists of the gross sales price, net of estimated allowances, discounts,

and personal rebates that are accounted for as a reduction from the gross sale price.

Cost of goods sold primarily consists of direct costs attributable to the purchase from third party suppliers and related

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Sales and marketing costs primarily consist of personnel costs for employees engaged in sales and marketing activities,

commissions, advertising and marketing costs, website enhancements, and conferences for our sales

and marketing staff.

commissions, advertising and marketing costs, website enhancements, and conferences for our sales and marketing staff.

and administrative expenses.

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equipment, amortization expense related to leasehold improvements, and amortization expense related to identifiable intangible assets.

Interest expense is incurred under our loan under the U.S.

Small Business Administration’s Payroll Protection

Program (PPP).

The components of interest expense include the amount of interest payable in cash at the stated interest rate, and accretion

and amortization of debt discounts and issuance costs.

Interest income relates to temporary cash investments and a note receivable from a related party arising from the sale

of our former company-owned dental clinic in Orem, Utah in 2019.

The components of interest income from the note receivable include interest

at the stated rate and accretion of the debt discount.

Due to the impairment of the note receivable, no interest will be accrued starting

January 1, 2022.

Other income relates to the PPP loan forgiven in January 2022 by the SBA.

of March 30, 2022 Financial Statements

described in the Explanatory Note and Note 2, “Restatement of Consolidated Financial Statement,” in Item 1 of Part 1 of Amendment

1 to our Quarterly Report on Form 10-Q for the three months ended March 31, 2022, originally filed with the SEC on May 16, 2022 and

such Amendment No.

1 being filed on November 25, 2022 (the “10-Q/A”), we determined it was necessary to restate our financial

statements for the three months ended March 31, 2022.

restatement of the previously filed financial statements was due to our management (with the concurrent of the Audit Committee of our

Board of Directors) determining that our existing revenue recognition policy was not consistent with the guidance in ASC 606.

After analyzing

our contracts using the five-step process in ASC 606, we have determined that for VIP enrollment contracts, it is necessary for us to

separately identify the performance obligations and recognize the revenue as the performance obligations are satisfied or over the customer

life as applicable.

We identified a material weakness related to the operating effectiveness of our review controls in that we did not

put the appropriate resources in place to be able to identify technical accounting issues and perform review functions appropriately

for the revenue recognition issue described above and for those items which we had previously identified in Part II, Item 9A of our Form

10-K for the fiscal year ended December 31, 2021.

of Operations

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consolidated statements of operations for the years ended December 31, 2022 and 2021 are presented below (dollars in thousands):

of sales (exclusive of depreciation and amortization shown separately below)

and administrative

and marketing

and amortization

Non-operating

income (expense)

increased by $3.8 million, or 29%, to $16.9 million for the year ended December 31, 2021 compared to $13.1 million for the year ended

December 31, 2020.

This increase consists of (i) approximately $1.5 million attributable to higher

appliance sales to VIPs to volume increases, (ii) an increase of approximately $1.0 million in VIP revenue, (iii) an increase of approximately

$1.1 million in center revenue, initial management service revenue including our MID program, and from the introduction of our orofacial

myofunctional therapy services, and (iv) an increase of approximately $0.3 million in BIS revenue.

R evenue growth was impacted

by the COVID-19 Delta and Omicron variant resurgences.

We achieved sales growth despite seeing significant headwinds throughout our core

customer base, mostly driven by COVID-19 Delta and Omicron variant resurgences in the middle and latter part of the year.

2021, the American Dental Association reported that just 60% of dental practices were open and operating with business as usual.

industry source reported 92% of dental practices were struggling to hire or replace hygienists, and 77% reported difficulty hiring front

desk positions.

These challenges across the dental community have impacted both doctor enrollments and patient case starts, as replacement

dental personnel must be trained in The Vivos Method.

the year ended December 31, 2021, we enrolled 197 VIPs net of cancellations and recognized VIP revenue of approximately $8.5 million,

an increase of 2% compared to the year ended December 31, 2020, when we enrolled 194 VIPs net of cancellations for a total of approximately

$7.5 million.

The 13% increase in total revenue was primarily driven by (i) higher enrollments that took place in June, August, and September

of which 50% of the enrollment fees were recognized during the year ended December 31, 2021, (ii) revenue recognized from higher prior

year enrollments, and (iii) a higher price per VIP enrollment 2021 of $40,000 per contract, when compared to $32,000 per VIP contract

VIP enrollment revenue is recognized 50% in the second month of enrollment and the remaining 50% pro rata throughout the

following eleven months of the service contract.

Product revenue

Service revenue

Total revenue

Cost of sales (exclusive of depreciation and amortization shown separately

Gross profit %

Operating expenses

General and administrative

Sales and marketing

Impairment loss

Depreciation and amortization

Operating loss

Non-operating income (expense)

Interest expense

Other expense

PPP loan forgiveness

decreased approximately $0.8 million, or 5%, to approximately $16 million for the year ended December 31, 2022 compared to $16.9 million

for year ended December 31, 2021.

Revenue during 2022 decreased due to a decrease of approximately $3.7 million in VIP enrollment revenue,

as well as an adjustment to our revenue recognition methodology which resulted in a cumulative decrease of approximately $0.4 million

in VIP revenue related to prior years.

This was offset by an increase of 29% or approximately $1.8 million attributable to higher appliance

sales to VIPs, (ii) an increase of approximately $0.1 million in revenue from our two company-owned dental centers, (iii) an increase

of approximately $0.3 million in BIS revenue, (iv) a $0.6 million increase in myofunctional therapy service revenue, (iv) and increase

of approximately $0.4 million in sleep testing services.

the year ended December 31, 2022, we enrolled 196 VIPs and recognized VIP revenue of approximately $4.8 million, a decrease of 43% in

enrollment revenue, compared to the year ended December 31, 2021, when we enrolled 197 VIPs for a total of approximately $8.5 million.

Revenue growth was impacted by a change in our revenue methodology adopted during 2022, which affected the contract life and allocation of performance obligations

to different categories.

In December 2021, the American Dental Association reported that just 60% of dental practices

were open and operating with business as usual.

Another industry source reported 92% of dental practices were struggling to hire or replace

hygienists, and 77% reported difficulty hiring front desk positions.

These challenges across the dental community have impacted both

doctor enrollments and patient case starts, as replacement dental personnel must be trained in The Vivos Method.

the year ended December 31, 2022, we sold 12,281 oral appliance arches for a total of approximately $7.8 million, a 29% increase from

the year ended December 31, 2020 when we sold 8,135 total oral appliance arches for a total of approximately $4.5 million.

Additionally,

for the year ended December 31, 2021 we had approximately $0.9 million in BIS revenue, a 46% increase from the year ended December 31,

2020 with approximately $0.6 million

Lastly, for the year ended December 31, 2021 we had approximately $0.8 million in center revenue and management service revenue

including our MID program, compared to approximately $0.4 million for the year ended December 31, 2020, and approximately $0.4 million

in our orofacial myofunctional therapy revenue, compared to none for the year ended December 31, 2020 due to the introduction of these

services in 2021, and approximately $0.3 million for SleepImage subscriptions, sponsorships, and seminar revenue for the year ended December

31, 2021, compared to $0.2 million for the year ended December 31, 2020.

the year ended December 31, 2021 when we sold 11,355 oral appliance arches for a total of approximately $6.0 million.

Lastly, for the

year ended December 31, 2022 we had approximately $0.6 million in center revenue, compared to approximately $0.5 million for the year

ended December 31, 2021, and approximately $1.0 million in our orofacial myofunctional therapy revenue, compared to $0.3 million for

the year ended December 31, 2021 due to the introduction of the service in 2021 and increased demand for these services.

of Sales and Gross Profit

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sales volume of our appliances, additional costs associated with VIP enrollments, and billing and myofunctional therapy revenue.

of sales includes approximately $0.8 million increase related to the deployment of SleepImage rings as part of the VIP enrollment package,

and approximately $0.1 million increase related to the leasing of SleepImage rings in 2021.

Additionally, we had an increase of

approximately $0.5 million related to costs associated with appliances and approximately $0.1 million related to costs associated with

our orofacial myofunctional therapy revenue.

the year ended December 31, 2021, gross profit increased by approximately $2.2 million to $12.6 million.

This increase was attributable

to an increase in total revenue of $3.8 million as discussed above, partially offset by an increase in cost of sales of $1.6 million.

Gross margin decreased to 75% for the year ended December 31, 2021 compared to 80% for the year ended December 31, 2020, primarily driven

by the higher costs associated with VIP enrollments.

of sales includes approximately $0.8 million related to costs associated with appliances, an increase of approximately $0.8 million related

to costs associated with VIP enrollment and training, and approximately $0.7 million increase related to our new program (started in

2022) related to the sale and leasing of SleepImage rings.

the year ended December 31, 2022, gross profit decreased by approximately $2.6 million to $10 million.

This decrease was attributable

to an increase in cost of sales of $1.7 million explained above, coupled with a decrease in revenue of approximately $0.8 million.

margin decreased to 63% for the year ended December 31, 2022 compared to 75% for the year ended December 31, 2021, primarily driven by

the higher costs associated with appliances due to increase in cost of raw materials and VIP enrollments and new incentives deployed

to increase VIP enrollments.

and Administrative Expenses

and administrative expenses increased approximately $9.7 million, or approximately 60%, to approximately $25.7 million

for the year ended December 31, 2021, as compared to $16.1 million for the year ended December 31, 2020.

The primary driver of this increase

was an increase in personnel and related compensation of approximately $4.6 million, including salaries, bonuses, paid time off, stock-based

compensation, and other employee-related expenses.

The increase in payroll related costs were mainly a result of increased headcount

(from 93 employees at December 31, 2020 to 158 employees at December 31, 2021).

Other drivers of the increase in general and administrative

expenses included an increase of approximately $1.2 million to general corporate costs such as director and officer insurance premiums

and professional fees, an increase of approximately $0.9 million for information and technology supplies and equipment, approximately

$1.2 million increase of bad debt expense driven by the increase in sales, and approximately $0.8 million in other corporate expenses

such as filing fees, subscriptions, and office expenses, and an increase of approximately $0.1 million for office rent and utilities.

These increases were due to the growth of the company combined with higher headcount and expenses associated with being a public company.

and administrative expenses increased approximately $3.3 million, or approximately 13%, to approximately $29 million for the year ended

December 31, 2022, as compared to $25.8 million for the year ended December 31, 2021.

The primary driver of this increase was an increase

in personnel and related compensation of approximately $2.4 million, including salaries and benefits, paid time off, stock-based compensation,

and other employee-related expenses.

The increase in payroll related costs were mainly a result of increased headcount in 2022 (from

137 average headcount at December 31, 2021 to 167 average headcount at December 31, 2022).

Other drivers of the increase in general and

administrative expenses included an increase of approximately $1.4 million to general corporate costs such as consulting and professional

fees, an increase of approximately $1.0 million related to travel expenses, and an increase of approximately $0.6 million for information

and technology supplies, equipment, rent, research as well as corporate expenses such as filing fees, subscriptions, and office expenses,

offset by a decrease of approximately $0.9 million in bad debt expense and approximately $0.3 million in bank and merchant fees.

increases were due to the growth of the company combined with higher headcount and expenses associated with being a public company.

and Marketing

and marketing expense increased by $3.2 million to $5.6 million for the year ended December 31, 2021, compared to $2.3 million for the

and marketing expense decreased by $0.2 million to $5.3 million for the year ended December 31, 2022, compared to $5.5 million for the

year ended December 31, 2021.

This increase was primarily due to an increase of approximately $1.2 million in new marketing campaigns,

updating marketing materials for investors and consumers, improving the Vivos website and promotion of conferences and events taking

place in 2021, such as the Vivos Institute.

Marketing expenses increased approximately $0.7 million due to various marketing initiatives

as well as the deployment of SleepImage HST

rings as demos to be used at different marketing events and marketing campaigns.

Additionally, we had an increase of approximately $1.3

million in conference expenses as a result of conferences hosted in throughout the country and our August 2021 grand opening of The

Vivos Institute in Denver, Colorado.

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

As a result of the settlement, we

issued 300,000 shares of common stock with a fair value of $1.8 million and 325,000 warrants to purchase common shares with a fair value

of $1.5 million.

The aggregate settlement expense of $3.3 million was recognized for the year ended December 31, 2020 and we did not

have a similar expense for the year ended December 31, 2021.

loss in 2021 resulted from the uncertainty of collection on a related party note receivable arising out of the sale of our company-owned

dental facility in Orem, Utah in 2019.

As a result, we impaired approximately $0.9 million as of December 31, 2021, and we did not have

a similar expense for the year ended December 31, 2020.

This decrease relates to approximately $1.6 million reduction in marketing campaigns, materials and product

samples, which was offset by an increase of approximately $0.6 million on redesigning and improving the Vivos website, and approximately

$0.2 million on print media and marketing supplies.

and Amortization

and amortization expense was approximately $0.7 million for year ended December 31, 2021 and 2020.

The impact of depreciation expense

related to new assets placed into service was offset by lower depreciation expense related to legacy assets that were retired during

Our fixed assets placed in service increased by approximately $1.9 million in the year-over-year comparison primarily attributable

to the buildout of our Vivos Institute facility in Denver, Colorado.

These assets were placed into services at the beginning of August

Accordingly, we expect to recognize higher depreciation and amortization expense in future periods.

expense decreased by approximately $0.1 million for the year ended December 31, 2021 as compared to the year ended December 31, 2020

as a result of convertible notes converted to Common Stock upon completion of our IPO in December

income was unchanged at approximately $0.1 million for the year ended December 31, 2021 and 2020.

Despite higher cash balances for the

year ended December 31, 2021, the current low interest rate environment did not result in material earnings from temporary cash investments.

and amortization expense was approximately $0.7 million for the years ended December 31, 2022 and 2021.

The change in depreciation expense

is related to new assets placed into service which was offset by lower depreciation expense related to legacy assets that were retired

during the year.

Loan Forgiveness

loan forgiveness was approximately $1.3 million for the year ended December 31, 2022 when compared to none for the year ended December

The increase is due to the PPP loan forgiven by the SBA in its entirety.

and Capital Resources

of December 31, 2021, we had cash and cash equivalents of $24.0 million compared to cash and cash equivalents of $18.2 million as of

December 31, 2020.

This increase was primarily driven by the net proceeds from our May 2021 underwritten follow-on offering, partially

offset by spending during the year ended December 31, 2021.

During the first quarter of 2021, we began tenant improvements to The

Vivos Institute facility in Denver, Colorado, which we lease.

The Vivos Institute facility opened in early August 2021 and provides

onsite training courses and post-graduate education to our VIPs and other healthcare professionals.

we have incurred losses and negative operating cash flows since inception, we believe that our existing cash resources following our

May 2021 follow-on offering will be sufficient to meet our capital requirements and fund our planned operations for at least the next

18 months, although this estimation assumes we do not face unexpected events, costs, or contingencies, any of which could affect our

liquidity and cash requirements.

Available resources may be consumed more rapidly than anticipated, resulting in the need for additional

funding if we do not generate positive cash flows from operations.

If and when required, we anticipate funding our liquidity requirements

from cash generated from operations and potentially from:

from public and private financings (including equity (such as our “at the market offering” program through Roth Capital

Partners), debt or equity-linked financings or commercial debt facilities);

from the exercise of outstanding options or warrants;

commercial transactions with third parties.

is a risk that none of these plans will be implemented if and when necessary or on commercially reasonable terms, if at all, which could

leave us without required cash resources and could adversely impact our results of operations and impair the viability of our company.

financial statements have been prepared in conformity with generally accepted accounting principles in the United States, which contemplate continuation

of our company as a going concern.

We have incurred losses since inception, including $20.3 million for the year ended December 31,

2021, resulting in an accumulated deficit of $55.6 million as of December 31, 2021.

As of December 31, 2022, we had an accumulated

deficit of $79.5 million, and approximately $3.5 million in cash, which will not be sufficient to fund our operations and strategic

objectives over the next twelve months from the date of issuance of these financial statements.

Without additional financing, these

factors raise substantial doubt regarding our ability to continue as a going concern.

will be required to obtain additional financing and expect to satisfy our cash needs primarily from the issuance of equity securities

or indebtedness in order to sustain operations until we can achieve profitability and positive cash flows, if ever.

There can be no assurances,

however, that adequate additional funding will be available on favorable terms, or at all.

If such funds are not available in the future,

we may be required to delay, significantly modify or terminate our operations, all of which could have a material adverse effect on our

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

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Financing activities

cash used in operating activities of approximately $15.7 million for the year ended December 31, 2021 is an increase of more than $10.0

cash used in operating activities of approximately 19.6 million for the year ended December 31, 2022 is an increase of approximately

$3.9 million compared to net cash used in operating activities of approximately $15.7 million for the year ended December 31, 2021.

This increase

is due primarily to the increase in our net loss of approximately $8.2 million, an increase of approximately $0.5 million related to

a tenant improvement allowance due to the company in 2022, $0.3 million in accounts receivable related to an increase in VIP enrollments

during the two quarters of the year, an increase of approximately $0.6 million in accrued expenses due to increase in consulting fees,

legal fees, and franchise tax, an increase of approximately $0.9 million in impairment for a related party note receivable arising

from the 2019 sale of our company-owned dental clinic in Orem, Utah, an increase of approximately $0.8 million in prepaid expenses and

current assets primarily driven by prepaid inventory for our SleepImage HST rings, deposits for future events including

conferences and exhibits, and other prepaid services.

Additionally, there was approximately a $0.5 million increase in contract liability

due to the increase in VIP enrollments during the year ended December 31, 2021, compared to the year ended December 31, 2020.

the year ended December 31, 2021, net cash used in investing activities consisted of (i) capital expenditures for property and equipment

of $2.4 million, and cash payments for a business acquisition of $0.2 million, for a total of $2.6 million.

Capital expenditures for

property and equipment were primarily attributable to leasehold improvements for The Vivos Institute that opened in August 2021.

For the year ended December 31, 2020, net cash used in investing activities amounted to $0.1 million for the purchase of equipment.

cash provided by financing activities of $24.2 million for the year ended December 31, 2021 was primarily attributable to proceeds of

$25.4 million from the issuance of Common Stock in our follow-on public offering in May 2021 and proceeds from the exercise of stock

options of $0.3 million.

Total financing cash inflows amounted to $27.9 million gross and were partially offset by cash payments of $1.5

million for the redemption of all remaining shares of Series A Preferred Stock, and $2.2 million for professional fees and other offering

costs related to our follow-on public offering, and principal payments under debt agreements of $0.1 million.

the year ended December 31, 2020, net cash provided by financing activities of $23.5 million was primarily attributable to $22.3 million

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

in proceeds from the PPP loan.

Total financing cash inflows amounted to $26 million and were partially offset by cash payments of $2.2

million for the redemption of shares of Series A Preferred Stock, $0.2 million for professional fees and other offering costs related

to our initial public offering, and principal payments under debt agreements of $0.1 million.

increase is due primarily to the increase in our net loss of approximately $3.6 million, a decrease of approximately $0.9 million in

accrued expenses due to increase in consulting fees, legal fees, third party lab fees associated with the production of our appliances, offset by an increase of approximately

$0.7 million in accounts receivable related to the MID clinics and VIP enrollments under payment plans, an increase of approximately

$0.5 million in accounts payable, an increase of approximately $0.1 million in prepaid expenses and current assets primarily driven by

annual renewals of subscriptions and other services, and an increase of approximately $0.5 million due to the collection of a tenant

improvement allowance related to the build-out of the Vivos Institute in Denver, Colorado.

the year ended December 31, 2022, net cash used in investing activities consisted of capital expenditures for software of $0.9 million

related to the development of software for internal use, which is expected to be placed in service in mid-2023.

This compares to net

cash used in investing activities for the year ended December 31, 2021 of $2.6 million due to capital expenditures for leasehold improvements

and equipment related to The Vivos Institute.

the year ended December 31, 2022, there was no cash used in financing activities.

For the year ended December 31, 2021, net cash provided

by financing activities of $24.2 million was primarily attributable to proceeds of $25.4 million from the issuance of Common Stock in

our follow-on public offering in May 2021 and proceeds from the exercise of stock options of $0.3 million.

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, First Vivos, Vivos Therapeutics (Canada) Inc., Vivos Management and Development, LLC and Vivos Del

Mar Management, LLC), are prepared in conformity with U.S.

GAAP and the rules and regulations of the SEC related to annual and quarterly

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 with U.S.

GAAP have been condensed or omitted pursuant to those

rules and regulations.

The consolidated balance sheet as of December 31, 2020 included in this report has been derived from our audited

consolidated financial statements.

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

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, 2021 and 2020.

Receivable, Net

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

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

Management determines the estimated

allowance for uncollectible amounts based on its judgements in evaluating the aging of the receivables and the financial condition of

Allowance for uncollectible receivables was $0.2 million as of December 31, 2021 and $0.5 million as of December 31, 2020.

assets consist of assets acquired from First Vivos and costs paid to MyoCorrect and Lyon Dental for work related to our patents,

intellectual property and customer contracts.

The identifiable intangible assets acquired from First Vivos and Lyon Dental for customer

contracts are amortized using the straight-line method over the estimated life of the assets, which approximates 5 years (See Note 5).

The costs paid to MyoCorrect and Lyon Dental for patents and intellectual property are amortized using the straight-line method over

the life of the underlying patents, which approximates 15 years.

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

Goodwill 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.

There was no impairment of goodwill recognized

at December 31, 2021 or 2020.

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

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

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, 2021 and 2020 resulted in no impairment loss.

Receivable, Net

note receivable in the accompanying financial statements were stated at the amount management expected to collect.

As of December 31,

2021, due to uncertainty of collections, we impaired the note receivable.

To the extent cash is collected in the future we will recognize

income in the period collected.

The note receivable arose from the 2019 sales of our company-owned dental clinic in Oren, Utah.

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:

accompanying consolidated financial statements, which include the accounts of the Company and its wholly owned subsidiaries

(BioModeling, First Vivos, Vivos Therapeutics (Canada) Inc., Vivos Management and Development, LLC, Vivos Del Mar Management, LLC, Vivos Modesto Management, LLC, Vivos Therapeutics DSO LLC, a Colorado

limited liability company, and Vivos Airway Alliances, LLC, a Colorado limited liability company),

are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S.

significant intercompany balances and transactions have been eliminated in consolidation.

Growth Company Status

Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our

Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements

that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required

to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”),

reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding a nonbinding advisory

vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting

standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do

not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are

required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out

of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election

to opt out is irrevocable.

The Company currently expects to retain its status as an emerging growth company until the year ending December

31, 2026, but this status could end sooner under certain circumstances.

Company generates revenue from the sale of products and services.

A significant majority of the Company’s revenues are generated

from enrolling dentists in the VIP program and sales of products and services to VIPs.

Revenue is recognized when control of the products

or services is transferred to customers (i.e., VIP dentists ordering such products or services for their patients) in a way that reflects

the consideration the Company expects to be entitled to in exchange for those products and services.

the guidance of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) and the applicable provisions of

ASC Topic 842, Leases (“ASC 842”), the Company determines revenue recognition through the following five-step model,

which entails:

identification

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of the transaction price to the performance obligations;

of revenue when, or as we satisfy each performance obligation.

review our VIP contracts using the 5-step method outlined above.

Once it is determined that a contract exists, service revenue is recognized

when the underlying training or other services are performed.

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

Enrollment Revenue

Company reviews its VIP enrollment contracts from a revenue recognition perspective using the 5-step method outlined above.

determined that a contract exists (a VIP enrollment agreement is executed and payment is received), service revenue related to VIP enrollments

is recognized when the underlying services are performed.

The price of the standard VIP enrollment that the VIP pays upon execution of

the contract is significant, running at approximately $31,500, with different entry levels from $2,500 to $50,000.

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 included training in a highly personalized, deep immersion workshop format which provided the dentist access

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

The key topics covered in training included 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.

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 contract.

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 basis.

addition to enrollment service revenue, in 2020 we launched an additional service on a monthly subscription basis:

Billing Intelligence

Service (or BIS).

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

Included in BIS is a monthly

AirO2 license.

In April 2021, we launched our MyoCorrect orofacial myofunctional therapy services.

identify all goods and services that are delivered separately under a sales arrangement and allocate 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.

the portion of fees paid by VIP customers for services that have not yet been performed as of the reporting date and are recorded as

the service is rendered.

The Company recognizes this revenue as performance obligations are met.

Accordingly, the contract liability

for unearned revenue is a significant liability for the Company.

Provisions for discounts are provided in the same period that the related

revenue from the products and/or services is recorded.

Company enters into programs that may provide for multiple performance obligations.

Commencing in 2018, the Company began enrolling medical

and dental professionals in a one-year program (later known as the VIP Program) which includes training in a highly personalized, deep

immersion workshop format which provides the VIP dentist access to a 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 the Company’s products, guidance on pricing, instruction on insurance reimbursement protocols and interacting with our

proprietary software system and the many features on the Company’s website.

The initial training and educational workshop are typically

provided within the first 30 to 45 days that a VIP enrolls.

Ongoing support and additional training are provided throughout the year and

includes access to the Company’s proprietary Airway Intelligence Service (“AIS”) which provides the VIP 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 Provider’s

needs on a subscription or a course-by-course basis.

enrollment fees include multiple performance obligations which vary on a contract by contract basis.

The performance obligations included

with enrollments may include sleep apnea rings, a six or twelve months BIS subscription, a marketing package, lab credits and the right

to sell our appliances.

We allocate the transaction price of a VIP enrollment contract to each performance obligation under

such contract using the relative standalone selling price method.

The relative standalone price method is based on the proportion of

the standalone selling price of each performance obligation to the sum of the total standalone selling prices of all the performance

obligations in the contract.

right to sell is similar to a license of intellectual property because without it the VIP cannot purchase appliances from us.

The right to sell performance obligation includes the Vivos training and enrollment materials which prepare dentists for treating their

patients using The Vivos Method.

the right to sell is never sold outside of VIP contracts, and VIP contracts are sold for varying prices, we believes it

is appropriate to estimate the standalone selling price of this performance obligation using the residual method.

As such, the observable

prices of other performance obligations under a VIP contract will be deducted from the contract price, with the residual being allocated

to the right to sell performance obligation.

Our management uses significant judgements in revenue recognition including an estimation of customer life over which it recognizes the right

Our management has determined that VIPs who do not complete sessions 1 and 2 of training rarely complete training at all and fail

to participate in the VIP program long term.

Since the beginning of the VIP program, just under one-third of new VIP members fall into

this category, and the revenue allocated to the right to sell for those VIPs is accelerated at the time in which it becomes remote that

a VIP will continue in the program.

Revenue is recognized in accordance with each individual performance obligation unless it becomes

remote the VIP would continue, at which time the remainder of review is accelerated and recognized in the following month.

who complete training typically remain active for a much longer period, and revenue from the right to sell for those VIPs is recognized

over the estimated period of which those VIPs will remain active.

Because of various factors occurring year to year, our management has

estimated customer life for each year a contract is initiated.

The estimated customer lives are calculated separately for each year and

have been estimated at 15 months for 2020, 14 months for 2021 and 18 months for 2022.

The right to sell is recognized on a sum of the

years’ digits method over the estimated customer life for each year as this approximates the rate of decline in VIPs purchasing

behaviors we have observed.

Service Revenue

addition to VIP enrollment service revenue, in 2020 we launched BIS, an additional service on a monthly subscription basis,

which includes our AireO2 medical billing and practice management software.

Revenue for these services is recognized

monthly during the month the services are rendered.

we offer our VIPs the ability to provide MyoCorrect to the VIP’s patients as part of treatment with The Vivos Method.

program includes packages of treatment sessions that are sold to the VIPs, and resold to their patients.

Revenue for MyoCorrect

services is recognized over the 12-month performance period as therapy sessions occur.

of Revenue to Performance Obligations

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

obligation based on relative fair values.

These fair values approximate the prices for the relevant performance obligation that would

be charged if those services were sold separately, and are recognized over the relevant service period of each performance obligation.

After allocation to the performance obligations, any remainder is allocated to the right to sell under the residual method and is recognized

over the estimated customer life.

In general, revenues are separated between durable medical equipment (product revenue) and education

and training services (service revenue).

of Discounts and Promotions

time to time, we offer various discounts to its customers.

These include the following:

for cash paid in full

and trade show incentives

or trade show incentives, such as subscription enrollment into the SleepImage ® home sleep test program, or free trial

period for the SleepImage ® lease program

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.

Credits/rebates

to be used towards future product orders such as lab rebates

The 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 the Company and the customer 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.

customer and we 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 period.

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

addition to revenue from services, we also generate revenue from the sale of our patented oral devices (such as mmRNA and DNA appliances)

and the Vivos Guides.

Revenue from appliance sales is recognized when control of product is transferred to the VIP (our customer) in

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

The VIP in 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 utilize third party contract manufacturers or labs to manufacture/fabricate each appliance and preformed Guide.

The manufacturer

designated by us (of which there are several) produces the appliance in strict adherence to our patents, design history 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 through us.

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 its patented oral devices and preformed guides (known as

appliances or systems) to its customers, the VIP dentists.

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

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

The VIP in 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 contract with VIPs for the sale of the appliance

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

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

Each appliance is unique and is fitted to the patient.

our network of certified VIPs throughout the United States and in some non-U.S.

jurisdictions to sell the appliances to their customers

as well as in two dental centers that we operate.

We utilize third party contract manufacturers or labs to produce its customized, patented

appliances and preformed guides.

The manufacturer designated by us produces the appliance in strict adherence to our patents, design

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

We performed 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 gross.

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.

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 the technical aspects of our products) discounts from our standard VIP pricing.

In addition, from time to time, we offer buy one, get one offers and other credits to our VIPs to use 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.

We measure the cost of employee and director services received in exchange for all equity awards granted, including

stock options, based on the fair market value of the award as of the grant date.

We performed an analysis under ASC 606-10-55-36

through 55-40 and concluded that we are the principal in the transaction and are reporting revenue on a gross basis.

We bill the applicable

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

Product revenue is recognized once the appliance ships

to the VIP under our direction.

each of the two centers that we own, we utilize a team of medical professionals to measure, order and fit each appliance.

scheduling the patient (which is our customer in this case), the center takes a deposit and reviews the patient’s insurance

Revenue is recognized differently for our owned centers than for revenue we recognize form VIPs.

We recognize revenue

from our centers after the appliance is received from the manufacturer and once the appliance is fitted and provided to the

offer certain dentists (known as Clinical Advisors) discounts from standard VIP pricing.

This is done to help encourage Clinical Advisors,

who help the VIPs with technical aspects of our products and to purchase our products for their own practices.

In addition, from time

to time, we offer credits to incentivize VIPs to adopt our products and increase Vivos Method case volume within their practices.

performance obligations are recorded as revenue in future periods over the life of the credit.

preparation of financial statements and related disclosures in conformity with U.S.

GAAP requires us to make judgments, assumptions,

and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes.

Our management bases

its estimates and assumptions on existing facts, historical experience, and various other factors that it believes are reasonable

under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other

Our significant accounting estimates include, but are not necessarily limited to, assessing collectability on accounts

receivable, the determination of customer life and breakage related to recognizing revenue for VIP contracts, notes receivable,

impairment of goodwill and long-lived assets;

valuation assumptions for assets acquired in business combinations;

assumptions for stock options, warrants and equity instruments issued for goods or services;

deferred income taxes and the related

valuation allowances;

and the evaluation and measurement of contingencies.

Additionally, the full impact of COVID-19 and its

variants is unknown and cannot be reasonably estimated.

However, we have made appropriate accounting estimates based on the facts

and circumstances available as of the reporting date.

To the extent there are material differences between our estimates and the

actual results, our future consolidated results of operations will be affected.

and Cash Equivalents

highly liquid investments purchased with an original maturity of three months or less that are freely available for the Company’s

immediate and general business use are classified as cash and cash equivalents.

Receivable, Net

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

Our management performs

credit evaluations of its 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.

Management 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.

and Equipment, Net

and equipment are stated at historical cost less accumulated depreciation.

Depreciation is computed using the straight-line method over

the estimated useful lives of the assets, which ranges from 4 to 5 years.

Amortization of leasehold improvements is recognized using

the straight-line method over the shorter of the life of the improvement or the term of the respective leases which range between 5 and

We do not begin depreciating assets until they are placed in service.

assets consist of assets acquired from First Vivos and costs paid to (i) MyoCorrect, LLC (“MyoCorrect LLC”), from whom we acquired certain assets related to our OMT service in March 2021 and (ii) Lyon Management and Consulting, LLC and its affiliates

(“Lyon Dental”), from whom we acquired certain medical billing and practice management software, licenses and contracts

in April 2021 (including the software underlying AireO2) for work related to our acquired patents, intellectual property

and customer contracts.

The identifiable intangible assets acquired from First Vivos and Lyon Dental for customer contracts are amortized

using the straight-line method over the estimated life of the assets, which approximates 5 years (See Note 6).

The costs paid to MyoCorrect

LLC and Lyon Dental for patents and intellectual property are amortized over the life of the underlying patents, which approximates 15

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

Goodwill 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 as of December 31.

There was no impairment of

goodwill recognized at December 31, 2021.

There were no quantitative or qualitative indicators of impairment that occurred for the

year ended December 31, 2022 and accordingly, no impairment was required.

of Long-lived Assets

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.

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, 2021 resulted in

no impairment loss.

There were no quantitative or qualitative indicators of impairment that occurred for the year ended December 31,

2022 and accordingly, no impairment was required.

Offering Costs

legal fees and other costs that are directly associated with equity offerings are capitalized as deferred offering costs, pending a determination

of the success of the offering.

Deferred offering costs related to successful offerings are charged to additional paid-in capital in

the period it is determined that the offering was successful.

Deferred offering costs related to unsuccessful equity offerings are recorded

as expense in the period when it is determined that an offering is unsuccessful.

for Payroll Protection Program Loan

We accounted for our U.S.

Small Business Administration’s (“SBA”) Payroll Protection Program (“PPP”) loan as a debt instrument under

ASC 470, Debt .

We recognized the original principal balance as a financial liability with interest accrued at the contractual rate

over the term of the loan.

On January 21, 2022, our PPP loan received of May 8, 2020 was forgiven by the SBA in its entirety, which includes

approximately $1.3 million in principal.

As a result, we recorded a gain on the forgiveness of the loan in the quarter ended March 31,

2022 under non-operating income (expense).

and Gain Contingencies

are subject to the possibility of various loss contingencies arising in the ordinary course of business.

An estimated loss contingency

is accrued when it is probable that an asset has been impaired, or a liability has been incurred, and the amount of loss can be reasonably

If some amount within a range of loss appears to be a better estimate than any other amount within the range, we accrue that

Alternatively, when no amount within a range of loss appears to be a better estimate than any other amount, we accrue the lowest

amount in the range.

If we determine that a loss is reasonably possible and the range of the loss is estimable, then we disclose the

range of the possible loss.

If we cannot estimate the range of loss, we will disclose the reason why we cannot estimate the range of

Our management regularly evaluates current information available to it to determine whether an accrual is required, an accrual

should be adjusted and if a range of possible loss should be disclosed.

Legal fees related to contingencies are charged to general and

administrative expense as incurred.

Contingencies that may result in gains are not recognized until realization is assured, which typically

requires collection in cash.

measure the cost of employee and director services received in exchange for all equity awards granted, including stock options,

based on the fair market value of the award as of the grant date.

We compute the fair value of stock options using the

Black-Scholes-Merton (“BSM”) option pricing model, and we estimate the expected term using the simplified method which is

the average of the vesting term and the contractual term of the respective options.

We then recognize the cost of the equity awards over

the period that services are provided to earn the award, usually the vesting period.

For awards granted which contain a graded vesting

schedule, and the only condition for vesting is a service condition, compensation cost is recognized as an expense on a straight-line

basis over the requisite service period as if the award were, in substance, a single award.

We recognize the impact of forfeitures in

the period that the forfeiture occurs, rather than estimating the number of awards that are not expected to vest in accounting for stock-based

compensation.

Prior to the commencement of public trading of our common stock in December 2020, we estimated fair value of our common

stock based on the most recent sales to third parties.

The 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 closing price of our common stock on the grant date.

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.

term — 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.

Our board of directors and shareholders 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.

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.

On July 28, 2021, our stockholders approved an amendment and restatement of the 2019 Plan to increase

the number of shares of common stock available for issuance thereunder by 1,200,000 shares of common stock such that, after amendment

and restatement of the 2019 Plan, and prior to any grants, 2,366,667 shares of common stock were available under the 2019 Plan.

Black-Scholes-Merton (“BSM”) option pricing model.

We estimate the expected term using the simplified method which is the

average of the vesting term and the contractual term of the respective options.

We determine the expected price volatility based on

the historical volatilities of shares 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

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.

We recognize the cost of the equity awards over the period that services

are provided to earn the award, usually the vesting period.

For awards granted which contain a graded vesting schedule, and the only

condition for vesting is a service condition, compensation cost is recognized as an expense on a straight-line basis over the

requisite service period as if the award were, in substance, a single award.

We recognize the impact of forfeitures and

cancellations in the period that the forfeiture or cancellations occurs, rather than estimating the number of awards that are not

expected to vest in accounting for stock-based compensation.

and Development

related to research and development are expensed as incurred and include costs associated with research and development of new products

and enhancements to existing products.

Research and development costs incurred were approximately $0.2 million and less than $0.1 million

for the years ended December 31, 2022 and 2021, respectively.

leases are included in operating lease right-of-use (“ROU”) asset, accrued expenses, and operating lease liability –

current and non-current portion in our balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and

lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities

are recognized at the lease commencement date based on the present value of lease payments over the lease term.

In determining the present

value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date as the

rate implicit in the lease is not readily determinable.

The determination of our incremental borrowing rate requires management judgment

based on information available at lease commencement.

The operating lease ROU assets also include adjustments for prepayments, accrued

lease payments and exclude lease incentives.

Our lease terms may include options to extend or terminate the lease when it is reasonably

certain that we will exercise such options.

Operating lease cost is recognized on a straight-line basis over the expected lease term.

Lease agreements entered into after the adoption of ASC 842 that include lease and non-lease components are accounted for as a single

lease component.

Lease agreements with a noncancelable term of less than 12 months are not recorded on our balance sheets.

account for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes, under which deferred

income taxes are recognized based on the estimated future tax effects of differences between the financial statement and tax bases of

assets and liabilities given the provisions of enacted tax laws.

Deferred income tax provisions and benefits are based on changes to

the assets or liabilities from year to year.

In providing for deferred taxes, we consider tax regulations of the jurisdictions in which

we operate, estimates of future taxable income, and available tax planning strategies.

If tax regulations, operating results, or the

ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required.

A valuation allowance is recorded when it is more likely than not that a deferred tax asset will not be realized.

The recorded valuation

allowance is based on significant estimates and judgments and if the facts and circumstances change, the valuation allowance could materially

In accounting for uncertainty in income taxes, we recognize the financial statement benefit of a tax position only after determining

that the relevant tax authority would more likely than not sustain the position following an audit.

For tax positions meeting the more

likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent

likelihood of being realized upon ultimate settlement with the relevant tax authority.

We recognize interest and penalties accrued on

any unrecognized tax benefits as a component of income tax expense.

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, 2021 and 2020, 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 formerly outstanding Series A Preferred Stock (Dr.

Dave Singh, our founder and former 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, 2021 and 2020, we incurred a net loss and, accordingly, there

were no undistributed earnings to allocate under the two-class method.

net loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common

shares outstanding for each period presented.

Diluted net loss per common share is computed by giving effect to all potential shares

of Common Stock, including stock options, convertible debt, preferred stock (if any), and warrants, to the extent dilutive.

Accounting Pronouncements

1 unchanged sentence

are adopted by us as of the specified effective date.

Unless otherwise discussed in Note 1 to our consolidated financial statements included

in Item 8 of this Report, we believe that the impact of recently issued standards that are not yet effective could have a material impact

on our financial position or results of operations upon adoption.

Unless otherwise discussed in Note 1 to the accompanying consolidated financial

statements included in this Report, we believe that the impact of recently issued standards that are not yet effective could have a material

impact on our financial position or results of operations upon adoption.

For additional information on recently issued accounting standards

and our plans for adoption of those standards, please refer to the section titled Recent Accounting Pronouncements under Note

1 to our consolidated financial statements included in Item 8 of this Report.

1 to the accompanying consolidated financial statements included in this Report.

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 7. Management’s Discussion and Analysis