<HTML>
<HEAD>
     <TITLE></TITLE>
</HEAD>
<BODY STYLE="font: 10pt Times New Roman, Times, Serif">

<P STYLE="margin: 0">&nbsp;</P>

<!-- Field: Rule-Page --><DIV STYLE="margin-top: 3pt; margin-bottom: 3pt; width: 100%"><DIV STYLE="font-size: 1pt; border-top: Black 2pt solid; border-bottom: Black 1pt solid">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="margin: 0"></P>

<P STYLE="margin: 0"></P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> As filed with the Securities and
Exchange Commission on November 9, 2021</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">Registration No. [*]</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Washington, D.C. 20549</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM S-1</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-variant: small-caps"><B>Tenon
Medical, Inc.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Exact name of registrant as specified in
its charter)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 30%; border-bottom: black 1pt solid; font-size: 10pt; text-align: center"><FONT STYLE="font-size: 10pt"><B>Delaware</B></FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 5%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 30%; border-bottom: black 1pt solid; font-size: 10pt; text-align: center"><FONT STYLE="font-size: 10pt"><B>3841</B></FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 5%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 30%; border-bottom: black 1pt solid; font-size: 10pt; text-align: center"><FONT STYLE="font-size: 10pt"><B>45-5574718</B></FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(State or Other Jurisdiction of</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Incorporation or Organization)</P></TD>
    <TD STYLE="vertical-align: bottom; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="vertical-align: top">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Primary Standard Industrial</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Classification Code Number)</P></TD>
    <TD STYLE="vertical-align: bottom; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="vertical-align: top">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(I.R.S. Employer</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Identification No.)</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>104 Cooper Court</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Los Gatos, CA 95032</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(408) 649-5760</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Address, including zip code, and telephone
number, including area code,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">of registrant&rsquo;s principal executive
offices)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Steven M. Foster</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Chief Executive Officer and President</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Tenon Medical, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>104 Cooper Court</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Los Gatos, CA 95032</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(408) 649-5760</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Name, address, including zip code, and
telephone number, including area code, of agent for service)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><U>Copies to</U>:</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; text-align: center"><FONT STYLE="font-size: 10pt"><B>Ross D. Carmel, Esq.</B></FONT></TD>
    <TD STYLE="width: 50%; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;<B>Ralph V. De Martino, Esq</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>Jeffrey P. Wofford, Esq.</B></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>Cavas Pavri, Esq</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>Carmel, Milazzo &amp; Feil LLP</B></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>Schiff Hardin LLP</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>55 West 39<SUP>th</SUP> Street, 18<SUP>th</SUP> Floor</B></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>901 K Street, NW #700</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>New York, New York 10018</B></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>Washington, DC 20001</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>Telephone: (212) 658-0458</B></FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt"><B>Telephone: 202-778-6400</B></FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Approximate date of commencement of proposed
sale to the public: <B>As soon as practicable after the effective date of this Registration Statement.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box.&nbsp;<FONT STYLE="font-family: Wingdings">x</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;<FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.&nbsp;<FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;&nbsp;</P>


<!-- Field: Page; Sequence: 1 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%">&nbsp;</TD><TD STYLE="width: 33%">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.&nbsp;<FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filer&rdquo; and &ldquo;smaller reporting company&rdquo; in Rule 12b-2
of the Exchange Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%"><FONT STYLE="font-size: 10pt">Large accelerated filer <FONT STYLE="font-family: Wingdings">&uml;</FONT></FONT></TD>
    <TD STYLE="width: 50%"><FONT STYLE="font-size: 10pt">Accelerated filer <FONT STYLE="font-family: Wingdings">&uml;</FONT></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Non-accelerated filer <FONT STYLE="font-family: Wingdings">&uml;</FONT></FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Smaller reporting company <FONT STYLE="font-family: Wingdings">x</FONT></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">Emerging growth company <FONT STYLE="font-family: Wingdings">x</FONT></FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided to Section 7(a)(2)(B) of the Securities Act.&nbsp;<FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CALCULATION OF REGISTRATION FEE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="border-bottom: Black 1pt solid; width: 70%; text-align: left; padding-bottom: 1pt">&nbsp;Title of Each Class of<BR> Securities to be Registered </TD><TD STYLE="padding-bottom: 1pt; width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; width: 12%; text-align: center"><FONT STYLE="font-size: 10pt">Proposed<BR> Maximum<BR> Aggregate<BR> Offering <BR>
Price<SUP>(1)(2)</SUP></FONT></TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; width: 12%; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;Amount of<BR> Registration<BR>
 Fee</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Common Stock, $0.00001 par value per share<SUP>(3)(4)</SUP> &nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt"> &nbsp; &nbsp;</FONT>17,250,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;
&nbsp;1,599.08</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Warrants to purchase Common Stock to be issued to the Underwriter <SUP>(4)(5)</SUP> &nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif">---</P>


</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif">---</P>


</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Common Stock issuable upon exercise of Warrants <SUP>(3)(4)</SUP> &nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;
517,500</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp; &nbsp; &nbsp;</FONT>47.97</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Total </TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt"> &nbsp; &nbsp;</FONT>17,767,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;
&nbsp;1,647.05</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(1)</SUP></TD><TD STYLE="text-align: justify">Includes additional shares (15% of the shares being sold in this offering) that may be purchased by the underwriters pursuant
to their over-allotment option that may be exercised over a 30 period.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0"></TD><TD STYLE="text-align: justify; width: 0.25in"><SUP>(2)</SUP></TD><TD STYLE="text-align: justify">There is no current market for the securities or price at which the shares are being offered. Estimated solely for the purpose
of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0"></TD><TD STYLE="text-align: justify; width: 0.25in"><SUP>(3)</SUP></TD><TD STYLE="text-align: justify">Pursuant to Rule 416 under the Securities Act of 1933, as amended, there is also being registered hereby such indeterminate
number of additional shares as may be issued or issuable because of stock splits, stock dividends and similar transactions.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0"></TD><TD STYLE="text-align: justify; width: 0.25in"><SUP>(4)</SUP></TD><TD STYLE="text-align: justify">We have agreed to issue to the representative of the several underwriters, who we refer to as the representative, warrants
to purchase the number of shares of common stock in the aggregate equal to three percent (3%) of the shares of common stock to
be issued and sold in this offering. The warrants are exercisable for a price per share equal to 100% of the public offering price.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in"><SUP>(5)</SUP></TD><TD>No fee required pursuant to Rule 457(g).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file&nbsp;a further
amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section
8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting
pursuant to said Section 8(a), may determine.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B></B></P>

<!-- Field: Rule-Page --><DIV STYLE="margin-top: 3pt; margin-bottom: 3pt; width: 100%"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; border-bottom: Black 2pt solid">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 2 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%">&nbsp;</TD><TD STYLE="width: 33%">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Red">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="color: Red">The information
in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Red">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: Red"><B>Subject to
Completion, dated November 9</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PRELIMINARY PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="img01.jpg" ALT="">&nbsp;<FONT STYLE="font-variant: small-caps"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>[*] Shares of Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This is an initial public offering of [*]
shares of Tenon Medical, Inc. common stock, par value, $0.001 per share. Prior to this offering, there has been no public market
for our common stock. We anticipate that the initial public offering price will be between $[*] and $[*]. We have applied to have
our common stock listed on the Nasdaq Capital Market under the symbol &ldquo;[*]&rdquo; which listing is a condition to this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We intend to use the proceeds from this
offering for sales and marketing activities, including training surgeons to use our products and clinical studies, and general
corporate purposes, including working capital. See &ldquo;<I>Use of Proceeds</I>.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Investing in our common stock involves
a high degree of risk. See &ldquo;<I>Risk Factors</I>&rdquo; beginning on page </B>[*] <B>of this prospectus for a discussion of
information that should be considered in connection with an investment in our common stock.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Neither the Securities and Exchange
Commission (&ldquo;SEC&rdquo;) nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are an &ldquo;emerging growth company&rdquo; as that term
is used in the Jumpstart Our Business Startups Act of 2012, and we have elected to comply with certain reduced public company reporting
requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-size: 10pt"><B>Per Share</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-size: 10pt"><B>Total</B></FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 70%; text-align: left">Initial public offering price</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-size: 10pt"> [*]</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Underwriting discounts and commissions (1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Proceeds, before expenses, to us</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>


<!-- Field: Page; Sequence: 3 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->1<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD STYLE="text-align: justify">Does not include a non-accountable expense allowance equal to 1% of the gross proceeds of this offering, payable to The Benchmark
Company, LLC, as representative of the underwriters, or the reimbursement of certain expenses of the underwriters. See &ldquo;<I>Underwriting</I>&rdquo;
beginning on page [*] of this prospectus for additional information regarding underwriting compensation.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">In addition to the underwriting
discounts listed above and the non-accountable expense allowance described in the footnote, we have agreed to issue upon the closing
of this offering to The Benchmark Company, LLC, as representative of the underwriters, warrants that will expire on the fifth
anniversary of the commencement date of sales in this initial public offering entitling the representative to purchase 3% of the
number of shares of common stock sold in this offering. The registration statement of which this prospectus is a part also covers
the underwriters&rsquo; warrants and the common shares issuable upon the exercise thereof. For additional information regarding
our arrangement with the underwriters, please see &ldquo;<I>Underwriting</I>&rdquo; beginning on page [*].</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">We have granted the representative an option, exercisable
for 30 days from the date of this prospectus, to purchase up to an additional [*] shares of common stock on the same terms as the
other shares being purchased by the underwriters from us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The underwriters expect to deliver the
shares against payment on [*], 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>The Benchmark Company</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Prospectus dated </B>[*]<B>, 2021</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


<!-- Field: Page; Sequence: 4 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->2<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Table of Contents</B></P>

<B>&nbsp;</B><TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 95%"><A HREF="#a_001"><FONT STYLE="font-size: 10pt">ABOUT THIS PROSPECTUS</FONT></A></TD>
    <TD STYLE="width: 5%; text-align: right"><A HREF="#a_001">3</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_002"><FONT STYLE="font-size: 10pt">MARKET DATA</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_002">4</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_003"><FONT STYLE="font-size: 10pt">PROSPECTUS SUMMARY</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_003">4</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_004"><FONT STYLE="font-size: 10pt">SUMMARY OF THE OFFERING</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_004">13</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_005"><FONT STYLE="font-size: 10pt">RISK FACTORS</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_005">14</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_006"><FONT STYLE="font-size: 10pt">SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_006">49</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_007"><FONT STYLE="font-size: 10pt">USE OF PROCEEDS</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_007">50</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_008"><FONT STYLE="font-size: 10pt">DIVIDEND POLICY</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_008">50</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_009"><FONT STYLE="font-size: 10pt">MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_009">51</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_010"><FONT STYLE="font-size: 10pt">CAPITALIZATION</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_010">52</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_011"><FONT STYLE="font-size: 10pt">DILUTION</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_011">53</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_012"><FONT STYLE="font-size: 10pt">MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_012">54</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_013"><FONT STYLE="font-size: 10pt">BUSINESS</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_013">67</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_014"><FONT STYLE="font-size: 10pt">MANAGEMENT</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_014">84</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_015"><FONT STYLE="font-size: 10pt">EXECUTIVE COMPENSATION</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_015">89</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_016"><FONT STYLE="font-size: 10pt">PRINCIPAL STOCKHOLDERS</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_016">91</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_017"><FONT STYLE="font-size: 10pt">CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_017">93</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_018"><FONT STYLE="font-size: 10pt">DESCRIPTION OF SECURITIES</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_018">94</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_019"><FONT STYLE="font-size: 10pt; text-transform: uppercase">Shares Eligible for Future Sale</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_019">100</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_020"><FONT STYLE="font-size: 10pt">UNDERWRITING</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_020">100</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_021"><FONT STYLE="font-size: 10pt">EXPERTS</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_021">105</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_022"><FONT STYLE="font-size: 10pt">LEGAL MATTERS</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_022">105</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><A HREF="#a_023"><FONT STYLE="font-size: 10pt">WHERE YOU CAN FIND MORE INFORMATION</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_023">105</A></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><A HREF="#a_036"><FONT STYLE="font-size: 10pt">INDEX TO FINANCIAL STATEMENTS</FONT></A></TD>
    <TD STYLE="text-align: right"><A HREF="#a_036">F-1</A></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Through and including [*], 2021 (the
25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating
in this offering, may be required to deliver a prospectus. This is in addition to the dealers&rsquo; obligation to deliver a prospectus
when acting as underwriter and with respect to their unsold allotments or subscriptions.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">You should rely only on the information
contained in this prospectus or any prospectus supplement or amendment. Neither we, nor the underwriters, have authorized any other
person to provide you with information that is different from, or adds to, that contained in this prospectus. If anyone provides
you with different or inconsistent information, you should not rely on it. Neither we nor the underwriters take responsibility
for, and can provide no assurance as to the reliability of, any other information that others may give you. You should assume that
the information contained in this prospectus or any free writing prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, financial condition, results
of operations and prospects may have changed since that date. We are not making an offer of any securities in any jurisdiction
in which such offer is unlawful.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">No action is being taken in any jurisdiction
outside the United States to permit a public offering of our common stock or possession or distribution of this prospectus in that
jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform
themselves about and to observe any restrictions as to this public offering and the distribution of this prospectus applicable
to that jurisdiction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B><A NAME="a_001"></A>ABOUT
THIS PROSPECTUS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Throughout this prospectus, unless otherwise
designated or the context suggests otherwise,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD>all references to the &ldquo;Company,&rdquo; the &ldquo;registrant,&rdquo; &ldquo;we,&rdquo; &ldquo;our,&rdquo; or &ldquo;us&rdquo;
in this prospectus mean Tenon Medical, Inc.;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 5 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->3<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">assumes an initial public offering price of our common stock of $[*] per share, the midpoint of
the estimated range of $[*] to $[*] per share;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD>an initial public offering price of our common stock of [*] per share;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD>&ldquo;year&rdquo; or &ldquo;fiscal year&rdquo; mean the year ending December 31<SUP>st</SUP>; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD>all dollar or $ references, when used in this prospectus, refer to United States dollars.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><A NAME="a_002"></A><B>Market
Data</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Market data and certain industry data
and forecasts used throughout this prospectus were obtained from internal company surveys, market research, consultant
surveys, publicly available information, reports of governmental agencies and industry publications and surveys. Industry
surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been
obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. To
our knowledge, certain third-party industry data that includes projections for future periods does not take into account the
effects of the worldwide coronavirus pandemic. Accordingly, those third-party projections may be overstated and should not be
given undue weight. We have not independently verified any of the data from third party sources, nor have we ascertained the
underlying economic assumptions relied upon therein. Similarly, internal surveys, industry forecasts and market research,
which we believe to be reliable based on our management&rsquo;s knowledge of the industry, have not been independently
verified. Forecasts are particularly likely to be inaccurate, especially over long periods of time. In addition, we do not
necessarily know what assumptions regarding general economic growth were used in preparing the forecasts we cite. Statements
as to our market position are based on the most currently available data. While we are not aware of any misstatements
regarding the industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to
change based on various factors, including those discussed under the heading &ldquo;<I>Risk Factors</I>&rdquo; in this
prospectus. We are, however, liable for the information in the prospectus related to the market and industry data.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><A NAME="a_003"></A><B>PROSPECTUS
SUMMARY</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>This summary provides a brief overview
of the key aspects of our business and our securities. The reader should read the entire prospectus carefully, especially the risks
of investing in our common stock discussed under &ldquo;Risk Factors.&rdquo; Some of the statements contained in this prospectus,
including statements under &ldquo;Summary&rdquo; and &ldquo;Risk Factors&rdquo; as well as those noted in the documents incorporated
herein by reference, are forward-looking statements and may involve a number of risks and uncertainties. Our actual results and
future events may differ significantly based upon a number of factors. The reader should not put undue reliance on the forward-looking
statements in this document, which speak only as of the date on the cover of this prospectus. </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unless the context otherwise requires,
references in this prospectus to &ldquo;Tenon,&rdquo; &ldquo;Tenon Medical,&rdquo; &ldquo;the Company,&rdquo; &ldquo;our company,&rdquo;
&ldquo;we,&rdquo; &ldquo;us&rdquo; and &ldquo;our&rdquo; refer to Tenon Medical, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>About our Company</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Tenon Medical, Inc. (&ldquo;Tenon&rdquo;), a medical device
company formed in 2012, has developed a proprietary, U.S. Food and Drug Administration (&ldquo;FDA&rdquo;) cleared surgical implant
system, which is designed to optimize sacroiliac joint (&ldquo;SI-Joint&rdquo;) fixation / fusion surgery and corresponding outcomes.
Tenon is preparing a national launch of this system to address the greatly underserved market opportunity that exists in this space.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>The Opportunity</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We estimate that over 30&nbsp;million American
adults have chronic lower back pain<I>.&nbsp;</I>Published clinical studies have shown that 15% to 30% of all chronic lower back
pain is associated with the SI-Joint. For patients whose chronic lower back pain stems from the SI-Joint,<I>&nbsp;</I>our experience
in both a clinical trial and commercial settings indicates the system to be introduced by Tenon could be beneficial for patients
who are properly diagnosed and screened for surgery by trained healthcare providers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Based on market research and internal estimates,
Tenon believes the potential market for surgical intervention of the SI-Joint to be 279,000 procedures annually in the US alone,
for a potential annual market in excess of $2.2 billion. These estimates are driven by coding data for SI-Joint injections to
treat pain and informed assumptions relative to surgical intervention candidacy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 6 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->4<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2019, approximately 475,000 patients
in the United States were estimated to have received an aesthetic injection to temporarily alleviate pain emanating from the SI-Joint
and/or to diagnose SI-Joint pain. Additionally, a number of non-surgical technologies have been introduced in the past 10 years
to address patients who do not respond to injection therapy, including systemic oral medications and opioids.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To date, the penetration of a surgical
solution for this market has been relatively low (5-7%). We believe this is due to complex surgical approaches and suboptimal implant
design of existing options. The penetration of this market with an optimized surgical solution is Tenon&rsquo;s focus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We believe the SI-Joint is the last major
joint to be successfully addressed by the orthopaedic implant industry. Studies have shown that disability resulting from disease
of the SI-Joint is comparable to the disability associated with a number of other serious orthopaedic conditions, such as knee
and hip arthritis and degenerative disc disease, each of which has surgical solutions where an implant is used and a multi-billion-dollar
market exists.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The SI-Joint</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="font-size: 10pt; text-align: center; width: 100%"><FONT STYLE="font-size: 10pt"></FONT><IMG SRC="img02.jpg" ALT=""></TD>
    </TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>


<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The SI-Joint is a strong weight bearing
synovial joint situated between the lumbar spine and the pelvis and is aligned along the longitudinal load bearing axis of the
human spine when in an upright posture. It functions
as a force transfer conduit where it transfers axial loads bi-directionally from the spine to the pelvis and lower extremities
and allows forces to be transmitted from the extremities to the spine. It also provides load sharing between the hip and spine
to contribute towards attenuation of impact shock and stress from activities of daily living.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The SI-Joint is a relatively immobile joint
that connects the sacrum (the spinal segment that is attached to the base of the lumbar spine at the L5 vertebra) and the ilium
of the pelvis. Each SI-Joint is approximately 2mm wide and irregularly shaped.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Motion of the SI-Joint features vertical
shear and rotation. Although the rotational forces about the SI-Joint are relatively low, repetitive motions created by daily activities
such as walking, jogging, twisting at the hips, and jumping can increase the stresses on the SI-Joint. If the SI-Joint is compromised
through injury or degeneration, the load bearing and motion restraints from the surrounding anatomical structures of the SI-Joint
will be compromised resulting in abnormal stress transfers across the joint to these structures, thereby further augmenting the
degenerative cascade of the SI-Joint. Eventual pain and cessation of an individual&rsquo;s normal activities due to a painful and
unstable SI-Joint have led to an increase in the recent development of SI-Joint stabilization devices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 7 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->5<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Diagnosis</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Historically, diagnosing pain from the
SI-Joint was not routinely a focus of orthopaedic or neurosurgery training during medical school or residency programs. Due to
its invasiveness, post-operative pain, and muscle disruption along with a difficult procedure overall, the open SI-Joint fusion
procedure was rarely taught in these settings.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The emergence of various SI Joint surgical
technologies has generated a renewed discussion of SI-Joint issues. Of particular focus is the diagnostic protocol utilized to
properly select patients for SI Joint surgery. Patients with low back pain typically start with primary care physicians who often
refer to pain specialists. Here, the patient will go through traditional physical therapy combined with oral medications (anti-inflammatory,
narcotic, etc.). If the patient fails to respond to these steps the pain specialist may move to therapeutic injections of the SI
Joint. These injections may serve to lessen inflammation to the point that the patient is satisfied. However, the impact from these
injections is often transient. In this case the patient is often referred to a surgeon to determine if the patient may be a candidate
for surgical intervention. A series of provocative tests in clinic, combined with a specific injection protocol to isolate the
SI-Joint as the pain generator is then utilized to confirm the need for surgical intervention. Published literature has shown this
technique to be a very effective step to determine the best treatment to alleviate pain.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Tenon has developed its own protocol to
instruct and train the medical community on how to perform provocative maneuvers in a physician&rsquo;s office that can reveal
the SI-Joint as the source of pain. If the provocative tests are positive, surgeons (or other physicians) confirm the diagnosis
by injecting a small amount of local anesthetic into the joint under fluoroscopic guidance. The SI-Joint is confirmed as a pain
source if the local anesthetic produces immediate and significant pain reduction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Limitations of Existing Treatment Options</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Surgical fixation and fusion of the SI-Joint
with an open surgical technique was first reported in 1908, with further reports in the 1920s. The open procedure uses plates and
screws, requires a&nbsp;6&nbsp;to&nbsp;12-inch&nbsp;incision and is extremely invasive. Due to the high invasiveness and associated
morbidity, the use of this procedure is limited to cases involving significant trauma, tumor, etc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Less invasive surgical options along with
implant design began to emerge over the past 15 years. These options feature a variety of approaches and implant designs and have
been met with varying degrees of adoption. Lack of a standard and accepted diagnostic approach, complexity of approach, high morbidity
of approach, abnormally high complication rates and inability to radiographically confirm fusion have all been cited as reasons
for low adoption of these technologies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Non-Surgical&nbsp;Treatment of Sacroiliac Joint Disease</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Although a number
of&nbsp;non-surgical&nbsp;treatments exist for sacroiliac joint pain, we believe based on literature that none have delivered
the long-term pain relief that has been seen with SI-Joint fixation. Although not as yet published and not submitted for peer
review, the results experienced by the initial 30 patients treated in our limited release have had a dramatic reduction in
pain relief. Non-surgical treatments include:&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><B>Drug Therapy</B>: including opiates and&nbsp;non-steroidal&nbsp;anti-inflammatory medications.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><B>Physical Therapy</B>: which can involve exercises as well as massage.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><B>Intra-Articular Injections of Steroid Medications</B>: which are typically performed by physicians who specialize in pain
treatment or anesthesia.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
<TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><P STYLE="text-align: justify; margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><B>Radiofrequency
                                         Ablation:</B> or the cauterizing of the lateral branches of the sacral nerve roots.</P></TD></TR>
</TABLE></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 8 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->6<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Commercialization</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Tenon is planning a commercial launch of
The CATAMARAN&trade; SIJ Fusion System (The CATAMARAN System) to address what we believe is a large market opportunity with a superior
product. The CATAMARAN System includes instruments and implants designed to prepare and fixate the SI-Joint for fusion. The CATAMARAN
System is distinct from other competitive offerings in the following ways:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Posterior / Inferior Sacroiliac Fusion Approach (PiSIF&trade;)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Reduced Approach Morbidity</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Direct And Visualized Approach to the SI Joint</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Single Implant &ldquo;One and Done&rdquo; Technique</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Insertion Trajectory Away from the Neural Foramen</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Autologous Bone Grafting in the Ilium, Sacrum and Bridge</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Radiographic Confirmation of Bridging Bone Fusion of the SI Joint</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fixation device and its key features
are shown below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 46%; text-align: justify"><FONT STYLE="font-size: 10pt"><IMG SRC="img04.jpg" ALT=""></FONT></TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 53%">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Key Features</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&ldquo;Pontoon&rdquo; in the ilium</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&ldquo;Pontoon&rdquo; in the sacrum</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&ldquo;Pontoons and Bridge&rdquo; filled with autologous bone
        from drilling process</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Leading edge osteotome creates defect and eases insertion</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The CATAMARAN System is a singular implant
designed with several proprietary components which allow for it to be explicitly formatted to address the SI Joint with a single
approach and implant. We refer to this as the &ldquo;One and Done&rdquo; feature of the implant. This contrasts with a number of
competitive implant systems that require multiple approach pathways and implants to achieve fixation. In addition, the approach
is direct to the joint and through limited anatomical structures which minimizes the morbidity of the approach. The implant features
a patented dual pontoon open cell design which enables the surgeon to pack the pontoons with the patient&rsquo;s own autologous
bone promoting bone fusion across the joint. The CATAMARAN System is designed specially to resist vertical shear and rotation of
the joint in which it was implanted, helping stabilize the joint in preparation for eventual fusion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The instruments we have developed are proprietary
to The CATAMARAN System and are designed for the procedure to be performed via the previously described PiSIF&trade; approach.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Tenon also has developed a proprietary 2D placement
protocol as well as a protocol for 3D navigation utilizing the latest techniques in spine surgery. We believe these Tenon advancements
will further ensure the safety of the procedure and encourage more surgeons to adopt the procedure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Coinciding with our commercial launch Tenon,
will initiate some clinical marketing studies. Since we have FDA 510K clearance to market The CATAMARAN System, our clinical trial
activities are focused on capturing post-market safety and efficacy data. Preliminary plans for clinical study evaluations may
include a longitudinal cohort study design with approximately 200 patients. Clinical study endpoints may include, but are not limited
to; length of surgical procedure, blood loss, post-op pain, length of stay, duration of non-weight-bearing post-op, radiographic
confirmation of fusion and surgical complication rates. Statistical analysis plans may be designed to demonstrate non-inferiority
to historical control, as reported in published literature, which may be used for submission to peer reviewed articles / posters
/ presentations and the like.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For a description of the challenges we face
and the risks and limitations that could harm our prospects, see <I>&ldquo;&mdash;Summary Risk Factors&rdquo; and &ldquo;Risk Factors.&rdquo;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Recent Developments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I><U>Warrants</U>.</I> On December 31, 2020,
the Company issued to Exchange Listing, LLC 5-year warrants to purchase 50,000 shares of our common stock at an exercise price
$2.60 per share. Exchange Listing, LLC has registration rights with respect to the shares underlying the warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I><U>2021 Financings&nbsp;</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">On January 27, 2021 we issued a Promissory Note in the principal amount of $130,560.34 to Wilson
Sonsini Goodrich &amp; Rosati, Professional Corporation (the &ldquo;WSGR Note&rdquo;). The WSGR Note bears interest at 3% per annum
and is due on the earlier of (x) July 27, 2021, (y) the closing of a debt or equity financing of at least $1,000,000 and (z) the
closing of a change in control transaction. The interest rate on the WSGR Note increases to 5% per annum if all principal and interest
is not paid when due. The WSGR Note was paid in full in May 2021.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 9 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->7<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">On April 30, 2021 we issued the following convertible promissory notes: (i) $170,000 Convertible
Promissory Note issued to Phoenix DeVentures Inc., which accrues interest at 8% per annum from April 30, 2021 and is due on December
31, 2021 (the &ldquo;Phoenix Note 1&rdquo;); (ii) $117,530 Amended and Restated 2015 Convertible Promissory Note issued to Phoenix
DeVentures Inc. (the &ldquo;Phoenix Note 2), which accrues interest at 8% per annum from January 1, 2016 and is due on April 30,
2022; (iii) $40,000 Convertible Promissory Note issued to Phoenix DeVentures Inc., which accrues interest at 8% per annum from
April 30, 2021 and is due on December 31, 2021 (the &ldquo;Phoenix Note 3&rdquo;); and (iv) $70,000 Amended and Restated 2019 Convertible
Promissory Note issued to Khalid Mentak (the &ldquo;Mentak Note&rdquo; and together with the Phoenix 1 Note, the Phoenix 2 Note
and the Phoenix 3 Note, the &ldquo;April 30 Notes&rdquo;), which accrues interest at 8% per annum from October 12, 2019 and is
due on April 30, 2022. Principal and interest is due in full at maturity on the April 30 Notes and are not prepayable.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">On May 3, 2021 we issued the following convertible promissory notes to Paul Orofino: (i) $200,000
Amended and Restated 2019 Convertible Promissory Note (the &ldquo;Orofino Note 1&rdquo;), which accrues interest at 8% per annum
from November 20, 2020 and is due on May 3, 2022; (ii) $50,000 Amended and Restated Promissory Note (the &ldquo;Orofino Note 2
and together with the Orofino Note 1, the &ldquo;May 3 Notes&rdquo;), which accrues interest at 8% per annum from October 21, 2019
and is due on May 3, 2022. Principal and interest is due in full at maturity on the May 3 Notes. The May 3 Notes are prepayable.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">On May 7, 2021 we issued the $68,359 Amended and Restated 2019 Convertible Promissory Note to Lince
Consulting, LLC (the &ldquo;Lince Note&rdquo;), which accrues interest at 8% per annum from June 12, 2019 and is due on May 7,
2022. Principal and interest is due in full at maturity on the Lince Note. The Lince Note is prepayable.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">During the period from May 17, 2021 to July 26, 2021, the Company issued an aggregate $12,177,328
of Convertible Promissory Notes to 125 investors (the &ldquo;Private Offering Notes&rdquo; and together with the April 30 Notes,
the May 3 Notes and the Lince Note, the &ldquo;Notes&rdquo;), which accrues interest at 8% per annum from the date of issuance
and are due one year from the date of issuance. Principal and interest is due in full at maturity on the Private Offering Notes.
The Private Offering Notes are not prepayable without the consent of a majority of the holders.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in">Immediately prior to the closing of this initial public
offering, the Notes will automatically convert into of shares of our common stock as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I></I></B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.5in; text-align: left">(i)</TD><TD STYLE="text-align: justify">each April 30 Note (other than the Phoenix Note 2) and May 3 Note will convert into [*] and
                                                                                  [*] shares of our common stock, respectively, in each case calculated by dividing the outstanding principal and accrued and
                                                                                  unpaid interest on such Note, by 70% of the per share initial public offering price;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.5in; text-align: left">(ii)</TD><TD STYLE="text-align: justify">the Lince Note and the Phoenix Note 2 will convert into [*] and [*] shares of our common
                                                                                   stock, respectively, in each case calculated by dividing the outstanding principal and accrued and unpaid interest on such Note by 80% of the per share initial public offering price;</TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.5in; text-align: left">(iii)</TD><TD STYLE="text-align: justify">the Private Offering Notes will convert into [*] shares of
our common stock calculated by dividing (x) the outstanding principal and accrued and unpaid interest on the Private Offering
Notes by (y) the lesser of (1) the quotient obtained by dividing (A) $22,500,000 by (B) the fully diluted capitalization of the
Company and (2) 70% of the per share initial public offering price.</TD>
</TR></TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I><U>Recent issuances of Options and Restricted
Stock under 2012 Equity Incentive Plan (the &ldquo;Plan&rdquo;)</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in">&nbsp;</TD>
    <TD STYLE="width: 0.25in; font-size: 10pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">In May 2021 we made eleven grants of non-statutory options to purchase in aggregate 787,595 shares of our common stock under the Plan at an exercise price of $2.60 per share. The options are subject to three-year monthly vesting at a rate of 1/36<SUP>th</SUP> per month and expire in May 2031.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 0.25in; font-size: 10pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">In July 2021 we made three grants of non-statutory options to purchase in aggregate 364,044 shares of our common stock and two grants of incentive stock options to purchase in aggregate 80,165 shares of our common stock under the Plan at an exercise price of $3.53 per share. The options vest monthly over a three-year period at the rate of 1/36<SUP>th </SUP>per month (except for 25,000 which vest at a rate of 1/24<SUP>th</SUP> per month). The options expire in July 2031.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 0.25in; font-size: 10pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&middot;</FONT></TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: white">In August
        2021 we granted non-statutory options to 2 individuals to purchase in aggregate 27,000 shares of our common stock and we granted
        incentive stock options to 2 individuals to purchase in aggregate 15,000 shares of our common stock under the Plan at an exercise
        price of $3.53 per share. Three of these options vest 33% on the first anniversary with the balance of the shares vesting monthly
        over the next two years and one option is subject to two-year monthly vesting and all options expire on August 10, 2031. We also
        granted 123,500 of restricted shares of common stock to 3 individuals under the Plan<FONT STYLE="background-color: white">, which vested immediately</FONT>.</FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: white">In October
        2021 we granted non-statutory options to 3 individuals to purchase in aggregate 24,000 shares of our common stock and we granted
        incentive stock options to 3 individuals to purchase in aggregate 20,000 shares of our common stock under the Plan at an exercise
        price of $3.75 per share. Three of these options vest 33% on the first anniversary with the balance of the shares vesting monthly
        over the next two years and the remaining options are subject to two-year monthly vesting and all options expire on October 8,
        2031. </FONT></P></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: -0.25in"><I>&nbsp;</I></P>


<!-- Field: Page; Sequence: 10 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->8<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I><U>National Distribution
Agreement</U></I>. On May 20, 2021, the Company entered into an Amended and Restated Exclusive Sales Representative Agreement
(the &ldquo;SpineSource Sales Agreement&rdquo;) by and between the Company and SpineSource, Inc. (&ldquo;SpineSource&rdquo;)
which became effective when the Company paid SpineSource $500,000 for prior services and issued SpineSource 107,513 shares of
our common stock (the &ldquo;SpineSource Shares&rdquo;). Pursuant to the SpineSource Sales Agreement, the Company appointed
SpineSource as its exclusive sales representative for marketing, sales, and support for The CATAMARAM System in the United
States and Puerto Rico in exchange for 60% of net sales invoiced by us from product sales that are completed in the United
States and Puerto Rico. The SpineSource Sales Agreement has a five-year term and automatically renews for five-year periods
unless written notice is provided by either party at least 180 days prior to the expiration of the term. Any extension beyond
ten (10) years requires a written agreement. The SpineSource Sales Agreement may also be terminated by the Company if certain
minimum sales targets are not achieved by SpineSource as set forth in the SpineSource Sales Agreement. Either party may
terminate the SpineSource Sales Agreement for a material breach by the other party, the liquidation, insolvency or bankruptcy
of the other party or if the other party ceases to actively engage in the business to which the SpineSource Sales Agreement
relates. In connection with the issuance of the SpineSource Shares, the Company entered into the Common Stock Purchase
Agreement with SpineSource dated May 19, 2021 (the &ldquo;SpineSource Stock Purchase Agreement&rdquo;), which provides
SpineSource with anti-dilution protection that maintains its ownership percentage of the Company, prior to the completion of
this initial public offering, at no less than 3% on a fully diluted basis. As of November 9, 2021, the Company has issued
88,894 shares to SpineSource pursuant to the anti-dilution protection contained in the SpineSource Stock Purchase
Agreement.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I><U>Exchange Agreement</U>.</I> On October
28, 2021, the Company entered into an Agreement (the &ldquo;Exchange Agreement&rdquo;) with Zuhlke Ventures AG (&ldquo;ZV&rdquo;),
the minority shareholder of Tenon Technology AG (&ldquo;TTAG&rdquo;), the Company&rsquo;s Swiss subsidiary. Pursuant to the Exchange
Agreement, ZV agreed to exchange 574,033 shares of Series A Preferred Stock issued by TTAG, representing all of its ownership
interest in TTAG for Tenon Series A Preferred Stock , representing 24% ownership interest in the Company on a fully diluted basis,
taking into account (i) all outstanding shares of common stock of the Company; (ii) shares issuable upon conversion or exchange
of all of the Company&rsquo;s securities directly or indirectly convertible into or exchangeable for our common stock and the
exercise of all outstanding options or warrants; and (iii) the shares of our common stock that are &nbsp;&nbsp;reserved, but neither
issued nor the subject of outstanding awards, under any Company equity incentive or similar plan. Pursuant to the terms of the
Exchange Agreement, the Company has issued ZV 2,550,763 shares of Tenon Series A Preferred Stock. ZV&rsquo;s shares of Tenon Series
A Preferred Stock are subject to anti-dilution protection that maintains ZV&rsquo;s 24% ownership interest in the Company, excluding
any shares issued by the Company in an initial public offering or a qualified offering of at least $5,000,000 at a per share price
of at least $3.3737. The anti-dilution protection terminates upon the earlier of (i) the closing of this initial public offering;
(ii) the conversion of the Private Offering Notes; (iii) the repayment of the Private Offering Notes in the case of a change in
control of the Company; or (iv) the liquidation of the Company. Also, pursuant to the terms of the Exchange Agreement, the Company
repaid the convertible note between TTAG and ZV in full in the amount of approximately $114,000, including accrued interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Information Regarding our Capitalization</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of November 9, 2021, we have (i) 1,979,907
&nbsp;shares of common stock issued and outstanding of which 54.7% are owned by Richard Ginn, our founder, Chief Technology Officer
and a director of the Company; (ii) 2,550,763 shares of Series A Preferred Stock (&ldquo;Tenon Series A Preferred Stock&rdquo;)
issued and outstanding, each share of which is convertible at any time at the option of the holder for one share of our common
stock and automatically converts into one share of our common stock immediately prior to the closing of this initial public offering
if the initial offering price is at least $6.00 per share and the gross proceeds to the Company from the offering are at least
$25,000,000 or at the written request of at least a majority of the holders of shares of Series B Preferred Stock, as applicable,
then outstanding (the &ldquo;Conversion Trigger&rdquo;); and (iii) 491,222 shares of Series B Preferred Stock (&ldquo;Tenon Series
B Preferred Stock&rdquo; and together with the Tenon Series A Preferred Stock, the &ldquo;Preferred Stock&rdquo;) issued and outstanding,
each share of which is convertible at any time at the option of the holder for one share of our common stock and automatically
converts into one share of our common stock upon the occurrence of the Conversion Trigger. Currently, prior to the conversion of
the Preferred Stock, holders thereof have a right to one vote per share voting with our common stock on all matters submitted to
the shareholders for a vote. Additional information regarding our issued and outstanding securities may be found under &ldquo;<I>Market
for Common Equity and Related Stockholder Matters</I>&rdquo; and &ldquo;<I>Description of Securities</I>.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>





<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Unless otherwise specifically stated, information
throughout this prospectus does not assume the exercise of outstanding options or warrants to purchase shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Corporate Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our principal executive offices are located
at 104 Cooper Court, Los Gatos, CA 95032. Our website address is www.tenonmed.com. The information included on our website is not
part of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Implications of Being an Emerging Growth
Company </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are an &ldquo;emerging growth company,&rdquo;
as defined in the Jumpstart Our Business Startups Act of 2012 (the &ldquo;JOBS Act&rdquo;). We will remain an emerging growth company
until the earlier of (i) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common
stock pursuant to an effective registration statement under the Securities Act; (ii) the last day of the fiscal year in which we
have total annual gross revenues of $1.07 billion or more; (iii) the date on which we have issued more than $1 billion in nonconvertible
debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under applicable
SEC rules. We expect that we will remain an emerging growth company for the foreseeable future, but cannot retain our emerging
growth company status indefinitely and will no longer qualify as an emerging growth company on or before the last day of the fiscal
year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement
under the Securities Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions
from specified disclosure requirements that are applicable to other public companies that are not emerging growth companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 11 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->9<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These exemptions include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">being permitted to provide only two years of audited financial statements, in addition to any required
unaudited interim financial statements, with correspondingly reduced &ldquo;<I>Management&rsquo;s Discussion and Analysis of Financial
Condition and Results of Operations</I>&rdquo; disclosure;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">not being required to comply with the requirement of auditor attestation of our internal controls
over financial reporting;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">not being required to comply with any requirement that may be adopted by the Public Company Accounting
Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor&rsquo;s report providing additional information
about the audit and the financial statements;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">reduced disclosure obligations regarding executive compensation; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD STYLE="text-align: justify">not being required to hold a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have taken advantage of certain reduced
reporting requirements in this prospectus. Accordingly, the information contained herein may be different than the information
you receive from other public companies in which you hold stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">An emerging growth company can take advantage
of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting
standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would
otherwise apply to private companies. We have irrevocably elected to avail ourselves of this extended transition period and, as
a result, we will not be required to adopt new or revised accounting standards on the dates on which adoption of such standards
is required for other public reporting companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are also a &ldquo;smaller reporting
company&rdquo; as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the &ldquo;Exchange Act&rdquo;), and
have elected to take advantage of certain of the scaled disclosure available for smaller reporting companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Summary Risk Factors</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our business is subject to numerous risks
and uncertainties, any one of which could materially adversely affect our results of operations, financial condition or business.
These risks include, but are not limited to, those listed below. This list is not complete, and should be read together with the
section titled &ldquo;Risk Factors&rdquo; below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We have incurred significant operating losses since inception, we expect to continue to incur operating losses in the future
and we may not be able to achieve or sustain future profitability;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Epidemic diseases, or the perception of their effects, could have
(or, in the case of the COVID-19 pandemic, will continue to have during its duration) a material adverse effect on our future business,
financial condition, results of operations, or cash flows;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">If hospitals, surgeons, and other healthcare providers are unable to obtain and maintain coverage and reimbursement from third-party
payors for procedures performed using our products, adoption of our products may be delayed, and it is unlikely that they will
gain further acceptance;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">If healthcare payors reverse decisions to cover minimally invasive SI-Joint fusion exclusively when performed with The CATAMARAN
System and choose to reimburse for procedures performed with competitive products, our market share could decline, adversely affecting
our revenues;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We may not be able to demonstrate to physicians that The CATAMARAN System is an attractive alternative to our competitors&rsquo;
products and that our procedure is an attractive alternative to existing surgical and non-surgical treatments of the SI-Joint;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 12 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->10<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Surgeons and payors may not find our clinical evidence to be compelling, which could limit our sales, and ongoing
and future research may prove our products to be less safe and effective than currently thought;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Pricing pressure from our competitors, changes in third-party coverage and reimbursement, healthcare provider consolidation,
payor consolidation and the presence of &ldquo;physician-owned distributorships&rdquo; may impact our ability to sell our product
at prices necessary to support our current business strategies;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Practice trends or other factors, including the COVID-19 pandemic, may cause procedures to shift from the hospital environment
to ambulatory surgical centers, or ASCs, where pressure on the prices of our products is generally more acute;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We will operate in a very competitive business environment and if we are unable to compete
                                                                      successfully against our existing or potential competitors, our sales and operating results may be adversely affected;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We currently manufacture (through contract manufacturers) and sell
a single family of products focused on procedures, the goal of which is to stabilize and fuse the SI-Joint. Reliance on a single
family of products and single procedure could negatively affect our results of operations and financial condition;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">If clinical experience with The CATAMARAN System does not result in positive outcomes for patients, or if clinical trials involving
the use of The CATAMARAN System fail to show meaningful patient benefit, sales of The CATAMARAN System could be adversely impacted;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">If we are unable to maintain our relationship with our national distributor, we may not be able to generate anticipated sales;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We may become dependent on a limited number of contract manufacturers,
some of them single-source and some of them in single locations, for most of our products, and the loss of any of these contract
manufacturers, or their inability to provide us with an adequate supply of product in the future in a timely and cost-effective
manner, could materially adversely affect our business;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We and our contract manufacturers are subject to extensive governmental
regulation both in the U.S. and abroad, and failure to comply with applicable requirements could cause our business to suffer;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We and our national distributor along with their independent sales
representatives must comply with U.S. federal and state fraud and abuse laws, including those relating to healthcare provider kickbacks
and false claims for reimbursement, and other applicable federal and state healthcare laws, as well as equivalent foreign laws,
and failure to comply could negatively affect our business; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">If we fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value
of our intellectual property rights would diminish and our ability to successfully commercialize our products may be impaired</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We could need to raise additional capital in the future, and if we are unable to secure adequate funds on terms acceptable
to us, we could be unable to execute our business plan.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Raising additional capital may cause dilution to our existing stockholders and restrict our operations or require us to relinquish
certain intellectual property rights.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will
discover them or that our trade secrets will be misappropriated or disclosed.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We could be subject to significant product liability obligations if our products are defective, which could have a material
adverse effect on our business, financial condition and results of operations.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 13 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->11<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We are increasingly dependent on information technology, and our systems and infrastructure face certain risks, including cybersecurity
and data leakage risks.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Product liability claims against us could be costly and could harm our reputation.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Litigation against us could be costly and time-consuming to defend and could materially and adversely affect our business,
financial condition and results of operations.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">If we lose our key management personnel, or are unable to attract or retain qualified personnel, it could adversely affect
our ability to execute our growth strategy.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">If the quality of our products does not meet the expectations of physicians or patients, then our brand and reputation could
suffer and our business could be adversely impacted.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We operate in a very competitive business environment and if we are unable to compete successfully against our existing or
potential competitors, our sales and operating results may be negatively affected and we may not grow.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We may seek to grow our business through acquisitions or investments in new or complementary businesses, products or technologies,
through the licensing of products or technologies from third parties or other strategic alliances, and the failure to manage acquisitions,
investments, licenses or other strategic alliances, or the failure to integrate them with our existing business, could have a material
adverse effect on our operating results, dilute our stockholders&rsquo; ownership, increase our debt or cause us to incur significant
expense.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We may be unable to gain the support of leading hospitals and key opinion leaders, which may make it difficult to establish
our products as a standard of care and achieve market acceptance.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We may be unable to successfully demonstrate to surgeons the merits of our products compared to those of our competitors.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">If orthopaedic or neurosurgeons fail to safely and appropriately
use our products, or if we are unable to train orthopaedic or neurosurgeons on the safe and appropriate use of our products, we
may be unable to achieve our expected growth.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We have a limited operating history and may face difficulties encountered by early-stage companies in new and evolving markets.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">If we are unable to convince hospital facilities to approve the use of our products, our sales may not increase.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">We lack published long-term data supporting superior clinical outcomes enabled by our products, which could limit sales.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">If coverage and reimbursement from third-party payors for procedures
using our products significantly decline, orthopaedic or neurosurgeons, hospitals and other healthcare providers may be reluctant
to use our products and our sales may not increase.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Our insurance policies are expensive and protect us only from some business risks, which will leave us exposed to significant
uninsured liabilities.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Rapidly changing standards and competing technologies could harm demand for our products, result in significant additional
costs, and have a material adverse effect on our business, financial condition and results of operations.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 14 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->12<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">The safety of our products is not yet supported by long-term clinical data and may therefore prove to be less safe and effective
than initially thought.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_004"></A><FONT STYLE="text-transform: uppercase"><B>SUMMARY
OF THE OFFERING</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>&nbsp;</B></FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 35%"><FONT STYLE="font-size: 10pt">Common stock offered by us</FONT></TD>
    <TD STYLE="width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 64%; text-align: justify"><FONT STYLE="font-size: 10pt">[*] shares.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Common stock outstanding prior to the offering <SUP>(1)</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">[1,979,907] shares of common stock.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Common stock to be outstanding after the offering<SUP>(2)(3)</SUP></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">[*] (or [*] shares if the underwriters exercise their option to purchase additional shares in full).</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Over-allotment option of common stock offered by us</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">The underwriters have a 30-day option to purchase up to [*] additional shares of common stock.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Use of Proceeds</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">We currently intend to use the net proceeds to us from this offering to [*]. See the section of this prospectus titled &ldquo;<I>Use of Proceeds</I>&rdquo; beginning on page [*].</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 35%"><FONT STYLE="font-size: 10pt">Proposed Listing</FONT></TD>
    <TD STYLE="width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 64%; text-align: justify"><FONT STYLE="font-size: 10pt">We have applied to have our common stock listed on the Nasdaq Capital Market under the symbol &ldquo;______&rdquo; which listing is a condition to this offering.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Underwriters&rsquo; warrants</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Upon the closing of this offering, we have agreed to issue to The Benchmark Company, as representative of the underwriters, warrants, that will expire on the fifth anniversary of the commencement date of sales in this offering, entitling the representative to purchase 3% of the number of shares of common stock sold in this offering. The registration statement of which this prospectus is a part also covers the underwriters&rsquo; warrants and the common shares issuable upon the exercise thereof. For additional information regarding our arrangement with the underwriters, please see &ldquo;<I>Underwriting</I>.&rdquo;</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 35%"><FONT STYLE="font-size: 10pt">Lock-up agreements</FONT></TD>
    <TD STYLE="width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 64%; text-align: justify"><FONT STYLE="font-size: 10pt">We and our executive officers, directors and certain of our stockholders have agreed with the underwriters not to sell, transfer or dispose of any shares or similar securities for 180 days following the effective date of the registration statement for this offering. For additional information regarding our arrangement with the underwriters, please see &ldquo;<I>Underwriting</I>.&rdquo;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt">Risk Factors</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the &ldquo;<I>Risk Factors</I>&rdquo; section beginning on page [*] of this prospectus before deciding whether or not to invest in shares of our common stock.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">As of November 9, 2021.</P></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD STYLE="text-align: justify">Includes (i) [*] shares issued to SpineSource pursuant to a common stock purchase
                                                            agreement which entitles them to maintain at least a 3% ownership interest in the Company on a fully diluted basis until the closing
                                                            of this initial public offering; (ii) [*] shares issued to Exchange Listing, LLC at the closing of this initial public
                                                            offering in exchange for consulting services and the automatic cashless exercise of its warrant, and (iii) [*] shares of
                                                            our common stock that are to be issued prior to the closing of this offering as a result of the conversion of our convertible
                                                            promissory notes.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-transform: uppercase"><B></B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in; text-align: left">(3)</TD><TD STYLE="text-align: justify">Does not include (i) 491,222 shares of our common stock that may be issued prior to the
                                                                              closing of this offering as a result of the conversion of our Series B Preferred Stock; (ii) [*] shares of our common stock
                                                                              issuable pursuant to options granted pursuant to our equity incentive plan, including shares issuable under a one-time option
                                                                              grant to our CEO, Steven Foster to maintain his ownership position at 4%; (iii) 2,550,763 shares of our common stock that may
                                                                              be issued prior to the closing of this offering as a result of the conversion of our Series A Preferred Stock and (iv) shares
                                                                              our common stock issuable upon the exercise of the underwriters&rsquo; warrants..</TD>
</TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-transform: uppercase"><B>&nbsp;&nbsp;</B></FONT></P>


<!-- Field: Page; Sequence: 15 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->13<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-transform: uppercase"><B></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B><A NAME="a_005"></A>RISK
FACTORS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Our business is subject to many risks
and uncertainties, which may affect our future financial performance. If any of the events or circumstances described below occur,
our business and financial performance could be adversely affected, our actual results could differ materially from our expectations,
and the price of our stock could decline. The risks and uncertainties discussed below are not the only ones we face. There may
be additional risks and uncertainties not currently known to us or that we currently do not believe are material that may adversely
affect our business and financial performance. You should carefully consider the risks described below, together with all other
information included in this prospectus including our financial statements and related notes, before making an investment decision.
The statements contained in this prospectus that are not historic facts are forward-looking statements that are subject to risks
and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements.
If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that
case, the trading price of our common stock could decline, and investors in our securities may lose all or part of their investment.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Risks Related to Our Business and Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>We have incurred losses in the past and may be unable
to achieve or sustain profitability in the future.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To date, we have financed our operations
primarily through the issuance of equity, convertible notes issued by our Swiss subsidiary and most recently by convertible notes
issued by Tenon. We have devoted substantially all of our resources to research and development, clinical and regulatory matters
for our products. There can be no assurances that we will be able to generate sufficient revenue from our existing products or
from any future product candidates to transition to profitability and generate consistent positive cash flows. Following this offering,
we expect that our operating expenses will continue to increase as we continue to build our commercial infrastructure, develop,
enhance, and commercialize our existing and new products and incur additional operating and reporting costs associated with being
a public company. As a result, we expect to continue to incur operating losses for the foreseeable future and may never achieve
profitability. Furthermore, even if we do achieve profitability, we may not be able to sustain or increase profitability on an
ongoing basis. If we do not achieve profitability, it will be more difficult for us to finance our business and accomplish our
strategic objectives.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our recurring losses from operations and
negative cash flows raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered
public accounting firm included an explanatory paragraph in its report on our financial statements for the fiscal years ended,
December&nbsp;31, 2020 and 2019, describing the existence of substantial doubt about our ability to continue as a going concern.
We believe that the successful completion of this offering or the conversion of all of the Private Offering Notes into common stock
prior to this offering will eliminate this doubt and enable us to continue as a going concern; however, if we are unable to raise
sufficient capital in this offering or the holders of the Private Offering Notes do not convert the Private Offering Notes in sufficient
amounts into our common stock, we may need to obtain alternative financing or significantly modify our operational plans for us
to continue as a going concern. Our expected future capital requirements may depend on many factors including expanding our
surgeon base, increasing the rate at which we train surgeons, the number of additional clinical papers initiated, and the timing
and extent of spending on the development of our technology to increase our product offerings. We may need additional funding to
fund our operations but additional funds may not be available to us on acceptable terms on a timely basis, if at all. We may seek
funds through borrowings or through additional rounds of financing, including private or public equity or debt offerings. If we
raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing into which
we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens
or additional debt, pay dividends, repurchase our common stock, make certain investments, and engage in certain merger, consolidation
or asset sale transactions. Any future debt financing or additional equity that we raise may contain terms that are not favorable
to us or our stockholders. Furthermore, we cannot be certain that additional funding will be available on acceptable terms, if
at all. If we are unable to raise additional capital or generate sufficient cash from operations to adequately fund our operations,
we will need to curtail planned activities to reduce costs, which will likely harm our ability to execute on our business plan
and continue operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>


<!-- Field: Page; Sequence: 16 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->14<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Epidemic diseases, or the perception
of their effects have had and could have (or, in the case of the COVID-19 pandemic, will continue to have during its duration)
a material adverse effect on our business, financial condition, results of operations, or cash flows.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Outbreaks of infectious diseases, such
as COVID-19, could divert medical resources and priorities towards the treatment of that disease. An outbreak of an infectious
disease, or continued escalation of the outbreak of COVID-19 could also negatively affect hospital admission rates and the decision
by patients to undergo elective surgery, which could decrease demand for procedures using The CATAMARAN System and cause other
disruptions to our business. Business disruptions could include disruptions or restrictions on our ability to travel or to distribute
our products, government orders suspending the performance of elective surgical procedures such as The CATAMARAN System, inability
of our customers to meet their financial commitments due to strain on the healthcare system, as well as temporary closures of our
facilities or the facilities of our suppliers and their contract manufacturers, and a reduction in the business hours of hospitals
and ambulatory surgery centers. Any disruption of our contract manufacturers or our customers would likely
impact our sales and operating results. In addition, a significant outbreak of an infectious disease in the human population could
result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting
in an economic downturn that could affect demand for our products. Any of these events could negatively impact the number of procedures
using The CATAMARAN System that are performed and have a material adverse effect on our business, financial condition, results
of operations, or cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-size: 10pt">COVID-19 may
have, an adverse impact on the timing and success of the commercialization of The CATAMARAN System and our future operations as
a result of preventive and precautionary measures that we may find necessary to take. There are numerous uncertainties associated
with this COVID-19 outbreak, including the number of individuals who will become infected, the level of resistance to taking vaccines
by significant portions of the population in the United States , the extent of the protective and preventative measures that have
been put in place by both governmental entities and other businesses and those that may be put in place in the future, the effect
that general availability of vaccines, testing for COVID-19 and antibodies will enable relaxation of protective measures for a
subset of the population, and numerous other uncertainties. We intend to continue to execute on our product development and strategic
plans during the COVID-19 outbreak. However, the aforementioned uncertainties may result in delays or modifications to our product
development and strategic plans.</FONT></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, the COVID-19 pandemic has
adversely affected, and may continue to adversely affect, the economies and financial markets of many countries, which may result
in a period of regional, national, and global economic slowdown or regional, national, or global recessions that could curtail
or delay spending by hospitals and affect demand for our products as well as increased risk of customer defaults or delays in payments.
These market disruptions could impair our ability to raise capital, should our business experience a prolonged period of reduced
revenue requiring additional capital to sustain the business. COVID-19 and the current financial, economic, and capital markets
environment, and future developments in these and other areas present material uncertainty and risk with respect to our performance,
financial condition, results of operations, and cash flows. Due to the uncertain scope and duration of the pandemic and uncertain
timing of global recovery and economic normalization, we are unable to estimate the long-term impacts on our operations and financial
results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The existence and further duration of the
COVID-19 pandemic may also further exacerbate certain of the risks described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Practice trends or other factors,
including the COVID-19 pandemic, may cause procedures to shift from the hospital environment to ambulatory surgical centers (&ldquo;ASCs&rdquo;),
where pressure on the prices of our products is generally more acute.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To protect health care professionals involved
in surgical care and their patients, we anticipate that more outpatient eligible procedures will be performed in ASCs during the
COVID-19 pandemic, and as its acuity declines and the healthcare system returns to a more normalized state. Since patients do not
stay overnight in ASCs and COVID-19 patients would not otherwise be treated in ASCs, it is likely that the ASC will be viewed as
a safer site of service for patients and health care providers, where the risk of transmission of the novel coronavirus can be
more effectively controlled. Because ASC facility fee reimbursement is typically less than facility fee reimbursement for hospitals,
we typically experience more pressure on the pricing of our products by ASCs than by hospitals, and the average price for which
we sell our products to ASCs is less than the average prices we charge to hospitals. An accelerated shift of procedures using our
products to ASCs as a result of the COVID-19 pandemic could adversely impact the average selling prices of our products and our
revenues could suffer as a result.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>


<!-- Field: Page; Sequence: 17 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->15<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If hospitals, surgeons, and other
healthcare providers are unable to obtain coverage and reimbursement from third-party payors for procedures performed using our
products, adoption of our products may be delayed, and it is unlikely that they will gain further acceptance.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Growing sales of our product depends on the
availability of adequate coverage and reimbursement from third-party payors, including government programs such as Medicare and
Medicaid, private insurance plans, and managed care programs. Hospitals, surgeons, and other healthcare providers that purchase
or use medical devices generally rely on third-party payors to pay for all or part of the costs and fees associated with the procedures
performed with these devices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Adequate coverage and reimbursement for procedures
performed with our products is central to the acceptance of our current and future products. We may be unable to sell our products
on a profitable basis if third-party payors deny coverage, continue to deny coverage or reduce their current levels of payment,
or if our costs for the product increase faster than increases in reimbursement levels.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Many private payors refer to coverage decisions
and payment amounts determined by the Centers for Medicare and Medicaid Services, or CMS, which administers the Medicare program,
as guidelines for setting their coverage and reimbursement policies. By June&nbsp;30, 2016, all Medicare Administrative Contractors
were regularly reimbursing for minimally invasive and/or open SI-Joint fusion. Private payors that do not follow the Medicare guidelines
may adopt different coverage and reimbursement policies for procedures performed with our products. Private commercial payors have
been slower to adopt positive coverage policies for minimally invasive and/or open SI-Joint fusion, and many private payors still
have policies that treat the procedure as experimental or investigational and do not regularly reimburse for the procedure. Future
action by CMS or third-party payors may further reduce the availability of payments to physicians, outpatient surgery centers,
and/or hospitals for procedures using our products.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The healthcare industry in the United States
has experienced a trend toward cost containment as government and private insurers seek to control healthcare costs. Payors are
imposing lower payment rates and negotiating reduced contract rates with service providers and being increasingly selective about
the technologies and procedures they chose to cover. There can be no guarantee that we will be able to provide the scientific and
clinical data necessary to overcome these policies. Payors may adopt policies in the future restricting access to medical technologies
like ours and/or the procedures performed using such technologies. Therefore, we cannot be certain that the procedures performed
with each of our products will be reimbursed. There can be no guarantee that, should we introduce additional products in the future,
payors will cover those products or the procedures in which they are used.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If the reimbursement provided by
third-party payors to hospitals, surgeons, and other healthcare providers for procedures performed using our products is insufficient,
adoption and use of our products and the prices paid for our implants may decline.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">When a Tenon procedure utilizing The CATAMARAN
System&nbsp;is performed, both the surgeon and the healthcare facility, a hospital (inpatient or outpatient clinic), submit claims
for reimbursement to the patient&rsquo;s insurer. Generally, the facility obtains a lump sum payment, or facility fee, for SI-Joint
fusions. Our products are purchased by the facility, along with other supplies used in the procedure. The facility must also pay
for its own fixed costs of operation, including certain operating room personnel involved in the procedure, and other medical
services care. If these costs exceed the facility reimbursement, the facility&rsquo;s managers may discourage or restrict surgeons
from performing the procedure in the facility or using certain technologies, such as the&nbsp;The CATAMARAN System, to perform
the procedure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 18 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->16<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Medicare 2021 national average hospital
inpatient payment ranges from approximately $25,000 to approximately $59,000 depending on the procedural approach and the presence
of Complication and Comorbidity (<B>CC</B>)/Major Complication and Comorbidity <B>(</B>MCC<B>)</B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Medicare 2021 national average hospital
outpatient clinic payment is $15,888. We believe that insurer payments to facilities are generally adequate for these facilities
to offer The CATAMARAN System. However, there can be no guarantee that these facility payments will not decline in the future.&nbsp;The
number of procedures performed,&nbsp;and the prices paid for our implants may in the future decline if payments to facilities for
SI-Joint fusions decline.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Surgeons are reimbursed separately for
their professional time and effort to perform a surgical procedure. Depending on the surgical approach, the incision size, type
and extent of imaging guidance, indication for procedure, and the insurer, The Catamaran System procedure may be reported by the
surgeon using any one of the applicable following CPT&reg; codes 27279, 27280, 27299. &nbsp; The Medicare 2021 national average
payment for CPT&reg; 27279 is $888 and $1,399 for 27280. CPT&reg; 27299 has no national valuation. Clinicians, however can present
a crosswalk to another procedure believed to be fairly equivalent and/or comparison to a code for which there is an existing valuation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For some governmental programs, such as
Medicaid, coverage and reimbursement differ from state to state, and some state Medicaid programs may not pay an adequate amount
for the procedures performed with our products, if any payment is made at all. Similar to Medicaid, many private payors&rsquo;
coverage and payment may differ from one payer to another as well.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We believe that some surgeons view the
current Medicare reimbursement amount as insufficient for the procedure, given the work effort involved with the procedure, including
the time to diagnose the patient and obtain prior authorization from the patient&rsquo;s health insurer when necessary. Many private
payors require extensive documentation of a multi-step diagnosis before authorizing SI-Joint fusion for a patient. We believe that
some private payors apply their own coverage policies and criteria inconsistently, and surgeons may experience difficulties in
securing approval and coverage for sacroiliac fusion procedures. Additionally, many private payors limit coverage for open SI-Joint
fusion to trauma, tumor or extensive spine fusion procedures involving multiple levels. The perception by physicians that the reimbursement
for SI-Joint fusion is insufficient to compensate them for the work required, including diagnosis, documentation, obtaining payor
approval for the procedure, and burden on their office staff, may negatively affect the number of procedures performed and may
therefore impede the growth of our revenues or cause them to decline.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may not be able to convince physicians
that The CATAMARAN System is an attractive alternative to our competitors&rsquo; products and that our procedure is an attractive
alternative to existing surgical and non-surgical treatments of the SI-Joint.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Surgeons play the primary role in determining
the course of treatment in consultation with their patients and, ultimately, the product that will be used to treat a patient.
In order for us to sell The CATAMARAN System successfully, we must convince surgeons through education and training that treatment
with The CATAMARAN System is beneficial, safe, and cost-effective for patients as compared to our competitors&rsquo; products.
If we are not successful in convincing surgeons of the merits of The CATAMARAN System, they may not use our product, and we will
be unable to increase our sales and achieve or grow profitability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Historically, most spine surgeons did not
include SI-Joint pain in their diagnostic work-up because they did not have an adequate surgical procedure to perform for patients
diagnosed with the condition. As a result, some patients with lower back pain resulting from SI-Joint dysfunction are misdiagnosed.
We believe that educating surgeons and other healthcare professionals about the clinical merits and patient benefits of The CATAMARAN
System is an important element of our growth. If we fail to effectively educate surgeons and other medical professionals, they
may not include a SI-Joint evaluation as part of their diagnosis and, as a result, those patients may continue to receive unnecessary
or only non-surgical treatment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Surgeons may also hesitate to change their medical treatment
practices for other reasons, including the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 19 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->17<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>lack of experience with minimally invasive procedures;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>perceived liability risks generally associated with the use of new products and procedures;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>costs associated with the purchase of new products; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>time commitment that may be required for training.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Furthermore, we believe surgeons may not
widely adopt The CATAMARAN System unless they determine, based on experience, clinical data, and published peer-reviewed publications,
that surgical intervention provides benefits or is an attractive alternative to non-surgical treatments of SI-Joint dysfunction.
In addition, we believe support of our products relies heavily on long-term data showing the benefits of using our product. If
we are unable to provide that data, surgeons may not use our product. In such circumstances, we may not achieve expected sales
and may be unable to achieve profitability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Surgeons and payors may not find our
clinical evidence to be compelling, which could limit our sales, and on-going and future research may prove our product to be less
safe and effective than initially anticipated.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">All of the component parts of the CATAMARAN
System have either received premarket clearance under Section&nbsp;510(k) of the U.S. Federal Food, Drug, and Cosmetic Act, or
FDCA, or are exempt from premarket review. The 510(k) clearance process of the U.S. Food and Drug Administration, or FDA, requires
us to document that our product is &ldquo;substantially equivalent&rdquo; to another 510(k)-cleared product. The 510(k) process
is shorter and typically requires the submission of less supporting documentation than other FDA approval processes, such as a
premarket approval, or PMA, and does not usually require pre-clinical or clinical studies. Additionally, to date, we have not been
required to complete clinical studies in connection with the sale of our product. For these reasons, surgeons may be slow to adopt
our product, third-party payors may be slow to provide coverage, and we may be subject to greater regulatory and product liability
risks. Further, future patient studies or clinical experience may indicate that treatment with our product does not improve patient
outcomes. Such results would slow the adoption of our product by surgeons, significantly reduce our ability to achieve expected
sales, and could prevent us from achieving profitability. Moreover, if future results and experience indicate that our product
causes unexpected or serious complications or other unforeseen negative effects, we could be subject to mandatory product recalls,
suspension, or withdrawal of FDA clearance.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Pricing pressure from our competitors,
changes in third-party coverage and reimbursement, healthcare provider consolidation, payor consolidation and the proliferation
of &ldquo;physician-owned distributorships&rdquo; may impact our ability to sell our product at prices necessary to support our
current business strategies.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If competitive forces drive down the prices,
we are able to charge for our product, our profit margins will shrink, which will adversely affect our ability to invest in and
grow our business. The SI-Joint fusion market has attracted numerous new companies and technologies. As a result of this increased
competition, we believe there will be continued and increased pricing pressure, resulting in lower gross margins, with respect to
our product.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Even to the extent our product and procedures
using our product are currently covered and reimbursed by third-party private and public payors, adverse changes in coverage and
reimbursement policies that affect our product, discounts, and number of implants used may also drive our prices down and harm
our ability to market and sell our product.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are unable to predict what changes will
be made to the reimbursement methodologies used by third-party payors. We cannot be certain that under current and future payment
systems, in which healthcare providers may be reimbursed a set amount based on the type of procedure performed, such as those utilized
by Medicare and in many privately managed care systems, the cost of our product will be justified and incorporated into the overall
cost of the procedure. In addition, to the extent there is a shift from inpatient setting to outpatient settings, we may experience
pricing pressure and a reduction in the number of The CATAMARAN System procedures performed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 20 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->18<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Consolidation in the healthcare industry,
including both third-party payors and healthcare providers, could lead to demands for price concessions or to the exclusion of
some suppliers from certain of our markets, which could have an adverse effect on our business, results of operations, or financial
condition. Because healthcare costs have risen significantly over the past several years, numerous initiatives and reforms initiated
by legislators, regulators, and third-party payors to curb these costs have resulted in a consolidation trend in the healthcare
industry to aggregate purchasing power. As the healthcare industry consolidates, competition to provide products and services to
industry participants has become and will continue to become more intense. This in turn has resulted and will likely continue to
result in greater pricing pressures and the exclusion of certain suppliers from important market segments as group purchasing organizations,
independent delivery networks, and large single accounts continue to use their market power to consolidate purchasing decisions
for hospitals. We expect that market demand, government regulation, third-party coverage, and reimbursement policies and societal
pressures will continue to change the worldwide healthcare industry, resulting in further business consolidations and alliances
among our customers, which may reduce competition, exert further downward pressure on the price of our product, and adversely impact
our business, results of operations, or financial condition. As we continue to expand into international markets, we will face
similar risks relating to adverse changes in coverage and reimbursement procedures and policies in those markets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We operate in a very competitive
business environment and if we are unable to compete successfully against our existing or potential competitors, our sales and
operating results may be negatively affected and we may not grow.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Upon commercialization of our product we
will likely be subject to intense competition. Many of our potential competitors are major medical device companies that have substantially
greater financial, technical, and marketing resources than we do, and they may succeed in developing products that would render
our product obsolete or non-competitive. In addition, many of these competitors have significantly longer operating history and
more established reputations than we do. Our field is intensely competitive, subject to rapid change and highly sensitive to the
introduction of new products or other market activities of industry participants. Our ability to compete successfully will depend
on our ability to develop proprietary products that reach the market in a timely manner, receive adequate coverage and reimbursement
from third-party payors, and are safer, less invasive, and more effective than alternatives available for similar purposes as demonstrated
in peer-reviewed clinical publications. Because of the size of the potential market, we anticipate that other companies will dedicate
significant resources to developing competing products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the United States, we believe that our primary
competitors currently will be SI-bone, Inc., Globus Medical, Inc., Medtronic plc&nbsp;, XTant Medical Holdings, Inc., and RTI Surgical,
Inc. At any time, these or other industry participants may develop alternative treatments, products or procedures for the treatment
of the SI-Joint that compete directly or indirectly with our product. If alternative treatments are, or are perceived to be, superior
to our product, sales of our product and our results of operations could be negatively affected. Some of our larger competitors
are either publicly traded or divisions or subsidiaries of publicly traded companies. These competitors may enjoy several competitive
advantages over us, including:</P>





<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">greater financial, human, and other resources for product research and development, sales and marketing,
and legal matters;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">significantly greater name recognition;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">established relationships with surgeons, hospitals, and other healthcare providers;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">large and established sales and marketing and distribution networks;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">greater experience in obtaining and maintaining domestic and international regulatory clearances
or approvals, or CE Certificates of Conformity for products and product enhancements;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">more expansive portfolios of intellectual property rights; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left">&bull;</TD><TD>greater ability to cross-sell their products or to incentivize
hospitals or surgeons to use their products.</TD>
</TR></TABLE>


<!-- Field: Page; Sequence: 21 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->19<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">New participants have increasingly entered
the medical device industry. Many of these new competitors specialize in a specific product or focus on a particular market segment,
making it more difficult for us to increase our overall market position. The frequent introduction by competitors of products that
are or claim to be superior to our product or that are alternatives to our existing or planned products may make it difficult to
differentiate the benefits of our product over competing products. In addition, the entry of multiple new products and competitors
may lead some of our competitors to employ pricing strategies that could adversely affect the pricing of our product and pricing
in the market generally.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a result, without the timely introduction
of new products and enhancements, our product may become obsolete over time. If we are unable to develop innovative new products,
maintain competitive pricing, and offer products that surgeons and other physicians perceive to be as reliable as those of our
competitors, our sales or margins could decrease, thereby harming our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We currently manufacture (through
third parties) and sell products used in a single procedure, which could negatively affect our operations and financial condition.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Presently we do not sell any product other
than The CATAMARAN System and related tools and instruments. Therefore, we are solely dependent on widespread market adoption of
The CATAMARAN System and we will continue to be dependent on the success of this single product for the foreseeable future. There
can be no assurance that The CATAMARAN System will gain a substantial degree of market acceptance among surgeons, patients or healthcare
providers. Our failure to successfully increase sales of The CATAMARAN System or any other event impeding our ability to sell The
CATAMARAN System, would result in a material adverse effect on our results of operations, financial condition and continuing operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>If we are unable to maintain the relationship
with our national distributor, SpineSource, and they do not expand their network of independent sales representatives, we may not
be able to generate anticipated sales.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of November 9, 2021, SpineSource our U.S.
national distributor has a network of approximately 750 independent sales representatives that specialize in spine products. Our
operating results are directly dependent upon the sales and marketing efforts of both our marketing and social media team and our
national distributor with their network of independent sales representatives.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As we launch The CATAMARAN System, we will
need to work with our national distributor to train and educate their network of independent sales representatives. Our future
success will depend largely on our national distributor&rsquo;s ability to hire, train, retain and motivate independent sales representatives
with significant technical knowledge in various areas, such as spine health and treatment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our intention is for our national distributor
and their independent sales representatives to develop long-lasting relationships with the surgeons they serve. If the independent
sales representatives fail to adequately promote, market and sell our product or decide to leave or cease to do business with our
national distributor, our sales could significantly decrease.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We face significant challenges and risks
in managing our national distributor with their geographically dispersed distribution network of independent sales representatives.
If the national distributor were to cease distribution of our product, our sales could be adversely affected. In such a situation,
we may need to seek alternative distribution options or develop our own network of direct sales representatives, which may not
prevent our sales from being adversely affected. If an independent sales representative were to depart and be retained by one of
our competitors, we may be unable to prevent them from helping competitors solicit business from our existing customers, which
could further adversely affect our sales. Because of the intense competition for their services, our national distributor may be
unable to recruit or retain additional qualified independent sales representatives to sell our product. Furthermore, our national
distributor may not be able to enter into agreements with them on favorable or commercially reasonable terms, if at all. Failure
to hire or retain qualified independent sales representatives would prevent us from expanding our business and generating sales.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->20<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If our national distributor does not incentivize
the independent sales representatives enough to fully promote The CATAMARAN System or we are not be able to influence that decision
on acceptable terms our sales growth could be delayed or slowed. If this occurs it could reduce the scope of any sales or marketing
activities, or cause us to increase our expenditures on commercialization activities. If we elect to increase our expenditures
to fund commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on
acceptable terms or at all</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We have a limited operating history
and may face difficulties encountered by early-stage companies in new and rapidly evolving markets.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Even though we were formed in 2012 we are
just beginning to build the infrastructure necessary to commercially launch The CATAMARAN System. Accordingly, we have a limited
operating history upon which to base an evaluation of our business and prospects. In assessing our prospects, you must consider
the risks and difficulties frequently encountered by early-stage companies in new and rapidly evolving markets, particularly companies
engaged in the development and sales of medical devices. These risks include our inability to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">obtain coverage by third-party, private, and government payors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">establish and increase awareness of our brand and strengthen customer loyalty;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">attract and retain qualified personnel;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>find and develop relationships with contract manufacturers that can manufacture the necessary volume of product;</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>manage our national distributor to achieve our sales growth objectives;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">commercialize new products and enhance our existing product;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">manage rapidly changing and expanding operations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>implement and successfully execute our business and marketing strategy;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">respond effectively to competitive pressures and developments.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We can also be negatively affected by general
economic conditions. Because of our limited operating history, we may not have insight into trends that could emerge and negatively
affect our business. As a result of these or other risks, our business strategy might not be successful.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our sales volumes and our operating
results may fluctuate over the course of the year.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Since our national launch is still pending,
we have limited history with respect to how rapidly adoption of The CATAMARAN System will occur. Sales growth could be slower than
we have projected. Our sales and results of operations will be affected by numerous factors, including, among other things:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">payor coverage and reimbursement;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">maintaining our training schedule with surgeons;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 23 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->21<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the number of procedures performed in the quarter and our ability to drive increased sales of our
product;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the performance of our national distributor and their network of independent sales representatives;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">pricing pressure applicable to our product, including adverse third-party coverage and reimbursement
outcomes;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">timing of new product offerings, acquisitions, licenses or other significant events by us or our
competitors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">our ability to find and develop relationships with contract manufacturers and their ability to
timely provide us with an adequate supply of products;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the evolving product offerings of our competitors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the demand for, and pricing of, our product and the products of our competitors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">factors that may affect the sale of our product, including seasonality and budgets of our customers;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">ability of surgeons to do our procedure given possible COVID restrictions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">interruption in the manufacturing or distribution of our product;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the effect of competing technological, industry and market developments;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">our ability to expand the geographic reach of our sales and marketing efforts;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the costs of maintaining adequate insurance coverage, including product liability insurance;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the availability and cost of components and materials needed by our contract manufacturers;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">the number of selling days in the quarter; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">impairment and other special charges.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Some of the products we may seek to develop
and introduce in the future will require FDA clearance or approval before commercialization in the United States. As a result,
it will be difficult for us to forecast demand for these products with any degree of certainty. In addition, we will be increasing
our operating expenses as we expand our commercial capabilities. Accordingly, we may experience significant, unanticipated quarterly
losses. If our quarterly or annual operating results fall below the expectations of investors or securities analysts, the price
of our common stock could decline substantially. Furthermore, any quarterly or annual fluctuations in our operating results may,
in turn, cause the price of our common stock to fluctuate substantially. Quarterly comparisons of our financial results may not
always be meaningful and should not be relied upon as an indication of our future performance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If we do not successfully implement
our business strategy, our business and results of operations will be adversely affected.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our business strategy was based on assumptions
about the market that might prove wrong. We believe that various demographics and industry-specific trends will help drive growth
in the market and our business, but these demographics and trends have been and will continue to be uncertain. Actual demand for
our product could differ materially from projected demand if our assumptions regarding these factors prove to be incorrect or do
not materialize, or if alternative treatments to those offered by our product gains widespread acceptance. Also, our strategy of
focusing exclusively on the SI-Joint market may limit our ability to grow. In addition, in order to increase our sales, we will
need to work with our national distributor to expand their independent sales representative network in existing and new regions
as well, in the future, commercialize new products. Moreover, we may decide to alter or discontinue aspects of our business strategy
and may adopt different strategies due to business or competitive factors not currently foreseen, such as new medical technologies
that would make our product obsolete. Any failure to implement our business strategy may adversely affect our business, results
of operations, and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>


<!-- Field: Page; Sequence: 24 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->22<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our business could suffer if we lose
the services of key members of our senior management, key advisors or personnel.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are dependent upon the continued services
of key members of our senior management and a number of key advisors and personnel. The loss of members of our senior management
team, key advisors or personnel, or our inability to attract or retain other qualified personnel or advisors, could have a material
adverse effect on our business, results of operations, and financial condition. We do not maintain &ldquo;key person&rdquo; insurance
for any of our executives or employees. In addition, several of the members of our executive management team are not subject to
non-competition agreements that restrict their ability to compete with us. Accordingly, the adverse effect resulting from the loss
of certain executives could be compounded by our inability to prevent them from competing with us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Although it will be subject to lock-up
agreements and other restrictions on trading, a portion of the equity of our management team will not contain other contractual
transfer restrictions at the time of this offering and may become tradable after the expiration of the 180-day lock-up agreement
with the underwriters. This liquidity may represent material wealth to such individuals and impact retention and focus of existing
key members of management.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Various factors outside our direct
control may adversely affect manufacturing and distribution of our product.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The manufacture and distribution of our
product is challenging. Changes that our contract manufacturers may make outside the purview of our direct control can have an
impact on our processes, quality of our product, and the successful delivery of products to our customers. Mistakes and mishandling
are not uncommon and can affect supply and delivery. Some of these risks include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">failure to manufacture in compliance with the required regulatory standards;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">transportation risk;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the cost and availability of components and supplies required by our contract manufacturers to
manufacture our products;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">delays in analytical results or failure of analytical techniques that we will depend on for quality
control and release of products;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">natural disasters, labor disputes, financial distress, raw material availability, issues with facilities
and equipment, or other forms of disruption to business operations affecting our manufacturers or their suppliers; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">latent defects that may become apparent after products have been released and that may result in
a recall of such products.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If any of these risks were to materialize,
our ability to provide our product to customers on a timely basis would be adversely impacted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may become dependent on a limited
number of contract manufacturers, some of them single-source and some of them in single locations, for our product, and the loss
of any of these contract manufacturers, or their inability to provide us with an adequate supply of products in a timely and cost-effective
manner, could materially adversely affect our business.</I></B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We rely on contract manufacturers to supply
our product. For us to be successful, our contract manufacturers must be able to provide us with product in substantial quantities,
in compliance with regulatory requirements, in accordance with agreed upon specifications, at acceptable prices, and on a timely
basis. We have a limited history with our current contract manufacturers and do not have long-term supply contracts with them.
We are in the process of identifying and evaluating new contract manufacturers for our products. The inability to find the required
contract manufacturers or the time required to switch contract manufacturers could adversely affect sales.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, our anticipated growth could
strain the ability of our contract manufacturers to deliver an increasingly large supply of product. Contract manufacturers often
experience difficulties in scaling up production, including financial issues, or problems with production yields and quality control
and assurance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 25 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->23<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We use a small number of contract manufacturers
for our instruments. Our dependence on such a limited number of contract manufacturers exposes us to risks, including, among other
things:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">contract manufacturers may fail to comply with regulatory requirements or make errors in manufacturing
that could negatively affect the safety or effectiveness of our product or cause delays in shipments of our product;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">some of our contract manufacturers have long lead times of 12 to 16 weeks and we may not be
                                                                    able to respond to unanticipated changes in customer orders, and if orders do not match forecasts, we or our contract
                                                                    manufacturers may have excess or inadequate inventory of materials and components;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">our contract manufacturers may be subject to price fluctuations due to a lack of long-term
supply arrangements for key components;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">our contract manufacturers may lose access to critical services and components, resulting
in an interruption in the manufacture, assembly and shipment of our product;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">we may experience delays in delivery by our contract manufacturers due to changes in demand from
us or their other customers;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">fluctuations in demand for products that our contract manufacturers manufacture for others may
affect their ability or willingness to deliver our product to us in a timely manner;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">our contract manufacturers may wish to discontinue supplying products or services to us for risk
management reasons;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">we may not be able to find new or alternative contract manufacturers in a timely manner if our
current contract manufacturers stop producing products; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">our contract manufacturers may encounter financial hardships
unrelated to our demand, which could inhibit their ability to fulfil our orders and meet our requirements.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If any one or more of these risks materialize,
it could significantly increase our costs and impact our ability to meet demand for our product. If we are unable to satisfy commercial
demand for our product in a timely manner, our ability to generate revenue would be impaired, market acceptance of our product
could be adversely affected, and customers may instead purchase or use our competitors&rsquo; products. Additionally, we could
be forced to seek alternative sources of supply.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Because of the nature of our internal quality
control requirements, regulatory requirements, and the custom and proprietary nature of our product, we may not be able to quickly
engage additional or replacement contract manufacturers for our product and accessories. We may also be required to assess any
potential new contract manufacturer&rsquo;s compliance with all applicable regulations and guidelines, which could further impede
our ability to obtain our product in a timely manner. As a result, we could incur increased product costs, experience delays in
deliveries of our product, suffer damage to our reputation, and experience an adverse effect on our business and financial results.
Failure of any of our contract manufacturers to meet our product demand level would limit our ability to meet our sales commitments
to our customers and could have a material adverse effect on our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We may also have difficulty obtaining similar
product from other contract manufacturers that are acceptable to the FDA and the failure of our contract manufacturers to comply
with strictly enforced regulatory requirements could expose us to delays in obtaining clearances or approvals, regulatory action
including warning letters, product recalls, termination of distribution, product seizures, civil, administrative, or criminal penalties.
We could incur delays while we locate and engage qualified alternative contract manufacturers, and we may be unable to engage alternative
contract manufacturers on favorable terms or at all. Any such disruption or increased expenses could harm our commercialization
efforts and adversely affect our ability to generate sales.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 26 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, we expect that most of our
contract manufacturers will operate at a facility in a single location and substantially all their inventory of component supplies
and finished goods will be held at these locations. We, and our contract manufacturers, will take precautions to safeguard facilities,
including acquiring insurance, adopting health and safety protocols, and utilizing off-site storage of computer data. However,
vandalism, terrorism, or a natural or other disaster, such as an earthquake, fire, or flood, could damage or destroy equipment
or component supplies or finished product, cause substantial delays in our operations, result in the loss of key information, and
cause us to incur additional expenses. Our insurance may not cover our losses in any particular case. In addition, regardless of
the level of insurance coverage, damage to our or our contract manufacturers&rsquo; facilities could harm our business, financial
condition, and operating results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>As our sales grow, our contract manufacturers
may encounter problems or delays in the manufacturing of our product or fail to meet certain regulatory requirements which could
result in an adverse effect on our business and financial results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To become profitable, our contract manufactures
must manufacture our product in adequate quantities in compliance with regulatory requirements and at an acceptable cost. Increasing
their capacity to manufacture and inspect our product may require them to improve internal efficiencies or require us to re-design
or change the specifications of our product. Our contract manufacturers may encounter several difficulties in increasing this capacity,
including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>managing production yields;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>maintaining quality control and assurance;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">providing component and service availability;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">maintaining adequate control policies and procedures;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">hiring and retaining qualified personnel; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">complying with state, federal, and foreign regulations.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If we are unable to satisfy commercial
demand for The CATAMARAN System due to our contract manufacturer&rsquo;s inability to manufacture and inspect our product, our
ability to generate revenue would be impaired, market acceptance of our product could be adversely affected and customers may instead
purchase or use our competitors&rsquo; products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>The size and future growth in the
market for the SI-Joint fixation market have not been established based on market reports and our estimates are based on our own
review and analysis of public information and may be smaller than we estimate, possibly materially. In addition, our estimates
of cost savings to the economy and healthcare system as a result of The CATAMARAN System procedure are based on our internal estimates
and market research and could also be smaller than we estimate, possibly materially. If our estimates and projections overestimate
the size of this market or cost savings, our sales growth may be adversely affected.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are not aware of an independent third-party
study that reliably reports the potential market size for the SI-Joint fixation market. Therefore, our estimates of the size and
future growth in the market for The CATAMARAN System product, including cost savings to the economy overall, including patients
and employers, and to the healthcare system and the number of people currently suffering from lower back pain who may benefit from
and be amenable to our procedure, is based on a number of internal and third-party studies, surveys, reports, and estimates. While
we believe these factors have historically provided and may continue to provide us with effective tools in estimating the total
market for our product and procedures and health cost savings, these estimates may not be correct and the conditions supporting
our estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. For example, we have
consulted with our clinical advisors, our national distributor and utilized public information as the basis for our market projections.
Additionally, the surveys we have conducted are based on a small number of respondents and are not statistically significant and
may have other limitations. The actual incidence of lower back pain, and the actual demand for our product or competitive products,
could differ materially from our projections if our assumptions and estimates are incorrect. As a result, our estimates of the
size and future growth in the market for our product may prove to be incorrect. In addition, actual health cost savings to the
healthcare system as a result of The CATAMARAN System procedure may materially differ from those presented in this prospectus.
If the actual number of people with lower back pain who would benefit from The CATAMARAN System and the size and future growth
in the market and related costs savings to the healthcare system is smaller than we have estimated, it may impair our projected
sales growth and have an adverse impact on our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>


<!-- Field: Page; Sequence: 27 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->25<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>In the future our product may become
obsolete, which would negatively affect operations and financial condition.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The medical device industry is characterized
by rapid and significant change. There can be no assurance that other companies will not succeed in developing or marketing devices,
and products that are more effective than The CATAMARAN System or that would render The CATAMARAN System obsolete or non-competitive.
Additionally, new surgical procedures, medications and other therapies could be developed that replace or reduce the importance
of our product. Accordingly, our success will depend in part on our ability to respond quickly to medical and changes through the
development and introduction of new products. Product development involves a high degree of risk and there can be no assurance
that our new product development efforts will result in any commercially successful products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If we experience significant disruptions
in our information technology systems</I></B>, <B><I>our business, results of operations, and financial condition could be adversely
affected.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The efficient operation of our business
depends on our information technology systems. We will rely on our information technology systems to effectively manage:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">sales and marketing, accounting, and financial functions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">inventory management;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">engineering and product development tasks; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">our research and development data.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our information technology systems are
vulnerable to damage or interruption from:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">earthquakes, fires, floods, and other natural disasters;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">terrorist attacks and attacks by computer viruses or hackers;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">power losses; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">computer systems, or Internet, telecommunications, or data network failures.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The failure of our information technology
systems to perform as we anticipate or our failure to effectively implement new systems could disrupt our entire operation and
could result in decreased sales, increased overhead costs, excess inventory and product shortages, and legal liability issues,
all of which could have a material adverse effect on our reputation, business, results of operations, and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may seek to grow our business
through acquisitions of or investments in new or complementary businesses, products or technologies, and the failure to manage
acquisitions or investments, or the failure to integrate them with our existing business, could have a material adverse effect
on us.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 28 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->26<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time, we expect to consider
opportunities to acquire or make investments in other technologies, products, and businesses that may enhance our capabilities,
complement our current product, or expand the breadth of our markets or customer base. Potential and completed acquisitions and
strategic investments involve numerous risks, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">problems assimilating the purchased technologies, products, or business operations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">issues maintaining uniform standards, procedures, controls, and policies;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">unanticipated costs and liabilities associated with acquisitions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">diversion of management&rsquo;s attention from our core business;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">adverse effects on existing business relationships with suppliers and customers;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">risks associated with entering new markets in which we have limited or no experience;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">potential loss of key employees of acquired businesses; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">increased legal and accounting compliance costs.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have no current commitments with respect
to any acquisition or investment. We do not know if we will be able to identify acquisitions, we deem suitable, whether we will
be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully
integrate any acquired business, product, or technology into our business or retain any key personnel, suppliers, or distributors.
Our ability to successfully grow through acquisitions depends upon our ability to identify, negotiate, complete, and integrate
suitable target businesses and to obtain any necessary financing. These efforts could be expensive and time consuming and may disrupt
our ongoing business and prevent management from focusing on our operations. If we are unable to successfully integrate any acquired
businesses, products, or technologies effectively, our business, results of operations, and financial condition will be materially
adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may enter into collaborations,
in-licensing arrangements, joint ventures, strategic alliances, or partnerships with third-parties that may not result in the development
of commercially viable products or the generation of significant future revenue.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the ordinary course of our business,
we may enter collaborations, in-licensing arrangements, joint ventures, strategic alliances, partnerships, or other arrangements
to develop products and to pursue new markets. We have not entered any collaboration arrangements to date. Proposing, negotiating,
and implementing collaborations, in-licensing arrangements, joint ventures, strategic alliances, or partnerships may be a lengthy
and complex process. Other companies, including those with substantially greater financial, marketing, sales, technology, or other
business resources, may compete with us for these opportunities or arrangements. We may not identify, secure, or complete any such
transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all. We have limited institutional
knowledge and experience with respect to these business development activities, and we may also not realize the anticipated benefits
of any such transaction or arrangement. These collaborations may not result in the development of products that achieve commercial
success or result in significant revenue and could be terminated prior to developing any products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Additionally, we may not be able to exercise
sole decision-making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses
on decisions, and our future collaborators may have economic or business interests or goals that are, or that may become, inconsistent
with our business interests or goals. It is possible that conflicts may arise with our collaborators, such as conflicts concerning
the achievement of performance milestones, or the interpretation of significant terms under any agreement, such as those related
to financial obligations or the ownership or control of intellectual property developed during the collaboration. If any conflicts
arise with any future collaborators, they may act in their self- interest, which may be adverse to our best interest, and they
may breach their obligations to us. In addition, we may have limited control over the amount and timing of resources that any future
collaborators devote to our or their future products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 29 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->27<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Disputes between us and our collaborators
may result in litigation or arbitration which would increase our expenses and divert the attention of our management. Further,
these transactions and arrangements will be contractual in nature and will generally be terminable under the terms of the applicable
agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or
may need to purchase such rights at a premium. If we enter into in-bound intellectual property license agreements, we may not be
able to fully protect the licensed intellectual property rights or maintain those licenses. Future licensors could retain the right
to prosecute and defend the intellectual property rights licensed to us, in which case we would depend on the ability of our licensors
to obtain, maintain and enforce intellectual property protection for the licensed intellectual property. These licensors may determine
not to pursue litigation against other companies or may pursue such litigation less aggressively than we would. Further, entering
into such license agreements could impose various diligence, commercialization, royalty, or other obligations on us. Future licensors
may allege that we have breached our license agreement with them, and accordingly seek to terminate our license, which could adversely
affect our competitive business position and harm our business prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We are increasingly dependent on
information technology, and our systems and infrastructure face certain risks, including cybersecurity and data leakage risks.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Significant disruptions to our
information technology systems or breaches of information security could adversely affect our business. In the ordinary
course of business, we will collect, store and transmit large amounts of confidential information, and it is critical that we
do so in a secure manner to maintain the confidentiality and integrity of such information. We have also outsourced
significant elements of our information technology infrastructure; as a result, we manage independent vendor relationships
with third parties who are responsible for maintaining significant elements of our information technology systems and
infrastructure and who may or could have access to our confidential information. The size and complexity of our information
technology systems, and those of our third-party vendors, make such systems potentially vulnerable to service interruptions
and security breaches from inadvertent or intentional actions by our employees, partners or vendors. These systems are also
vulnerable to attacks by malicious third parties and may be susceptible to intentional or accidental physical damage to the
infrastructure maintained by us or by third parties. Maintaining the secrecy of confidential, proprietary and/or trade secret
information is important to our competitive business position. While we have taken steps to protect such information and have
invested in systems and infrastructures to do so, there can be no guarantee that our efforts will prevent service
interruptions or security breaches in our systems or the unauthorized or inadvertent wrongful use or disclosure of
confidential information that could adversely affect our business operations or result in the loss, dissemination or misuse
of critical or sensitive information. A breach our security measures or the accidental loss, inadvertent disclosure,
unapproved dissemination, misappropriation or misuse of trade secrets, proprietary information or other confidential
information, whether as a result of theft, hacking, fraud, trickery or other forms of deception, or for any other cause,
could enable others to produce competing products, use our proprietary technology or information, and/or adversely affect our
business position. Further, any such interruption, security breach, loss or disclosure of confidential information could
result in financial, legal, business and reputational harm to us and could have a material adverse effect on our business,
financial position, results of operations and/or cash flow.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Risks Related to Our Legal and Regulatory
Environment</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We and our contract manufacturers
are subject to extensive governmental regulation both in the United States and abroad, and failure to comply with applicable requirements
could cause our business to suffer.</I></B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I></I></B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The medical device industry is regulated
extensively by governmental authorities, principally the FDA and corresponding state and foreign regulatory agencies. The FDA and
other U.S. and foreign governmental agencies regulate, among other things, with respect to medical devices:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">design, development, and manufacturing;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">testing, labeling, content, and language of instructions for use and storage;</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">clinical trials;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 30 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->28<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">product safety;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">marketing, sales, and distribution;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">premarket clearance and approval;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">conformity assessment procedures;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">record keeping procedures;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">advertising and promotion;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">compliance with good manufacturing practices requirements;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">recalls and field safety corrective actions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">post-market surveillance, including reporting of deaths or serious injuries and malfunctions that,
if they were to recur, could lead to death or serious injury;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">post-market approval studies; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">product import and export.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The regulations to which we are subject
are complex and have tended to become more stringent over time. Regulatory changes could result in restrictions on our ability
to carry on or expand our operations, difficulties achieving new product clearances, higher than anticipated costs or lower than
anticipated sales.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Before we can market or sell a new regulated
product or make a significant modification to an existing product in the United States, with very limited exception, we must obtain
either clearance under Section&nbsp;510(k) of the FDCA for Class&nbsp;II devices or approval of a premarket approval, or PMA, application
from the FDA for a Class&nbsp;III device. In the 510(k) clearance process, the FDA must determine that a proposed device is &ldquo;substantially
equivalent&rdquo; to a device legally on the market, known as a &ldquo;predicate&rdquo; device, with respect to intended use, technology,
and safety and effectiveness, in order to clear the proposed device for marketing. Clinical data is sometimes required to support
substantial equivalence. The PMA pathway requires an applicant to demonstrate the safety and effectiveness of the device based,
in part, on extensive data, including, but not limited to, technical, preclinical, clinical trial, manufacturing, and labeling
data. The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life-sustaining, life-supporting,
or implantable devices. Products that are approved through a PMA application generally need FDA approval before they can be modified.
Similarly, some modifications made to products cleared through a 510(k) may require a new 510(k). Both the 510(k) and PMA processes
can be expensive and lengthy and require the payment of significant fees, unless exempt. The FDA&rsquo;s 510(k) clearance process
usually takes from three to 12 months, but may last longer. The process of obtaining a PMA is much more costly and uncertain than
the 510(k) clearance process and generally takes from one to three years, or even longer, from the time the application is submitted
to the FDA until an approval is obtained. The process of obtaining domestic and international regulatory clearances or approvals
to market a medical device can be costly and time consuming, and we may not be able to obtain these clearances or approvals on
a timely basis, if at all.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the United States, all of the components to The CATAMARAN System
have either received premarket clearance under Section&nbsp;510(k) of the FDCA or are exempt from premarket review. If
the FDA requires us to go through a lengthier, more rigorous examination for future products or modifications to existing products
than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline.
In addition, the FDA may determine that future products will require the more costly, lengthy, and uncertain PMA process. Although
we do not currently market any devices under PMA, the FDA may demand that we obtain a PMA prior to marketing certain of our future
products. In addition, if the FDA disagrees with our determination that a product we currently market is subject to an exemption
from premarket review, the FDA may require us to submit a 510(k) or PMA in order to continue marketing the product. Further, even
with respect to those future products where a PMA is not required, we cannot assure you that we will be able to obtain the 510(k)
clearances with respect to those products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 31 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->29<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The FDA can delay, limit or deny clearance
or approval of a device for many reasons, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">we may not be able to demonstrate to the FDA&rsquo;s satisfaction that our product is safe and
effective for their intended users;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the data from our pre-clinical studies and clinical trials may be insufficient to support clearance
or approval, where required; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the manufacturing process or facilities we use may not meet applicable requirements.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, the FDA may change its clearance
and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or
delay clearance or approval of our product under development or impact our ability to modify our currently approved or cleared
product on a timely basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Any delay in, or failure to receive or
maintain, clearance or approval for our product under development could prevent us from generating revenue from these products
or achieving profitability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, even after we have obtained
the proper regulatory clearance or approval to market a product, the FDA has the power to require us to conduct post-market surveillance
on our product. These studies can be very expensive and time consuming to conduct. Failure to comply with those studies in a timely
manner could result in the revocation of the 510(k) clearance for a product that is subject to such surveillance and the recall
or withdrawal of the product, which could prevent us from generating sales from that product in the United States.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Additionally, as part of the conformity
assessment process, medical device manufacturers must carry out a clinical evaluation of their medical devices to verify that they
comply with the relevant Essential Requirements covering safety and performance. A clinical evaluation includes an assessment of
whether a medical device&rsquo;s performance is in accordance with its intended use and that the known and foreseeable risks linked
to the use of the device under normal conditions are minimized and acceptable when weighed against the benefits of its intended
purpose. The clinical evaluation conducted by the manufacturer must also address any clinical claims, the adequacy of the device
labeling and information (particularly claims, contraindications, precautions/ warnings) and the suitability of related Instructions
for Use. This assessment must be based on clinical data, which can be obtained from (i)&nbsp;clinical studies conducted on the
devices being assessed; (ii)&nbsp;scientific literature from similar devices whose equivalence with the assessed device can be
demonstrated; or (iii)&nbsp;both clinical studies and scientific literature.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The FDA and other regulatory authorities
have broad enforcement powers. Regulatory enforcement or inquiries, or other increased scrutiny on us, could dissuade some surgeons
from using our product and adversely affect our reputation and the perceived safety and effectiveness of our product.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Failure to comply with applicable regulations
could jeopardize our ability to sell our product and result in enforcement actions such as:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">warning letters;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">fines;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">injunctions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">civil penalties;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">termination of distribution;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">recalls or seizures of products;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 32 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->30<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">delays in the introduction of products into the market;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">total or partial suspension of production;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">facility closures;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>refusal of the FDA other regulators to grant future clearances or approvals</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">in the most serious cases, criminal penalties.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Adverse action by an applicable regulatory
agency the FDA could result in inability to produce our product in a cost-effective and timely manner, or at all, decreased sales,
higher prices, lower margins, additional unplanned costs or actions, damage to our reputation, and could have material adverse
effect on our reputation, business, results of operations, and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>We and our national distributor along
with their independent sales representatives must comply with U.S. federal and state fraud and abuse laws, including those relating
to physician kickbacks and false claims for reimbursement.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Healthcare providers, distributors, physicians,
and third-party payors play a primary role in the distribution, recommendation, ordering, and purchasing of any implant or other
medical device for which we have or obtain marketing clearance or approval. Through our arrangements with customers and third-party
payors, we are exposed to the risk that our employees, independent contractors, principal investigators, consultants, vendors,
or independent sales representatives may engage in fraudulent or other illegal activity. Misconduct by these parties could include,
among other infractions or violations, intentional, reckless and/or negligent conduct or unauthorized activity that violates FDA
regulations, manufacturing standards, federal and state healthcare fraud and abuse laws and regulations, laws that require the
true, complete, and accurate reporting of financial information or data, other commercial or regulatory laws or requirements, and
equivalent foreign rules. We plan to implement a compliance program, Code of Conduct, and associated policies and procedures, but
it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we plan
to take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting
us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or
regulations, and government authorities may conclude that our business practices do not comply with applicable fraud and abuse
or other healthcare laws and regulations or guidance despite our good faith efforts to comply.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There are numerous U.S. federal and state
laws pertaining to healthcare fraud and abuse, including anti-kickback and false claims laws. Our relationships and our distributors&rsquo;
relationships with surgeons, other healthcare professionals, and hospitals are subject to scrutiny under these laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Healthcare fraud and abuse laws and related
regulations are complex, and even minor irregularities can potentially give rise to claims that a statute or prohibition has been
violated. The laws that may affect our ability to operate include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully
soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either
the referral of an individual for, or the purchase, order or recommendation of, items or services for which payment may be made,
in whole or in part, under federal healthcare programs, such as the Medicare and Medicaid programs;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the federal False Claims Act, which prohibits, among other things, individuals or entities from
knowingly presenting, or causing to be presented, false or fraudulent claims for payment of government funds; knowingly making,
using, or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease, or conceal an
obligation to pay money to the federal government. A claim including items or services resulting from a violation of the federal
Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. There are also criminal penalties
for making or presenting a false or fictitious or fraudulent claim to the federal government;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 33 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->31<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the federal Health Insurance Portability and Accountability Act of 1996, which imposes criminal
and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud
any healthcare benefit program including private third-party payors, or knowingly and willfully falsifying, concealing, or covering
up a material fact or making a materially false, fictitious, or fraudulent statement or representation, or making or using any
false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection
with the delivery of or payment for healthcare benefits, items, or services;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics
and medical supplies for which payment is available under Medicare, Medicaid, or the Children&rsquo;s Health Insurance Program
to report annually to the Centers for Medicare&nbsp;&amp; Medicaid Services, or CMS, information related to payments or other &ldquo;transfers
of value&rdquo; made to physicians and teaching hospitals, and requires applicable manufacturers to report annually to CMS ownership
and investment interests held by physicians and their immediate family members and payments or other &ldquo;transfers of value&rdquo;
to such physician owners; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">analogous state law equivalents of each of the above federal laws, such as anti-kickback and false
claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws
that require device companies to comply with the industry&rsquo;s voluntary compliance guidelines and the applicable compliance
guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other
potential referral sources; state beneficiary inducement laws, and state laws that require device manufacturers to report information
related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, many of
which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If we or our employees are found to have
violated any of the above laws we may be subjected to administrative, civil and criminal penalties, including imprisonment, exclusion
from participation in federal healthcare programs, such as Medicare and Medicaid, and significant fines, monetary penalties and
damages, and damage to our reputation. Additional information about these laws is provided in &ldquo;Business&mdash;Regulation.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We have entered into consulting agreements
with surgeons who are also customers. We anticipate entering into additional agreements with surgeons who use our product as we
move into full commercialization. The primary mission of these surgeon advisors is research and development and surgeon education.
Medical device technology development requires thoughtful surgeon input from experienced healthcare professionals. Medical device
surgeon education requires experienced faculty for didactic and anatomic lab activities in a peer-to-peer setting. We believe
these engagements will allow us to successfully meet the expectations of the physician community. In addition, a small number
of surgeons (which are or may become customers) own less than 1.0% of our stock, invested in convertible notes, or granted stock
options which they either purchased in an arm&rsquo;s length transaction on terms identical to those offered to others or received
from us as fair market value consideration for consulting services performed. While all of these transactions were structured
with the intention of complying with all applicable laws, including the federal Anti-Kickback Statute, state anti-kickback laws
and other applicable laws, to the extent applicable, it is possible that regulatory agencies may view these transactions as prohibited
arrangements that must be restructured, or discontinued, or for which we could be subject to significant penalties. We would be
materially and adversely affected if regulatory agencies interpret our financial relationships with surgeons who order our product
to be in violation of applicable laws and we were unable to comply with such laws, which could subject us to, among other things,
monetary penalties for non-compliance, the cost of which could be substantial.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In certain cases, federal and state authorities
pursue actions for false claims on the basis that manufacturers and distributors are promoting unapproved, or &ldquo;off-label&rdquo;
uses of their products. Pursuant to FDA regulations, we can only market our product for cleared or approved uses. Although surgeons
are permitted to use medical devices for indications other than those cleared or approved by the FDA, we are prohibited from promoting
products for &ldquo;off-label&rdquo; uses. We market our product and provide promotional materials and training programs to surgeons
regarding the use of our product. If it is determined that our marketing, promotional materials or training programs constitute
promotion of unapproved uses, we could be subject to significant fines in addition to regulatory enforcement actions, including
the issuance of a warning letter, injunction, seizure, criminal penalty, and damage to our reputation. Federal and state authorities
also pursue actions for false claims based upon improper billing and coding advice or recommendations, as well as decisions related
to the medical necessity of procedures, including the site-of-service where procedures are performed. Actions under the federal
False Claims Act may also be brought by whistleblowers under its <I>qui tam</I> provisions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 34 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->32<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To enforce compliance with the
federal laws, the U.S. Department of Justice has increased its scrutiny of interactions between healthcare companies and
healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the
healthcare industry. Dealing with investigations can be time and resource consuming and can divert management&rsquo;s
attention from the business. Additionally, if a healthcare company settles an investigation with the Department of Justice or
other law enforcement agencies, it may need to agree to additional onerous compliance and reporting requirements as part of a
consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise
have an adverse effect on our business. Even if we are not determined to have violated these laws, government investigations
into these issues typically require the expenditure of significant resources and generate negative publicity, which could
harm our financial condition and divert resources and the attention of our management from operating our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The scope and enforcement of these laws
is uncertain and subject to rapid change. The shifting compliance environment and the need to build and maintain robust and expandable
systems to comply with different compliance and/or reporting requirements in multiple jurisdictions increase the possibility that
we may run afoul of one or more of the requirements or that federal or state regulatory authorities might challenge our current
or future activities under these laws. Additionally, we cannot predict the impact of any changes in these laws, whether or not
retroactive.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our failure to adequately protect
personal information in compliance with evolving legal requirements could harm our business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the ordinary course of our business, we
plan to collect and store sensitive data, including legally protected personally identifiable information. We may collect this
kind of information during the course of future clinical trials and for possible post-marketing safety vigilance, helping enable
surgeons and their patients to pursue claims for reimbursement for procedures using The CATAMARAN System and servicing potential
warranty claims.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There are a number of state, federal, and
international laws protecting the privacy and security of health information and personal data. These data protection and privacy-related
laws and regulations are evolving and may result in ever-increasing regulatory and public scrutiny of companies&rsquo; data practices
and escalating levels of enforcement and sanctions. As part of the American Recovery and Reinvestment Act 2009, or ARRA, Congress
amended the privacy and security provisions of the Health Insurance Portability and Accountability Act, or HIPAA. HIPAA imposes
certain requirements regarding the privacy, security, use, and disclosure of an individual&rsquo;s protected health information,
or PHI, by certain health care providers, health care clearinghouses, and health insurance plans, collectively referred to as &ldquo;covered
entities,&rdquo; and their &ldquo;business associates,&rdquo; or subcontractors who provide services to covered entities that involve
the creation, use, maintenance, or disclosure of PHI. ARRA included significant increases in the penalties for improper use or
disclosure of an individual&rsquo;s PHI under HIPAA and extended enforcement authority to state attorneys general. The amendments
also created notification requirements applicable to covered entities and business associates in certain cases when PHI in their
control has been inappropriately accessed or disclosed. In the case of a breach of unsecured PHI, covered entities may be required
to provide notification to individuals affected by the breach, federal regulators, and, in some cases, local and national media.
In addition to HIPAA, most states have laws requiring notification of affected individuals and state regulators in the event of
a breach of &ldquo;personal information,&rdquo; which is a broader class of information than the PHI protected by HIPAA. Certain
states also have data privacy requirements applicable to individually identifiable health information. Privacy laws in different
states may contain different requirements, and such laws may not be pre-empted by HIPAA, which could complicate our efforts to
comply.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, even when HIPAA does not apply,
according to the FTC, failing to take appropriate steps to keep consumers&rsquo; personal information secure constitutes unfair
acts or practices in or affecting commerce in violation of Section&nbsp;5(a) of the FTCA, 15 U.S.C &sect; 45(a). The FTC expects
a company&rsquo;s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information
it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
Medical data is considered sensitive data that merits stronger safeguards. The FTC&rsquo;s guidance for appropriately securing
consumers&rsquo; personal information is similar to what is required by the HIPAA Security Rule.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 35 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->33<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our failure to comply with applicable laws
and regulations, or to protect such data, could result in enforcement actions against us, including fines, imprisonment of company
officials and public censure, claims for damages by end-customers, and other affected individuals, and the imposition of integrity
obligations and agency oversight, damage to our reputation, and loss of goodwill, any of which could harm on our operations, financial
performance, and business. Evolving and changing definitions of personal data and personal information, within the United States,
and elsewhere, may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that
may involve the sharing of data. Moreover, if the relevant laws and regulations change, or are interpreted and applied in a manner
that is inconsistent with our data practices or the operation of our product, or if we expand into new regions and are required
to comply with new requirements, we may need to expend resources in order to change our business operations, data practices, or
the manner in which our product operates. Even the perception of privacy concerns, whether or not valid, may harm our reputation
and inhibit adoption of our product.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Even if our product is approved by regulatory
authorities if our contract manufacturers fail to comply with ongoing FDA, or if we experience unanticipated problems with our
products, these products could be subject to restrictions or withdrawal from the market.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Any product for which we obtain regulatory
clearance or approval, , and the manufacturing processes, reporting requirements, post-approval clinical data, and promotional
activities for such product, will be subject to continued regulatory review, oversight and periodic inspections by the FDA and
other domestic bodies. In particular, we and our contract manufacturers are required to comply with FDA&rsquo;s Quality System
Regulations (&ldquo;QSR&rdquo;) for the manufacture of our product and other regulations which cover the methods and documentation
of the design, testing, production, control, quality assurance, labeling, packaging, storage, and shipping of any product for which
we obtain regulatory clearance or approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The failure by us or one of our contract manufacturers
to comply with applicable statutes and regulations, or the failure to timely and adequately respond to any adverse inspectional
observations or product safety issues, could result in, among other things, any of the following enforcement actions:</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">untitled letters, warning letters, fines, injunctions, consent, and civil penalties;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">unanticipated expenditures to address or defend such actions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">customer notifications for repair, replacement, refunds;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">recall, detention, or seizure of our product;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">operating restrictions or partial suspension or total shutdown of production;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">refusing or delaying our requests for 510(k) clearance or premarket approval and conformity assessments
of new products or modified products;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">limitations on the intended uses for which the product may be marketed;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">operating restrictions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">withdrawing 510(k) clearances or PMA approvals that have already been granted;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">criminal prosecution.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 36 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->34<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, we may be required to conduct
costly post-market testing and surveillance to monitor the safety or effectiveness of our product, and we must comply with medical
device reporting requirements, including the reporting of adverse events and malfunctions related to our product. Later discovery
of previously unknown problems with our product, including unanticipated adverse events or adverse events of unanticipated severity
or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR, may result in changes to labeling,
restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls,
a requirement to repair, replace, or refund the cost of any medical device we manufacture or distribute, fines, suspension, variation,
or withdrawal of regulatory approvals product seizures, injunctions, or the imposition of civil, administrative, or criminal penalties
which would adversely affect our business, operating results, and prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If the FDA determines that our promotional
materials, labeling, training or other marketing or educational activities constitute promotion of an unapproved use, it could
request that we cease or modify our training or promotional materials or subject us to regulatory enforcement actions. It is also
possible that other federal, state or foreign enforcement authorities might take action if they consider our training or other
promotional materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under
other statutory authorities, such as laws prohibiting false or fraudulent claims for payment of government funds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If any of these actions were to occur it
would harm our reputation and cause our product sales and profitability to suffer and may prevent us from generating revenue. Furthermore,
our key component suppliers may not currently be or may not continue to be in compliance with all applicable regulatory requirements,
which could result in our failure to produce our product on a timely basis and in the required quantities, if at all.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The FDA has not yet inspected our facility
but we expect an inspection in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Our employees, independent contractors,
consultants, contract manufacturers, and national distributor along with their independent sales representatives may engage in
misconduct or other improper activities, relating to regulatory standards and requirements.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are exposed to the risk that our employees,
independent contractors, consultants, contract manufacturers, and national distributor along with their independent sales representatives
may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or
negligent conduct or disclosure of unauthorized activities to us that violates FDA regulations, including those laws requiring
the reporting of true, complete and accurate information to the FDA, manufacturing standards, federal and state healthcare laws
and regulations, and laws that require the true, complete and accurate reporting of financial information or data. These laws and
regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer
incentive programs, and other business arrangements. Misconduct by these parties could also involve the improper use of individually
identifiable information, including, without limitation, information obtained in the course of clinical trials, which could result
in regulatory sanctions and serious harm to our reputation. We have a compliance program, code of conduct and associated policies
and procedures, but it is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent
this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations
or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are
instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant
impact on our business, including the imposition of significant civil, criminal, and administrative penalties, including, without
limitation, damages, fines, disgorgement of profits, imprisonment, exclusion from participation in government healthcare programs,
such as Medicare and Medicaid, and the curtailment or restructuring of our operations.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may be subject to enforcement
action, including fines, penalties or injunctions, if we are determined to be engaging in the off-label promotion of our product.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our promotional materials and training
methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of off-label
use. Physicians may use our product off-label, as the FDA does not restrict or regulate a physician&rsquo;s choice of treatment
within the practice of medicine. In the United States, the full indication for The CATAMARAN System is: &ldquo;The Tenon Catamaran
Sacroiliac Joint Fixation System (CAT SIJ Fixation System) is intended for sacroiliac joint fusion for conditions including sacroiliac
joint disruptions and degenerative sacroiliitis. Contraindications are patients with the following conditions: skeletally immature
spines; deformities; severe osteoporosis; morbid obesity, tumor resection and active infection at treatment site.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 37 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->35<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We believe that the specific surgical procedures
for which our product are marketed fall within the scope of the surgical applications that have been cleared by the FDA. However,
if the FDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that
we modify our training or promotional materials, require us to stop promoting our product for those specific procedures until we
obtain FDA clearance or approval for them, or subject us to regulatory or enforcement actions, including the issuance of an untitled
letter, a warning letter, injunction, seizure, civil fines, and criminal penalties. It is also possible that other federal, state
or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion
of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting
false or fraudulent claims for payment of government fund. In that event, our reputation could be damaged and adoption of the product
would be impaired. Although our policy is to refrain from statements that could be considered off-label promotion of our product,
the FDA or another regulatory agency could disagree and conclude that we have engaged in off-label promotion. In addition, the
off-label use of our product may increase the risk of injury to patients, and, in turn, the risk of product liability claims. Product
liability claims are expensive to defend and could divert our management&rsquo;s attention, result in substantial damage awards
against us and harm our reputation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We are required to report certain
malfunctions, deaths, and serious injuries associated with our product, which can result in voluntary corrective actions or agency
enforcement actions.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Further, under the FDA&rsquo;s medical
device reporting, regulations, we are required to report to the FDA any information that our product may have caused or contributed
to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or
contribute to death or serious injury. If we fail to report these events to the FDA within the required timeframes, or at all,
FDA could take enforcement action against us. Any such adverse event involving our product or repeated product malfunctions may
result in a voluntary or involuntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection
or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit could
divert managerial and financial resources, impair our ability to manufacture our product in a cost-effective and timely manner,
and have an adverse effect on our reputation, results of operations, and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Any adverse event involving our product
in the United States could result in future voluntary corrective actions, such as recalls, including corrections, or customer notifications,
or agency action, such as inspection or enforcement actions. If malfunctions do occur, we may be unable to correct the malfunctions
adequately or prevent further malfunctions, in which case we may need to cease manufacture and distribution of the affected products,
initiate voluntary recalls, and redesign the products. Regulatory authorities may also take actions against us, such as ordering
recalls, imposing fines, or seizing the affected products. Any corrective action, whether voluntary or involuntary, will require
the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial
results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>A recall of our product, either voluntarily
or at the direction of the FDA or the discovery of serious safety issues or malfunctions with our product, can result in voluntary
corrective actions or agency enforcement actions, which could have a significant adverse impact on us.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The FDA has the authority to require the
recall of commercialized products in the event of material deficiencies or defects in design or manufacture or in the event that
a product poses an unacceptable risk to health. Manufacturers may, under their own initiative, recall a product if any material
deficiency in a device is found.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the case of the FDA, the authority to
require a recall must be based on an FDA finding that there is an unreasonable risk of substantial public harm. In addition, foreign
governmental bodies have the authority to require the recall of our product in the event of material deficiencies or defects in
design or manufacture. A government-mandated or voluntary recall by us or one of the independent sales representatives could occur
as a result of an unacceptable risk to health, component failures, manufacturing errors, design or labeling defects, or other deficiencies
and issues. Recalls of any of our product would divert managerial and financial resources and have an adverse effect on our reputation,
results of operations, and financial condition, which could impair our ability to produce our product in a cost-effective and timely
manner in order to meet our customers&rsquo; demands. We may also be required to bear other costs or take other actions that may
have a negative impact on our future sales and our ability to generate profits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 38 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->36<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The FDA requires that certain classifications
of recalls be reported to FDA within 10 working days after the recall is initiated. Companies are required to maintain certain
records of recalls, even if they are not reportable to the FDA. We may initiate voluntary recalls involving our product in the
future that we determine do not require notification of the FDA. If the FDA disagrees with our determinations, they could require
us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect
our sales. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Modifications to our product may
require new 510(k) clearances or premarket approvals may require us to cease marketing or recall the product until clearances</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Any modification to a 510(k)-cleared device
that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design,
or manufacture, requires a new 510(k) clearance or, possibly, a PMA. The FDA requires every manufacturer make and document this
determination in the first instance. A manufacturer may determine that a modification could not significantly affect safety or
effectiveness and does not represent a major change in its intended use, so that no new 510(k) clearance is necessary. FDA may
review any manufacturer&rsquo;s decision and may not agree with our decisions regarding whether new clearances or approvals are
necessary. The FDA may also on its own initiative determine that a new clearance or approval is required.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have modified our product and have determined
based on our review of the applicable FDA guidance that a new 510(k) clearances or PMAs is not required. If the FDA disagrees with
our determination and requires us to submit new 510(k) clearances or PMAs for modifications to our previously cleared products
for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall
the modified product until we obtain clearance or approval, and we may be subject to significant enforcement action, regulatory
fines, or penalties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If a manufacturer determines that a modification
to an FDA-cleared device could significantly affect its safety or effectiveness or would constitute a major change in its intended
use, then the manufacturer must file for a new 510(k) clearance or possibly a premarket approval application. Where we determine
that modifications to our product require a new 510(k) clearance or premarket approval application, we may not be able to obtain
those additional clearances or approvals for the modifications or additional indications in a timely manner, or at all. FDA&rsquo;s
ongoing review of the 510(k) programs may make it more difficult for us to make modifications to our previously cleared products,
either by imposing more strict requirements on when a new 510(k) for a modification to a previously cleared product must be submitted
or applying more onerous review criteria to such submissions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Clinical trials necessary to support a
510(k) or reimbursement may require the enrolment of large numbers of patients, and suitable patients may be difficult to identify
and recruit. Delays or failures in our clinical trials could affect third party reimbursement as many of the payors want to see
Peer reviewed articles to maintain coverage and lack of changes in reimbursement could materially slow down our commercial efforts
and effort our revenue projections.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>The results of our future clinical
trials may not support our product candidate claims or may result in the discovery of adverse side effects.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If our anticipated clinical trials are
initiated and completed as planned, we cannot be certain that their results will support our product marketing claims or third
party reimbursors will agree with our conclusions regarding them. The clinical trial process may fail to demonstrate efficacy and
cost effectiveness of our product and may hinder the adoption of our product or ability to obtain payor coverage. It is also possible
that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the product candidate&rsquo;s
profile.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>


<!-- Field: Page; Sequence: 39 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->37<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may incur product liability losses,
and insurance coverage may be inadequate or unavailable to cover these losses.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our business exposes us to potential product
liability claims that are inherent in the testing, design, manufacture, and sale of medical devices for SI-Joint surgery procedures.
SI-Joint surgery involves significant risk of serious complications, including bleeding, nerve injury, paralysis, and even death.
In addition, if longer-term patient results and experience indicates that our product or any component of such product cause tissue
damage, motor impairment, or other adverse effects, we could be subject to significant liability. Surgeons may misuse or ineffectively
use our product, which may result in unsatisfactory patient outcomes or patient injury. We could become the subject of product
liability lawsuits alleging that component failures, manufacturing flaws, design defects, or inadequate disclosure of product-related
risks or product-related information resulted in an unsafe condition or injury to patients. Product liability lawsuits and claims,
safety alerts, or product recalls, regardless of their ultimate outcome, could have a material adverse effect on our business and
reputation, our ability to attract and retain customers and our results of operations or financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Although we maintain third-party product
liability insurance coverage, it is possible that claims against us may exceed the coverage limits of our insurance policies or
cause us to record a self-insured loss. Even if any product liability loss is covered by an insurance policy, these policies typically
have substantial retentions or deductibles that we are responsible for. Product liability claims in excess of applicable insurance
coverage could have a material adverse effect on our business, results of operations, and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, any product liability claim
brought against us, with or without merit, could result in an increase of our product liability insurance rates. Insurance coverage
varies in cost and can be difficult to obtain, and we cannot guarantee that we will be able to obtain insurance coverage in the
future on terms acceptable to us or at all.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We are subject to environmental laws
and regulations that can impose significant costs and expose us to potential financial liabilities.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our business and facility and those of
our contract manufacturer are subject to foreign, federal, state, and local laws and regulations relating to the protection of
human health and the environment, including those governing the use, manufacture, storage, handling, and disposal of, and exposure
to, such materials and wastes. In addition, under some environmental laws and regulations, we could be held responsible for costs
relating to any contamination at our past or present facilities and at third-party waste disposal sites even if such contamination
was not caused by us. A failure to comply with current or future environmental laws and regulations could result in severe fines
or penalties. Any such expenses or liability could have a significant negative impact on our business, results of operations, and
financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I> U.S. tax legislation may materially
affect our financial condition, results of operations and cash flows.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Tax Cuts and Jobs
Act (the &ldquo;Tax Act&rdquo;) has significantly changed the U.S. federal income taxation of U.S. businesses, including by reducing
the U.S. corporate income tax rate, limiting interest deductions, permitting immediate expensing of certain capital expenditures,
modifying or repealing many business deductions and credits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Coronavirus Aid, Relief, and Economic
Security Act (the &ldquo;CARES Act&rdquo;) modifies certain provisions of the Tax Act, including increasing the amount of interest
expense that may be deducted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Tax Act as modified by the CARES Act
is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations
and implementing regulations by the Treasury and IRS, any of which could lessen or increase certain adverse impacts of the legislation.
In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal
taxable income as a starting point for computing state and local tax liabilities. Our analysis and interpretation of this legislation
is preliminary and ongoing and there may be material adverse effects resulting from the legislation that we have not yet identified.
While some of the changes made by the tax legislation may adversely affect us, other changes may be beneficial. We continue to
work with our tax advisors and auditors to determine the full impact that the recent tax legislation as a whole will have on us.
We urge our investors to consult with their legal and tax advisors with respect to such legislation and its potential effect on
an investment in our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 40 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->38<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Risks Related to Our Intellectual Property</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our ability to protect our intellectual
property and proprietary technology is uncertain.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We rely primarily on patent, copyright, trademark
and trade secret laws, as well as confidentiality and non- disclosure agreements and other methods, to protect our proprietary
technologies and know-how. As of August 30, 2021, we owned one issued patent, eight pending patent applications and one trade mark.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have applied for patent protection relating
to certain existing and proposed products and processes. While we generally apply for patents in those countries where we intend
to make, have made, use, or sell patented products, we may not accurately predict all the countries where patent protection will
ultimately be desirable. If we fail to timely file a patent application in any such country, we may be precluded from doing so
later. Furthermore, we cannot assure you that any of our patent applications will be approved. The rights granted to us under our
patents, including prospective rights sought in our pending patent applications, may not be meaningful or provide us with any commercial
advantage. In addition, those rights could be opposed, contested, or circumvented by our competitors or be declared invalid or
unenforceable in judicial or administrative proceedings. The failure of our patents to adequately protect our technology might
make it easier for our competitors to offer the same or similar products or technologies. Competitors may be able to design around
our patents or develop products that provide outcomes which are comparable to ours without infringing on our intellectual property
rights. Due to differences between foreign and U.S. patent laws, our patented intellectual property rights may not receive the
same degree of protection in foreign countries as they would in the United States. Even if patents are granted outside the United
States, effective enforcement in those countries may not be available. Since most of our issued patents are for the United States
only, we lack a corresponding scope of patent protection in other countries. In countries where we do not have significant patent
protection, we may not be able to stop a competitor from marketing products in such countries that are the same as or similar to
our product.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We plan to rely on our trademarks, trade names
and brand names to distinguish our product from the products of our competitors and have registered or applied to register many
of these trademarks. We cannot assure you that our trademark applications will be approved. Third parties may also oppose our trademark
applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we
could be forced to rebrand our product, which could result in loss of brand recognition, and could require us to devote resources
to advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe upon our trademarks,
or that we will have adequate resources to enforce our trademarks.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We also rely on trade secrets, know-how, and
technology, which are not protected by patents, to maintain our competitive position. We try to protect this information by entering
into confidentiality and intellectual property assignment agreements with parties that develop intellectual property for us and/or
have access to it, such as our officers, employees, consultants, contract manufacturers and advisors. However, in the event of
unauthorized use or disclosure or other breaches of such agreements, we may not be provided with meaningful protection for our
trade secrets or other proprietary information. In addition, our trade secrets may otherwise become known or be independently discovered
by competitors. To the extent that our commercial partners, collaborators, employees, and consultants use intellectual property
owned by others in their work for us, disputes may arise as to the rights in related or resulting know- how and inventions. If
any of our trade secrets, know-how or other technologies not protected by a patent were to be disclosed to or independently developed
by a competitor, our business, financial condition, and results of operations could be materially adversely affected.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the future, we may enter into licensing
agreements to maintain our competitive position. If we enter into in-bound intellectual property license agreements, we may not
be able to fully protect the licensed intellectual property rights or maintain those licenses. Future licensors could retain the
right to prosecute and defend the intellectual property rights licensed to us, in which case we would depend on the ability of
our licensors to obtain, maintain and enforce intellectual property protection for the licensed intellectual property. These licensors
may determine not to pursue litigation against other companies or may pursue such litigation less aggressively than we would. Further,
entering into such license agreements could impose various diligence, commercialization, royalty, or other obligations on us. Future
licensors may allege that we have breached our license agreement with them, and accordingly seek damages or to terminate our license,
which could adversely affect our competitive business position and harm our business prospects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 41 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->39<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If a competitor infringes upon one of our
patents, trademarks, or other intellectual property rights, enforcing those patents, trademarks, and other rights may be difficult
and time consuming. Even if successful, litigation to defend our patents and trademarks against challenges or to enforce our intellectual
property rights could be expensive and time consuming and could divert management&rsquo;s attention from managing our business.
Moreover, we may not have sufficient resources to defend our patents or trademarks against challenges or to enforce our intellectual
property rights. In addition, if third parties infringe any intellectual property that is not material to the products that we
make, have made, use, or sell, it may be impractical for us to enforce this intellectual property against those third parties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>We may be subject to damages resulting
from claims that we, our employees, or our national distributor along with their independent sales representative have wrongfully
used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with
our competitors.</I></B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Many of our employees were previously employed
at other medical device companies, including our competitors or potential competitors, in some cases until recently. Some of the
independent sales representatives of our national distributor sell, or in the past have sold, products of our competitors. We may
be subject to claims that we, our employees, or the independent sales representatives of our national distributor have inadvertently
or otherwise used or disclosed trade secrets or other proprietary information of these former employers or competitors. In addition,
we have been and may in the future be subject to claims that we caused an employee to breach the terms of his or her non-competition
or non-solicitation agreement. Even if we are successful in defending against these claims, litigation could result in substantial
costs, divert the attention of management from our core business and harm our reputation. If our defense to those claims fails,
in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. There can be no assurance
that this type of litigation will not continue, and any future litigation or the threat thereof may adversely affect our ability
to hire additional direct sales representatives. A loss of key personnel or their work product could hamper or prevent our ability
to commercialize product candidates, which could have an adverse effect on our business, results of operations, and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>The medical device industry is characterized
by patent litigation and we could become subject to litigation that could be costly, result in the diversion of management&rsquo;s
time and efforts, require us to pay damages, and/or prevent us from developing or marketing our existing or future products.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our commercial success will depend in part
on not infringing the patents or violating the other proprietary rights of third parties. Significant litigation regarding patent
rights exists in our industry. Our competitors in both the United States and abroad, many of which have substantially greater resources
and have made substantial investments in competing technologies, may have applied for or obtained or may in the future apply for
and obtain, patents that will prevent, limit, or otherwise interfere with our ability to make and sell our product. We have conducted
a limited review of patents issued to third parties. The large number of patents, the rapid rate of new patent issuances, the complexities
of the technology involved, and the uncertainty of litigation increase the risk of business assets and management&rsquo;s attention
being diverted to patent litigation. Any litigation or claim against us, even those without merit, may cause us to incur substantial
costs, and could place a significant strain on our financial resources, divert the attention of management from our core business,
and harm our reputation. Further, as the number of participants in the medical device industry grows, the possibility of intellectual
property infringement claims against us increases. If we are found to infringe the intellectual property rights of third parties,
we could be required to pay substantial damages, including treble, or triple, damages if an infringement is found to be wilful,
and/or royalties and could be prevented from selling our product unless we obtain a license or are able to redesign our product
to avoid infringement. Any such license may not be available on reasonable terms, if at all, and there can be no assurance that
we would be able to redesign our product in a way that would not infringe the intellectual property rights of others. If we fail
to obtain any required licenses or make any necessary changes to our product or technologies, we may have to withdraw our existing
product from the market or may be unable to commercialize one or more of our future products, all of which could have a material
adverse effect on our business, results of operations, and financial condition. If passed into law, patent reform legislation currently
pending in the U.S. Congress could significantly change the risks associated with bringing or defending a patent infringement lawsuit.
For example, fee shifting legislation could require a non-prevailing party to pay the attorney fees of the prevailing party in
some circumstances.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 42 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->40<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Patent terms are limited and we may
not be able to effectively protect our product and business.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Patents have a limited lifespan. In the
U.S., the natural expiration of a patent is generally 20 years after it is filed. Although various extensions may be available,
the life of a patent, and the protection it affords, is limited. In addition, upon issuance in the U.S., the patent term may be
extended based on certain delays caused by the applicant(s) or the USPTO. Even if we obtain effective patent rights for all our
current patent applications, we may not have sufficient patent terms or regulatory exclusivity to protect our product, and our
business and results of operations would be adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Changes in U.S. patent law could
diminish the value of patents in general, thereby impairing our ability to protect our product.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As is the case with other medical devices
companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in
the medical devices industry involves both technological and legal complexity. Therefore, obtaining and enforcing patents is costly,
time-consuming and inherently uncertain. In addition, the U.S. has recently enacted and is currently implementing wide-ranging
patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain
circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard
to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of
patents, once obtained. Depending on future actions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations
governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing
patents and patents that we might obtain in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may not be able to protect our
intellectual property rights throughout the world.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Filing, prosecuting and defending patents
on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights
in some countries outside the U.S. can be less extensive than those in the U.S. In addition, the laws of some foreign countries
do not protect intellectual property rights to the same extent as federal and state laws in the U.S. Competitors may use our technologies
in jurisdictions where we have not obtained patent protection to develop their own products and may also export otherwise infringing
products to territories where we have patent protection, but enforcement is not as strong as that in the U.S. These products may
compete with our product and our patents or other intellectual property rights may not be effective or sufficient to prevent them
from competing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Many companies have encountered significant
problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries,
particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property
protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement
of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our
patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and
attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our
patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any
lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our
efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage
from the intellectual property that we develop or license.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 43 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->41<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I><B><I>If we are unable to protect the confidentiality
of our trade secrets, our business and competitive position could be harmed.</I></B></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In addition to patent protection, we also rely
upon copyright and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees,
consultants, contract manufacturers and third parties, to protect our confidential and proprietary information. In addition to
contractual measures, we try to protect the confidential nature of our proprietary information using commonly accepted physical
and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an
employee or third party with authorized access, provide adequate protection for our proprietary information. Our security measures
may not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor, and recourse
we take against such misconduct may not provide an adequate remedy to protect our interests fully. Unauthorized parties may also
attempt to copy or reverse engineer certain aspects of our product that we consider proprietary. Enforcing a claim that a party
illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable.
Even though we use commonly accepted security measures, trade secret violations are often a matter of state law, and the criteria
for protection of trade secrets can vary among different jurisdictions. In addition, trade secrets may be independently developed
by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our
trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor,
our business and competitive position could be harmed.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Third parties may assert that our
employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We employ individuals who previously worked
with other companies, including our competitors or potential competitors. Although we try to ensure that our employees and consultants
do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees,
consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade
secrets or other proprietary information, of a former employer or other third party. Litigation may be necessary to defend against
these claims. If we fail in defending any such claims or settling those claims, in addition to paying monetary damages or a settlement
payment, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims,
litigation could result in substantial costs and be a distraction to management and other employees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Risks Related to this Offering and Ownership
of our Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our management will have broad discretion
over the use of any net proceeds from this offering and you may not agree with how we use the proceeds, and the proceeds may not
be invested successfully.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our management will have broad discretion as
to the use of any net proceeds from this offering and could use them for purposes other than those contemplated at the time of
this offering. Accordingly, you will be relying on the judgment of our management with regard to the use of any proceeds from this
offering and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used
appropriately. It is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for you.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Investors in this offering may experience
future dilution as a result of this and future equity offerings.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In order to raise additional capital, we
may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common
stock. Investors purchasing our shares or other securities in the future could have rights superior to existing common stockholders,
and the price per share at which we sell additional shares of our common stock or other securities convertible into or exchangeable
for our common stock in future transactions may be higher or lower than the price per share in this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Sales of a significant number of
shares of our common stock in the public markets, or the perception that such sales could occur, could depress the market price
of our common stock.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Sales of a substantial number of shares
of our common stock in the public markets could depress the market price of our common stock and impair our ability to raise capital
through the sale of additional equity securities. We cannot predict the effect that future sales of our common stock would have
on the market price of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 44 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->42<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If securities or industry analysts
do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could
decline.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The trading market for our common stock
will depend in part on the research and reports that securities or industry analysts publish about us or our business. If no or
too few securities or industry analysts provide coverage or if one or more of the analysts who cover us downgrade our stock or
publish inaccurate or unfavorable research about our business, the price of our stock would likely decline. If one or more of these
analysts cease coverage of us or fail to publish reports on us regularly, demand for our stock could decrease, which might cause
the price of our stock and trading volume to decline.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;<B><I>There is no existing market
for our common stock, and we cannot assure you that a market will develop for our common stock or what the market price of our
common stock will be.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to this offering, there has been
no public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the
development of an active trading market on the Nasdaq Capital Market or otherwise or how liquid that market might become. If an
active trading market does not develop, you may have difficulty selling any shares of our common stock that you purchase, and the
value of such shares might be materially impaired.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, we cannot predict the prices
at which our common stock will trade. The initial public offering price for our common stock will be determined by negotiations
between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market
following this initial public offering. Consequently, you may not be able to sell shares of our common stock at prices equal to
or greater than the price you paid in this initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>The price of our common stock may
be volatile, and you may be unable to resell your shares at or above the initial public offering price.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to this offering, there has been
no public market for our common stock, and medical device stocks have historically experienced volatility. The trading price of
our common stock following this offering may fluctuate substantially. Following the closing of this initial public offering, the
market price of our common stock may be higher or lower than the price you pay in the offering, depending on many factors, some
of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose
all or part of your investment in our common stock. Factors that could cause fluctuations in the trading price of our common stock
include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>actual or anticipated fluctuations in our financial condition and operating results;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>actual or anticipated changes in our growth rate relative to our competitors;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>commercial success and market acceptance of our product;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>success of our competitors in developing or commercializing products;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>ability to commercialize or obtain regulatory approvals for our product, or delays in commercializing or obtaining regulatory
approvals;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>strategic transactions undertaken by us;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>additions or departures of key personnel;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>product liability claims;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>prevailing economic conditions;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>disputes concerning our intellectual property or other proprietary rights;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>FDA or other U.S. or foreign regulatory actions affecting us or the healthcare industry;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>healthcare reform measures in the United States;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>sales of our common stock by our officers, directors or significant stockholders;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>future sales or issuances of equity or debt securities by us;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>business disruptions caused by earthquakes, fires or other natural disasters; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>issuance of new or changed securities analysts&rsquo; reports or recommendations regarding us.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in">&nbsp;</TD>
    <TD STYLE="width: 0.25in; font-size: 10pt"><FONT STYLE="font-size: 10pt">&bull;</FONT></TD>
    <TD STYLE="font-size: 10pt"><FONT STYLE="font-size: 10pt">Covid-19 restrictions on elective surgeries</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 45 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->43<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, if the market for healthcare
stocks or the stock market, in general, experience a loss of investor confidence, the trading price of our common stock could decline
for reasons unrelated to our business, results of operations, or financial condition. The trading price of our common stock might
also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us.
In the past, following periods of volatility in the market price of a company&rsquo;s securities, securities class action litigation
has often been brought against that company. If our stock price is volatile, we may become the target of securities litigation.
Securities litigation could result in substantial costs and divert our management&rsquo;s attention and resources from our business.
This could have a material adverse effect on our business, results of operations, and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Because the initial public offering
price of our common stock will be substantially higher than the pro forma as adjusted net tangible book value per share of our
outstanding common stock following this offering, new investors will experience immediate and substantial dilution.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The initial public offering price of our
common stock is substantially higher than the pro forma as adjusted net tangible book value per share of our common stock immediately
following this offering based on the total value of our tangible assets less our total liabilities. Therefore, if you purchase
shares of our common stock in this offering, you will experience immediate dilution of $[*] per share, the difference between the
assumed limited public offering price of $[*] per share, which is the midpoint of the range as set forth on the cover page of this
prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, and the pro forma
as adjusted net tangible book value per share of our common stock as of $[*], immediately after giving effect to the issuance of
shares of our common stock in this offering. See &ldquo;Dilution.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Sales of substantial amounts of our
common stock in the public markets, including when the &ldquo;lock-up&rdquo; or &ldquo;market standoff&rdquo; period ends, or the
perception that sales might occur, could reduce the price of our common stock and may dilute your voting power and your ownership
interest in us.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Sales of a substantial number of shares
of our common stock in the public market after this offering, or the perception that these sales could occur, could adversely affect
the market price of our common stock, and may make it more difficult for you to sell your common stock at a time and price that
you deem appropriate. Subject to certain exceptions, the Company, our directors and officers and certain of our stockholders have
agreed not to offer, sell or agree to sell, directly or indirectly, any shares of common stock without the permission of the representative
of the underwriters for a period of 180 days from the date of this prospectus. When the lock-up period expires, our security holders
will be able to sell shares in the public market subject to any restrictions under the securities laws. In addition, the representative
of the underwriters may, in its discretion, release all or some portion of the shares subject to lock-up agreements prior to the
expiration of the lock-up period. See &ldquo;Shares Eligible for Future Sale&rdquo; for more information. Sales of a substantial
number of such shares upon expiration, or the perception that such sales may occur, or early release of the lock-up, could cause
our share price to fall, or make it more difficult for you to sell your common stock at a time and price that you deem appropriate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We also may register the offer and sale
of all shares of common stock that we may issue under our equity compensation plans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We may issue our shares of common stock
or securities convertible into our common stock from time to time in connection with a financing, acquisition, investments or
otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the trading price of
our common stock to decline.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>


<!-- Field: Page; Sequence: 46 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->44<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may be subject to securities litigation,
which is expensive and could divert our management&rsquo;s attention.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The market price of our securities may
be volatile, and in the past companies that have experienced volatility in the market price of their securities have been subject
to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against
us could result in substantial costs and divert our management&rsquo;s attention from other business concerns.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>If there is no viable public market
for our common stock, you may be unable to sell your shares at or above the initial public offering price.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to this offering there has been no
public market for shares of our common stock. Although we expect our common stock will be approved for listing on NASDAQ, an active
trading market for our shares may never develop or be sustained following this offering. You may be unable to sell your shares
quickly or at the market price if trading in shares of our common stock is not active. The initial public offering price for our
common stock will be determined through negotiations with the underwriters, and the negotiated price may not be indicative of the
market price of the common stock after the offering. As a result of these and other factors, you may be unable to resell your shares
of our common stock at or above the initial public offering price. Further, an inactive market may also impair our ability to raise
capital by selling shares of our common stock and may impair our ability to enter into strategic partnerships or acquire companies
or products by using our shares of common stock as consideration.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>The public price of our common stock
may be volatile, and could, following a sale decline significantly and rapidly.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The initial public offering price for the
shares will be determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail
in the open market following this offering. The market price of our common stock may decline below the initial offering price,
and you may not be able to sell your shares of our common stock at or above the price you paid in the offering, or at all. Following
this Offering, the public price of our common stock in the secondary market will be determined by private buy and sell transaction
orders collected from broker-dealers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We may not be able to satisfy listing
requirements of Nasdaq to maintain a listing of our common stock.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If our common stock is listed on Nasdaq,
we must meet certain financial and liquidity criteria to maintain such listing. If we violate the maintenance requirements for
continued listing of our common stock, our common stock may be delisted. In addition, our board may determine that the cost of
maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our common stock
from Nasdaq may materially impair our stockholders&rsquo; ability to buy and sell our common stock and could have an adverse effect
on the market price of, and the efficiency of the trading market for, our common stock. In addition, the delisting of our common
stock could significantly impair our ability to raise capital.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>This offering has not been reviewed
by independent professionals.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have not retained any independent professionals
to review or comment on this prospectus or otherwise protect the interest of the investors hereunder. Although we have retained
our own counsel, neither such counsel nor any other counsel has made, on behalf of the investors, any independent examination of
any factual matters represented by management herein. Therefore, for purposes of making a decision to purchase our common stock,
you should not rely on our counsel with respect to any matters herein described. Prospective investors are strongly urged to rely
on the advice of their own legal counsel and advisors in making a determination to purchase our shares of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 47 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->45<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Our failure to maintain effective
internal controls over financial reporting could have an adverse impact on us</I></B>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are required to establish and maintain
appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once
established, could adversely impact our public disclosures regarding our business, financial condition or results of operations.
In addition, management&rsquo;s assessment of internal controls over financial reporting may identify weaknesses and conditions
that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors.
Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure
of management&rsquo;s assessment of our internal controls over financial reporting or disclosure of our public accounting firm&rsquo;s
attestation to or report on management&rsquo;s assessment of our internal controls over financial reporting may have an adverse
impact on the price of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition,
the design of a control system must reflect the fact that there are resource constraints and the benefit of controls must be relative
to their costs. Because of the inherent limitations in all control systems, no system of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Further, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management
override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with
policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to
error or fraud may occur and may not be detected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At present, management has identified material
weaknesses due to lack of segregation of duties and lack of sufficient supporting documentation for certain transactions. The
lack of segregation of duties existed as a result of the Company having no employees until June 2021. Management has taken initial
steps to remedy this weakness by hiring a Chief Financial Officer, a senior accountant and external financial consultants, and
plans to continue to add additional resources, technology and headcount as warranted by the growth of the Company and our plans
to become a public company. The lack of sufficient supporting documentation was primarily related to transactions taking place
in our foreign subsidiary and to agreements that were not formalized until after the underlying services had already taken place.
Management has taken initial steps to remedy this weakness by hiring a Chief Financial Officer as well as a Chief Executive
Officer, and we are in the process of putting proper policies and procedures in place to ensure proper documentation is established
and maintained for transactions that the Company enters into. While we believe these efforts will improve our internal controls
and address the underlying causes of the material weaknesses, such material weaknesses will not be remediated until our remediation
plan has been fully implemented and we have concluded that our controls are operating effectively for a sufficient period of time.
We cannot be certain that the steps we are taking will be sufficient to remediate the control deficiencies that led to our material
weaknesses in our internal control over financial reporting or prevent future material weaknesses or control deficiencies from
occurring.&nbsp;While we are working to remediate the material weaknesses as timely and efficiently as possible, at this time
we cannot provide an estimate of costs expected to be incurred in connection with the implementation of this remediation plan,
nor can we provide an estimate of the time it will take to complete this remediation plan. Even if management does establish effective
remedial measures, we cannot guarantee that those internal controls and disclosure controls that we put in place will prevent
all possible errors, mistakes or all fraud.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our financial controls and procedures
may not be sufficient to ensure timely and reliable reporting of financial information, which, as a public company, could materially
harm our stock price.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We will require significant financial resources
to maintain our public reporting status. We cannot assure you we will be able to maintain adequate resources to ensure that we
will not have any future material weakness in our system of internal controls. The effectiveness of our controls and procedures
may in the future be limited by a variety of factors including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD>faulty human judgment and simple errors, omissions or mistakes;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD>fraudulent action of an individual or collusion of two or more people;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD>inappropriate management override of procedures; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">the possibility that any enhancements to controls and procedures may still not be adequate to assure timely and accurate financial
information.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our internal control over financial
reporting will be a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the
United States of America. Our internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the Company&rsquo;s assets that could have a material effect on the financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 48 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->46<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Despite these anticipated controls,
because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control
objectives. Furthermore, smaller reporting companies like us face additional limitations. Smaller reporting companies employ
fewer individuals and can find it difficult to employ resources for complicated transactions and effective risk management.
Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of
software controls.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If we fail to have effective controls and
procedures for financial reporting in place, we could be unable to provide timely and accurate financial information and be subject
to investigation by the Securities and Exchange Commission and civil or criminal sanctions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We must implement additional and
expensive procedures and controls in order to grow our business and organization and to satisfy new reporting requirements, which
will increase our costs and require additional management resources.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Upon becoming a fully public reporting company,
we will be required to comply with the Sarbanes-Oxley Act of 2002 (the &ldquo;Sarbanes-Oxley Act&rdquo;) and the related rules
and regulations of the SEC, including the requirements that we maintain disclosure controls and procedures and adequate internal
control over financial reporting. Compliance with the Sarbanes-Oxley Act and other SEC and national exchange requirements will
increase our costs and require additional management resources. We plan to begin the process of upgrading our procedures and controls
and will need to begin implementing additional procedures and controls as we grow our business and organization and to satisfy
new reporting requirements. If we are unable to complete the required assessment as to the adequacy of our internal control over
financial reporting, as required by Section 404 of the Sarbanes-Oxley Act or if we fail to establish and maintain internal control
over financial reporting, our ability to produce timely, accurate and reliable periodic financial statements could be impaired.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">If we do not establish and maintain adequate
internal control over financial reporting, investors could lose confidence in the accuracy of our periodic reports filed under
the Exchange Act. Additionally, our ability to obtain additional financing could be impaired or a lack of investor confidence in
the reliability and accuracy of our public reporting could cause our stock price to decline.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We are an &ldquo;emerging growth
company&rdquo; under the JOBS Act of 2012 and we cannot be certain if the reduced disclosure requirements applicable to emerging
growth companies will make our common stock less attractive to investors.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are an &ldquo;emerging growth company,&rdquo;
as defined in the Jumpstart Our Business Startups Act of 2012 (the &ldquo;JOBS Act&rdquo;), and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not &ldquo;emerging growth
companies&rdquo; including, but not limited to, not being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less
attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there
may be a less active trading market for our common stock and our stock price may be more volatile.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, Section 107 of the JOBS Act
also provides that an &ldquo;emerging growth company&rdquo; can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act of 1933 (the &ldquo;Securities Act&rdquo;) for complying with new or revised accounting standards.
In other words, an &ldquo;emerging growth company&rdquo; can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with
new or revised accounting standards.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 49 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->47<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We will remain an &ldquo;emerging growth
company&rdquo; until the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common
stock pursuant to an effective registration statement under the Securities Act, although we will lose that status sooner if our
revenues exceed $1.07 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market
value of our common stock that is held by non-affiliates exceeds $700 million as of the last day of our most recently completed
second fiscal quarter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our status as an &ldquo;emerging
growth company&rdquo; under the JOBS Act may make it more difficult to raise capital as and when we need it.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Because of the exemptions from various
reporting requirements provided to us as an &ldquo;emerging growth company&rdquo; and because we will have an extended transition
period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult
for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies
in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are
unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially
and adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>We have not paid dividends in the
past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have never paid cash dividends on our
common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future. We currently intend to
retain any future earnings to support the development of our business and do not anticipate paying cash dividends in the foreseeable
future. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various
factors, including, but not limited to, our financial condition, operating results, cash needs, growth plans and the terms of any
credit agreements that we may be a party to at the time. In addition, our ability to pay dividends on our common stock may be limited
by Delaware state law. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never
occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our common
stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>The elimination of personal liability
against our directors and officers under Delaware law and the existence of indemnification rights held by our directors, officers
and employees may result in substantial expenses.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our amended and restated certificate of incorporation,
as amended and our Bylaws eliminate the personal liability of our directors and officers to us and our stockholders for damages
for breach of fiduciary duty as a director or officer to the extent permissible under Delaware law. Further, our amended and restated
certificate of incorporation allow for us to and our Bylaws provide that we are obligated to indemnify each of our directors or
officers to the fullest extent authorized by the Delaware law and, subject to certain conditions, advance the expenses incurred
by any director or officer in defending any action, suit or proceeding prior to its final disposition. Those indemnification obligations
could expose us to substantial expenditures to cover the cost of settlement or damage awards against our directors or officers,
which we may be unable to afford. Further, those provisions and resulting costs may discourage us or our stockholders from bringing
a lawsuit against any of our current or former directors or officers for breaches of their fiduciary duties, even if such actions
might otherwise benefit our stockholders.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Our certificate of incorporation
will designate the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated
by our stockholders, which could limit our stockholders&rsquo; ability to obtain a favorable judicial forum for disputes with us.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our amended and restated certificate of incorporation,
as amended specifies that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the
State of Delaware shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company,
(b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Company
to the Company or the Company&rsquo;s stockholders, (c) any action asserting a claim arising pursuant to any provision of the Delaware
General Corporation Law, the Company&rsquo;s Amended and Restated Certificate of Incorporation or the Bylaws, or (d) any action
asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction
over the indispensable parties named as defendants therein. However, prior to the effectiveness of the registration statement related
to this prospectus, we will amend our Amended and Restated Certificate of Incorporation to include a statement that this exclusive
forum provision does not apply to claims arising under federal securities laws. Any person or entity purchasing or otherwise acquiring
any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our amended
and restated certificate of incorporation, as amended, as described above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">This choice of forum provision may limit a
stockholder&rsquo;s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors,
officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. As such, stockholders of
the Company seeking to bring a claim regarding the internal affairs of the Company may be subject to increased costs associated
with litigating in Delaware as opposed to their home state or other forum, precluded from bringing such a claim in a forum they
otherwise consider to be more favorable, and discouraged from bringing such claims as a result of the foregoing or other factors
related to forum selection. Alternatively, if a court were to find the choice of forum provision contained in our amended and
restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated
with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 50 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->48<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We believe these provisions benefit us
by providing increased consistency in the application of Delaware law by chancellors particularly experienced in resolving corporate
disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens
of multi-forum litigation. However, the provision may have the effect of discouraging lawsuits against our directors, officers,
employees and agents as it may limit any stockholder&rsquo;s ability to bring a claim in a judicial forum that such stockholder
finds favorable for disputes with us or our directors, officers, employees or agents. The enforceability of similar choice of forum
provisions in other companies&rsquo; certificates of incorporation has been challenged in legal proceedings, and it is possible
that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained
in our amended and restated certificate of incorporation, as amended, to be inapplicable or unenforceable in such action. If a
court were to find the choice of forum provision contained in our amended and restated certificate of incorporation, as amended,
to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other
jurisdictions, which could adversely affect our business, financial condition or results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>You should consult your own independent
tax advisor regarding any tax matters arising with respect to the securities offered in connection with this offering.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Participation in this offering could result
in various tax-related consequences for investors. All prospective purchasers of the resold securities are advised to consult their
own independent tax advisors regarding the U.S. federal, state, local and non-U.S. tax consequences relevant to the purchase, ownership
and disposition of the resold securities in their particular situations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>IN ADDITION TO THE ABOVE RISKS, BUSINESSES
ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING THIS FILING, POTENTIAL INVESTORS SHOULD
KEEP IN MIND THAT OTHER POSSIBLE RISKS MAY ADVERSELY IMPACT THE COMPANY&rsquo;S BUSINESS OPERATIONS AND THE VALUE OF THE COMPANY&rsquo;S
SECURITIES.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B><A NAME="a_006"></A>SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This prospectus contains &ldquo;forward-looking
statements.&rdquo; Forward-looking statements reflect the current view about future events. When used in this prospectus, the words
&ldquo;anticipate,&rdquo; &ldquo;believe,&rdquo; &ldquo;estimate,&rdquo; &ldquo;expect,&rdquo; &ldquo;future,&rdquo; &ldquo;intend,&rdquo;
&ldquo;plan,&rdquo; or the negative of these terms and similar expressions, as they relate to us or our management, identify forward-looking
statements. Such statements, include, but are not limited to, statements contained in this prospectus relating to our business
strategy, our future operating results and liquidity and capital resources outlook. Forward-looking statements are based on our
current expectations and assumptions regarding our business, the economy and other future conditions. Because forward&ndash;looking
statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult
to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither
statements of historical fact nor guarantees of assurance of future performance. We caution you therefore against relying on any
of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking
statements include, without limitation:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">Our ability to effectively operate our business segments;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">Our ability to manage our research, development, expansion,
growth and operating expenses;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">Our ability to evaluate and measure our business,
prospects and performance metrics;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">Our ability and our national distributor&rsquo;s ability
to compete, directly and indirectly, and succeed in the highly competitive medical devices industry;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 51 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->49<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">Our ability to respond and adapt to changes in technology
and customer behavior;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">Our ability to protect our intellectual property and
to develop, maintain and enhance a strong brand; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">Other factors (including the risks contained in the
section of this prospectus entitled &ldquo;<I>Risk Factors</I>&rdquo;) relating to our industry, our operations and results of
operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated,
believed, estimated, expected, intended or planned.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Factors or events that could cause our
actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee
future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual
results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B><A NAME="a_007"></A>USE
OF PROCEEDS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We estimate that we will receive net proceeds
of approximately [*] (or approximately [*] if the underwriters&rsquo; option to purchase additional shares is exercised in full)
from the sale of the common stock offered by us in this offering, based on public offering price of [*] per share, and after deducting
the estimated underwriting discounts and commissions and estimated offering expenses payable by us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The principal purposes of this offering
are to increase our capitalization and financial flexibility, increase our visibility in the marketplace and create a public
market for our common stock. As of the date of this prospectus, we cannot specify with certainty all of the particular uses
for the net proceeds to us from this offering. However, we currently intend to use the net proceeds from this offering to
hire additional employees, commence the commercial launch of our product including training surgeons on The CATAMARAN
System procedure, initiating clinical marketing studies that are focused on capturing post-market safety data, gathering
system feedback and initiating product refinements, other sales and marketing activities and for working capital and general
corporate purposes. <I>See &ldquo;Business&mdash;Research &amp; Development</I>.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We will retain broad discretion in the
allocation of the net proceeds from this offering and could utilize the proceeds in ways that do not necessarily improve our results
of operations or enhance the value of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The table below sets forth the manner in
which we expect to use the net proceeds we receive from this offering. All amounts included in the table below are estimates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="border-bottom: Black 1pt solid; width: 85%; font-weight: bold">Description </TD><TD STYLE="padding-bottom: 1pt; width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right; width: 1%">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; width: 12%; font-weight: bold; text-align: center"><FONT STYLE="font-size: 10pt"><B>Amount</B> &nbsp;</FONT></TD><TD STYLE="width: 1%; padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Surgeon Training</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"> [*]</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif">Clinical Marketing Studies</P>


Hiring Staff </TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"> [*]</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Product development</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt"> [*]</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Other Sales and Marketing</P>

<P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif">Working Capital and General Corporate Purposes</P>



</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt"> [*]</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt">Total </TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The foregoing information is an estimate
based on our current business plan. We may find it necessary or advisable to re-allocate portions of the net proceeds reserved
for one category to another, and we will have broad discretion in doing so. Pending these uses, we intend to invest the net proceeds
of this offering in a money market or other interest-bearing account.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_008"></A><B>DIVIDEND POLICY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have not declared any cash dividends
since inception and we do not anticipate paying any dividends in the foreseeable future. Instead, we anticipate that all of our
earnings will be used to provide working capital, to support our operations, and to finance the growth and development of our business,
including potentially the acquisition of, or investment in, businesses, technologies or products that complement our existing business.
The payment of dividends is within the discretion of the board of directors and will depend on our earnings, capital requirements,
financial condition, prospects, applicable Delaware law, which provides that dividends are only payable out of surplus or current
net profits, and other factors our board might deem relevant. There are no restrictions that currently limit our ability to pay
dividends on our common stock other than those generally imposed by applicable state law.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


<!-- Field: Page; Sequence: 52 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->50<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B><A NAME="a_009"></A>MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to this offering, our common stock
has not been listed on any stock exchange or quoted on any over-the-counter market or quotation system and there has been no public
market for our common stock. We have applied to have our common stock listed on the Nasdaq Capital Market under the symbol _________which
listing is a condition to this offering. For more information see the section &ldquo;<I>Risk Factors</I>.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#8239;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of November 9, 2021, we have issued
and outstanding 1,979,907 shares of common stock issued and outstanding held by 7 stockholders of record.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We also have outstanding:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">2,550,763 shares of Series A Preferred Stock held by 1 stockholder of record, which are voluntarily
convertible by the holder&nbsp;at any time or automatically convertible immediately prior to the closing of this initial public
offering under certain conditions, in each case, into 2,550,763 shares of our common stock;</TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">491,222 shares of Series B
Preferred Stock held by 17 stockholders of record, which are voluntarily convertible by the holder&nbsp;at any time or automatically
convertible immediately prior to the closing of this initial public offering under certain conditions, in each case, into 491,222
shares of our common stock;</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">A warrant issued to Exchange
Listing, LLC to purchase up to 50,000 shares of our common stock at an exercise price equal to $2.60 per share;</FONT></TD>
</TR></TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in">&nbsp;</TD>
    <TD STYLE="width: 0.25in; font-size: 10pt"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">Options to purchase 1,459,783 shares of our common stock, 326,689 shares of which are vested.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in">&nbsp;</TD>
    <TD STYLE="width: 0.25in; font-size: 10pt"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">$12,893,217 of Convertible Notes plus $[*] of
    accrued and unpaid interest, which convert into [*] shares of our common stock at the closing of this initial public
    offering.&nbsp;&nbsp;</FONT></TD></TR>
</TABLE>






<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<!-- Field: Page; Sequence: 53 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->51<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Securities Authorized for Issuance under Equity Incentive
Plan</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On October 1, 2012, the Board of Directors
of&nbsp;the Company adopted the 2012 Equity Incentive Plan (the &ldquo;Plan&rdquo;). The Plan governs equity awards to our employees,
directors, officers, consultants and other eligible participants. Under the 2012 Plan there are 1,598,531 shares of common stock
reserved for issuance.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The types of awards permitted under the
Plan include nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock
units, performance shares, performance units and other awards. Each option shall be exercisable at such times and subject to such
terms and conditions as the Board may specify.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board of Directors has the power to
amend, suspend or terminate the Plan without stockholder approval or ratification at any time or from time to time. No change may
be made that increases the total number of shares of our common stock reserved for issuance pursuant to incentive awards or reduces
the minimum exercise price for options or exchange of options for other incentive awards, unless such change is authorized by our
stockholders within one year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Under the Plan, the Company has granted a total
of (i) 1,434,818 (of which 90,200 have been canceled) nonqualified stock options to 21 individuals and one entity; (ii) 115,165
incentive stock options to 7 individuals and (iii) 123,500 shares of fully vested restricted stock to three individuals. Upon an
initial public offering of the Company, the Company will provide a one-time option grant to Steven M. Foster to maintain his ownership
position at 4% of the fully diluted outstanding equity.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_010"></A><FONT STYLE="text-transform: uppercase"><B>CAPITALIZATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table sets forth our consolidated
cash and capitalization, as of September 30, 2021. Such information is set forth on the following basis:&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>on an actual basis;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify"><P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif">on a pro forma basis to reflect the (i) the issuance of
                                                                                                    [&#9679;] shares of our common stock by us after September 30, 2021, but prior to the offering; and (ii) the issuance of [*]
                                                                                                    shares of our common stock to SpineSource, Inc.</P>


</TD></TR></TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 18pt"></TD><TD STYLE="width: 15.75pt">&bull;</TD><TD STYLE="text-align: justify"><P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif">on a pro forma as adjusted basis to reflect the pro forma adjustments
discussed in the prior bullet and (i) our receipt of the net proceeds our sale and issuance of [*] shares of common stock in this
offering at an assumed initial public offering price of $[*] per share (the midpoint of the price range set forth on the front
cover page of this prospectus), after deducting estimated underwriting discounts and commissions and estimated offering expenses
payable by us and after the use of net proceeds therefrom; (ii) the conversion of all outstanding balances of our convertible notes
into [*] shares of common stock in connection with the closing of this offering and (iii) the issuance of [*] shares of common
stock to Exchange Listing, LLC at the closing of this initial public offering pursuant to the automatic cashless exercise of its
warrant.</P>


</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">You should read the following table in
conjunction with &ldquo;<I>Use of Proceeds</I>,&rdquo; &ldquo;<I>Management&rsquo;s Discussion and Analysis of Financial Condition
and Results of Operations</I>&rdquo; and our financial statements and related notes included in this prospectus. The following
table sets forth our cash and cash equivalents and capitalization as of September 30, 2021:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 54 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->52<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 10pt">Actual</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 10pt">Pro<BR>
Forma(1)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-size: 10pt">Pro Forma<BR>
&nbsp;as <BR>
adjusted(2)</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt"><B>Cash and Investments</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">9,271,373</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt"><B>Convertible notes payable and accrued interest</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">13,338,211</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 10pt"><B>Convertible Preferred Stock:</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-bottom: 1pt">Series A convertible preferred stock, $0.001 par value; 1,798,905
and 1,437,628 shares authorized at September 30, 2021 and December 31, 2020, respectively; 2,805,839 shares authorized pro forma;
2,550,763 shares issued and outstanding, pro forma; 0 shares issued and outstanding, pro forma as adjusted</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">-</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Series B convertible preferred stock, $0.001 par value; 661,897 shares authorized; 491,222 shares issued and outstanding, pro forma as adjusted</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1,271,715</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&nbsp;</P></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD><FONT STYLE="font-size: 10pt"><B>Stockholders&rsquo; Equity:</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="width: 61%">Common stock, $0.001 par value, 7,000,000 shares authorized; 1,891,013
shares issued and outstanding, actual; 13,784,965 shares authorized, 1,979,907 shares issued and outstanding, pro forma; [*] shares
authorized, [*] shares issued and outstanding, pro forma as adjusted</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">1,891</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 10pt">Additional paid-in capital</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,149,157</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD><FONT STYLE="font-size: 10pt">Accumulated deficit</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(8,692,057</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 10pt">Accumulated other comprehensive loss</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(55,627</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Non-controlling interest</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1,674,125</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Total stockholders&rsquo; deficit</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(5,922,511</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt"><B>Total capitalization</B></FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">8,687,415</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="text-transform: uppercase"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_011"></A>DILUTION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Purchasers of our common stock in this
offering will experience an immediate and substantial dilution in the as adjusted net tangible book value of their shares of our
common stock. Dilution in as adjusted net tangible book value represents the difference between the public offering price per share
and the as adjusted net tangible book value per share of our common stock immediately after the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The historical net tangible book value
of our common stock as of September 30, 2021, was [&#9679;] or $[&#9679;] per share. Historical net tangible book value per share of
our common stock represents our total tangible assets (total assets less intangible assets) less total liabilities divided by the
number of shares of our common stock outstanding as of that date. After giving effect to the sale of [*]
shares in this offering at an initial public offering price of $[&#9679;] per share for net proceeds of approximately $[&#9679;]
as if such offering and such share issuances had occurred on December 31, 2020, our pro forma net tangible book value as of [&#9679;],
would have been $[net tangible book value change] or approximately $[&#9679;] per share of our common stock. This represents an
immediate increase in as adjusted pro forma, net tangible book value per share of $[&#9679;] to the existing stockholders and an
immediate dilution in as adjusted pro forma net tangible book value per share of $[&#9679;] to new investors who purchase shares
of our common stock in the offering. The following table illustrates this per share dilution to new investors:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 82%">&nbsp;Public offering price per share </TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right"><FONT STYLE="font-size: 10pt"></FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Historical net tangible book value per share as of September 30, 2021 </TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Increase in as adjusted pro forma net tangible book value per share attributable to the offering </TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Pro forma net tangible book value (deficit) per share as of September 30, 2021 </TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Dilution in net tangible book value per share to new investors </TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
</TABLE>



<P STYLE="margin-top: 0; margin-bottom: 0"></P>
<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>


<!-- Field: Page; Sequence: 55 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->53<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">After completion of this offering, our
existing stockholders would own approximately [&#9679;]% and our new investors would own approximately [&#9679;]% of the total
number of shares of our common stock outstanding after this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To the extent that outstanding options
or warrants are exercised, you will experience further dilution. In addition, we may choose to raise additional capital due to
market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these
securities may result in further dilution to our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Capitalization Table</B></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Shares Purchased</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Total Consideration</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Number</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Percent</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Amount</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Percent</B></FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Per Share</B></FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 45%"><FONT STYLE="font-size: 10pt">Existing stockholders</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">%</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 8%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">(2)</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">%</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 8%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">New Investors</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right">&nbsp;</TD>
    <TD><FONT STYLE="font-size: 10pt">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_012"></A>MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS
OF</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>You should read the following discussion
and analysis of our financial condition and results of operations together with &ldquo;Selected Consolidated Financial Data&rdquo;
and our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion and other parts
of this prospectus contain forward-looking statements that involve risks, uncertainties, and assumptions, such as our plans, objectives,
expectations, intentions, and beliefs. Our actual results could differ materially from those discussed in these forward-looking
statements. Some of the numbers included herein have been rounded for convenience of presentation. Factors that could cause or
contribute to such differences include, but are not limited to, those identified below and those discussed in the section &ldquo;Risk
Factors&rdquo; included elsewhere in this prospectus.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Tenon, a medical device company formed
in 2012, has developed a proprietary, U.S. Food and Drug Administration (&ldquo;FDA&rdquo;) approved surgical
implant system, which we call The CATAMARAN<SUP>TM </SUP>SIJ Fusion System (The CATAMARAN System) designed to fuse one or both
sacroiliac joints (&ldquo;SI-Joint&rdquo;) to treat SI-Joint dysfunction that often causes severe lower back pain. Published clinical
studies have shown that 15% to 30% of all chronic lower back pain is associated with the SI-Joint. Tenon believes that the implant
design and procedure we have developed, along with the 2D and 3D protocols for proper implantation will be received well by the
surgeon community who have been looking for a next generation device. Our initial clinical results indicate that The CATAMARAN
System implant is promoting fusion across the joint as evidenced by CT scans which is the gold standard widely accepted by the
surgeon community. Tenon is preparing for a national launch of The CATAMARAN System through a national distributor to address the
greatly underserved market opportunity that exists.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We have incurred net losses since our inception
in 2012. During 2019 and 2020 and for the nine months ended September 30, 2021 we had net losses of approximately $586,000, $705,000,
and $4,239,000, respectively. As of September&nbsp;30, 2021, we had an accumulated deficit of approximately $8.7&nbsp;million.
To date, we have financed our operations primarily through private placements of equity securities, certain debt-related financing
arrangements, and sales of our product. We have devoted substantially all of our resources to research and development, regulatory
matters and sales and marketing of our product.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 56 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->54<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Components of Results of Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Revenue</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We derive substantially all our revenue
from sales of The CATAMARAN System to limited number of surgeons. Revenue from sales of The CATAMARAN System fluctuates based on
volume of cases (procedures performed), discounts, and the number of implants used for a particular patient. Similar to other orthopaedic
companies, our revenue can also fluctuate from quarter to quarter due to a variety of factors, including reimbursement, changes
in independent sales representatives and physician activities.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Cost of Goods Sold, Gross Profit,
and Gross Margin</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We utilize contract manufacturers for production
of The CATAMARAN System implants and instrument sets. Cost of goods sold consists primarily of costs of the components of The CATAMARAN
System implants and instruments, quality inspection, packaging, scrap and inventory obsolescence, as well as distribution-related
expenses such as logistics and shipping costs. We anticipate that our cost of goods sold will increase in absolute dollars as case
levels increase.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our gross margins have been and will continue
to be affected by a variety of factors, including the cost to have our product manufactured for us, pricing pressure from increasing
competition, and the factors described above impacting our revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Operating Expenses</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our operating expenses consist of sales
and marketing, research and development, and general and administrative expenses. Personnel costs are the most significant component
of operating expenses and consist of consulting expenses, salaries, sales commissions and other cash and stock-based compensation
related expenses. We expect operating expenses to increase in absolute dollars, as we continue to invest and grow our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Sales and Marketing Expenses</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Sales and marketing expenses primarily
consist of stock-based compensation expense and commissions to our independent sales representative. Starting in May 2021 commissions
to our national distributor have been based on a percentage of sales and we anticipate that these commissions will make up a significant
portion of our sales and marketing expenses. We expect our sales and marketing expenses to increase in absolute dollars with the
commercial launch of The CATAMARAN System resulting in higher commissions, initiation of The CATAMARAN System surgeon and sales
representative training and the start of clinical studies to gain wider surgeon adoption of The CATAMARAN System. Our sales and
marketing expenses may fluctuate from period to period due to timing of sales and marketing activities related to the commercial
launch of our product.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Research and Development Expenses</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our research and development expenses primarily
consist of engineering, product development, regulatory expenses, and consulting services, outside prototyping services, outside
research activities, materials, and other costs associated with development of our product. Research and development expenses also
include related personnel and consultants&rsquo; compensation and stock-based compensation expense. We expense research and development
costs as they are incurred. We expect research and development expense to increase in absolute dollars as we improve The CATAMARAN
System, develop new products, add research and development personnel, and undergo clinical activities that may be required for
regulatory clearances of future products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>General and Administrative Expenses</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">General and administrative expenses
primarily consist of salaries, consultants&rsquo; compensation, stock-based compensation expense, and other costs for
finance, accounting, legal, compliance, and administrative matters. We expect our general and administrative expenses to
increase in absolute dollars to as we add personnel and IT infrastructure to support the growth of our business. We also
expect to incur additional general and administrative expenses as a result of operating as a public company, including but
not limited to: expenses related to compliance with the rules and regulations of the Securities and Exchange Commission and
those of the Nasdaq Capital Market on which our securities will be traded; additional insurance expenses; investor relations
activities; and other administrative and professional services. While we expect the general and administrative expenses to
increase in absolute dollars, we anticipate that it will decrease as a percentage of revenue over time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>


<!-- Field: Page; Sequence: 57 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->55<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Gain (Loss) on Investments</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Gain (loss) on investments consists of
interest income and realized gains and losses from the sale of our investments in money market and corporate debt securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Interest Expense</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Interest expense is related to borrowings
and includes deemed interest derived from the beneficial conversion prices of notes payable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Other Income (Expense), Net</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Other income and expenses have not been significant to date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Results of Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth our results
of operations for the period presented:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Year Ended December 31,</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Nine Months Ended</B></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>September 30,</B></P></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt"><B>Consolidated Statements of Operations Data:</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2019</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2020</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2020</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2021</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 52%"><FONT STYLE="font-size: 10pt">Revenue</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">53,640</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">43,820</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">30,380</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">107,400</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Cost of goods sold</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">18,257</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">18,257</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">9,129</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">38,797</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Gross profit</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">35,383</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">25,563</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">21,251</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">68,603</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Operating expenses:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">Research and development</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">371,545</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">220,884</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">166,192</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">925,076</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Sales and marketing</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">25,618</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">29,301</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">25,139</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,473,227</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">General and administrative</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">171,662</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">311,667</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">167,888</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1,569,239</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Total operating expenses</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">568,825</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">561,852</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">359,219</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">3,967,542</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">Loss from operations</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(533,442</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(536,289</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(337,968</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(3,898,939</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Interest and other income (expense), net:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">Gain on investments</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,379</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Interest expense</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(52,358</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(167,846</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(61,376</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(340,944</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Other expense</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(28</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(1,230</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(1,193</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(880</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Net loss</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(585,828</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(705,365</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(400,537</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(4,239,384</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Loss attributable to non-controlling interest</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(76,248</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(120,187</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(56,610</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(33,498</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Net loss attributable to Tenon Medical, Inc.</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">(509,580</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">(585,178</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">(343,927</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">(4,205,886</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table sets forth our results of operations as
a percentage of revenue:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Year Ended December 31,</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Nine Months Ended September 30,</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt"><B>Consolidated Statements of Operations Data:</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2019</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2020</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2020</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2021</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 52%"><FONT STYLE="font-size: 10pt">Revenue</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">100</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">%</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">100</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">%</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">100</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">%</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">100</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Cost of goods sold</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">34</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">42</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">30</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">36</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Gross profit</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">66</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">58</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">70</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">64</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Operating expenses:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">Research and development</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">693</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">504</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">547</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">861</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Sales and marketing</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">48</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">67</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">83</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,372</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">General and administrative</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">320</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">711</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">553</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1,461</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Total operating expenses</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1,060</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1,282</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1,182</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">3,694</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">Loss from operations</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(994</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(1,224</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(1,112</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(3,630</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Interest and other income (expense), net:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">Gain on investments</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Interest expense</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(98</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(383</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(202</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(317</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Other expense</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(0</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(3</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(4</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(1</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Net loss</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(1,092</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(1,610</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(1,318</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(3,947</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Loss attributable to non-controlling interest</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(142</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(274</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(186</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(31</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Net loss attributable to Tenon Medical, Inc.</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">(950</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">)%</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">(1,335</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">)%</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">(1,132</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">)%</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">(3,916</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">)%</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>


<!-- Field: Page; Sequence: 58 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->56<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B>Comparison of the Nine Months Ended September&nbsp;30, 2020 and
2021</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Revenue, Cost of Goods Sold, Gross Profit, and Gross Margin</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Nine Months Ended September 30,</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2020</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2021</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>$ Change</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>% Change</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="width: 52%"><FONT STYLE="font-size: 10pt">Revenue</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">30,380</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">107,400</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">77,020</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">254</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Cost of goods sold</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">9,129</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">38,797</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">29,668</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">325</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Gross profit</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">21,251</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">68,603</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">47,352</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">223</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 10pt">Gross margin</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">70</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">64</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Revenue.&nbsp;</I>Revenue increased approximately
$77,000, or 254%, for the nine months ended September&nbsp;30, 2021 as compared to the nine months ended September&nbsp;30, 2020.
The increase was primarily due to a 325% increase in the number of surgical procedures in which The CATAMARAN System was used,
offset by lower revenue per procedure due to a national distribution agreement in effect for sales from July 2020 through April
of 2021 that decreased the amount of revenue that the Company was able to recognize per surgical procedure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Cost of Goods Sold, Gross Profit, and Gross
Margin.</I>&nbsp;Total cost of goods sold increased approximately $30,000, or 325%, for the nine months ended September&nbsp;30,
2021 as compared to the nine months ended September&nbsp;30, 2020. The increase in cost of goods sold is due to a 325% increase
in the number of surgical procedures. Gross profit increased approximately $47,000, or 223%, to approximately $69,000 due to the
increase in the number of surgical procedures. Gross margin percentage decreased from 70% to 64% due to lower revenue per procedure
during the first four months of 2021 due to a national distribution agreement in effect for sales from July 2020 through April
of 2021 that decreased the amount of revenue that the Company was able to recognize per surgical procedure.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Operating Expenses</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Nine Months Ended September 30,</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2020</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2021</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>$ Change</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>% Change</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="width: 52%"><FONT STYLE="font-size: 10pt">Research and development</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">166,192</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">925,076</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">758,884</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">457</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD><FONT STYLE="font-size: 10pt">Sales and marketing</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">25,139</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,473,227</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,448,088</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">5,760</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">General and administrative</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">167,888</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1,569,239</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">1,401,351</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">835</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Total operating expenses</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">359,219</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">3,967,542</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">3,608,323</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Research and Development Expenses.&nbsp;</I>Research
and development expenses increased approximately $759,000, or 457%, for the nine months ended September&nbsp;30, 2021, compared
to the nine months ended September&nbsp;30, 2020. The increase was primarily due to a $339,000 increase in consulting expenses
and $208,000 in payroll expenses. We did not have any employees during the nine months ended September 30, 2020.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Sales and Marketing Expenses.&nbsp;</I>Sales
and marketing expenses increased approximately $1,448,000, or 5,760%, for the nine months ended September&nbsp;30, 2021, compared
to the nine months ended September&nbsp;30, 2020. The increase was primarily due to a one-time cash payment of $500,000 plus $380,000
in shares of common stock in connection with the amendment of our sales representative agreement, and approximately $436,000 in
shares of restricted stock to consultants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>General and Administrative Expenses</I>.
General and administrative expenses increased approximately $1,401,000, or 835%, for the nine months ended September&nbsp;30, 2021,
compared to the nine months ended September&nbsp;30, 2020. The increase was primarily due to an increase of approximately $437,000
in legal and accounting fees, $303,000 in consulting fees, $264,000 in payroll expenses, and $154,000 in stock-based compensation.
The significant increase in general and administrative expenses was a result of the Company&rsquo;s transition to an operating
company with formalization and amendment of consulting and sales representative agreements, an audit of the Company&rsquo;s 2019
and 2020 consolidated financial statements, and the creation of an infrastructure to support future growth through the hiring of
employees and establishment of a facility lease.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>


<!-- Field: Page; Sequence: 59 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->57<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Interest and Other Income (Expense),
Net</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Nine Months Ended September 30,</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2020</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2021</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>$ Change</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>% <BR>
Change</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 52%"><FONT STYLE="font-size: 10pt">Gain on investments</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">&mdash;</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">1,379</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">1,379</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Interest expense</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(61,376</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(340,944</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(279,568</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">456</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">Other expense</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(1,193</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(880</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(26</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">%)</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Gain on Investments.</I> Gain on investments
increased approximately $1,000 for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020,
due to interest on our investments in money market and corporate debt securities. We did not have any investments in corporate
debt securities during the nine months ended September 30, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Interest Expense</I>. Interest expense increased
approximately $280,000, or 456%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020,
primarily due to an $12.2&nbsp;million increase in the level of borrowings associated with closing a new convertible debt offering
during May through July 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I>Other Income (Expense), Net.&nbsp;</I>Other
income and expenses were not significant during the nine months ended September 30, 2021 and 2020.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Comparison of the Years Ended December&nbsp;31,
2019 and 2020</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Revenue, Cost of Goods Sold, Gross
Profit, and Gross Margin</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Years Ended December 31,</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2019</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2020</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">$ Change</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Change</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 52%">Revenue</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">53,640</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">43,820</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(9,820</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">(18</TD><TD STYLE="width: 1%; text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Cost of goods sold</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,257</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,257</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Gross profit</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">35,383</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">25,563</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(9,820</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(28</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Gross margin</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">58</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Revenue.&nbsp;</I>Revenue decreased
approximately $10,000, or 18%, from 2019 to 2020. The decrease was primarily due to a national distribution agreement in effect
for sales from July 2020 through April of 2021 that decreased the amount of revenue that the Company was able to recognize per
surgical procedure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Cost of Goods Sold, Gross Profit, and
Gross Margin.</I>&nbsp;Total cost of goods sold remained the same from 2019 to 2020. This is primarily due to the Company&rsquo;s
inventory used in a similar number of surgical procedures during each year. Gross profit decreased approximately $10,000, or 28%,
to $26,000 from 2019 to 2020 due to lower revenue and flat cost of goods sold.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Operating Expenses</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Years Ended December 31,</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2019</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2020</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">$ Change</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Change</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 52%; text-align: left">&nbsp;Research and development</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">371,545</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">220,884</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(150,661</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">(41</TD><TD STYLE="width: 1%; text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;Sales and marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,618</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,301</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,683</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;General and administrative</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">171,662</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">311,667</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">140,005</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">82</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;Total operating expenses</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">568,825</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">561,852</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(6,973</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Research and Development Expenses.&nbsp;</I>Research
and development expenses decreased approximately $151,000, or 41%, from 2019 to 2020. The decrease was primarily due to a $147,000
reduction in prototype materials expenditures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>


<!-- Field: Page; Sequence: 60 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->58<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Sales and Marketing Expenses.&nbsp;</I>Sales
and marketing expenses increased approximately $4,000, or 14%, from 2019 to 2020. The increase was primarily due to $13,000 in
increased stock-based compensation to an outside sales representative, offset by an $11,000 decrease in commissions expense.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>General and Administrative Expenses</I>.
General and administrative expenses increased approximately $140,000, or 82%, from 2019 to 2020. The increase was primarily due
to an increase of $82,000 in consulting fees and $41,000 in legal fees as the Company began preparations to position itself for
its convertible note offering and an initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Interest and Other Income (Expense), Net</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Years Ended December 31,</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2019</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2020</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">$ Change</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Change</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 52%; text-align: left">&nbsp;Interest expense</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(52,358</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(167,846</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(115,488</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">221</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;Other expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(28</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,230</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,202</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,293</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Interest Expense</I>. Interest expense
increased approximately $115,000, or 221%, from 2019 to 2020 primarily due to $88,000 of deemed interest on conversion of debt,
as well as the impact of $307,000 of new notes payable issued during 2020 resulting in higher average balances during the year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Other Income (Expense), Net.&nbsp;</I>Other
income and expenses were not significant during 2019 and 2020.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Liquidity and Capital Resources</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September&nbsp;30, 2021, we had cash,
cash equivalents, and investments of $9.3&nbsp;million. Since inception, we have financed our operations through private placements
of preferred stock, debt financing arrangements, and the sale of our products. As of September&nbsp;30, 2021, we had $13.0&nbsp;million
principal amount of outstanding debt, net of debt discounts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 30, 2021, we had an accumulated
deficit of $8.7&nbsp;million. During 2020 and the nine months ended September&nbsp;30, 2021 we incurred net losses of $0.7 million
and $4.2 million, respectively, and expect to incur additional losses in the future. We have not achieved positive cash flow from
operations to date. We evaluated our current cash position, historical results, forecasted cashflows, and plans in regards to liquidity.
Considering all of these factors, we believe, absent this offering, that there is substantial doubt about our ability to continue
as a going concern for the next 12 months.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Based upon our current operating plan,
we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will enable us to fund
our operating expenses and capital expenditure requirements through at least the next 12 months from the date of this offering.
We continue to face challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly
than currently expected due to (a) the uncertainty of future revenues from The CATAMARAN System; (b)&nbsp;changes we may make to
the business that affect ongoing operating expenses; (c)&nbsp;changes we may make in our business strategy; (d)&nbsp;regulatory
developments affecting our existing products; (e)&nbsp;changes we may make in our research and development spending plans; and
(f)&nbsp;other items affecting our forecasted level of expenditures and use of cash resources.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If we need to raise additional capital
to fund our operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate
financing when needed, we may have to delay, reduce the scope of or suspend one or more of our sales and marketing efforts, research
and development activities, or other operations. We may seek to raise any necessary additional capital through a combination of
public or private equity offerings, debt financings, and collaborations or licensing arrangements. If we do raise additional capital
through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms
of these securities may include liquidation or other preferences that adversely affect our stockholders&rsquo; rights. If we raise
additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we are unable to raise capital,
we will need to delay, reduce, or terminate planned activities to reduce costs. Doing so will likely harm our ability to execute
our business plans.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>


<!-- Field: Page; Sequence: 61 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->59<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Borrowings</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2015, the Company issued a $53,447
convertible promissory note to a consultant that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. In June 2019, the note and its accrued interest to date was replaced by a $68,359 convertible
promissory note that, along with accrued interest at an annual rate of 8.0%, was automatically convertible upon a preferred stock
financing of at least $1,000,000, at a conversion price equal to 90% of the price per share paid by the other cash purchasers in
the future financing. The note had a maturity date of June 12, 2021. In May 2021, the note was again replaced by a $68,359 convertible
promissory note with a maturity date of May 7, 2022 that, along with accrued interest at an annual rate of 8.0%, is automatically
convertible upon an Initial Public Offering (&ldquo;IPO&rdquo;) or a capital stock financing of at least $5,000,000. The conversion
price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2016, the Company issued a $117,530
convertible promissory note to a vendor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of January 1, 2019 and remained unpaid during 2019 and 2020.
In April 2021, the note was replaced by a $117,530 convertible promissory note with a maturity date of April 30, 2022 that, along
with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least
$5,000,000. The conversion price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing
of at least $5,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2018, the Company issued two convertible
promissory notes for an aggregate of $305,084 to the minority shareholder of its subsidiary. In September 2019 and June 2020, the
Company issued additional convertible promissory notes to the same minority shareholder for $201,309 and $106,620, respectively.
These notes, along with accrued interest at an annual rate of 10.0%, could be applied to future capital increases for the subsidiary.
In November 2020, notes payable and accrued interest totaling $784,895 was converted into the subsidiary&rsquo;s Series A preferred
stock shares, which increased the minority shareholder&rsquo;s ownership percentage from 39.2% to 43.8%. In connection with the
conversion of the notes, the Company recorded deemed interest on beneficial conversion in the amount of $88,238.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2019, the Company issued a $70,000
convertible promissory note to the Company&rsquo;s Chief Executive Officer that, along with accrued interest at an annual rate
of 8.0%, was automatically convertible upon a preferred stock financing of at least $500,000, at a conversion price equal to 80%
of the price per share paid by the other cash purchasers in the future financing. The note had a maturity date of October 12, 2022.
In April 2021, the note was replaced by a $70,000 convertible promissory note with a maturity date of April 30, 2022 that, along
with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least
$5,000,000. The conversion price is equal to 70% of the IPO price or $1.9565 per share in the event of a capital stock financing
of at least $5,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2019, the Company issued a $50,000
convertible promissory note to an investor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 80% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of October 21, 2022. In May 2021, the note was replaced by
a $50,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest at an annual rate of
8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion price is equal
to 70% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2020, the Company issued a
$200,000 convertible promissory note to the same investor that, along with accrued interest at an annual rate of 8.0%, was automatically
convertible upon a preferred stock financing of at least $2,000,000, at a conversion price equal to 80% of the price per share
paid by the other cash purchasers in the future financing. The note had a maturity date of November 16, 2022. In May 2021, the
note was replaced by a $200,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest
at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion
price is equal to 70% of the IPO price or 70% of the price per share paid by the other cash purchasers in the future financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 62 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->60<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2021, the Company issued a promissory
note of $130,560 to a law firm. The note bore interest at 3.0% per annum and had a maturity date of the earlier of July 27, 2021,
the closing of a debt or equity financing, or the closing of a change in control transaction. The interest rate was to increase
to 5.0% if all principal and interest had not been paid by the maturity date. The Company repaid this note and accrued interest
in May 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2021, the Company issued two convertible
promissory notes of $40,000 and $170,000, respectively, to the same vendor described above that, along with accrued interest at
an annual rate of 8.0%, are automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion
price is equal to 70% of the IPO price or 70% of the price per share paid by the other cash purchasers in the future financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In June 2021, the Company&rsquo;s subsidiary
issued a convertible promissory note for approximately $107,000 to the minority shareholder of its subsidiary. The note was due
upon the earlier of a capital increase or December 31, 2021. This convertible promissory note, along with accrued interest at an
annual rate of 8.0%, was convertible into the subsidiary&rsquo;s Series A Preferred Stock. The Company repaid this note and accrued
interest in October 2021.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the period May through July 2021,
the Company issued convertible promissory notes to multiple investors for aggregate proceeds of $12.2 million. The notes, along
with accrued interest at an annual rate of 8.0%, are automatically convertible upon an IPO, a capital stock financing of at least
$5,000,000, or a change of control transaction. The conversion price upon an IPO or a capital stock financing is equal to the lesser
of 70% of the price per share paid by the other cash purchasers, or the price per share at a Company valuation of $22,500,000.
Upon a change of control, noteholders will receive the greater of a 100% premium on the outstanding principal, plus accrued interest,
or the conversion of the principal and accrued interest into common stock at a Company valuation of $22,500,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">As of December&nbsp;31, 2020 and September&nbsp;30, 2021 we were
in compliance with all of our debt obligations and covenants.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Contractual Obligations</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table summarizes our contractual obligations as
of December&nbsp;31, 2020:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Payments Due By Period</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">Less than</TD><TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center">More<BR>
 than</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">1 year</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">1-3 years</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">4-5 years</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">5 years</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 40%; text-align: justify">Principal obligations on the debt arrangements (1)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">505,889</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">185,889</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">320,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">Interest obligations on the debt arrangements (2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">69,086</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,508</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,578</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify">Operating leases</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify; padding-bottom: 1pt">Purchase obligations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify; padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">574,975</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">241,397</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">333,578</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(1)</TD><TD>For further discussion, see Note 4 to our consolidated financial statements.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">
<TR STYLE="vertical-align: top">
<TD STYLE="width: 0"></TD><TD STYLE="width: 0.25in">(2)</TD><TD>We had no operating lease obligations as of December 31, 2020.</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 63 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->61<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2021, we entered into a new five-year
lease for our Los Gatos, California facility. The total commitment is $1,461,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Cash Flows</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth the primary
sources and uses of cash for each of the periods presented below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Nine Months Ended September 30,</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2020</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>2021</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>$ Change</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>% Change</B></FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">Net cash (used in) provided by:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 52%"><FONT STYLE="font-size: 10pt">Operating activities</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">(134,923</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">(2,602,326</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">(2,467,403</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">1,829</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">Investing activities</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(7,878,415</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(7,878,415</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">)&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-size: 10pt">Financing activities</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">105,273</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">11,648,309</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">11,543,036</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">10,965</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">Effect of foreign currency translation on cash flow</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">3,244</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(4,066</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(7,310</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)</FONT></TD>
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(225</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">)%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Net increase (decrease) in cash and cash equivalents</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">(26,406</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">)&nbsp;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">1,163,502</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">1,189,908</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double">&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Years Ended December 31,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2019</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">$ Change</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% Change</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Net cash (used in) provided by:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 52%; text-align: left">&nbsp;Operating activities</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(235,203</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">(167,363</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 9%; text-align: right">67,840</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">(29</TD><TD STYLE="width: 1%; text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;Investing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">N/A</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;Financing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">321,309</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">254,800</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(66,509</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(21</TD><TD STYLE="text-align: left">)%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;Effect of foreign currency translation on cash flow</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,373</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,230</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,857</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">354</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;Net increase in cash and cash equivalents</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">87,479</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">93,667</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,188</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Cash Used in Operating Activities</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Net cash used in operating activities increased
$2.5&nbsp;million, or 1,829%, from the nine months ended September&nbsp;30, 2020 to the nine months ended September&nbsp;30, 2021.
The increase in the net cash used in operating activities was primarily due to an increase of $3.8&nbsp;million in our net loss
during the nine months ended September 30, 2021 as we began to utilize the cash received from our convertible debt offering during
May through July of 2021, offset by an increase in non-cash interest and stock-based expenses totaling approximately $1.3 million.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Net cash used in operating activities decreased
approximately $68,000, or 29%, from 2019 to 2020. The decrease in the net cash used in operating activities was primarily due to
2019 sales collected during 2020, and a greater portion of operating expenses remaining in accounts payable and accrued expenses
at the end of 2020, as compared to 2019.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Cash Used in Investing Activities</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Net cash used in investing activities increased
$7.9 million from the nine months ended September&nbsp;30, 2020 to the nine months ended September&nbsp;30, 2021. Cash used in
investing activities for the nine months ended September 30, 2021 was primarily due to the purchase of $7.9 million of corporate
debt securities using the proceeds from our convertible debt offering during May through July of 2021.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There was no cash used in investing activities
during the years ended December 31, 2019 and 2020.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Cash Provided by Financing Activities</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Cash provided by financing activities increased
$11.5&nbsp;million, or 10,965%, from the nine months ended September&nbsp;30, 2020 to the nine months ended September&nbsp;30,
2021. Cash provided by financing activities for the nine months ended September&nbsp;30, 2020 consisted primarily of net proceeds
of $0.1&nbsp;million from the issuance of convertible notes payable. Cash provided by financing activities for the nine months
ended September 30, 2021 consisted of $12.1 million proceeds from our convertible debt offering, offset by notes payable repayments
of $131,000, debt issuance costs of $71,000, and deferred IPO offering costs of $222,000.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 64 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->62<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cash provided by financing activities decreased
approximately $67,000, or 21%, from 2019 to 2020. Cash provided by financing activities during 2019 consisted of net proceeds of
$321,000 from the issuance of convertible notes payable. Cash provided by financing activities during 2020 consisted of net proceeds
of $307,000 from the issuance of convertible notes payable, offset by payments of debt issuance costs of $22,000, and payments
of public offering costs of $30,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Critical Accounting Policies, Significant
Judgments, and Use of Estimates</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This discussion and analysis of our financial
condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with
U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated
financial statements, as well as the reported revenue generated, and expenses incurred during the reporting periods. Our estimates
are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates. We believe that the accounting policies discussed below are
critical to understanding our historical and future performance, as these policies relate to the more significant areas involving
management&rsquo;s judgments and estimates. For more detail on our critical accounting policies, see Note 2 to our consolidated
financial statements appearing elsewhere in this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Investments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company classifies its investments
in marketable debt securities as available-for-sale and records them at fair value in its consolidated balance sheets. The net
unrealized gains and losses are recorded as a separate component of stockholders&rsquo; equity. Realized gains and losses are recorded
in the consolidated statements of operations and comprehensive loss. Margin loans for which a right of setoff exists are classified
in the consolidated balance sheets as reductions to the investment value. The Company determines any realized gains or losses on
the sale of marketable debt securities on a specific identification method, and records such gains and losses as a component of
other income (expense), net.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Revenue Recognition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s revenue is derived
from the sale of its products to medical groups and hospitals through its independent sales representative and national distributor
in Florida and Texas.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In accordance with Accounting Standards
Codification 606, Revenue from Contracts with Customers (&quot;ASC 606&quot;), which the Company adopted effective January&nbsp;1,
2019, revenue is recognized when control is transferred to the customer, in an amount that reflects the consideration the Company
expects to be entitled to in exchange for the goods or services. The Company had no contracts with customers prior to the date
of adoption. Under ASC 606, the Company applies the following five step approach: (1) identify the contract with a customer, (2)
identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to
the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company generates its revenue from
the sale of products through an independent sales representative and national distributor to certain hospitals or medical facilities
where the products are delivered in advance of a procedure. The performance obligation is the delivery of the products along with
the completion of the surgery and therefore, revenue is recognized upon delivery to the customers and completion of the surgery,
net of rebates and price discounts. The Company accounts for rebates and price discounts as a reduction to revenue, calculated
based on the terms agreed to with the customer. Historically, there has been no significant rebates or price discounts. Sales prices
are specified in either the customer contract, agreed price list, or purchase order, which is executed prior to the transfer of
control to the customer. As of April 2020, the Company has an agreement in place with a national distributor, which includes standard
terms that do not allow for payment contingent on resale of the product, obtaining financing, or other terms that could impact
the distributor&rsquo;s payment obligation. From April 2020 through May 20, 2021, the distributor billed and collected from the
end-user customer, was required to pay the Company on the 5th day of the calendar month after the customer paid the distributor,
and the Company recognized revenue based on the net amount received from the distributor. Prior to April 2020 and subsequent to
May 20, 2021, the Company billed and collected directly with the end-user customers and recognized revenue based on the gross sales
price. For direct sales to end-user customers, the Company's standard payment terms are generally net&nbsp;30&nbsp;days.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company offers its standard warranty
to all customers. The Company does not sell any warranties on a standalone basis. The Company&rsquo;s warranty provides that its
products are free of material defects and conform to specifications, and includes an offer to replace or refund the purchase price
of defective products. This assurance does not constitute a service and is not considered a separate performance obligation. The
Company estimates warranty liabilities at the time of revenue recognition and records it as a charge to cost of goods sold.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 65 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->63<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Stock-Based Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We account for stock-based compensation
in accordance with&nbsp;ASC 718, Compensation - Stock Compensation. We account for all stock-based compensation awards using a
fair-value method on the grant date and recognizes the fair value of each award as an expense over the requisite service period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We recorded total&nbsp;non-cash&nbsp;stock-based
compensation expense of $30,570, $16,649, and $1,023,951 during 2019, 2020, and the nine months ended September 30, 2021, respectively.
At September&nbsp;30, 2021, we had $1.6&nbsp;million of total unrecognized stock-based compensation expense related to stock option
grants. This amount will be recognized as expense over a weighted-average period of 2.7 years. We expect to continue to grant
stock options in the future, and, to the extent that we do, our actual stock-based compensation expense recognized in future periods
will likely increase.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The intrinsic value of all outstanding options
as of September&nbsp;30, 2021 was $_______ million based on the assumed initial public offering price of $_______&nbsp;per share,
which is the midpoint of the price range set forth on the cover page of this prospectus, of which $______&nbsp;million related
to vested options and $______&nbsp;million related to unvested options.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Determining Fair Value of Stock Options</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We recognize compensation costs related
to stock-based awards granted to employees, directors, and consultants including stock options, based on the estimated fair value
of the awards on the date of grant. We estimate the grant date fair value, and the resulting stock-based compensation, using the
Black-Scholes option-pricing model. The grant date fair value of the stock-based awards is generally recognized on a straight-line
basis over the requisite service period, which is generally the vesting period of the respective awards.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Black-Scholes option-pricing model requires the use of subjective
assumptions to determine the fair value of stock-based awards. These assumptions include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify"><I>Expected Term</I>&mdash;The expected term represents the period that stock-based awards are expected to be outstanding.
The expected term for option grants is determined using the simplified method. The simplified method deems the expected term to
be the midpoint between the vesting date and the contractual life of the stock-based awards.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in"><P STYLE="text-align: justify; margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify"><I>Expected Volatility</I>&mdash;Since we have been privately held and do not have any trading history for our common stock,
the expected volatility was estimated based on the average volatility for comparable publicly traded companies over a period equal
to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the
life cycle, or area of specialty.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><I>Risk-Free Interest Rate</I>&mdash;The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect
at the time of grant for periods corresponding with the expected term of option.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in"><P STYLE="text-align: justify; margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify"><I>Expected Dividend</I>&mdash;We have never paid dividends on our common stock and have no plans to pay dividends on our common
stock. Therefore, we used an expected dividend yield of zero.</TD></TR></TABLE>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in"><P STYLE="text-align: justify; margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify"><I>Forfeitures</I>&mdash;We account for forfeitures as they occur.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 66 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->64<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our board of directors intends all options
granted to be exercisable at a price per share not less than the per share fair value of our common stock underlying those options
on the date of grant. The estimated fair value of our common stock was determined at each valuation date by a third-party independent
valuation firm in accordance with the guidelines outlined in the&nbsp;<I>American Institute of Certified Public Accountants Practice
Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation</I>. These valuations took into account numerous
factors, including developments at our company and market conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The valuations as of December 31 2018,
2019, and 2020 used the income approach to determine the Company&rsquo;s enterprise value. The income approach recognizes
that the value of an investment is premised on the receipt of future economic benefits. Within the income approach, the
Discounted Cash Flow (&ldquo;DCF&rdquo;) method, estimates the value of the future cash flows that a company will generate in
two stages: (1) a discrete projection period; and (2) a terminal value, capturing the value of all cash flows beyond the
discrete projection period. The DCF was weighted 100% in these valuations and was based on financial projections provided by
management. The key assumptions in the financial projections are the annual revenue, gross margins, annual operating
expenses, and investments in working capital and capital equipment. The terminal values were estimated by applying an
enterprise value to a revenue multiple. The discrete projected free cash flows and terminal value were discounted to present
value using a Weighted Average Cost of Capital (&ldquo;WACC&rdquo;) of 22.9% for 2018, 20.5% for 2019, and 21.7% for 2020.
These discounted figures were summed to arrive at the enterprise values.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Adjustments were made to the enterprise values
for the Company&rsquo;s cash and debt as of the valuation dates to determine the applicable equity values. The option pricing method
(&ldquo;OPM&rdquo;) was used to allocate the equity values to our various equity securities including our common stock. The OPM
treats common stock and preferred stock as call options on the Company&rsquo;s equity value, with exercise prices based on the
liquidation preferences and conversion rights of the preferred stock. The OPM relies on the Black-Scholes option pricing model
and requires assumptions for equity volatility. The equity volatility was determined to be 70.0% based on the volatility rate of
certain comparable public companies. A discount for lack of marketability (&ldquo;DLOM&rdquo;) of 35% was applied to the common
stock in the valuations for years 2018 and 2019. A 30% DLOM was applied in the 2020 valuation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The May 21, 2021 valuation used a hybrid method
which combines the Probability Weighted Expected Return Method (&ldquo;PWERM&rdquo;) with the OPM. The PWERM considers a set of
discrete potential liquidity scenarios for the Company, the value common stock would receive in each scenario, and the time required
and risk inherent in achieving those values. The May 21, 2021 valuation examined the following scenarios for the Company: (i) an
IPO; (ii) remaining private and raising capital; and (iii) dissolution. Within the IPO scenario, 100% weighting was placed on the
Market Approach for determining the enterprise value. The Market Approach assumes that businesses operating in the same industry
will share similar characteristics, and therefore a comparison of the business to similar businesses whose financial information
is publicly available may provide a reasonable basis to estimate a subject business&rsquo;s value. The equity value in the IPO
scenario was estimated considering guideline IPOs, the anticipated size of the Company&rsquo;s offering, and forecasted cash and
debt. The estimated common stock value as of the IPO was present valued using a discount rate of 22.4% based on Company&rsquo;s
WACC, less an adjustment of 2.0% to reflect the risk reduction of an IPO event.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The August 31, 2021 valuation used a hybrid
method which combines the Probability Weighted Expected Return Method (&ldquo;PWERM&rdquo;) with the OPM. The PWERM considers a
set of discrete potential liquidity scenarios for the Company, the value common stock would receive in each scenario, and the time
required and risk inherent in achieving those values. The August 31, 2021 valuation examined the following scenarios for the Company:
(i) an IPO; (ii) remaining private and raising capital; and (iii) dissolution. Within the IPO scenario, 100% weighting was placed
on the Market Approach for determining the enterprise value. The Market Approach assumes that businesses operating in the same
industry will share similar characteristics, and therefore a comparison of the business to similar businesses whose financial information
is publicly available may provide a reasonable basis to estimate a subject business&rsquo;s value. The equity value in the IPO
scenario was estimated considering guideline IPOs, the anticipated size of the Company&rsquo;s offering, and forecasted cash and
debt. The estimated common stock value as of the IPO was present valued using a discount rate of 32.0% based on Company&rsquo;s
WACC, less an adjustment of 5.0% to reflect the risk reduction of an IPO event.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In determining the enterprise value within
the remain private scenario, 100% weighting was applied to the DCF Method under the income approach, in the same manner as in
the December 31, 2018, 2019, and 2020 valuations. The discount rate in this scenario was determined to be 22.4% based on Company&rsquo;s
WACC. Adjustments were made to the enterprise value for the Company&rsquo;s cash and debt as of the valuation date to determine
the equity value in this scenario. The OPM was used to allocate the equity value to our common stock. The equity volatility rate
was determined to be 70.0% based on the volatility rate of certain comparable public companies. DLOMs of (i) 10.0% in the IPO
scenario and (ii) 30.0% in the remaining private scenario were applied to the common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Following the closing of this offering,
the fair value of our common stock will be determined based on the closing price of our common stock on the Nasdaq Capital Market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Common Stock Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We account for warrants for shares of common
stock as equity in accordance with the accounting guidance for derivatives. The accounting guidance provides a scope exception
from classifying and measuring as a financial liability a contract that would otherwise meet the definition of a derivative if
the contract is both (i)&nbsp;indexed to the entity&rsquo;s own stock and (ii)&nbsp;classified in the stockholders&rsquo; deficit
section of the consolidated balance sheet. We estimate the fair value of our warrants for shares of common stock by using the Black-Scholes
option pricing model. Warrants classified as equity are recorded as additional&nbsp;paid-in&nbsp;capital on the consolidated balance
sheet and no further adjustments to their valuation are made after the issuance of the warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Income Taxes</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We account for income taxes under the asset
and liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are
expected to affect taxable income. We assess the likelihood that the resulting deferred tax assets will be realized. A valuation
allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 67 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->65<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December&nbsp;31, 2020, we had net
operating loss carryforwards of approximately $1.7 million, $4.3&nbsp;million, and $1.7 million available to reduce future taxable
income, if any, for federal, state, and foreign income tax purposes, respectively. If not utilized, our federal, state, and foreign
net operating loss carryforwards begin to expire in 2034, 2032, and 2021, respectively, and valuation allowances have been established,
where necessary. These net operating loss carryforwards could expire unused and be unavailable to reduce future income tax liabilities,
which could materially and adversely affect our results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We did not record a provision or benefit for
income taxes during the nine months ended September&nbsp;30, 2021 or 2020. We continue to maintain a full valuation allowance against
our net deferred tax assets.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We assess all material positions taken
in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment
or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the positions
sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon
ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and we will determine
whether (i)&nbsp;the factors underlying the sustainability assertion have changed and (ii)&nbsp;the amount of the recognized tax
benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning
the recognition and measurement of a tax benefit may change as new information becomes available.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Tax Reform Act of 1986 limits the use
of net operating loss and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company.
We have not completed a study to determine whether any ownership changes per the provisions of Section&nbsp;382 of the Tax Reform
Act of 1986, as amended, as well as similar state provisions, has occurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Off-Balance&nbsp;Sheet Arrangements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2019 and 2020 and for the nine
months ended September&nbsp;30, 2021, we did not have any relationships with unconsolidated organizations or financial partnerships,
such as structured finance or special purpose entities that would have been established for the purpose of facilitating&nbsp;off-balance&nbsp;sheet
arrangements or other contractually narrow or limited purposes.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Seasonality</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our business could be affected by seasonal
variations. For instance, we expect to experience lower sales in the summer months and higher sales in the last quarter of the
fiscal year. However, taken as a whole, seasonality does not have a material impact on our financial results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>JOBS Act Accounting Election</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2012, the JOBS Act was enacted.
Section&nbsp;107(b) of the JOBS Act provides that an &ldquo;emerging growth company&rdquo; can take advantage of the extended transition
period provided in Section&nbsp;7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus,
an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to
private companies. We have elected to avail ourselves of this exemption and, therefore, we will not be subject to the same new
or revised accounting standards as other public companies that are not emerging growth companies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Quantitative and Qualitative Disclosures
about Market Risk</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Interest Rate Risk</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are exposed to interest rate risks related
to our cash and cash equivalents. We had cash and cash equivalents of $246,000 and $1.4&nbsp;million as of December&nbsp;31, 2020
and September&nbsp;30, 2021, respectively, which&nbsp;consist of bank deposits and money market funds. Our cash balance consisted
of bank deposits in 2020. Such interest-earning instruments carry a degree of interest rate risk; however, historical fluctuations
in interest income have not been significant.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 68 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->66<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We
had outstanding debt of $575,000 and $13.0 million as of December&nbsp;31, 2020 and September&nbsp;30, 2021, which accrues interest
at a fixed rate of 8.0%. In the ordinary course of business, we may enter into contractual arrangements to reduce our exposure
to interest rate risks. We do not believe that a 10% change in interest rates would have a significant impact on our consolidated
financial statements.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Foreign Currency Exchange Risk</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We operate in one country other than the
United States, and, therefore, we are exposed to foreign currency risks. All of our sales to date have been inside of the United
States in US Dollars. Operating expenses related to our Swiss subsidiary are largely denominated in the local currency, Swiss Francs.
We do not believe that a 10% change in foreign currency exchange rates would have a significant impact on our net income. We do
not currently hedge our exposure to foreign currency exchange rate fluctuations; however, we may choose to hedge our exposure in
the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Recent Accounting Pronouncements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2016, the FASB issued ASC 842,
&ldquo;<I>Leases</I>&rdquo;. This standard requires lessees to present right-of-use assets and lease liabilities on the balance
sheet. The new guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative periods
in the financial statements and is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted.
We early adopted ASC 842 upon the inception of our facility lease in June 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2020, the FASB issued ASU 2020-6,&nbsp;<I>Debt&mdash;Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging&mdash;Contracts in Entity&rsquo;s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity&rsquo;s Own Equity</I>&nbsp;(&ldquo;ASU 2020-6&rdquo;),
which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash
conversion feature and (2) convertible instruments with a beneficial conversion feature. Upon adoption, a convertible debt instrument
will be accounted for as a single liability at amortized cost unless (a) the convertible instrument contains features that require
bifurcation as a derivative under ASC 815,&nbsp;<I>Derivatives and Hedging</I>, or (b) the convertible debt instrument was issued
at a substantial premium. These changes will reduce reported interest expense and increase reported net income for entities that
have issued a convertible instrument that was bifurcated according to previously existing rules. ASU 2020-6 also requires the application
of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available.
The new guidance is effective for public entities excluding smaller reporting companies in fiscal years beginning after December
15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. For public business entities
that meet the definition of a smaller reporting company, the amendments in ASU 2020-6 are effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2023. ASU 2020-6 is effective for us in the first quarter of fiscal
2024. We are currently evaluating the impact of adoption of ASU 2020-6 on our consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><A NAME="a_013"></A><B>BUSINESS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Introduction</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Tenon Medical, Inc. (&ldquo;Tenon&rdquo;),
a medical device company formed in 2012, has developed a proprietary, U.S. Food and Drug Administration (&ldquo;FDA&rdquo;) cleared
surgical implant system, which is designed to optimize sacroiliac joint fixation / fusion surgery and corresponding outcomes. Tenon
is preparing a national launch of this system to address the greatly underserved market opportunity that exists in this space.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>The Opportunity</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We estimate that over 30&nbsp;million American
adults have chronic lower back pain<I>.&nbsp;</I>Published clinical studies have shown that 15% to 30% of all chronic lower back
pain is associated with the SI-Joint. For patients whose chronic lower back pain stems from the Sacroiliac Joint (&ldquo;SI-Joint&rdquo;),<I>&nbsp;</I>our
experience in both clinical trials and commercial settings indicates the system to be introduced by Tenon could be beneficial for
patients who are properly diagnosed and screened for surgery by trained healthcare providers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 69 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->67<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2019, approximately 475,000 patients
in the United States were estimated to have received an aesthetic injection to temporarily alleviate pain emanating from the SI-Joint
and/or to diagnose SI-Joint pain. Additionally, a number of non-surgical technologies have been introduced in the past 10 years
to address patients who do not respond to injection therapy, including systemic oral medications and opioids.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To date, the penetration of a surgical
solution for this market has been relatively low (5-7%). We believe this is due to complex surgical approaches and suboptimal implant
design of existing options. The penetration of this market with an optimized surgical solution is Tenon&rsquo;s focus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We believe the SI-Joint is the last major joint
to be successfully addressed by the orthopaedic implant industry. Studies have shown that disability resulting from disease of
the SI-Joint is comparable to the disability associated with a number of other serious orthopaedic conditions, such as knee and
hip arthritis and degenerative disc disease, each of which has surgical solutions where an implant is used and a multi-billion-dollar
market exists.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The SI-Joint</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="img15.jpg" ALT="">&nbsp;</P>


<P STYLE="margin-top: 0; margin-bottom: 0"></P>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The SI-Joint is a strong weight bearing synovial
joint situated between the lumbar spine and the pelvis and is aligned along the longitudinal load bearing axis of the human spine
when in an upright posture. It functions as a force transfer conduit where it transfers axial loads bi-directionally from the spine
to the pelvis and lower extremities and allows forces to be transmitted from the extremities to the spine. It also provides load
sharing between the hip and spine to contribute towards attenuation of impact shock and stress from activities of daily living.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The SI-Joint is a relatively immobile joint
that connects the sacrum (the spinal segment that is attached to the base of the lumbar spine at the L5 vertebra) and the ilium
of the pelvis. Each SI-Joint is approximately 2mm wide and irregularly shaped.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Motion of the SI-Joint features vertical
shear and rotation. Although the rotational forces about the SI-Joint are relatively low, repetitive motions created by daily activities
such as walking, jogging, twisting at the hips, and jumping can increase the stresses on the SI-Joint. If the SI-Joint is compromised
through injury or degeneration, the load bearing and motion restraints from the surrounding anatomical structures of the SI-Joint
will be compromised resulting in abnormal stress transfers across the joint to these structures, thereby further augmenting the
degenerative cascade of the SI-Joint. Eventual pain and cessation of an individual&rsquo;s normal activities due to a painful and
unstable SI-Joint have led to an increase in the recent development of SI-Joint stabilization devices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 70 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->68<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Diagnosis</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Historically, diagnosing pain from the
SI-Joint was not routinely a focus of orthopaedic or neurosurgery training during medical school or residency programs. Due to
its invasiveness, post-operative pain, and muscle disruption along with a difficult procedure overall, the open SI-Joint fusion
procedure was rarely taught in these settings.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The emergence of various SI-Joint surgical
technologies has generated a renewed discussion of SI-Joint issues. Of particular focus is the diagnostic protocol utilized to
properly select patients for SI-Joint surgery. Patients with low back pain typically start with primary care physicians who often
refer to pain specialists. Here, the patient will go through traditional physical therapy combined with oral medications (anti-inflammatory,
narcotic, etc.). If the patient fails to respond to these steps the pain specialist may move to therapeutic injections of the SI-Joint.
These injections may serve to lessen inflammation to the point that the patient is satisfied. However, the impact from these injections
is often transient. In this case the patient is often referred to a surgeon to determine if the patient may be a candidate for
surgical intervention. A series of provocative tests in clinic, combined with a specific injection protocol to isolate the SI-Joint
as the pain generator is then utilized to confirm the need for surgical intervention. Published literature has shown this technique
to be a very effective step to determine the best treatment to alleviate pain.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Tenon has developed its own protocol to
instruct and train the medical community on how to perform provocative maneuvers in a physician&rsquo;s office that can reveal
the SI-Joint as the source of pain. If the provocative tests are positive, surgeons (or other physicians) confirm the diagnosis
by injecting a small amount of local anesthetic into the joint under fluoroscopic guidance. The SI-Joint is confirmed as a pain
source if the local anesthetic produces immediate and significant pain reduction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Limitations of Existing Treatment Options</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Surgical fixation and fusion of the SI-Joint
with an open surgical technique was first reported in 1908, with further reports in the 1920s. The open procedure uses plates and
screws, requires a&nbsp;6&nbsp;to&nbsp;12-inch&nbsp;incision and is extremely invasive. Due to the high invasiveness and associated
morbidity, the use of this procedure is limited to cases involving significant trauma, tumor, etc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Less invasive surgical options along with
implant design began to emerge over the past 15 years. These options feature a variety of approaches and implant designs and have
been met with varying degrees of adoption. Lack of a standard and accepted diagnostic approach, complexity of approach, high morbidity
of approach, abnormally high complication rates and inability to radiographically confirm fusion have all been cited as reasons
for low adoption of these technologies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Non-Surgical&nbsp;Treatment of Sacroiliac Joint Disease</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Although a number of&nbsp;non-surgical&nbsp;treatments exist
for sacroiliac joint pain, we believe based on literature that none have delivered the long-term pain relief that has been seen
with SI-Joint fixation. Although not as yet published, the results experienced by the initial 30 patients treated in our limited
release have had a dramatic reduction in pain relief. Non-surgical treatments include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify"><B>Drug Therapy</B>: including opiates and&nbsp;non-steroidal&nbsp;anti-inflammatory medications.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify"><B>Physical Therapy</B>: which can involve exercises as well as massage.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify"><B>Intra-Articular Injections of Steroid Medications</B>: which are typically performed by physicians who specialize in pain
treatment or anesthesia.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify"><B>Radiofrequency Ablation</B>: or the cauterizing of the lateral branches of the sacral nerve roots.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 71 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->69<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>The Market</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Based on market research and internal estimates,
Tenon believes the potential market for surgical intervention of the SI-Joint to be 279,000 procedures annually in the US alone,
for a potential annual market in excess of $2.2 billion. These estimates are driven by coding data for SI-Joint injections to treat
pain and informed assumptions relative to surgical intervention candidacy</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Based on public information, we believe
that the largest clinical device supplier in this market does approximately 10-11,000 SI-Joint fixations a year representing the
largest market share. The other competitive devices that are offered are all products generally part of much larger companies with
a variety of orthopaedic devices and as such do not specifically call out the number of specific SI-Joint procedures performed with
their products. It is our belief that all other competitive devices represent approximately another 5,000 potential SI-Joint procedures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Based on this analysis we believe the market
is vastly underserved and only penetrated 5-7%, leaving tremendous upside for a next generation device that meets the needs of
this market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Competitive Landscape</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We believe Tenon is the first company to
develop and manufacture a novel posterior/inferior approach featuring a dual pontoon fixation technology cleared by the FDA expressly
for SI-Joint fusion. The approach, referred to as PiSIF&trade; (Posterior Inferior Sacroiliac Fusion) is focused on these critical
aspects of the surgical procedure:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">1.</TD><TD STYLE="text-align: justify">Safety: the approach trajectory and angle are away from the neural foramen</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">2.</TD><TD STYLE="text-align: justify">Efficiency: the approach is direct to the SI Joint, which allows for visualization of the joint
and passes through minimal muscle structures, resulting in a faster and more efficient surgical procedure and reduced post-op pain
for the patient</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">3.</TD><TD STYLE="text-align: justify">Targeted Anatomy: the approach places the implant in the aspect of the SI-Joint with the densest
bone, providing maximum fixation and resistance to vertical shear. This ensures a secure press fit of the implant, reducing the
incidence of revision surgery due to implant loosening, which we believe is the reason for many competitive device failures as
reported to the FDA Medical Device Reporting (MDR).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Note the trajectory used in the PiSIF&trade;
approach:</P>


<!-- Field: Page; Sequence: 72 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->70<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;<IMG SRC="img05.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Over the past several years, other companies
have recognized the opportunity and have entered the minimally invasive SI-Joint fixation market. However, all these products are
either screw / triangular rod-based or allograft products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the United States, we believe that
our primary competitors will be SI-Bone, Inc., Globus Medical, Inc., Medtronic plc and RTI Surgical, Inc. We also
compete against non-hardware products, such as allograft bone implants. These allograft products are comprised of human cells
or tissues and are regulated by the FDA differently from implantable medical devices made of metallic or other
non-tissue-based materials.&nbsp;&nbsp;The following chart is a comparison of specifications and features among the various
available clinical devices:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Current Clinical Device Comparison &ndash;
SI-Joint</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="img06.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 73 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->71<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We believe from our study of the market
that many physicians who have been trained to use one of the existing clinical devices have not adopted the procedure for a variety
of reasons. Complexity of approach, high morbidity of approach, abnormally high complication rates and inability to radiographically
confirm fusion have all been cited as reasons for low adoption of these technologies</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following are the primary factors on which companies compete
in our industry:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">product and clinical procedure effectiveness;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">ease of surgical technique and use of associated instruments;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">safety;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">published clinical outcomes and evidence;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">sales force knowledge and service levels;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">product support and service, and customer service;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">comprehensive training, including disease, anatomy, diagnosis and treatment;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">product innovation and the speed of innovation;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">intellectual property;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">accountability and responsiveness to customers&rsquo; demands;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">pricing and reimbursement;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">scientific (biomechanics) data; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">attracting and retaining key personnel.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Tenon believes that refined approaches
and improved implant design will open the door to enhanced adoption and further penetration of this important market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>The CATAMARAN&trade; SIJ Fusion System
Solution</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Tenon currently sells The CATAMARAN&trade;
SIJ Fusion System (&ldquo;The CATAMARAN System&rdquo;) to a limited number of surgeon advisors to develop the product for a commercial
launch. Tenon is planning a limited of The CATAMARAN System in the fourth quarter of 2021 and a full commercial launch in the first
quarter of 2022, which will address what we believe is a large market opportunity with a superior product. The CATAMARAN System
includes instruments and implants designed to prepare and fixate the SI-Joint for fusion. The CATAMARAN System is distinct from
other competitive offerings in the following ways:</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Posterior / Inferior Sacroiliac Fusion Approach (PiSIF&trade;)</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Reduced Approach Morbidity</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Direct And Visualized Approach to the SI-Joint</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Single Implant &ldquo;One and Done&rdquo; Technique</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Insertion Trajectory Away from the Neural Foramen</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Autologous Bone Grafting in the Ilium, Sacrum and Bridge</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">Radiographic Confirmation of Bridging Bone Fusion of the SI-Joint</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fixation device and its key features
are shown below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; text-align: justify"><FONT STYLE="font-size: 10pt"></FONT><IMG SRC="img04.jpg" ALT=""></TD>
    <TD STYLE="width: 50%">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Key Features</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&rdquo;Pontoon&rdquo; in the ilium</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&ldquo;Pontoon&rdquo; in the sacrum</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&ldquo;Pontoons and Bridge&rdquo; filled with autologous bone
        from drilling process</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Leading edge osteotome creates defect and eases insertion</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 74 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->72<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The CATAMARAN System is a singular implant
designed with several proprietary components which allow for the &ldquo;One and Done&rdquo; feature of the implant. With its patented
dual pontoon open cell design which enables the surgeon to pack the pontoons with the patient&rsquo;s own autologous bone promoting
bone fusion across the joint, The CATAMARAN System is designed specially to resist vertical shear and rotation of the joint in
which it was implanted, helping stabilize the joint in preparation for eventual fusion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The instruments we have developed are proprietary
to The CATAMARAN System and are designed for the procedure to be performed via the previously described PiSIF&trade; approach.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Tenon also has developed a proprietary
2D placement protocol as well as a protocol for 3D navigation utilizing the latest techniques in spine surgery. We believe these
Tenon advancements will further ensure the safety of the procedure and encourage more surgeons to adopt the procedure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The CATAMARAN System, as mentioned previously,
is placed in the densest aspect of the SI-Joint as confirmed by the pre-op planning images below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD ROWSPAN="2" STYLE="width: 49%; text-align: justify"><FONT STYLE="font-size: 10pt"></FONT><IMG SRC="img07.jpg" ALT=""></TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 49%">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Surgical Plan Key:</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Yellow: Guidewire</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Purple: Lateral Pontoon (Ilium)</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Green: Medial Pontoon
        (Sacrum)</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Notes:</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upper Right Quadrant: The green and purple pontoons represent
        the placement in the dense bone inferior &ndash; contrasted with the gap superiorly where competitive systems are most often placed,
        often times resulting in revision surgery.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Lower Right Quadrant: The yellow and purple outlines represent
        The CATAMARAN System pontoons, illustrating the angle of insertion is <U>away</U> from the sacral neuro foramen providing for a
        much safter trajectory for device implantation.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>The Procedure</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The CATAMARAN System and its differentiated
characteristics allow for an efficient and effective procedure that delivers short-term stabilization and long-term fusion that
can be confirmed radiographically. Shown below is an illustration showing the unique placement of The CATAMARAN System inserted
posterior / inferior and coming directly down to the joint</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>


<!-- Field: Page; Sequence: 75 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->73<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; text-align: justify"><FONT STYLE="font-size: 10pt"><IMG SRC="img08.jpg" ALT=""></FONT></TD>
    <TD STYLE="width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 49%; text-align: right"><IMG SRC="img09.jpg" ALT=""></TD></TR>
</TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The CATAMARAN System procedure is typically
performed under general anaesthesia using a specially designed instrument set we provide to prepare for the posterior/inferior access
to the SI-Joint. Specially designed imaging and navigation protocols ensure the surgeon has the proper Entry Point, Trajectory,
Angle and Depth (ETAD&trade;) so that the pontoons of The CATAMARAN System are placed for maximum fixation. The CATAMARAN System
incorporates two pontoons and is designed so that when the system is impacted into the bone one pontoon is on the Illum side and
the other is in the Sacrum side with the bridge spanning the joint, preventing shear and rotation of the joint. The device also
features an open cell design where the patient&rsquo;s own (autologous) bone is packed into the pontoons and the bridge to facilitate
fusion across the joint. The leading edge of the bridge is designed to act as an osteotome, providing a self-created deficit upon
insertion. These features create an ideal environment for bone ingrowth and fusion. Below is a fluoroscopic image of an implanted
CATAMARAN Fixation Device spanning the SI Joint.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Tenon believes the surgical approach and
implant design it has developed, along with the 2D and 3D protocols for proper implantation will be received well by the surgeon
community who have been looking for a next generation device. Our initial clinical results indicate that The CATAMARAN System is
promoting fusion across the joint as evidenced by post-op CT scans (the recognized gold standard widely accepted by the surgeon
community).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%; text-align: center">Post-Op fluoroscopic image of <BR>
implant spanning the SI Joint</TD>
    <TD STYLE="width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 49%; text-align: center">6-Month CT-Scan showing clear <BR>
bridging bone fusion</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;<IMG SRC="img10.jpg" ALT=""></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;<IMG SRC="img11.jpg" ALT=""></TD></TR>
</TABLE>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A preliminary 20 case series (Michael Joseph
Chaparro, MD, F.A.A.N.S., F.A.C.S.) has documented that The CATAMARAN System does in fact promote fusion across the SI-Joint, which
many of our competitors have not been able to demonstrate. While products from our competitors use screws and triangular wedges
to treat the SI-Joint, most do not effectively resist the vertical shear and twisting within the joint.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 76 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->74<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">An independent biomechanical study (Lisa Ferrara,
Ph.D. OrthoKinetic Technologies, LLC now part of Element) demonstrated that a single CATAMARAN SIJ Fixation Device was superior
to predicate device in the areas of Fixation Strength, Shear Stiffness, Dynamic Endurance and Pullout Strength. We hold issued
patents on The CATAMARAN System and its unique features including the dual pontoons and the open cell structure for bone graft
packing. We also hold an issued patent for the method of placing The CATAMARAN System into the SI-Joint where one pontoon is in
the ilium and the other in the sacrum.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The CATAMARAN System&rsquo;s unique design
has already demonstrated radiographically confirmed fusion in initial patients. We believe that this beneficial advantage along
with a simpler, safer and less painful procedure will make this the procedure of choice for most surgeons. As more surgeons are
trained, Tenon intends to run head-to-head clinical trials against other devices to further document the unique attributes of The
CATAMARAN System.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Coverage and Reimbursement</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">When a Tenon procedure utilizing The CATAMARAN System&nbsp;is
performed, the healthcare facility, either a hospital (inpatient or outpatient clinic), and the surgeon submit claims for reimbursement
to the patient&rsquo;s insurer. Generally, the facility obtains a lump sum payment, or facility fee, for SI-Joint fusions. Our
products are purchased by the facility, along with other supplies used in the procedure. The facility must also pay for its own
fixed costs of operation, including certain operating room personnel involved in the procedure, ICD and other medical services
care. If these costs exceed the facility reimbursement, the facility&rsquo;s managers may discourage or restrict surgeons from
performing the procedure in the facility or using certain technologies, such as The CATAMARAN System, to perform the procedure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Medicare 2021 national average hospital
inpatient payment for SI-Joint Procedures ranges from approximately $25,000 to approximately $59,000 depending on the procedural
approach and the presence of Complication and Comorbidity/Major Complication and Comorbidity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Medicare 2021 national average hospital
outpatient clinic payment is $15,888. We believe that insurer payments to facilities are generally adequate for these facilities
to offer The CATAMARAN System procedure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Surgeons are reimbursed separately for
their professional time and effort to perform a surgical procedure. Depending on the surgical approach, the incision size, type
and extent of imaging guidance, indication for procedure, and the insurer, The CATAMARAN System procedure may be reported by the
surgeon using any one of the applicable following CPT&reg; codes 27279, 27280, 27299. &nbsp; The Medicare 2021 national average
payment for CPT&reg; 27279 is $888 and $1,399 for 27280. CPT&reg; 27299 has no national valuation. Clinicians, however, can present
a crosswalk to another procedure believed to be fairly equivalent and/or comparison to a code for which there is an existing valuation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For some governmental programs, such as
Medicaid, coverage and reimbursement differ from state to state, and some state Medicaid programs may not pay an adequate amount
for the procedures performed with our products, if any payment is made at all. Similar to Medicaid, many private payors&rsquo;
coverage and payment may differ from one payer to another.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We believe that some surgeons view the
current Medicare reimbursement amount as insufficient for current SI-Joint procedures, given the work effort involved with the
procedure, including the time to diagnose the patient and obtain prior authorization from the patient&rsquo;s health insurer when
necessary. Many private payors require extensive documentation of a multi-step diagnosis before authorizing SI-Joint fusion for
a patient. We believe that some private payors apply their own coverage policies and criteria inconsistently, and surgeons may
experience difficulties in securing approval and coverage for sacroiliac fusion procedures. Additionally, many private payors limit
coverage for open SI-Joint fusion to trauma, tumor or extensive spine fusion procedures involving multiple levels.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 77 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->75<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We believe the unique design of The CATAMARAN
System and the fact The CATAMARAN System may be placed both via an open procedure based on the surgeon&rsquo;s determination of
trauma induced SI-Joint pain or as a minimally invasive approach provides a unique and differentiated approach for the surgeon
to determine the reimbursement code that best fits the clinical problem. We believe this is a significant advantage over competitive
devices by providing the surgeon the clinical flexibility of offering the best clinical solution and approach for patients.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Sales and Marketing</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We will market and sell The CATAMARAN System
primarily through an out-sourced national distribution network specializing in orthopaedics and spine sales. This exclusive distributor
relationship with SpineSource&reg; provides Tenon access to a large independent sales representative network comprising as many
as 750 independent sales representatives that specialize in spine products. Our target customer base includes approximately 12,000
physicians who perform spine and/or pelvic surgical procedures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">SpineSource has over 30 years of experience
distributing spine and orthopaedic products. Over that period of time, they have developed national contracts which speeds the
ability to sell within large hospital networks. SpineSource has also developed close relationships with the independent sales representatives
in their network. These relationships are important contact points within the United States as much of the sales of spine and orthopaedic
products are sold through close surgeon to sales rep consultative relationships developed over many years. Our national distributor
and network of independent sales representatives has extensive training and experience selling medical devices for spine problems
and pain management, generally focusing on emerging technologies and markets.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition to general sales and marketing
training, we provide our distribution organization with comprehensive, hands-on cadaveric and dry-lab training sessions focusing
on the clinical benefits of The CATAMARAN System and the importance of using the 2D and 3D protocols we have developed. We believe
many surgeons have already been trained using one of the alternative products but have not been satisfied with the approach and
technology. This provides Tenon with an opportunity to demonstrate to an already-trained-surgeon the unique attributes of The
CATAMARAN System.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our business objective is to introduce
the Next Generation Implant for Si-Joint Fixation. The past 10 years has seen an acceleration in recognition and discussion of
the SI-Joint as a cause of pain that can be treated. However, adoption has been hindered by complexity of the procedure as evidenced
by the significant number of reported Medical Device Records (MDR&rsquo;s). The need for multiple implants and resulting post-op
pain has also contributed to low adoption numbers. Our strategy is to provide a safer, faster, and better surgical experience and
a significant pain reduction benefit for the patient. Our goals are simple but impactful and as such we plan on the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">Educate and inform physicians and other healthcare providers, payors, and patients about the
                                                                                                                                            growing body of evidence supporting what we believe is the safety, durable clinical effectiveness, economic benefit, and
                                                                                                                                            reduction in opioid use associated with SI-Joint fixation and The CATAMARAN System procedure</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">Utilize the most effective means of training via video and in-person labs demonstrating the ease of use with 2D and 3D navigation.
Since many physicians have already been trained but have not incorporated SI-Joint fixation into their practices we will work with
these physicians to reengage and train them on the Next Generation of an SI-Joint implant which incorporates a safer and simpler
approach</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">Utilize the best approaches of direct-to-consumer outreach to educate patients that there is a safe solution to help them improve
their quality of life. Additionally, to reach the broadest physician and patient audience on case study results from around the
United States we plan to implement an active social media campaign incorporating Facebook, Instagram, YouTube, etc.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">Invest in our distributor network to ensure that all Tenon representatives have the latest in marketing and education tools
to reduce the time from training to adoption</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">Remain true to our next generation product development strategy by continually bringing out new advancements in and around
the SI-Joint and pelvic region.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 78 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->76<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD>Continue to grow our existing intellectual property portfolio.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Regulatory Status</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Tenon has received 510K clearance to market
and sell the Catamaran System. The company plans to begin initial sales in late Q-4 2021 with a full domestic product launch beginning
Q-1 2022.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Research &amp; Development</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our initial development of The CATAMARAN
System has incorporated several differentiating features which we believe will make an important contribution for many patients
suffering from SI-Joint pain. To our knowledge no other competitive product incorporates these Next Generation features:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD>Dual Pontoon implant that bridges the targeted joint;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Open cell design designed for utilizing the patient&rsquo;s own autologous bone for promotion of fusion;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD>Bridge design between the dual pontoons for enhanced strength;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Leading edge of the implant designed to function as an osteotome providing a self-creating defect feature not available with
competitive systems;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Single implant designed with varying pontoon sizes to ensure a robust fixation based on
                                                                     anatomy; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&middot;</TD><TD STYLE="text-align: justify">Additional smaller Catamaran designed for smaller anatomy and/or revision surgery.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Tenon development plan is to expand
The CATAMARAN System offering by introducing a series of progressively longer pontoons so that the surgeon has a full complement
of sized implants to choose from depending on the patient&rsquo;s anatomy. These product enhancements will enable the surgeon to
optimize the size of each implant to ensure full fixation based on anatomy. Tenon believes based on literature searches of prior
SI-Joint fixation technologies that there may be as much as 20% of the implants performed to date where the implant has loosened
or been misplaced thereby requiring a revision surgery. Tenon believes that its ability to make The CATAMARAN System a specifically
sized fixation device will benefit many patients requiring a revision surgery.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The CATAMARAN System shown below has been
cleared by the FDA for commercialization. This patented titanium implant incorporates The CATAMARAN SIJ Fixation Device pontoon
design and the open cell configuration which we believe, when filled with the patient&rsquo;s autologous bone, promotes fusion.
The 2 images below show a comparison of a competitive implant requiring 3 implants and The CATAMARAN System unique pontoon design
showing the need of only 1 implant to cover the same amount of the SI-Joint.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center; width: 50%">&nbsp;<IMG SRC="img12.jpg" ALT=""></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="text-align: center; width: 49%"><IMG SRC="img13.jpg" ALT="">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">The CATAMARAN&trade; SIJ Fusion <BR>
System Single Implant</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">SI Bone iFuse&reg; Three Implants</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 79 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->77<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our mission will be to continue developing
enhancements to The CATAMARAN System to meet our customers&rsquo; changing needs and to improve the surgery&rsquo;s effectiveness.
This includes revision surgery options as well as options to complete long fusion constructs in the lumbar spine.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Coinciding with our commercial launch, Tenon
will initiate some clinical marketing studies. Since we have FDA 510K clearance to market The CATAMARAN System our clinical trial
activities are focused on capturing post-market safety and efficacy data. Preliminary plans for clinical study evaluations may
include a longitudinal cohort study design with approximately 200 patients. Clinical study endpoints may include, but are not limited
to; length of surgical procedure, blood loss, post-op pain, length of stay, duration of non-weight-bearing post-op, radiographic
confirmation of fusion and surgical complication rates. Statistical analysis plans may be designed to demonstrate non-inferiority
to historical control, as reported in published literature, which may be used for submission to peer reviewed articles / posters
/ presentations and the like.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Intellectual Property</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Developing and maintaining a strong intellectual
property position is an important element of our business. Currently we own all of our intellectual property though our subsidiary,
Tenon Technology AG (&ldquo;TTAG&rdquo;). We maintain the intellectual property through a combination of patent protection, trademarks,
and trade secrets. We have sought, and will continue to seek, patent protection for our technology, for improvements to our technology,
as well as for any of our other technologies where we believe such protection will be advantageous.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 30, 2021, we own one (1) issued
U.S. utility patent, six (6) pending U.S. utility patent applications, three (3) issued foreign utility patents in Australia, Canada
and Israel, and three (3) pending foreign utility patent applications in the European Community, Brazil and Japan. The patent claims
in one (1) U.S. utility patent application have been allowed and the U.S. utility patent based thereon is scheduled to be issued
on October 19, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our utility patents and patent applications
are directed to several different aspects of our sacroiliac (SI) joint stabilization technology and related patent platform. By
way of example, our granted patents and pending patent applications cover various structural features of our unique Catamaran<SUP>TM</SUP>
SI joint prosthesis and means for employing same to stabilize a dysfunctional SI joint.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The term of individual patents depends on the
legal term for patents in the countries in which they are granted. In most countries, including the United States, the patent term
for a utility patent is generally 20 years from the earliest claimed filing date of a nonprovisional patent application in the
applicable country. Our issued U.S. and foreign utility patents are anticipated to naturally expire around 2031, and our U.S. pending
utility patent applications, if issued into patents, are similarly anticipated to naturally expire around 2031, excluding any additional
patent term adjustment(s) or extension(s), and assuming payment of all applicable maintenance or annuity fees. Once a patent expires,
patent protection ends and an invention enters the public domain allowing anyone to commercially exploit the invention without
infringing the patent.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We cannot guarantee that patents will be issued
from any of our pending applications or that issued patents will be of sufficient scope or strength to provide meaningful protection
for our technology. Notwithstanding the scope of the patent protection available to us, a competitor could develop methods or devices
that are not covered by our patents or circumvent these patents. Furthermore, although, at present, we are unaware of any patent
applications that may result in one or more issued patents that our existing products or technologies may be alleged to infringe,
since U.S. and foreign applications can take many months to publish, there may be applications unknown to us that may result in
one or more issued patents that our existing products or technologies may be alleged to infringe.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 30, 2021, we also have priority
rights in and to several significant trademarks that support our products and brand, including eight (8) U.S. trademark applications
and four (4) foreign trademark applications in the European Community, Australia and Japan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Regulation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Domestic Regulation of Our Products and
Business. </I></B>Our research, development and clinical programs, as well as our manufacturing and marketing operations, are subject
to extensive regulation in the United States and other countries. Most notably, all of our products sold in the United States are
subject to the Federal Food, Drug and Cosmetic Act (the &ldquo;FDCA&rdquo;), as implemented and enforced by the FDA. The FDA governs
the following activities that we perform or that are performed on our behalf, to ensure that medical products distributed domestically
or exported internationally are safe and effective for their intended uses:</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">product design, development, and manufacture;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">product safety, testing, labeling, and storage;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">record keeping procedures;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">product marketing, sales, distribution and export; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">post-marketing surveillance, complaint handling, medical device reporting, reporting of deaths,
serious injuries or device malfunctions, and repair or recall of products.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There are numerous FDA regulatory requirements
governing the clearance or approval and marketing of our products. These include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">product listing and establishment registration, which helps facilitate FDA inspections and other
regulatory action;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">investigational device exemptions to conduct premarket clinical trials, which include extensive
monitoring, recordkeeping, and reporting requirements;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">QSR, which requires manufacturers, including contract manufacturers,
to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing
process;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved
or off-label use or indication;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 80 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->78<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">clearance of product modifications that could significantly affect safety or effectiveness or that
would constitute a major change in intended use of one of our cleared devices;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">approval of product modifications that affect the safety or effectiveness of one of our approved
devices;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">medical device reporting regulations, which require that manufacturers comply with FDA requirements
to report if their device may have caused or contributed to a death or serious injury, or has malfunctioned in a way that would
likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">post-approval restrictions or conditions, including post-approval study commitments;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">post-market surveillance regulations, which apply when necessary to protect the public health or
to provide additional safety and effectiveness data for the device;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">the FDA&rsquo;s recall authority, whereby it can ask, or under certain conditions order, device
manufacturers to recall from the market a product that is in violation of governing laws and regulations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">regulations pertaining to voluntary recalls; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><P STYLE="margin: 0pt 0"><FONT STYLE="font-family: Symbol">&middot;</FONT></P></TD><TD STYLE="text-align: justify">notices of corrections or removals.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The FDA has broad post-market and regulatory
enforcement powers. We and our contract manufacturers are subject to announced and unannounced inspections by the FDA to determine
our compliance with the QSR and other regulations and these inspections may include the manufacturing facilities of our suppliers.
Tenon has a robust Supplier Qualification and Audit process as part of our quality system that ensures contract manufacturers,
and their suppliers meet all requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">An FDA pre-approval inspection is not required
for the The CATAMARAN System due to its lower device classification, class II versus the higher class III.&nbsp;&nbsp;As is the
case for most medical device firms, Tenon is subject to routine and &ldquo;for cause&rdquo; FDA inspections. Routine inspections<B>&nbsp;</B>are
mandated by law every 2 years for class II and class III device manufacturers and make up the majority of FDA's inspections.&nbsp;
If a serious public health risk is identified during a routine inspection, the inspection may convert to a &ldquo;for cause&rdquo;
inspection.&nbsp;&nbsp;In the current environment, FDA has limited compliance resources and has not been able to perform routine
inspections in accordance with the 2-year mandate.&nbsp;&nbsp;Therefore, FDA uses a risk-based approach when deciding which firms
should be selected for a routine inspection. Using the Establishment Registration and Device Listing databases, FDA identifies
who manufactures and/or distributes which devices. The firms are then prioritized by risk, class III &gt; class II &gt; class I.
Firms that have recently introduced a new device to the market also are given higher priority, as well as those that have had significant
prior violations and complaints.&nbsp;&nbsp;At present, Tenon has not been selected for an FDA inspection.&nbsp;&nbsp;Tenon uses
best practices to secure and maintain regulatory compliance by engaging with suppliers and contract manufacturing firms that are
ISO 13485 (or equivalent) compliant and by periodically performing internal, external, and third-party inspections and audits of
the facilities and systems to assess compliance.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>FDA Premarket Clearance and Approval
Requirements. </I></B>Unless an exemption applies, each medical device we wish to commercially distribute in the United States
will require either premarket notification, or 510(k), clearance or approval of a PMA from the FDA. The FDA classifies medical
devices into one of three classes. Devices deemed to pose lower risks are placed in either Class&nbsp;I or II, which typically
requires the manufacturer to submit to the FDA a premarket notification requesting permission to commercially distribute the device.
This process is generally known as 510(k) clearance. Some low-risk devices are exempted from this requirement. Devices deemed by
the FDA to pose the greatest risks, such as life-sustaining, life- supporting or implantable devices, or devices deemed not substantially
equivalent to a previously cleared 510(k) device, are placed in Class&nbsp;III, requiring a PMA. If the FDA agrees that the device
is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market
the device. If the FDA determines that the device is &ldquo;not substantially equivalent&rdquo; to a previously cleared device,
the device is automatically designated as a Class&nbsp;III device. The device sponsor must then fulfill more rigorous PMA requirements
or can request a risk-based classification determination for the device in accordance with the &ldquo;de novo&rdquo; process, which
is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate
device. All of our currently marketed products are Class&nbsp;II devices, subject to 510(k) clearance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 81 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->79<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">After a device receives 510(k) marketing
clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change
or modification in its intended use, will require a new 510(k) marketing clearance or, depending on the modification, PMA approval.
The determination as to whether or not a modification could significantly affect the device&rsquo;s safety or effectiveness is
initially left to the manufacturer using available FDA guidance. Many minor modifications today are accomplished by a &ldquo;letter
to file&rdquo; in which the manufacture documents the rationale for the change and why a new 510(k) is not required. However, the
FDA may review such letters to file to evaluate the regulatory status of the modified product at any time and may require the manufacturer
to cease marketing and recall the modified device until 510(k) clearance or PMA approval is obtained. The manufacturer may also
be subject to significant regulatory fines or penalties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Clinical Trials. </I></B>Clinical trials
are generally required to support a PMA application and are sometimes required for 510(k) clearance. Such trials for implanted
devices such as the CATAMARAN&trade; SIJ Fixation Device generally require an investigational device exemption application, or
IDE, approved in advance by the FDA for a specified number of subjects and study sites, unless the product is deemed a nonsignificant
risk device eligible for more abbreviated IDE requirements. Clinical trials are subject to extensive monitoring, recordkeeping,
and reporting requirements. Clinical trials must be conducted under the oversight of an institutional review board, or IRB, for
the relevant clinical trial sites and must comply with FDA regulations, including but not limited to those relating to good clinical
practices. To conduct a clinical trial, we also are required to obtain the subjects&rsquo; informed consent in form and substance
that complies with both FDA requirements and state and federal privacy and human subject protection regulations. We, the FDA, or
the institutional review board, or IRB, could suspend a clinical trial at any time for various reasons, including a belief that
the risks to study subjects outweigh the anticipated benefits. Even if a trial is completed, the results of clinical testing may
not adequately demonstrate the safety and effectiveness of the device or may otherwise not be sufficient to obtain FDA clearance
or approval to market the product in the United States.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Pervasive and Continuing Regulation.
</I></B>After a device is placed on the market, numerous regulatory requirements continue to apply. These include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">Product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">QSR, which requires manufacturers, including contract manufacturers,
to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the manufacturing
process;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label use or indication;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">clearance of product modifications that could significantly affect safety or effectiveness or that would constitute a major
change in intended use of one of our cleared devices;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">approval of product modifications that affect the safety or effectiveness of one of our approved devices;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">post-approval restrictions or condition, including post-approval study commitments;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety
and effectiveness data for the device;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the FDA&rsquo;s recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from
the market a product that is in violation of governing laws and regulations;</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">regulations pertaining to voluntary recalls; and</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="text-align: justify; width: 0.25in"></TD><TD STYLE="text-align: justify; width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">notices of corrections or removals.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The FDA has broad post-market and regulatory enforcement powers.
We are subject to unannounced inspections by the FDA to determine our compliance with the QSR and other regulations, and these
inspections may include the manufacturing facilities of some of our subcontractors. Failure by us or by our suppliers to comply
with applicable regulatory requirements can result in enforcement action by the FDA or other regulatory authorities, which may
result in sanctions including, but not limited to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 82 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->80<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>untitled letters, warning letters, fines, injunctions, consent decrees, and civil penalties;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>unanticipated expenditures to address or defend such actions</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>customer notifications for repair, replacement, refunds;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>recall, detention or seizure of our products;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>operating restrictions or partial suspension or total shutdown of production;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>refusing or delaying our requests for 510(k) clearance or PMA approval of new products or modified products;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>operating restrictions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>withdrawing 510(k) clearances or PMA approvals that have already been granted:</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>refusal to grant export approval for our products; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>criminal prosecution.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The FDA has not yet inspected our contract manufacturer&rsquo;s
manufacturing facilities.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Promotional Materials &ldquo;Off-Label&rdquo;
Promotion. </I></B>Advertising and promotion of medical devices, in addition to being regulated by the FDA, are also regulated
by the Federal Trade Commission and by state regulatory and enforcement authorities. If the FDA determines that our promotional
materials or training constitutes promotion of an unapproved use, it could request that we modify our training or promotional materials
or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction,
seizure, civil fine, or criminal penalties. It is also possible that other federal, state, or foreign enforcement authorities might
take action if they consider our promotional or training materials to constitute promotion of an unapproved use, which could result
in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In
that event, our reputation could be damaged, and adoption of the products would be impaired.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, under the federal Lanham Act
and similar state laws, competitors, and others can initiate litigation relating to advertising claims.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Healthcare Fraud and Abuse</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Federal and state governmental agencies
and equivalent foreign authorities subject the healthcare industry to intense regulatory scrutiny, including heightened civil and
criminal enforcement efforts. These laws constrain the sales, marketing and other promotional activities of medical device manufacturers
by limiting the kinds of financial arrangements we may have with hospitals, physicians and other potential purchases of our products.
Federal healthcare fraud and abuse laws apply to our business when a customer submits a claim for an item or service that is reimbursed
under Medicare, Medicaid, or other federally funded healthcare programs. Descriptions of some of the laws and regulations that
may affect our ability to operate follows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 83 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->81<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The federal Anti-Kickback Statute prohibits,
among other things, persons from knowingly and willfully soliciting, receiving, offering, or paying remuneration, directly or indirectly,
in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of,
items or services for which payment may be made, in whole or in part, under federal healthcare programs. The term &ldquo;remuneration&rdquo;
has been broadly interpreted to include anything of value, and the government can establish a violation of the Anti-Kickback Statute
without proving that a person or entity had actual knowledge of, or a specific intent to violate, the law. The Anti-Kickback Statute
is subject to evolving interpretations and has been applied by government enforcement officials to a number of common business
arrangements in the medical device industry. There are a number of statutory exceptions and regulatory safe harbors protecting
some common activities from prosecution; however, those exceptions and safe harbors are drawn narrowly, and there is no exception
or safe harbor for many common business activities. Failure to meet all of the requirements of a particular statutory exception
or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute, but the legality of the arrangement
will be evaluated on a case-by-case basis based on the totality of the facts and circumstances. A number of states also have anti-kickback
laws that establish similar prohibitions that may apply to items or services reimbursed by government programs, as well as by any
third-party payors, including commercial payors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The civil False Claims Act prohibits, among
other things, knowingly presenting or causing the presentation of a false or fraudulent claim for payment of federal funds, or
knowingly making, or causing to be made, a false record or statement material to a false or fraudulent claim to avoid, decrease
or conceal an obligation to pay money to the federal government. A claim including items or services resulting from a violation
of the Anti- Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. Actions under the False
Claims Act may be brought by the government or as a <I>qui tam </I>action by a private individual in the name of the government.
<I>Qui tam </I>actions are filed under seal and impose a mandatory duty on the U.S. Department of Justice to investigate such allegations.
Most private citizen actions are declined by the Department of Justice or dismissed by federal courts. However, the investigation
costs for a company can be significant and material even if the allegations are without merit. There are also criminal penalties,
including imprisonment and criminal fines, for making or presenting a false or fictitious or fraudulent claim to the federal government.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">False Claims Act liability is potentially
significant in the healthcare industry because the statute provides for treble damages and mandatory penalties of $11,181 to $22,363
per claim (adjusted annually for inflation). Because of the potential for large monetary exposure, healthcare companies often resolve
allegations without admissions of liability for significant and sometimes material amounts to avoid the uncertainty of treble damages
and per claim penalties that may awarded in litigation proceedings. Moreover, to avoid the risk of exclusion from federal healthcare
programs as a result of a False Claims Act settlement, companies may enter into corporate integrity agreements with the government,
which may impose substantial costs on companies to ensure compliance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, HIPAA created federal criminal
statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any
healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare
benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying,
concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with
the delivery of or payment for healthcare benefits, items or services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The federal Physician Payment Sunshine
Act, implemented by CMS as the Open Payments program, requires manufacturers of drugs, devices, biologics and medical supplies
for which payment is available under Medicare, Medicaid, or the Children&rsquo;s Health Insurance Program to report annually to
CMS information related to payments or other &ldquo;transfers of value&rdquo; made to physicians and teaching hospitals, and requires
applicable manufacturers to report annually to CMS ownership and investment interests held by physicians and their immediate family
members and payments or other &ldquo;transfers of value&rdquo; to such physician owners.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Certain states also mandate implementation
of corporate compliance programs, impose restrictions on device manufacturer marketing practices, and/or require tracking and reporting
of gifts, compensation, and other remuneration to healthcare professionals and entities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Foreign Corrupt Practices Act and similar
anti-bribery laws in other countries, such as the UK Bribery Act, generally prohibit companies and their intermediaries from making
improper payments to government officials and/or other persons for the purpose of obtaining or retaining business. Our policies
mandate compliance with these anti-bribery laws.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Violations of these federal and state fraud
abuse laws can subject us to administrative, civil, and criminal penalties, including imprisonment, substantial fines, penalties,
damages, and exclusion from participation in federal healthcare programs, including Medicare and Medicaid.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 84 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->82<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Data Privacy and Security Laws</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">HIPAA requires the notification of patients,
and other compliance actions, in the event of a breach of unsecured PHI. If notification to patients of a breach is required, such
notification must be provided without unreasonable delay and in no event later than 60 calendar days after discovery of the breach.
In addition, if the PHI of 500 or more individuals is improperly used or disclosed, we could be required to report the improper
use or disclosure to the U.S. Department of Health and Human Services, or HHS, which would post the violation on its website, and
to the media. Failure to comply with the HIPAA privacy and security standards can result in civil monetary penalties up to $55,910
per violation, not to exceed $1.68&nbsp;million per calendar year for non-compliance of an identical provision, and, in certain
circumstances, criminal penalties with fines up to $250,000 per violation and/or imprisonment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, even when HIPAA does not apply,
according to the FTC, failing to take appropriate steps to keep consumers&rsquo; personal information secure constitutes unfair
acts or practices in or affecting commerce in violation of Section&nbsp;5(a) of the FTCA, 15 U.S.C &sect; 45(a). The FTC expects
a company&rsquo;s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information
it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
Medical data is considered sensitive data that merits stronger safeguards. The FTC&rsquo;s guidance for appropriately securing
consumers&rsquo; personal information is similar to what is required by the HIPAA Security Rule.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are subject to the supervision of local
data protection authorities in those jurisdictions where we are established or otherwise subject to applicable law. We depend on
a number of third parties in relation to our provision of our services, a number of which process personal data on our behalf.
With each such provider we enter into contractual arrangements to ensure that they only process personal data according to our
instructions, and that they have sufficient technical and organizational security measures in place. Where we transfer personal
data outside the EEA, we do so in compliance with the relevant data export requirements. We take our data protection obligations
seriously, as any improper disclosure, particularly with regard to our customers&rsquo; sensitive personal data, could negatively
impact our business and/or our reputation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Manufacturing and Supply</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We do not manufacture any products or component
parts and currently use five contract manufacturers to produce all of our instruments, implants and sterilization cases. The majority
of our instruments have a secondary manufacturing supplier, and we continually work with additional manufacturers to establish
secondary manufacturing suppliers. Our contract manufacturers source and purchase all raw materials used in the manufacture of
The CATAMARAN System which includes mainly stainless steel and aluminum for our instruments and sterilization cases and titanium
for our implants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We do not currently have manufacturing agreements
with any of our contract manufacturers and orders are controlled through purchase orders. The Company does not believe its relationship
with any one contract manufacturer is material to its business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We believe the manufacturing operations of
our contract manufacturers, and those of the suppliers of our manufacturers, comply with regulations mandated by the FDA, as well
as Medical Devices Directive regulations in the EEA. Manufacturing facilities that produce medical devices or component parts intended
for distribution world-wide are subject to regulation and periodic planned and unannounced inspection by the FDA and other domestic
and international regulatory agencies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the United States, the product we sell is
required to be manufactured in compliance with the QSR, which covers the methods used in, and the facilities used for, the design,
testing, control, manufacturing, labelling, quality assurance, packaging, storage, and shipping.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are required to demonstrate continuing compliance
with applicable regulatory requirements and will be subject to FDA inspections. Further, we and certain of our contract manufacturers
are required to comply with all applicable regulations and current good manufacturing practices. As set forth above, these FDA
regulations cover, among other things, the methods and documentation of the design, testing, production, control, quality assurance,
labelling, packaging, sterilization, storage, and shipping of our products. Compliance with applicable regulatory requirements
is subject to continual review and is monitored rigorously through periodic inspections. If we or our manufacturers fail to adhere
to current good manufacturing practice requirements, this could delay production of our products and lead to fines, difficulties
in obtaining regulatory approvals, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences,
which could, in turn, have a material adverse effect on our financial condition or results of operations.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 85 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->83<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Product Liability and Insurance</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The manufacture and sale of our products
subjects us to the risk of financial exposure to product liability claims. Our products are used in situations in which there is
a risk of serious injury or death. We carry insurance policies which we believe to be customary for similar companies in our industry.
We cannot assure you that these policies will be sufficient to cover all or substantially all losses that we experience.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We endeavor to maintain executive and organization
liability insurance in a form and with aggregate coverage limits that we believe are adequate for our business purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Legal Proceedings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman,serif; margin: 0; text-align: justify">On September 2, 2021, Khalid Mentak, a former director
and CEO of the Company filed an arbitration claim against the Company for approximately $3.3 million plus attorneys&rsquo; fees
and other costs with the American Arbitration Association in the State of California for unpaid wages and other claims. The Company
maintains that any such claim should be limited to $600,000 because the services provided by Mr. Mentak are pursuant to and governed
by a Consulting Agreement (the &ldquo;KM Consulting Agreement&rdquo;) dated March 21, 2021 between the Company and Key Medical
Technologies, Inc. (&ldquo;Key Medical&rdquo;), a company which Mentak served as CEO. See &ldquo;<I>Certain Relationships and Related
Party Transactions&rdquo; </I>for further details about the KM Consulting Agreement. The arbitration proceeding was also initiated
pursuant to the arbitration provision in the KM Consulting Agreement. Accordingly, as of the date of the claim, the Company has
recorded a total of $600,000 in accrued expenses in its consolidated financial statements in respect of these services. An arbitrator
has been appointed and the Company anticipates that a preliminary hearing to set a schedule will take place within the next 30
days. While the Company is unable to provide any assurances as to the ultimate outcome of this matter, it believes the claim for
additional compensation is without merit and intends to vigorously defend against it. The Company is currently unable to estimate
the costs and timing of the arbitration, including any potential damages, if the other party were to prevail on its claim.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We may also from time to time be, party to
litigation and subject to claims incident to the ordinary course of business. As our growth continues, we may become party to an
increasing number of litigation matters and claims. The outcome of litigation and claims cannot be predicted with certainty, and
the resolution of these matters could materially affect our future results of operations, cash flow or financial position.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Employees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of November 9, 2021, we have 8 employees,
5 senior consulting advisors of various specialty including product development, general administrative and accounting. As of November 9, 2021, our national distributor has a network composed of 750 independent sales representatives. None of our employees is subject
to a collective bargaining agreement, and we consider our relationship with our employees to be good.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Property</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We lease and maintain our primary offices
at 104 Cooper Court, Los Gatos, CA 95032. We do not currently own any real estate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Corporate Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We were incorporated on June 6, 2012, in
Delaware. Our principal executive offices are located at 104 Cooper Court, Los Gatos, CA 95032 and our telephone number is (408)
649-5760.&nbsp;Our website address is&nbsp;www.tenonmed.com.&nbsp;The information on, or that can be accessed through, our website
is not part of this prospectus. We have included our website address as an inactive textual reference only.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_014"></A><B>MANAGEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following are our executive officers
and directors and their respective ages and positions as of November 9, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: bottom; width: 30%; border-top: black 1pt solid; border-bottom: black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Name</B> &nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; width: 1%; border-top: black 1pt solid; border-bottom: black 1pt solid; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 5%; border-top: black 1pt solid; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Age</B></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; width: 1%; border-top: black 1pt solid; border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 63%; border-top: black 1pt solid; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Position</B></FONT></TD></TR>
<TR STYLE="background-color: #CCEEFF">
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Steven M. Foster &nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">54</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Executive Officer and President, Director</FONT></TD></TR>
<TR STYLE="background-color: white">
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Richard Ginn &nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">56</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Technology Officer and Director</FONT></TD></TR>
<TR STYLE="background-color: #CCEEFF">
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Steve Van Dick &nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">66</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">EVP, Finance and Administration and Chief Financial Officer</FONT></TD></TR>
<TR STYLE="background-color: white">
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Richard Ferrari &nbsp;</FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">68</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Executive Chairman of the Board</FONT></TD></TR>
<TR STYLE="background-color: #CCEEFF">
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Frank Fischer<SUP>1</SUP></FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">80</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director nominee</FONT></TD></TR>
<TR STYLE="background-color: white">
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ivan Howard<SUP>1</SUP></FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">55</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director nominee</FONT></TD></TR>
<TR STYLE="background-color: #CCEEFF">
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Robert K. Weigle<SUP>1</SUP></FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">62</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director nominee</FONT></TD></TR>
<TR STYLE="background-color: white">
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stephen H. Hochschuler, M.D<SUP>1</SUP></FONT></TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">78</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director nominee</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<!-- Field: Rule-Page --><DIV STYLE="margin-top: 3pt; margin-bottom: 3pt; width: 25%"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><SUP>1 </SUP>Have been asked and have agreed
to serve on our Board of Directors effective on the date our common stock is first listed on Nasdaq.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 86 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->84<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Steven M. Foster </B>is our Chief Executive
Officer and President, and is also a director of the Company. Mr Foster has over 30 years of marketing, sales, operations and general
management experience. From 2015 to present Mr. Foster has been a principal with CTB Advisors, LLC in Brentwood, Tennessee. CTB
Advisors was founded as a single member limited liability company for the purpose of providing medical device organizations and
physicians with consultative assistance on commercialization focused projects. Projects included: CRM based surgeon engagement
program design, training and implementation for NuVasive (NUVA). Valuation assessment / business plan development of early-stage
spine technology including IP assessment and regulatory pathway definition. M&amp;A (SafeOp Surgical) integration project, Alphatech
Spine (ATEC). Current Status: Exclusive to ATEC. From 2012 to 2014 Mr. Foster was Global Commercialization President of Safe Orthopaedics
SAS, Paris, FR (based in Michigan): There Mr Foster worked on early-stage commercialization of a novel single-use / sterile / traceable
surgical kit for lumbar spine fusion. His focus included pre-clinical design, surgeon advisor team development, early marketing,
web design, convention presence and P&amp;L preparation and management. Technology reached 200 global surgeries in first 12 months
of commercialization. From 1992 to 2012 Mr. Foster was part of the Danek Group Inc., Sofamor Danek, Medtronic Spine organization
where he held a variety of marketing, sales administration and general management roles, including as VP / GM of Medtronic Spine&rsquo;s
Western Europe operations from 2007-2010. Mr. Foster received a Bachelor of Science, Business Administration with a concentration
in Marketing and Management from Central Michigan University in 1990.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Richard Ginn</B> is a founder, the Chief
Technology Officer and a director of the Company. Mr. Ginn&rsquo;s focus is primarily on intellectual property and product development,
he has travelled throughout the world to train physicians and participated in multiple FIH trials and is a named inventor on more
than 300 patents for medical devices. Over the course of his career he has helped raise more than $100 million in venture capital
and has provided an average 10x return to his investors. Mr. Ginn is the founder of TransAortic Medical, an embolic protection
device company, and is its President, CEO and a director from 2013 to present. At TransAortic, Mr. Ginn Managed all corporate operations,
raised capital to support company needs; managed acquisition of technology by strategic partner; managed all Intellectual Property;
and set up European distribution for CE Marked device. Mr. Ginn is the founder of Promed, a large hole femoral closure device company
and was the CEO, President and a director from 2012 to 2019. At Promed he managed all corporate operations; raised capital to support
company needs; and managed all intellectual property.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Steven Van Dick</B> is our Executive
Vice President, Finance and Administration and Chief Financial Officer. Mr. Van Dick has been the Chief Financial Officer for the
Company since June 1, 2021. Mr. Van Dick is a strategic financial and accounting executive with a record of transitioning early-stage
companies to commercialization through astute financial management. Respected in the medical device startup community, he develops
and leads comprehensive, world-class financial and accounting groups credited for propelling startup companies forward. Across
his career Steve has played a key role on the Executive Leadership Teams that successfully completed three separate Initial Public
Offering (IPOs) and three mergers/integrations. From 2016 to 2017 Mr. Van Dick was the Chief Financial Officer for Benvenue Medical
Inc., a minimally invasive spine company in Santa Clara, California. At Benvenue, Mr. Van Dick was responsible for all accounting,
finance and IT functions with his primary focus on developing a long-range financial model and reducing cash burn. From 2010 to
2016, Mr Van Dick was the Vice President, Finance Administration&mdash;Chief Financial Officer for Spiracur Inc., a disposable/portable
negative pressure wound therapy company in Sunnyvale California. At Spiracur, Mr. Van Dick was responsible for all accounting,
finance and IT functions. He managed growth of company from initial commercialization to $12 million annualized run rate, lead
the conversion to fully integrated ERP system and developed controls to become Hipaa compliant. Mr Van Dick received a Bachelor
of Science, Business Administration with a concentration in Accounting from San Jose University in 1977 and an MBA from Santa Clara
University in 1984.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Richard Ferrari</B> is a founder, a director
and Executive Chairman of the Company. Since 2000, Mr. Ferrari has been and currently is a Managing Director of Denovo Ventures
a $650Mill venture firm specializing in Medical Devices and Biotechnology. &nbsp;From January 2019 until April 2021 Mr. Ferrari
was employed as CEO and Chairman of the Board of Directors of PQ Bypass which culminated is a successful acquisition by Endologix.
During the last five years Mr. Ferrari has been and currently is a board member (Executive Chairman) of Medlumics, S.L., a medical
device company founded in 2011; a board member (Vice Chairman) of ABS Interventional; a board member (Executive Chairman) of Heart
Beam Inc.; a board member of Biomodex Corporation; a board member of Retriever Medical Inc.; a board member of RMx Medical; a board
member of Hawthorne Effect, Inc.; a board member and co-founder of TransAortic acquired by Medtronic; Executive Chairman of Sentreheart
acquired by Atricure, a board member of Spinal Modualtion sold to St Jude and a board member of Hands of Hope. Mr. Ferrari has
raised over $1billion for the companies he has been involved with and been a key member of the various boards M&amp;A teams achieving
over $2Bill in Acquisitions. &nbsp;Mr. Ferrari continues to mentor and advise a number of CEO&rsquo;s and start-up companies on
strategy and building organizations dedicated to delivering excellence. Mr. Ferrari is the creator of Excellence by Choice a series
of lectures and presentations to help early-stage companies perform at the highest level of execution. Mr. Ferrari received a Bachelor&rsquo;s
Degree in Education from Ashland University and a MBA from University of South Florida.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Frank Fischer</B> has more than 40 years
of senior management experience in the medical device industry. He co-founded NeuroPace in December 1997, led the company as its
President and Chief Executive Officer from January 2000 through July 2019, served on its Board of Directors since inception and
is currently Chairman of the Board. Prior to joining NeuroPace, Mr. Fischer was President and Chief Executive Officer of Heartport,
Inc., a cardiac surgery company, from May 1998 until September 1999 and served on Heartport&rsquo;s Board of Directors. Previously,
Mr. Fischer was President and Chief Executive Officer and a director of Ventritex, Inc., a company that pioneered implantable cardiac
defibrillators, from July 1987 until the sale of the company to St. Jude Medical, Inc. in 1997. Before joining Ventritex, he held
various management positions at Cordis Corporation from 1977 to 1987 in the cardiac and neurosurgical device areas, serving most
recently as President of the Implantable Products Division. Currently he is a member of the Board of Directors of Nevro, Inc.,
the Board of Trustees of both Rensselaer Polytechnic Institute and Babson College as well as the Board of Directors of the Epilepsy
Foundation of America. Mr. Fischer holds B.S.M.E. and M.S. in Management degrees from Rensselaer Polytechnic Institute.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We believe that Mr. Fischer is well qualified
to serve as a Director on our Board with his experience in leading medical device companies both as a senior executive and as a
member of the board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Ivan Howard</B> has been since 2019 and
currently is a Vice President and Sr. Specialist in Alternative Investment Fiduciary Risk for Banco Santander, a multinational
financial services company. From 2020 Mr. Howard has been and currently serves as Director on the Collier County Farm Bureau board
of directors.&nbsp; From 2016, Mr. Howard has been and currently serves as Chairman of the Hendry/Glades County Farm Service Agency.
From 2020 Mr. Howard has been and currently serves on the U.S. Department of Agriculture Advisory Committee on Minority Farmers.
From 2018 Mr. Howard has been and is currently a member of the University of Florida College of Biomedical Engineering External
Advisory board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We believe that Mr. Howard is well qualified
to serve as a Director on our Board with his financial services and board membership experience.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Robert K. Weigle </B>currently is and
has been since October 2020, the CEO of Prime Genomics, a saliva-based diagnostics company utilizing Genomics. Mr Weigle is also
currently an executive in residence with DigitalDX, a venture capital firm. Mr. Weigle was CEO and a director of Benvenue Medical
from May 2009 until August 2020. Benvenue was a Silicon Valley based medical device company, which raised over $200 million in
funding. At Benvenue Mr. Weigle led growth from pre-clinical to successful clinical trials to commercial launch of first generation
devices in two distinct markets, one for the treatment of compression fractures in the spine and the second for the treatment of
degenerative disc disease, resulting in a first full-year run rate exceeding $1 million per month. Mr. Weigle oversaw all early
aspects of corporate strategy, including defining, communicating and executing the company&rsquo;s overall business model; and
represented Benvenue to the investment community. Mr. Weigle was also a senior executive at numerous healthcare/medical device
companies, including TherOx, Inc, Cardiac Pathways, Baxter Healthcare and Cardima Corporation. Mr. Weigle also has relevant experience
at Johnson &amp; Johnson. Mr. Weigle holds a BA in Political Science from University of California, Berkeley.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We believe that Mr. Weigle is well qualified
to serve as a Director on our Board with his experience in leading medical device companies both as a senior executive and as a
member of the board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>Stephen H. Hochschuler, M.D. </B>is a world
renowned orthopaedic spine surgeon. Dr. Hochschuler is the co-founder of the Texas Back Institute and founder of Back Systems,
Inc., and founding Chairman of Innovative Spinal Technologies, Dr. Hochschuler has severed on numerous boards of directors and
advisory boards for medical and scientific institutions. Dr. Hochschuler is a member of numerous national and international professional
organizations including the American Academy of Orthopedic Surgeons; the American Pain Society; North American Spine Society; and
the Southwest Chapter of the Society of International Business Fellows. Internationally, he is a member of the International Intradiscal
Therapy Society; the International Society for Minimal Intervention in Spinal Surgery; the International Society for the Study
of the Lumbar Spine; and is a founding board member of the Spinal Arthroplasty Society. He has also been a founding board member
of The American Board of Spine Surgery and The American College of Spine Surgery. He is published in a wide range of professional
journals, and has delivered numerous presentations worldwide. Dr. Hochschuler holds a BA from Columbia College and his medical
degree from Harvard Medical School.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We believe that Dr. Hochschuler is well qualified
to serve as a Director on our Board with his experience in as an orthopaedic spine surgeon and his service on boards of directors
and advisory boards of medical and scientific institutions as a member of the board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 87 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->85<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Board Composition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our business and affairs are managed under
the direction of our board of directors. Our board of directors currently consists of three (3) members, none of whom qualify as
&ldquo;independent&rdquo; under the listing standards of Nasdaq.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Directors serve until the next annual meeting
and until their successors are elected and qualified. Officers are appointed to serve for one year until the meeting of the Board
following the annual meeting of shareholders and until their successors have been elected and qualified.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Director Independence</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to the closing of this initial public
offering, our board of directors will be composed of a majority of &ldquo;independent directors&rdquo; as defined under the rules
of Nasdaq. We use the definition of &ldquo;<I>independence</I>&rdquo; applied by Nasdaq to make this determination. Nasdaq Listing
Rule 5605(a)(2) provides that an &ldquo;<I>independent director</I>&rdquo; is a person other than an officer or employee of the
company or any other individual having a relationship which, in the opinion of the Company&rsquo;s Board, would interfere with
the exercise of independent judgment in carrying out the responsibilities of a director. The Nasdaq listing rules provide that
a director cannot be considered independent if:&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>the director is, or at any time during the past three (3) years was, an employee of the company;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any
period of twelve (12) consecutive months within the three (3) years preceding the independence determination (subject to certain
exemptions, including, among other things, compensation for board or board committee service);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the director or a family member of the director is a partner in, controlling shareholder of, or an executive officer of an
entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years
that exceed 5% of the recipient&rsquo;s consolidated gross revenue for that year or $200,000, whichever is greater (subject to
certain exemptions);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the director or a family member of the director is employed as an executive officer of an entity where, at any time during
the past three (3) years, any of the executive officers of the company served on the compensation committee of such other entity;
or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">the director or a family member of the director is a current partner of the Company&rsquo;s outside auditor, or at any time
during the past three (3) years was a partner or employee of the Company&rsquo;s outside auditor, and who worked on the company&rsquo;s
audit.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under such definitions, our Board has undertaken
a review of the independence of each director. Based on the information provided by each director concerning his or her background,
employment, and affiliations, our Board has determined that [&#9679;] are all independent directors of the Company.
However, our common stock is not currently quoted or listed on any national exchange or interdealer quotation system with a requirement
that a majority of our Board be independent and, therefore, the Company is not subject to any director independence requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Board Committees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Upon the consummation of this Offering, the
Company&rsquo;s Board will establish three standing committees: Audit, Compensation, and Nominating and Corporate Governance. Each
of the committees will operate pursuant to its charter. The committee charters will be reviewed annually by the Nominating and
Corporate Governance Committee. If appropriate, and in consultation with the chairs of the other committees, the Nominating and
Corporate Governance Committee may propose revisions to the charters. The responsibilities of each committee are described in more
detail below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Nasdaq permits a phase-in&nbsp;period of up
to one year for an issuer registering securities in an initial public offering to meet the Audit Committee, Compensation Committee
and Nominating and Corporate Governance Committee independence requirements. Under the initial public offering phase-in&nbsp;period,
only one member of each committee is required to satisfy the heightened independence requirements at the time our registration
statement becomes effective, a majority of the members of each committee must satisfy the heightened independence requirements
within 90&nbsp;days following the effectiveness of our registration statement, and all members of each committee must satisfy
the heightened independence requirements within one year from the effectiveness of our registration statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 88 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->86<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Audit Committee</I></B>. Upon the closing of this
initial public offering, we will establish an audit committee consisting of at least three directors, all of which will be &ldquo;independent&rdquo;
as defined by Nasdaq and include an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under
the Securities Act of 1933, as amended, or the Securities Act. The audit committee&rsquo;s duties will be specified in a charter
and include, but not be limited to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending
to the board whether the audited financial statements should be included in our annual disclosure report;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">discussing with management and the independent auditor significant financial reporting issues and judgments made in connection
with the preparation of our financial statements;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">discussing with management major risk assessment and risk management policies;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>monitoring the independence of the independent auditor;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit
partner responsible for reviewing the audit as required by law;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>reviewing and approving all related-party transactions;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>inquiring and discussing with management our compliance with applicable laws and regulations;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the
fees and terms of the services to be performed;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>appointing or replacing the independent auditor;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between
management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or
related work;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal
accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">approving reimbursement of expenses incurred by our management team in identifying potential target businesses.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;The audit committee will be composed
exclusively of &ldquo;independent directors&rdquo; who are &ldquo;financially literate&rdquo; as defined under the Nasdaq listing
standards. The Nasdaq listing standards define &ldquo;financially literate&rdquo; as being able to read and understand fundamental
financial statements, including a company&rsquo;s balance sheet, income statement and cash flow statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Compensation Committee</I></B>. Upon the closing of
this initial public offering, we will establish a compensation committee of the board of directors, which will consist of at least
three directors, all of which will be &ldquo;independent&rdquo; as defined by Nasdaq. The compensation committee&rsquo;s duties
will be specified in a charter and will include, but not be limited to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>reviews, approves and determines, or makes recommendations to our board of directors regarding, the compensation of our executive
officers;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 89 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->87<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>administers our equity compensation plans;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">reviews and approves, or makes recommendations to our board of directors, regarding incentive compensation and equity compensation
plans; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>establishes and reviews general policies relating to compensation and benefits of our employees.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Nominating and Corporate Governance Committee. </I></B>Upon the closing of this initial public offering, we will establish a nominating and corporate governance committee consisting of
at least two directors, all of which will be &ldquo;independent&rdquo; as defined by Nasdaq. The nominating and corporate governance
committee&rsquo;s duties will be specified in a charter and will include, but not be limited to:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">identifying, reviewing and evaluating candidates to serve on our board of directors consistent with criteria approved by our
board of directors;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">evaluating director performance on our board of directors and applicable committees of our board of directors and determining
whether continued service on our board of directors is appropriate</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">evaluating nominations by stockholders of candidates for election to our board of directors; and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD>corporate governance matters</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Role of Board in Risk Oversight Process</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our board of directors has responsibility
for the oversight of our risk management processes and, either as a whole or through its committees, regularly discusses with management
our major risk exposures, their potential impact on our business and the steps we take to manage them. The risk oversight process
includes receiving regular reports from board committees and members of senior management to enable our board of directors to understand
our risk identification, risk management, and risk mitigation strategies with respect to areas of potential material risk, including
operations, finance, legal, regulatory, cybersecurity, strategic, and reputational risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Code of Ethics</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Board plans to adopt a written code
of business conduct and ethics (&ldquo;Code&rdquo;) that applies to our directors, officers and employees, including our principal
executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions.
We intend to post on our website a current copy of the Code and all disclosures that are required by law in regard to any amendments
to, or waivers from, any provision of the Code.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Family Relationships</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There are no family relationships among
any of our executive officers or directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Involvement in Certain Legal Proceedings</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To our knowledge, none of our current directors
or executive officers has, during the past ten (10) years:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 36pt"></TD><TD STYLE="width: 13.5pt">&bull;</TD><TD STYLE="text-align: justify">been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and
other minor offenses);</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation
or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or
within two (2) years prior to that time;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>


<!-- Field: Page; Sequence: 90 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->88<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his
involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities,
or to be associated with persons engaged in any such activity;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating
to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial
institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or
restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law
or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">&bull;</TD><TD STYLE="text-align: justify">been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the
Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its
members or persons associated with a member.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_015"></A>EXECUTIVE COMPENSATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our executive officers did not receive
any compensation in fiscal years 2020 or 2019.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Employment Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have executed the following employment
agreements with our executive officers The material terms of each of those arrangements are summarized below. The summaries are
not complete description of all provisions of the employment arrangements and are qualified in their entirety by reference to the
written employment arrangements, each filed as an exhibit to the registration statement of which this prospectus is a part.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Foster Employment Agreement. </I></B>Steven
M. Foster, our Chief Executive Officer and President and a member of our Board of Directors, and the Company entered into an Employment
Agreement dated as of June 1, 2021 (the &ldquo;Foster Employment Agreement&rdquo;). The Foster Employment Agreement provides Mr.
Foster an annual base salary of $300,000, an annual bonus of up to $120,000 based upon achievement of mutually agreed upon milestones,
options to purchase shares of our common stock in an amount sufficient to maintain Mr. Foster&rsquo;s equity ownership at 4%, which
are to be granted at the closing of this initial public offering or upon a change of control of the Company if such change of control
occurs prior to the closing of this initial public offering and employee benefits that are generally given to our senior executives.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the Foster Employment Agreement,
in the event that Mr. Foster&rsquo;s employment is terminated by us without cause (as described in the Foster Employment Agreement)
or by Mr. Foster for good reason (as described in the Foster Employment Agreement), Mr. Foster would be entitled to (1)&nbsp;severance
equal to his base salary at termination, payable in instalments over the 12-month&nbsp;period following termination and (2)&nbsp;payments
in respect of continuing health care coverage for up to twelve months following termination. In addition, upon a change in control
of the Company, Mr. Foster would be entitled to (1) vesting of his options granted prior to the date of the Foster Employment Agreement
and (2) a lump sum cash payment of one year of his base salary and bonus opportunity then in effect.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 91 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->89<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If Mr. Foster is terminated for cause or
because of death or disability or resigns without good reason, then all vesting of Mr. Foster&rsquo;s equity awards and payments
of compensation will immediately terminate and any severance benefits will be paid in accordance with established policies, if
any, then in effect.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Foster Employment Agreement contains
restrictive covenants and other obligations relating to&nbsp;non-solicitation&nbsp;of our employees,&nbsp;non-disclosure&nbsp;of
our proprietary information and assignment of inventions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Ginn Employment Agreement</I></B><I>.</I>
Richard Ginn, our founder, Chief Technology Officer and a director of the Company, and the Company entered into an Employment Agreement
dated as of June 1, 2021 (the &ldquo;Ginn Employment Agreement&rdquo;). The Ginn Employment Agreement provides Mr. Ginn an annual
base salary of $275,000, an annual bonus of up to 30% of base salary based upon achievement of mutually agreed upon milestones,
a second bonus of up to $200,000 based on certain milestones determined by our board of directors and employee benefits that are
generally given to our senior executives.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the Ginn Employment Agreement, in
the event that Mr. Ginn&rsquo;s employment is terminated by us without cause (as described in the Ginn Employment Agreement) or
by Mr. Ginn for good reason (as described in the Foster Employment Agreement), Mr. Ginn would be entitled to (1)&nbsp;severance
equal to his base salary at termination, payable in instalments over the 12-month&nbsp;period following termination and (2)&nbsp;payments
in respect of continuing health care coverage for up to twelve months following termination. In addition, upon a change in control
of the Company, Mr. Ginn would be entitled to (1) vesting of his options granted prior to the date of the Ginn Employment Agreement
and (2) a lump sum cash payment of one year of his base salary and bonus opportunity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If Mr. Ginn is terminated for cause or
because of death or disability or resigns without good reason, then all vesting of Mr. Ginn&rsquo;s equity awards and payments
of compensation will immediately terminate and any severance benefits will be paid in accordance with established policies, if
any, then in effect.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Ginn Employment Agreement contains
restrictive covenants and other obligations relating to&nbsp;non-solicitation&nbsp;of our employees,&nbsp;non-disclosure&nbsp;of
our proprietary information and assignment of inventions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Van Dick Employment Agreement. </I></B>Steven
Van Dick, our Executive Vice President, Finance and Administration and Chief Financial Officer, and the Company entered into that
certain Employment Agreement dated as of June 1, 2021 (the &ldquo;Van Dick Employment Agreement&rdquo;). The Van Dick Employment
Agreement provides Mr. Van Dick an annual base salary of $275,000, an annual bonus of up to 30% of base salary based upon achievement
of mutually agreed upon milestones and employee benefits that are generally given to our senior executives.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the Van Dick Employment Agreement,
in the event that Mr. Van Dick&rsquo;s employment is terminated by us without cause (as described in the Van Dick Employment Agreement)
or by Mr. Van Dick for good reason (as described in the Van Dick Employment Agreement), Mr. Van Dick would be entitled to (1)&nbsp;severance
equal to his base salary at termination, payable in instalments over the 12-month&nbsp;period following termination and (2)&nbsp;payments
in respect of continuing health care coverage for up to twelve months following termination. In addition, upon a change in control
of the Company, Mr. Van Dick would be entitled to (1) vesting of his options granted prior to the date of the Van Dick Employment
Agreement and (2) a lump sum cash payment of one year of his base salary and bonus opportunity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If Mr. Van Dick is terminated for cause
or because of death or disability or resigns without good reason, then all vesting of Mr. Van Dick&rsquo;s equity awards and payments
of compensation will immediately terminate and any severance benefits will be paid in accordance with established policies, if
any, then in effect.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Van Dick Employment Agreement contains
restrictive covenants and other obligations relating to&nbsp;non-solicitation&nbsp;of our employees,&nbsp;non-disclosure&nbsp;of
our proprietary information and assignment of inventions.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>The above summary description of the
named executives&rsquo; employment agreement includes some of the general terms and provisions of those agreements. For a more
detailed description of those employment agreements, you should refer to such agreements, which are included as exhibits to the
registration statement of which this prospectus forms a part.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Stock Options</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company granted Steven M. Foster an option
to purchase 225,000 shares of common stock at an exercise price of $2.60 per share with a grant date of May 1, 2021, subject to
monthly equal vesting over a three-year period and adjustment in certain circumstances as provided therein (31,250 shares of which
are vested). In addition, upon an initial public offering of the Company, the Company will provide a one-time option grant to maintain
Steven M. Foster&rsquo;s ownership position at 4% of the fully diluted outstanding equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company granted Richard Ginn (i) an option
to purchase 113,000 shares of common stock at an exercise price of $2.60 per share with a grant date of May 1, 2021, subject to
monthly equal vesting over a three-year period commencing April 1, 2021(18,833 shares of which are vested) and (ii) an option to
purchase 10,998 shares of common stock at an exercise price of $3.53 per share with a grant date of July 19, 2021, subject to monthly
equal vesting over a three-year period commencing July 19, 2021(917 shares of which are vested).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company granted Steven Van Dick (i) an
option to purchase 113,000 shares of common stock at an exercise of $2.60 per share with a grant date of May 1, 2021, subject to
monthly equal vesting over a three-year period that commenced on November 1, 2020 (34,528 shares of which are vested) and (ii)
an option to purchase 69,167 shares of common stock at an exercise price of $3.53 per share with a grant date of July 19, 2021,
subject to monthly equal vesting over a three-year period commencing July 19, 2021(5,764 shares of which are vested).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company granted Richard Ferrari an option
to purchase 225,000 shares of common stock at an exercise of $2.60 per share with a grant date of May 1, 2021, subject to monthly
equal vesting over a three-year period that commenced on January 1 2021 (56,250 shares of which are vested) and (ii) an option
to purchase 321,502 shares of common stock at an exercise price of $3.53 per share with a grant date of July 19, 2021, subject
to monthly equal vesting over a three-year period commencing July 19, 2021 (26,792 shares of which are vested).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company granted Stephen Hochschuler an
option to purchase 17,071 shares of common stock at an exercise price of $0.31 per share with a grant date of November 15, 2016, all of which are vested.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company granted Frank Fischer an option
to purchase 15,000 shares of common stock at an exercise price of $2.60 per share with a grant date of May 7, 2021, subject to
monthly equal vesting over a two-year period that commenced immediately (3,125 shares of which are vested).</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>


<!-- Field: Page; Sequence: 92 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->90<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Board Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 7, 2021 the Company entered into
a Consulting Agreement (the &ldquo;Ferrari Consulting Agreement&rdquo;) with Richard Ferrari, a founder of the Company and its
Executive Chairman, pursuant to which Mr. Ferrari was to assume the role of Executive Chairman of the Company in exchange for compensation
of $22,500 per month starting September 1, 2021 and $350,000 upon the closing of this initial public offering if the market capitalization
of the Company exceeds $50 million at the time of the initial public offering or anytime thereafter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">None of the other board members receive
compensation from the Company for their role as board members.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_016"></A>PRINCIPAL STOCKHOLDERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table sets forth certain information,
as of November 9, 2021, with respect to the holdings of (1) each person who is the beneficial owner of more than 5% of a class
of Company voting stock, (2) each of our directors, (3) each executive officer, and (4) all of our current directors and executive
officers as a group.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Beneficial ownership of a class of voting stock
is determined in accordance with the rules of the SEC and includes any shares of such class of the Company&rsquo;s voting stock
over which a person exercises sole or shared voting or investment power, or of which a person has a right to acquire ownership
at any time within 60 days of November 9, 2021. Except as otherwise indicated, we believe that the persons named in this table
have sole voting and investment power with respect to all shares of voting stock held by them. Applicable percentage ownership
in the following table is based on 1,979,907 shares of common stock, 2,550,763 shares of Series A Preferred Stock and 491,222 shares
of Series B Preferred Stock, in each case, issued and outstanding on November 9, 2021 and [*] shares of common stock issued and
outstanding after the offering assuming a common stock offering of [*] shares&nbsp;(excluding [*] shares which may be sold upon
exercise of the underwriters&rsquo; over-allotment option), plus, for each individual, any securities that individual has the right
to acquire within 60 days of November 9, 2021.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To the best of our knowledge, except as
otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of
our common stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge,
none of the shares listed below are held under a voting trust or similar agreement, except as noted. To our knowledge, there is
no arrangement, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date
result in a change in control of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 93 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->91<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; border-bottom: black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Name and Address<BR>
of Beneficial Owner (1)</B></FONT></TD>
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; border-bottom: black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Title</B></FONT></TD>
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; border-bottom: black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Title of Class(2)</B></FONT></TD>
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Beneficially<BR>
owned</B></FONT></TD>
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Percent of Class<BR>
Before Offering</B></FONT></TD>
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Percent of Class<BR>
After Offering</B></FONT></TD>
    <TD STYLE="white-space: nowrap">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Officers and Directors</B></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; width: 20%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Steven M. Foster</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 29%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Executive Officer and President</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 13%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 9%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">43,750</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(3)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 9%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.2</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%*<SUP>(3)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 1%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 9%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]<SUP>(3)</SUP></FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Richard Ginn</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Technology Officer</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,109,499</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(4)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">55.3</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%<SUP>(4)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]<SUP>(4)</SUP></FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Steven Van Dick</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">EVP, Finance and Admin and Chief Financial Officer</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">50,412</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(5)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.5</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%<SUP>(5)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%<SUP>(5)</SUP></FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Richard Ferrari</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chairman of the Board</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">272,576</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(6)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">12.9</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%<SUP>(6)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]<SUP>(6)</SUP></FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Frank Fischer</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Nominee</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4,375</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(7)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ivan Howard</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Nominee</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">159,173</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(8)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">7.9</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Robert K. Weigle</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Nominee</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stephen H. Hochschuler, M.D</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Nominee</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">75,815</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(9)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.78</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%<SUP>(9)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%<SUP>(9)</SUP></FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Series B Preferred Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">8,944</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(10)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.8</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Officers and Directors as a Group (total of 4 persons)</B></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,615,600</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">70.3</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Series B Preferred Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">8,944</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.8</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>5% Stockholders of a Class of Voting Stock</B></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Zuhlke Ventures AG</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,550,763</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(11)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">56.3</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%<SUP>(11)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%</FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Series A Preferred Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,550,763</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">100</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Richard Ginn</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Technology Officer</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,109,499</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(4)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">55.3</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%<SUP>(4)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%<SUP>(4)</SUP></FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">TCTIG, LLC<SUP>(12)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">636,693</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(13)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">30.5</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%<SUP>(13)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%<SUP>(13)</SUP></FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">SpineSource, Inc.<SUP>(14)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">198,407</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">9.92</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%<SUP>(15)</SUP></FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Theodore Franklin&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Series B Preferred Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">89,445</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">18.2</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Khalid Mentak&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">230,729</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(16)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">11.1</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%<SUP>(16)</SUP></FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%<SUP>(16)</SUP></FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Series B Preferred Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">71,556</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">14.6</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Marlin W. Hilliard Family Trust<SUP>(17)</SUP>&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Series B Preferred Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">89,446</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">18.2</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">WS Investment Company, LLC<SUP>(18)</SUP>&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Series B Preferred Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">26,883</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.5</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">K&amp;A Investments Ltd.<SUP>(19)</SUP>&nbsp;</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Series B Preferred Stock</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">64,401</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">13.1</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*</FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">]%</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 94 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->92<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(1) Unless otherwise indicated, the principal
address of the named officers and directors and holders of 5% of a class of voting stock of the Company is c/o Tenon Medical, Inc.,
104 Cooper Court, Los Gatos, CA 95032.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(2) Each share of our Preferred Stock entitles
its holder to one vote per share in all matters submitted to the common stockholders for a vote.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(3) Consists of 43,750 shares of our common
stock underlying stock options which that have vested and are exercisable within 60 days of November 9, 2021 and [*] shares of
our common stock underlying a one-time option grant to maintain Steven M. Foster&rsquo;s ownership position at 4% of the fully
diluted outstanding equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(4) Includes 26,639 shares of our common stock
underlying stock options that have vested and are exercisable within 60 days of November 9, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(5) Consists of 50,412 shares of our common
stock underlying stock options that have vested and are exercisable within 60 days of November 9, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(6) Consists of 113,402 shares of our common
stock underlying stock options that have vested and are exercisable within 60 days of November 9, 2021 and 159,174 shares of our
common stock (27,339 shares of which are in the form of options) held by TCTIG, LLC and for which Richard Ferrari has voting control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(7) Consists of 4,375 shares of our common
stock underlying stock options that have vested and are exercisable within 60 days of November 9, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(8) Consists of 159,174 shares of our common
stock (27,338 shares of which are in the form of options) held by TCTIG, LLC and for which Ivan Howard has voting control.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(9) Includes 17,071 shares of our common stock
underlying options that have vested and are exercisable within 60 days of October 8, 2021; 8,944 shares of our common stock underlying
8,944 shares of Series B Preferred Stock that are convertible within 60 days of November 9, 2021 and [*] shares of our common stock
underlying Notes that automatically convert at the closing of this initial public offering. The 8,944 shares of Series B Preferred
Stock and the Notes are held by SHKH LLC, an entity for which Stephen H. Hochschuler has a controlling interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(10) Held by SHKH LLC, an entity for which
Stephen H. Hochschuler has a controlling interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(11) Consists of 2,550,763 shares of our common
stock underlying 2,550,763 shares of Series A Preferred Stock that are convertible within 60 days of November 9, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(12) Richard Ferrari, Ivan Howard, Khalid Mentak
and Geoff Dillion are the members of TCTIG, LLC and each have a 25% equity interest therein and each have control over how TCTIG,
LLC will vote 25% of the shares of our common stock held by TCTIG, LLC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(13) Includes 109,353 shares of our common
stock underlying an option that is exercisable within 60 days of October 8, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(14) Tom Mitchell is the CEO, President and
sole director of SpineSource and has control over the voting and disposition of the shares of our common stock held by SpineSource.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(15)
Includes [*] shares that will be issued to SpineSource at the closing of this initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(16) Includes 27,338 shares of our common stock
underlying an option that is exercisable within 60 days of October 8, 2021; 71,556 shares of common stock that are underlying 71,556
shares of Series B Preferred Stock that are convertible within 60 days of November 9, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(17) Joe Marlin Hilliard III is the trustee
of Marlin W. Hilliard Family Trust and has control over the voting and disposition of the shares of our common stock held by Marlin
W. Hilliard Family Trust.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(18) James Terranova is the Managing Director
of WS Investment Company, LLC and has control over the voting and disposition of the shares of our common stock held by WS Investment
Company, LLC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(19) Ken Smith and Andrea Smith are managers
of K&amp;A Investment Ltd. and each have control over the voting and disposition of the shares of our common stock held by K&amp;A
Investment Ltd.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_017"></A><B>CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 7, 2021 the Company entered into
the &ldquo;Ferrari Consulting Agreement with Richard Ferrari, a founder of the Company and its Executive Chairman. See &ldquo;Executive
Compensation&mdash;Board Compensation for a summary description of the terms of the Ferrari Consulting Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 21, 2021 the Company entered into
the KM Consulting Agreement, pursuant to which Key Medical was engaged to provide services in the areas of product development,
commercial launch of The CATAMARAN System, fund raising and other mutually agreed to services in exchange for compensation of $300,000
upon the closing of a financing of at least $5 million; $300,000 if the financing is for less than $5 million but we achieve annual
revenues of $3 million; or $600,000 if prior to a financing we were to be acquired. The KM Consulting Agreement terminated on June
1, 2021. Khalid Mentak, a former director of the Company (and Chief Executive Officer of the Company on the date of the KM Consulting
Agreement) is the CEO of Key Medical. Mr. Mentak has filed for arbitration against the Company for claims under the KM Consulting
Agreement. See <I>&ldquo;Business&mdash;Legal Proceedings.&rdquo;</I></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><I></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Khalid Mentak is also the holder of our
Amended and Restated 2019 Convertible Promissory Note having a principal amount of $70,000 that was issued on April 30, 2021 and
is due on April 30, 2022. The note bears interest at 8% per annum and is subject to automatic conversion upon the closing of this
initial public offering at a conversion price equal to 70% of the offering price in this initial public offering. Mr. Mentak is
also the holder of 71,556 shares of Series B Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 17, 2021, Steven, our Chief Executive
Officer, purchased one of our convertible notes in the principal amount of $50,000.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 17, 2021, the Van Dick Family Trust
purchased one of our convertible notes in the principal amount of $80,000.&nbsp;Steve Van Dick our Chief Financial Officer is a
Trustee of this Trust.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 17, 2021, Richard Ginn, our Chief Technology
Officer, purchased one of our convertible notes in the principal amount of $100,000.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 17, 2021, Richard Ferrari, our Executive
Chairman of the Board, purchased one of our convertible notes in the principal amount of $300,000.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 17, 2021, Frank Fischer, one of our
director nominees, purchased one of our convertible notes in the principal amount of $600,000.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 17, 2021, Theodore D. Franklin, who
currently owns more than 5% of the company&rsquo;s Series B Preferred Stock, purchased one of our convertible notes in the principal
amount of $25,000.&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 24, 2021, Steven H. Hochschuler
M.D., one of our director nominees, purchased one of our convertible notes in the principal amount of $50,000.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 24, 2021, WS Investment Company, LLC,
who currently owns more than 5% of the company&rsquo;s Series B Preferred Stock, purchased one of our convertible notes in the
principal amount of $125,000.&nbsp;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 95 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->93<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On October 31, 2020 the Company entered
into a Consulting Agreement (the &ldquo;Van Dick Consulting Agreement&rdquo;) with Steven Van Dick, our Executive Vice President,
Finance and Administration and Chief Financial Officer, pursuant to which Mr. Van Dick was to provide finance and accounting services,
budget and financial services and any other mutually agreed upon services in exchange for compensation of $19,000 per month of
which $5,000 has been paid each month and the remainder paid in May 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 20, 2021, the Company entered into
the SpineSource Sales Agreement, which became effective when the Company paid SpineSource $500,000 for prior services and
issued the SpineSource Shares. Pursuant to the SpineSource Sales Agreement, the Company appointed SpineSource as its
exclusive sales representative for marketing, sale, and support for The CATAMARAN<SUP>TM </SUP>System in the United States
and Puerto Rico in exchange for 60% of net sales invoiced by us from product sales that are completed in the United States
and Puerto Rico. The SpineSource Sales has a five-year term and automatically renews for five-year periods unless written
notice is provided by either party at least 180 days prior to the expiration of the term. Any extension beyond ten (10) years
requires a written agreement. The Agreement may also be terminated by the Company if certain minimum sales targets are not
achieved by SpineSource as set forth in the SpineSource Sales Agreement. Either party may terminate the SpineSource Sales
Agreement for a material breach by the other party, the liquidation, insolvency or bankruptcy of the other party or if the
other party ceases to actively engage in the business to which the SpineSource Sales Agreement relates. On June 24, 2021, the
Tom and Susan Mitchell Revocable Trust purchased one of our convertible notes in the principal amount of $50,000.&nbsp; Tom
Mitchell, CEO of SpineSource, is a Trustee of this Trust. In connection with the issuance of the SpineSource Shares, the
Company entered into the SpineSource Stock Purchase Agreement, which provides SpineSource with anti-dilution protection that
maintains its ownership percentage of the Company, prior to the completion of this initial public offering, at no less than
3%&nbsp;on a fully diluted basis. As of November 9, 2021, the Company has issued 88,894 shares to SpineSource pursuant to the
anti-dilution protection contained in the SpineSource Stock Purchase Agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On October 28, 2021, the Company entered into
an Agreement (the &ldquo;Exchange Agreement&rdquo;) with Zuhlke Ventures AG (&ldquo;ZV&rdquo;), the minority shareholder of Tenon
Technology AG (&ldquo;TTAG&rdquo;), the Company&rsquo;s Swiss subsidiary. Pursuant to the Exchange Agreement, ZV agreed to exchange
574,033 shares of Series A Preferred Stock issued by TTAG, representing all of its ownership interest in TTAG for Tenon Series
A Preferred Stock , representing 24% ownership interest in the Company on a fully diluted basis, taking into account (i) all outstanding
shares of common stock of the Company; (ii) shares issuable upon conversion or exchange of all of the Company&rsquo;s securities
directly or indirectly convertible into or exchangeable for our common stock and the exercise of all outstanding options or warrants;
and (iii) the shares of our common stock that are reserved, but neither issued nor the subject of outstanding awards, under any
Company equity incentive or similar plan. Pursuant to the terms of the Exchange Agreement, the Company has issued ZV 2,550,763
shares of Tenon Series A Preferred Stock. ZV&rsquo;s shares of Tenon Series A Preferred Stock are subject to anti-dilution protection
that maintains ZVs 24% ownership interest in the Company, excluding any shares issued by the Company in an initial public offering
or a qualified equity offering of at least $5,000,000 at a per share price of at least $3.3737. The anti-dilution protection terminates
upon the earlier of (i) the closing of this initial public offering; (ii) the conversion of the Private Offering Notes; (iii) the
repayment of the Private Offering Notes in the case of a change in control of the Company; or (iv) the liquidation of the Company.
Also, pursuant to the terms of the Exchange Agreement, the Company repaid the convertible note between TTAG and ZV in full in the
amount of approximately $114,000, including accrued interest.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>The above summary description of related
part transactions includes some of the general terms and provisions of the agreements related to such transactions. For a more
detailed description of those agreements, you should refer to such agreements which are included as exhibits to the registration
statement of which this prospectus forms a part</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_018"></A><FONT STYLE="text-transform: uppercase"><B>DESCRIPTION
OF SECURITIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>The following summary description sets
forth some of the general terms and provisions of our capital stock. Because this is a summary description, it does not contain
all of the information that may be important to you. For a more detailed description of our capital stock, you should refer to
the applicable provisions of the General Corporation Law of the State of Delaware (the &ldquo;DGCL&rdquo;), our charter and our
bylaws as currently in effect. Copies of our amended and restated certificate of incorporation, as amended, and our bylaws are
included as exhibits to the registration statement of which this prospectus forms a part.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>General</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The total number of shares of stock which the
Company is authorized to issue is 13,784,965 shares of capital stock, consisting of 10,487,904 shares of common stock, $0.001 par
value per share, and 3,297,061 shares of preferred stock, $0.001 par value per share.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The holders of our common stock are entitled
to the following rights:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Voting Rights</I></B>. Each share
of our common stock entitles its holder to one vote per share on all matters to be voted or consented upon by the stockholders.
Holders of our common stock are not entitled to cumulative voting rights with respect to the election of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Election of Directors. </I></B>The
holders of our common stock, voting as a separate class, shall be entitled to elect one member of our Board of Directors<B><I>.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>


<!-- Field: Page; Sequence: 96 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->94<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Dividend Rights</I></B>. Subject
to limitations under Delaware law and preferences that may apply to any shares of preferred stock that we may decide to issue in
the future, holders of our common stock are entitled to receive ratably such dividends or other distributions, if any, as may be
declared by our Board out of funds legally available therefor.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Liquidation Rights</I></B>. In the
event of the liquidation, dissolution or winding up of our business, the holders of our common stock are entitled to share ratably
in the assets available for distribution after the payment of all of our debts and other liabilities, subject to the prior rights
of the holders of our preferred stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Other Matters</I></B>. The holders
of our common stock have no subscription, redemption or conversion privileges. Our common stock does not entitle its holders to
preemptive rights. All of the outstanding shares of our common stock are fully paid and non-assessable. The rights, preferences
and privileges of the holders of our common stock are subject to the rights of the holders of shares of any series of preferred
stock which we may issue in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Preferred Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of November 9, 2021, we have designated
2,805,839 shares of our preferred stock as Series A Preferred Stock, of which 2,550,763 are outstanding and designated 491,222 shares
of our preferred stock as Series B Preferred Stock (together with the Series A Preferred Stock, the &ldquo;Preferred Stock&rdquo;),
of which 491,222 are issued and outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The holders of our Preferred Stock are
entitled to the following rights:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Voting Rights</I></B>. Each share
of our Preferred Stock entitles its holder to a number of votes equal to the number of shares of common stock into which one such
share is convertible into. Currently each share of Preferred Stock is entitled to one (1) vote per share. The holders of shares
of Preferred Stock are entitled to vote on all matters on which our common stock shall be entitled to vote.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Dividend Rights</I></B><I>.</I> The
holders of our Preferred Stock are entitled to receive dividends, as and if declared by our board of directors prior to the payment
of dividends on our common stock with equal priority with each other. Their right to receive dividends is not cumulative.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Liquidation Rights</I></B><I>.</I>
Each share of Preferred Stock is entitled to a liquidation preference per share with equal priority equal to the sum of (i) the
applicable Liquidation Preference plus (ii) all declared but unpaid dividends (if any) on such share, or such lesser per share
amount as may be approved by the holders of the majority of the outstanding shares of Series A Preferred Stock or Series B Preferred
Stock, as applicable. If upon liquidation the assets of the Company legally available for distribution to the holders of the Preferred
Stock are insufficient to permit the payment to such holders of the full amounts, then the entire assets of the Company legally
available for distribution shall be distributed with equal priority and <I>pro rata </I>among the holders of the Preferred Stock
in proportion to the full amounts they would otherwise be entitled to receive with regard to liquidation rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Voluntary Conversion</I></B>. Each
share of Preferred Stock is any time at the option of the holder convertible into a number of shares of our common stock equal
the quotient obtained by dividing the Original Issue Price for the relevant series by the Conversion Price for the relevant series
and such quotient for a series is referred to as the &ldquo;Conversion Rate&rdquo; for such series.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The &ldquo;Original Issue Price&rdquo; is $3.3737
per share for the Series A Preferred Stock and $2.795 per share for the Series B Preferred Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The &ldquo;Conversion Price&rdquo; is $3.3737
per share for the Series A Preferred Stock and $2.795 per share for the Series B Preferred Stock. The Conversion Price for each
series is subject to adjustment as described below</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Automatic Conversion.</I></B> Each
share of Preferred Stock shall automatically be converted into a number of shares of our common stock equal to the applicable Conversion
Rate (i) immediately prior to the closing of this initial public offering; provided that the initial public offering is at a price
not less than $6.00 per share and the gross proceeds from the offering are not less than $25,000,000 or (ii) upon receipt by the
Company of a written request for such conversion from the holders of at least a majority of the Preferred Stock then outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 97 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->95<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Adjustments to Conversion Price.
</I></B>Except for Exempt Additional Issuances, the Conversion Price for the Series A Preferred Stock or Series B Preferred Stock,
as applicable, shall be adjusted for any additional issuances of common stock below the current Conversion Price for such series
by multiplying the Conversion Price by a fraction, the numerator of which is shall be the number of shares of our common stock
outstanding immediately prior to such additional issuance plus the number of shares of common stock that could be purchased with
the aggregate consideration received by the Company for such additional share at the Conversion Price and the denominator is the
number of shares of common stock outstanding immediately after the issuance of such additional shares. The Conversion Price for
Preferred Stock is also adjusted for stock splits, combinations, stock dividends or reclassifications of either common stock or
Preferred Stock, as applicable.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Exempt Additional Issuances mean the following
issuances of:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(1) shares of our common stock issued upon
the conversion of our Preferred Stock</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(2) up to 2,805,839 shares of Series A Preferred
Stock;</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(3) shares of our common stock and options,
warrants or other rights to purchase our common stock issued or issuable to employees, officers or directors of, or consultants
or advisors to the Corporation or any subsidiary pursuant to stock grants, restricted stock purchase agreements, option plans,
purchase plans, incentive programs or similar arrangements, or such greater number as may be approved by the Board of Directors;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(4) shares of our common stock issued upon
the exercise or conversion of options or convertible securities outstanding as of October 1, 2012;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(5) shares of our common stock issued or
issuable as a dividend or distribution on preferred stock or pursuant to any event for which adjustment is made pursuant to our
amended and restated certificate of incorporation, as amended;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(6) shares of our common stock issued or
issuable in a registered public offering under the Securities Act pursuant to which all outstanding shares of Preferred Stock are
automatically converted into our common stock;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(7) shares of our common stock issued or
issuable pursuant to an acquisition of another corporation by merger, purchase of substantially all of the assets or other reorganization
or to a joint venture agreement, <I>provided, </I>that such issuances are approved by the Board of Directors;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(8) shares of our common Stock issued or
issuable to banks, equipment lessors or other financial institutions pursuant to a debt financing or commercial leasing transaction
approved by the Board of Directors;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(9) shares of our common stock issued or
issuable in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other similar
agreements or strategic partnerships approved by the Board of Directors; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(10) any other shares of our common stock
issued or issuable, provided that holders of at least a majority of the then outstanding shares of Series A Preferred Stock and
Series B Preferred Stock voting together as a single class, expressly designate such issuance as being an Exempt Additional Issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Election of Directors</I></B>. So
long as any of the of Series B Preferred Stock remains outstanding, the holders of Series B Preferred Stock, voting as a separate
class, shall be entitled to elect one member of our Board of Directors<B><I>. </I></B>So long as any of the of Series A Preferred
Stock remains outstanding, the holders of Series A Preferred Stock, voting together as a separate class, shall be entitled to elect
one member of our Board of Directors<B><I>.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 98 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->96<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Other Matters</I></B>. The holders
of our Preferred Stock have no subscription or redemption privileges and are not subject to redemption. Our Preferred Stock do
not entitle its holders to pre-emptive rights.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Additional Preferred Stock</I></B><I>.</I>
Our charter authorizes our Board to provide for the issuance of shares of preferred stock in one or more series without further
authorization from stockholders. If at least 200,000 shares of preferred stock are issued and outstanding, an approval of at least
a majority of the outstanding shares of the preferred stock voting together as a single class is required in order to, among other
things as stated in the charter, issue any new class or series of equity security having rights, preferences or privileges senior
to or on a parity with the preferred stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">While we do not currently have any plans
for the issuance of any additional preferred stock, the issuance of additional preferred stock could adversely affect the rights
of the holders of common stock and, therefore, reduce the value of the common stock. It is not possible to state the actual effect
of the issuance of any shares of preferred stock on the rights of holders of the common stock until the Board of Directors determines
the specific rights of the holders of the preferred stock; however, these effects may include:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD>Restricting dividends on the common stock;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD>Diluting the voting power of the common stock;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD>Impairing the liquidation rights of the common stock; or</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">&#9679;</TD><TD>Delaying or preventing a change in control of the Company without further action by the stockholders.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Notes</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During 2021 we issued and amended a number of promissory notes
which are described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 27, 2021 we issued a Promissory
Note in the principal amount of $130,560.34 to Wilson Sonsini Goodrich &amp; Rosati, Professional Corporation (the &ldquo;WSGR
Note&rdquo;). The WSGR Note bears interest at 3% per annum and is due on the earlier of (x) July 27, 2021, (y) the closing of a
debt or equity financing of at least $1,000,000 and (z) the closing of a change in control transaction. The interest rate on the
WSGR Note increases to 5% per annum if all principal and interest is not paid when due. The WSGR Note was paid in full in May 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 30, 2021 we issued the following
convertible promissory notes: (i) $170,000 Convertible Promissory Note issued to Phoenix DeVentures Inc., which accrues interest
at 8% per annum from April 30, 2021 and is due on December 31, 2021 (the &ldquo;Phoenix Note 1&rdquo;); (ii) $117,530 Amended and
Restated 2015 Convertible Promissory Note issued to Phoenix DeVentures Inc. (the &ldquo;Phoenix Note 2), which accrues interest
at 8% per annum from January 1, 2016 and is due on April 30, 2022; (iii) $40,000 Convertible Promissory Note issued to Phoenix
DeVentures Inc., which accrues interest at 8% per annum from April 30, 2021 and is due on December 31, 2021 (the &ldquo;Phoenix
Note 3&rdquo;); and (iv) $70,000 Amended and Restated 2019 Convertible Promissory Note issued to Khalid Mentak (the &ldquo;Mentak
Note&rdquo; and together with the Phoenix 1 Note, the Phoenix 2 Note and the Phoenix 3 Note, the &ldquo;April 30 Notes&rdquo;),
which accrues interest at 8% per annum from October 12, 2019 and is due on April 30, 2022. Principal and interest is due in full
at maturity on the April 30 Notes and are not prepayable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 3, 2021 we issued the following
convertible promissory notes to Paul Orofino: (i) $200,000 Amended and Restated 2019 Convertible Promissory Note (the &ldquo;Orofino
Note 1&rdquo;), which accrues interest at 8% per annum from November 20, 2020 and is due on May 3, 2022; (ii) $50,000 Amended and
Restated Promissory Note (the &ldquo;Orofino Note 2 and together with the Orofino Note 1, the &ldquo;May 3 Notes&rdquo;), which
accrues interest at 8% per annum from October 21, 2019 and is due on May 3, 2022. Principal and interest is due in full at maturity
on the May 3 Notes. The May 3 Notes are prepayable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 7, 2021 we issued the $68,359 Amended
and Restated 2019 Convertible Promissory Note to Lince Consulting, LLC (the &ldquo;Lince Note&rdquo;), which accrues interest at
8% per annum from June 12, 2019 and is due on May 7, 2022. Principal and interest is due in full at maturity on the Lince Note.
The Lince Note is prepayable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 99 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->97<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the period from May 17, 2021 to
July 26, 2021, the Company issued an aggregate $12,177,328 of Convertible Promissory Notes to 125 investors (the &ldquo;Private
Offering Notes&rdquo; and together with the April 30 Notes, the May 3 Notes and the Lince Note, the &ldquo;Notes&rdquo;), which
accrues interest at 8% per annum from the date of issuance and are due one year from the date of issuance. Principal and interest
is due in full at maturity on the Private Offering Notes. The Private Offering Notes are not prepayable without the consent of
a majority of the holders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Immediately prior to the closing of this
initial public offering, the Notes will automatically convert into of shares of our common stock as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.5pt; text-align: justify; text-indent: -13.7pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(i)</TD><TD STYLE="text-align: justify">each April 30 Note (other than the Phoenix 2 Note) and May 3 Note will convert into [*] and
                                                                [*] shares of our common stock, respectively, in each case calculated by dividing the outstanding principal and accrued and
                                                                unpaid interest on such Note, by 70% of the per share initial public offering price;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(ii)</TD><TD STYLE="text-align: justify">the Lince Note and the Phoenix 2 Note will convert into [*] and [*] shares of our common
                                                                 stock, respectively, in each case calculated by dividing the outstanding principal and accrued and unpaid interest on such Note by 80% of the per share initial public offering price;</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in">(iii)</TD><TD STYLE="text-align: justify">the Private Offering Notes will convert into [*] shares of our common stock calculated by dividing
(x) the outstanding principal and accrued and unpaid interest on the Private Offering Notes by (y) the lesser of (1) the quotient
obtained by dividing (A) $22,500,000 by (B) the fully diluted capitalization of the Company and (2) 70% of the per share initial
public offering price.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 31, 2020, the Company issued
to Exchange Listing, LLC warrants to purchase 50,000 shares of our common stock at an exercise price $2.60 per share. The warrant
expires on the earlier of (i) December 31, 2025, (ii) the acquisition of the Company by another control group, or (iii) immediately
prior to the closing of this initial public offering. Upon the closing of this initial public offering, the warrant will automatically
be exercised on a cashless basis to the extent such net issue exercise would result in issuance of shares. Pursuant to the consulting
agreement between the Company and Exchange Listing, LLC, Exchange Listing, LLC has registration rights with respect to the shares
underlying the warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Options</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">In
2012 our board of directors and shareholders approved our 2012 Equity Incentive Plan (the &ldquo;Plan&rdquo;). There are currently
1,598,531 shares reserved for issuance under the Plan. The following options were issued under the Plan:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">On
June 19, 2014 we granted three separate non-statutory options to purchase a total of 121,870 shares of our common stock under the
Plan at an exercise price of $0.31 per share. The options are fully vested and expire on June 19, 2024.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">On
November 15, 2016 we granted a non-statutory option to purchase 17,071 shares of our common stock under the Plan at an exercise
price of $0.31 per share. The option is fully vested and expires on November 15, 2026.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">On
September 8, 2019 we granted a non-statutory option to purchase 43,038 shares of our common stock under the Plan at an exercise
price of $0.31 per share. The option vests monthly over a four-year period and expires on September 8, 2029.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">On
May 1, 2021 we granted non-statutory options to 6 individuals to purchase in aggregate 749,000 shares of our common stock
under the Plan at an exercise price of $2.60 per share. All of the options are subject to three-year monthly vesting and expire
on May 1, 2031.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: white">On May
7, 2021 we granted non-statutory options to two individuals to purchase in aggregate 25,000 shares of our common stock under the
Plan at an exercise price of $2.60 per share. One option for 10,000 shares is subject to three-year vesting and the other option
for 25,000 shares is subject to two-year vesting and both expire on May 7, 2031.</FONT></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">On
July 8, 2021 we granted a non-statutory option to purchase 25,000 shares of our common stock under the Plan at an exercise price
of $3.53 per share. The option vests monthly over a two-year period and expires on July 8, 2031.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 100 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->98<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: white">On July
19, 2021 we granted non-statutory options to 2 individuals to purchase 339,044 shares of our common stock and we granted incentive
stock options to 2 individuals for 80,165 shares of our common stock under the Plan at an exercise price of $3.53 per share. The
options are subject to three-year monthly vesting and expire on July 19, 2031. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: white">On August
10, 2021 we granted non-statutory options to 2 individuals to purchase 27,000 shares of our common stock and we granted incentive
stock options to 2 individuals for 15,000 shares of our common stock under the Plan at an exercise price of $3.53 per share. Three
of these options vest 33% on the first anniversary with the balance of the shares vesting monthly over the next two years and one
option is subject to two-year monthly vesting and all options expire on August 10, 2031. We also granted 123,500 of restricted
shares of common stock to 3 individuals under the Plan<FONT STYLE="background-color: white">, which vested immediately</FONT>.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: white">On October
8, 2021 we granted non-statutory options to 3 individuals to purchase 24,000 shares of our common stock and we granted incentive
stock options to 3 individuals for 20,000 shares of our common stock under the Plan at an exercise price of $3.75 per share. Three
of these options vest 33% on the first anniversary with the balance of the shares vesting monthly over the next two years and the
remaining options are subject to two-year monthly vesting and all options expire on October 8, 2031. </FONT></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Upon the closing of this initial public
offering, the Company will provide a one-time option grant to Steven M. Foster to maintain his ownership position at 4% of the
fully diluted equity<FONT STYLE="background-color: white">. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="background-color: white">From
time to time, we expect to continue to issue options under the Plan to various consultants, employees, officers and directors of
the Company.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Exclusive Forum </B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Certificate of Incorporation, as amended
provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware
shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company, (b) any action
asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Company to the Company
or the Company&rsquo;s stockholders, (c) any action asserting a claim arising pursuant to any provision of the Delaware General
Corporation Law, the Company&rsquo;s Certificate of Incorporation or the Bylaws, or (d) any action asserting a claim governed by
the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable
parties named as defendants therein. This exclusive forum provision may limit the ability of our stockholders to bring a claim
in a judicial forum that such stockholders find favorable for disputes with us or our directors or officers, which may discourage
lawsuits against us or our directors or officers. Our Certificate of Incorporation also provides that this choice of forum provision
does not apply to claims arising under federal securities laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><B>Section 203 of the Delaware General
Corporation Law</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are subject to the provisions of Section
203 of the DGCL regulating corporate takeovers. This statute prevents certain Delaware corporations, under certain circumstances,
from engaging in a &ldquo;business combination&rdquo; with:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 0.25in; font-size: 10pt"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="font-size: 10pt; text-align: justify"><FONT STYLE="font-size: 10pt">a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an &ldquo;interested stockholder&rdquo;);</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">an affiliate of an interested stockholder; or</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A &ldquo;business combination&rdquo; includes
a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">our board of directors approves the transaction that made the stockholder an &ldquo;interested stockholder,&rdquo; prior to the date of the transaction; or</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Transfer Agent and Registrar</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The transfer agent and registrar for our common stock will be
VStock Transfer LLC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 101 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->99<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Listing</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have applied to have our common stock
listed on the Nasdaq Capital Market under the symbol &ldquo;_______&rdquo; which listing is a condition to this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><A NAME="a_019"></A><B>SHARES
ELIGIBLE FOR FUTURE SALE</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There is not currently an established U.S.
trading market for our common stock. We cannot predict the effect, if any, that market sales of shares of our common stock or the
availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time.
Sales of substantial amounts of our common stock in the public market after this offering, could adversely affect market prices
prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Upon completion of the sale of [*] shares
of common stock pursuant to this offering, we will have [*] shares of common stock issued and outstanding. In the event the underwriters
exercise the over-allotment option in full, we will have [*] shares of common stock issued and outstanding. The common stock sold
in this offering will be freely tradable without restriction or further registration or qualification under the Securities Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All previously issued shares of common
stock that were not offered and sold in this offering, as well as shares subject to employee stock options, are or will be upon
issuance, &ldquo;restricted securities,&rdquo; as that term is defined in Rule 144 under the Securities Act. These restricted securities
are eligible for public sale only if such public resale is registered under the Securities Act or if the resale qualifies for an
exemption from registration under Rule 144 under the Securities Act, which are summarized below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In general, a person who has beneficially
owned restricted shares of our common stock for at least six months in the event we have been a reporting company under the Exchange
Act for at least ninety (90) days before the sale, would be entitled to sell such securities, provided that such person is not
deemed to be an affiliate of ours at the time of sale or to have been an affiliate of ours at any time during the ninety (90) days
preceding the sale. A person who is an affiliate of ours at such time would be subject to additional restrictions, by which such
person would be entitled to sell within any three-month period only a number of shares that does not exceed the greater of the
following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">1% of the number of shares of our common stock then outstanding;
or</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">1% of the average weekly trading volume
of our common stock during the four calendar weeks preceding the filing by such person of a notice on Form 144 with respect to
the sale;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">provided that, in each case, we are subject to the periodic
reporting requirements of the Exchange Act for at least 90 days before the sale. Rule 144 trades must also comply with the manner
of sale, notice and other provisions of Rule 144, to the extent applicable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Lock-Up Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our officers and directors have agreed,
subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise
dispose of any shares of our common stock or other securities convertible into or exercisable or exchangeable for shares of our
common stock for a period of 180 days after the effective date of the registration statement for this offering without the prior
written consent of the representative (as defined herein).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><A NAME="a_020"></A><B>UNDERWRITING</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the terms and subject to the conditions
in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom The Benchmark Company, LLC
is acting as the representative, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of
shares indicated below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Underwriter</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number of<BR> Shares</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 70%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="vertical-align: bottom; width: 12%; text-align: center">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">The Benchmark Company, LLC</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-size: 10pt">[*]</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">Totals:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="vertical-align: bottom; text-align: center"><FONT STYLE="font-size: 10pt">[*]</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 102 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->100<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the terms of the underwriting agreement,
the underwriters are committed to purchase, severally and not jointly, all of the shares offered by this prospectus (other than
the shares subject to the underwriters&rsquo; option to purchase additional shares), if the underwriters buy any of such shares.
The underwriters&rsquo; obligation to purchase the shares is subject to satisfaction of certain conditions, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-size: 10pt">&bull;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">receipt and acceptance of our shares of common stock by the underwriters; and</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.5in">&nbsp;</TD>
    <TD STYLE="width: 0.25in"><FONT STYLE="font-size: 10pt">&bull;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">the underwriters&rsquo; right to reject orders in whole or in part.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have been advised by the representative
that the underwriters intend to make a market in our shares of common stock but that they are not obligated to do so and may discontinue
making a market at any time without notice.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In connection with this offering, certain
of the underwriters or securities dealers may distribute prospectuses electronically.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Over-Allotment Option</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have granted to the underwriters an
option, exercisable for 30 days from the date of this prospectus, to purchase up to [*] additional shares of common stock at the
public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters
may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the
shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated,
subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed
next to the underwriter&rsquo;s name in the preceding table that bears to the total number of shares of common stock listed next
to the names of all underwriters in the preceding table.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Discounts and Commissions and Expenses</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Shares sold by the underwriters to the
public will initially be offered at the initial offering price set forth on the cover of this prospectus. In addition, the underwriters
may offer some of the shares to other securities dealers at such price less a concession of up to $[*] per share. The underwriters
may offer the shares through one or more of their affiliates or selling agents. If all the shares are not sold at the public offering
price, the representative may change the offering price and the other selling terms. Upon execution of the underwriting agreement,
the underwriters will be obligated to purchase the shares at the prices and upon the terms stated therein.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The underwriting discount is equal to the
public offering price per share, less the amount paid by the underwriters to us per share. The underwriting discount was determined
through an arms&rsquo; length negotiation between us and the underwriters. We have agreed to sell the shares of our common stock
to the underwriters at the offering price of $[&#9679;] per share, which represents the public offering price of our shares set
forth on the cover page of this prospectus less a 7.0% underwriting discount</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table shows the public offering
price, underwriting discounts and proceeds, before expenses, to us. The information assumes either no exercise or full exercise
by the underwriters of their over-allotment option. The underwriting discounts are equal to the public offering price per share
less the amount per share the underwriters pay us for the shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 103 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->101<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>Per
        Share of</B></FONT></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>Common
        Stock</B></FONT></P></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Total
    without Over-allotment Option</B></FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Total
    with<BR>
    Over-allotment Option</B></FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="width: 55%; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Public
    offering price</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 12%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Underwriting discounts</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*]</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*]</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: #CCEEFF">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Proceeds, before
    expenses, to us</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*]</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">[*]</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have agreed to pay the representative
a non-accountable expense allowance of 1.0% of the gross proceeds of the offering. We estimate that the total expenses, but excluding
underwriting discounts and commissions and the 1.0% non-accountable expense allowances, will be approximately $[*], all of which
are payable by us. This figure includes expense reimbursements we have agreed to pay the representative for reimbursement of its
expenses related to the offering up to a maximum aggregate expense allowance of $132,500, for which we have paid a $25,000 advance,
which will be returned to us to the extent not offset by actual expenses in accordance with FINRA Rule 5110(g)(4)(A).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Underwriters&rsquo; Warrants</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As additional compensation to the underwriters,
upon consummation of this offering, we will issue to the underwriters or their designees warrants to purchase an aggregate number
of shares of our common stock equal to 3% of the number of shares of common stock issued in this offering, at an exercise price
per share equal to 100% of the initial public offering price (the &ldquo;Underwriters&rsquo; Warrants&rdquo;). The Underwriters&rsquo;
Warrants and the underlying shares of common stock shall not be sold during the offering, or sold, transferred, assigned, pledged,
or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective
economic disposition of the securities by any person for a period of 180 days immediately following the commencement date of sales
in this offering in accordance with FINRA Rule 5110(e)(1). The Underwriters&rsquo; Warrants will be exercisable, in whole or in
part, commencing 180 days from the commencement date of sales in this offering and will expire on the fifth anniversary of the
commencement date of sales in this offering in accordance with FINRA Rule 5110(g)(8)(A).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><B>Tail Financing</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">If, during the
period that is six months following the closing of this initial public offering, we consummate a financing with investors with
whom we have had a conference call or a meeting arranged by the representative the period in which we engaged the representative,
we will pay the representative a fee equal 7% of the proceeds of such financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><B>Right of First
Refusal</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">We have granted
to the representative the right to act as lead or joint-lead investment banker, lead or joint book-runner and/or lead or joint
placement agent, for any of our future public and private equity and debt offerings, including all equity linked financings, during
the six month period following the completion of this initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><B>Determination
of Offering Price</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Before this offering,
there has been no public market for our common stock. Accordingly, the public offering price will be negotiated between us and
the Representative. Among the factors to be considered in these negotiations are:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">the information set forth in this prospectus and otherwise available to the underwriters;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">the prospects for our Company and the industry in which we operate;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">An assessment of our management;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">our past and present financial and operating performance;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">our prospects for future earnings;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">financial and operating information and market valuations of publicly traded companies engaged in activities similar to ours;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">the prevailing conditions of United States securities markets at the time of this offering; and</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">other factors deemed relevant.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 104 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->102<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Neither we nor the underwriters can assure
investors that an active trading market will develop for shares of our common stock, or that the shares will trade in the public
market at or above the initial public offering price.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Lock-Up Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Each of our officers, directors, affiliates
and holders of more than 5% of our voting stock have agreed, for a period of six months after the closing of this offering, subject
to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose
of any shares of our common stock or other securities convertible into or exercisable or exchangeable for shares of our common
stock without the prior written consent of the representative.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The representative may in its sole discretion
and at any time without notice release some or all of the shares subject to lock-up agreements prior to the expiration of the lock-up
period. When determining whether or not to release shares from the lock-up agreements, the representative will consider, among
other factors, the security holder&rsquo;s reasons for requesting the release, the number of shares for which the release is being
requested and market conditions at the time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the underwriting agreement,
we have also agreed, for a period of six months from the closing date of the offering, that we will not, subject to specified exempt
issuances, offer, pledge, issue, sell, contract to sell, purchase, contract to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for common
stock; or file any registration statement with the SEC relating to the offering of any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Indemnification</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have agreed to indemnify the underwriters
against specified liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may
be required to make in respect thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><B>Electronic
Offer, Sale and Distribution of Shares</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">A prospectus in
electronic format may be made available on a website maintained by the representative and may also be made available on a website
maintained by other underwriters. The underwriters may agree to allocate a number of shares to underwriters for sale to their online
brokerage account holders. Internet distributions will be allocated by the Representative to underwriters that may make Internet
distributions on the same basis as other allocations. In connection with the offering, the underwriters or syndicate members may
distribute prospectuses electronically. No forms of electronic prospectus other than prospectuses that are printable as Adobe&reg;
PDF will be used in connection with this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The underwriters
have informed us that they do not expect to confirm sales of shares offered by this prospectus to accounts over which they exercise
discretionary authority.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Other than the prospectus in electronic
format, the information on any underwriter&rsquo;s website and any information contained in any other website maintained by an
underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved
and/or endorsed by us or any underwriter in its capacity as underwriter and should not be relied upon by investors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Price Stabilization, Short Positions
and Penalty Bids</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">In connection
with this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common
stock. Specifically, the underwriters may over-allot in connection with this offering by selling more shares than are set forth
on the cover page of this prospectus. This creates a short position in our common stock for its own account. The short position
may be either a covered short position or a naked short position. In a covered short position, the number of shares of common stock
over-allotted by the underwriters is not greater than the number of shares of common stock that they may purchase in the over-allotment
option. In a naked short position, the number of shares of common stock involved is greater than the number of shares of common
stock in the over-allotment option. To close out a short position, the underwriters may elect to exercise all or part of the over-allotment
option. The underwriters may also elect to stabilize the price of our common stock or reduce any short position by bidding for,
and purchasing, common stock in the open market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>


<!-- Field: Page; Sequence: 105 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->103<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The underwriters
may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to it for
distributing a security in this offering because the underwriter repurchases that security in stabilizing or short covering transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Finally, the underwriters
may bid for, and purchase, shares of our common stock in market making transactions, including &ldquo;passive&rdquo; market making
transactions as described below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">These activities
may stabilize or maintain the market price of our common stock at a price that is higher than the price that might otherwise exist
in the absence of these activities. The underwriters are not required to engage in these activities, and may discontinue any of
these activities at any time without notice. These transactions may be effected on the Nasdaq Capital Market, in the over-the-counter
market, or otherwise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">In connection
with this offering, the underwriters and selling group members, if any, or their affiliates may engage in passive market making
transactions in our common stock immediately prior to the commencement of sales in this offering, in accordance with Rule 103 of
Regulation M under the Exchange Act. Rule 103 generally provides that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">a passive market maker may not effect transactions
or display bids for our common stock in excess of the highest independent bid price by persons who are not passive market makers:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 0.25in">&nbsp;</TD>
    <TD STYLE="width: 0.25in; text-align: justify"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">net purchases by a passive market maker on each day are generally limited to 30% of the passive market maker&rsquo;s average daily trading volume in our common stock during a specified two-month prior period or 200 shares, whichever is greater, and must be discontinued when that limit is reached; and</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">&#9679;</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">passive market making bids must be identified as such.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><B>Certain Relationships</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Certain of the
underwriters and their affiliates have provided and may in the future provide various investment banking, commercial banking and
other financial services for us and our affiliates for which they have or may in the future receive customary fees, however, except
for the right of first refusal and the tail financing disclosed in this prospectus, we have no present arrangements with any of
the underwriters for any further services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><B>Offer Restrictions
Outside the United States</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Other than in the United States, no action
has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any
jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly
or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of
any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance
with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised
to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This
prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus
in any jurisdiction in which such an offer or a solicitation is unlawful.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Listing</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have applied for approval of our common
stock for listing on The Nasdaq Capital Market under the symbol &ldquo;________.&rdquo; Trading of our common stock on Nasdaq is
expected to begin following this prospectus being declared effective by the SEC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>


<!-- Field: Page; Sequence: 106 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->104<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B><A NAME="a_021"></A>EXPERTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Armanino LLP, an independent registered
public accounting firm, audited our consolidated financial statements for the years ended December 31, 2020 and 2019. We have included
our consolidated financial statements with their report in this prospectus and elsewhere in the registration statement in reliance
on the report of Armanino LLP, given on their authority as experts in accounting and auditing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B><A NAME="a_022"></A>LEGAL
MATTERS </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Certain legal matters with respect to the
validity of the securities being offered by this prospectus will be passed upon by Carmel, Milazzo &amp; Feil LLP, New York, New
York. Schiff Hardin LLP, Washington, DC, is acting as counsel for the representative of the underwriters with respect to the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="text-transform: uppercase"><B><A NAME="a_023"></A>WHERE
YOU CAN FIND MORE INFORMATION</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="text-transform: uppercase"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">We have filed
with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock offered
by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information
set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the
rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration
statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning
the contents of any contract or any other document is not necessarily complete. If a contract or document has been filed as an
exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this
prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. You may obtain
copies of this information by mail from the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C.
20549, at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, like us,
that file electronically with the SEC. The address of that website is <I>www.sec.gov</I>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">We are subject
to the information and reporting requirements of the Exchange Act and, in accordance with this law, are required to file periodic
reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information are
available for inspection and copying at the SEC&rsquo;s public reference facilities and the website of the SEC referred to above.
We also maintain a website at <I>www.tenonmed.com</I>. You may access these materials free of charge as soon as reasonably practicable
after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this
prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 107 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->105<!-- Field: /Sequence -->&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_036"></A>Tenon Medical, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Contents</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 90%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 10%; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Page</B></FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding-left: 12pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><B>Consolidated Financial
    Statements for the Years Ended December 31, 2020 and 2019:</B></FONT></TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding-left: 12pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><A HREF="#a_024">Report
    of Independent Registered Public Accounting Firm</A></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: right"><FONT STYLE="font-size: 10pt"><A HREF="#a_024">F-2</A></FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding-left: 12pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt">Consolidated Financial
    Statements</FONT></TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding-left: 24pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><A HREF="#a_025">Consolidated
    Balance Sheets</A></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: right"><FONT STYLE="font-size: 10pt"><A HREF="#a_025">F-3</A></FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding-left: 24pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><A HREF="#a_026">Consolidated
    Statements of Operations and Comprehensive Loss</A></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: right"><FONT STYLE="font-size: 10pt"><A HREF="#a_026">F-4</A></FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding-left: 24pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><A HREF="#a_027">Consolidated
    Statements of Convertible Preferred Stock and Stockholder&rsquo;s Deficit</A></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: right"><FONT STYLE="font-size: 10pt"><A HREF="#a_027">F-5</A></FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding-left: 24pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><A HREF="#a_028">Consolidated
    Statements of Cash Flows</A></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: right"><FONT STYLE="font-size: 10pt"><A HREF="#a_028">F-6</A></FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding-left: 24pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><A HREF="#a_029">Notes
    to Consolidated Financial Statements</A></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: right"><FONT STYLE="font-size: 10pt"><A HREF="#a_029">F-7&nbsp;-&nbsp;F-21</A></FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding-left: 0; text-indent: -12pt"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 20pt; text-indent: -20pt"><FONT STYLE="font-size: 10pt"><B>Condensed
                                         Consolidated Financial Statements for the Nine Months Ended September&nbsp;30, 2021 and
                                         2020 (Unaudited):</B></FONT></P></TD>
    <TD STYLE="vertical-align: bottom"><FONT STYLE="font-size: 10pt"><B>&nbsp;</B></FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding-left: 24pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><A HREF="#a_030">Condensed
    Consolidated Balance Sheets</A></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: right"><FONT STYLE="font-size: 10pt"><A HREF="#a_030">F-22</A></FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding-left: 24pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><A HREF="#aa_026">Condensed
    Consolidated Statements of Operations and Comprehensive Loss</A></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: right"><FONT STYLE="font-size: 10pt"><A HREF="#a_026">F-23</A></FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding-left: 24pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><A HREF="#aa_027">Condensed
    Consolidated Statements of Convertible Preferred Stock and Stockholders&rsquo; Deficit</A></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: right"><FONT STYLE="font-size: 10pt"><A HREF="#a_027">F-24</A></FONT></TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top; padding-left: 24pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><A HREF="#aa_028">Condensed
    Consolidated Statements of Cash Flows</A></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: right"><FONT STYLE="font-size: 10pt"><A HREF="#a_028">F-25</A></FONT></TD></TR>
<TR STYLE="background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: top; padding-left: 24pt; text-indent: -12pt"><FONT STYLE="font-size: 10pt"><A HREF="#aa_029">Notes
    to Unaudited Condensed Consolidated Financial Statements</A></FONT></TD>
    <TD STYLE="white-space: nowrap; vertical-align: bottom; text-align: right"><FONT STYLE="font-size: 10pt"><A HREF="#a_029">F-26&nbsp;to&nbsp;F-42</A></FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>


<!-- Field: Page; Sequence: 108; Options: NewSection; Value: 1 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->1<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="text-transform: uppercase"><B><A NAME="a_024"></A>Report
of Independent Registered Public Accounting Firm</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="text-transform: uppercase"><B>&nbsp;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Board of Directors and Stockholders</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Tenon Medical Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Opinion on the Consolidated Financial Statements </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
balance sheets of Tenon Medical Inc. and Subsidiary (collectively the &quot;Company&quot;) as of December 31, 2020 and 2019 and
the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders' deficit,
and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019 and
the related results of its operations and cash flows for the years then ended in conformity with U.S. generally accepted accounting
principles.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Basis for Opinion </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company's management is responsible
for these consolidated financial statements. Our responsibility is to express an opinion on the Company's consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audits in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are
required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our audits included performing procedures
to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe
that our audit provides a reasonable basis for our opinion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Emphasis of Matter</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements,
the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going
concern. Management&rsquo;s plans regarding these matters are also described in Note 2. The consolidated financial statements do
not include any adjustments that might result from the outcome of this uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD STYLE="width: 50%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/ Armanino<SUP>LLP</SUP></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">San Jose, California </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">August 30, 2021</FONT></TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&nbsp;</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have served as the Company's auditor
since 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&nbsp;</P>


<!-- Field: Page; Sequence: 109; Value: 1 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->2<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_025"></A><B>Tenon Medical, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Balance Sheets</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">December 31,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-style: normal; font-weight: normal">2020</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Current Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left; padding-left: 10pt">Cash and cash equivalents</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="width: 10%; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">245,635</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">151,968</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Accounts receivable</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">14,474</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">53,768</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt">Inventory</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">43,288</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61,545</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-align: left; padding-left: 10pt">Prepaid expenses</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,172</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Total current assets</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">303,397</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">268,453</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-align: left; padding-left: 10pt">Deferred offering costs</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">87,504</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">TOTAL ASSETS</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">390,901</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">268,453</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Liabilities, Convertible Preferred Stock, and Stockholders&rsquo; Deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Current Liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Accounts payable</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">589,191</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">447,520</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Accrued expenses</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">663,657</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">507,194</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-align: left; padding-left: 10pt">Convertible notes payable and accrued interest - current</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">241,397</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">734,413</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total current liabilities</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">1,494,245</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,689,127</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Convertible notes payable and accrued interest - net of current portion</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">256,751</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">122,164</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-align: left; padding-left: 10pt">Convertible notes payable and accrued interest due to related parties</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">76,827</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">71,227</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">Total Liabilities</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">1,827,823</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,882,518</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Commitments and Contingencies (Notes 6 and 10)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Convertible Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Series A convertible preferred stock, $0.001 par value; 1,437,628 shares authorized, 0 shares issued and outstanding</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&mdash;</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Series B convertible preferred stock, $0.001 par value; 661,897 shares authorized; 491,222 shares issued and outstanding; liquidation preference of $1,372,953</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">1,271,715</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,271,715</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Stockholders&rsquo; Deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Common stock, $0.001 par value; 3,937,550 shares authorized; 1,660,000 shares issued and outstanding</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">1,660</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,660</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Additional paid-in capital</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">125,437</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,284</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Accumulated deficit</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(4,486,171</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,900,993</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Accumulated other comprehensive income (loss)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(56,571</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(32,409</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total Tenon Medical, Inc. stockholders' deficit</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(4,415,645</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,880,458</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total non-controlling interest</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">1,707,008</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">994,678</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-align: left">Total stockholders&rsquo; deficit</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(2,708,637</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,885,780</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' DEFICIT</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">390,901</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">268,453</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>


<!-- Field: Page; Sequence: 110; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->3<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><A NAME="a_026"></A><B>Tenon Medical, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Statements of Operations
and Comprehensive Loss</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Year Ended December 31,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-style: normal; font-weight: normal">2020</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; font-weight: bold">Revenue</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="width: 10%; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">43,820</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">53,640</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Cost of sales</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">18,257</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">18,257</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Gross Profit</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">25,563</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,383</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Operating Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Research and development expenses</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">220,884</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">371,545</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Sales and marketing expenses</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">29,301</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,618</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-align: left; padding-left: 10pt">General and administrative expenses</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">311,667</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">171,662</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">Total Operating Expenses</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">561,852</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">568,825</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Loss from Operations</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(536,289</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(533,442</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Other Income (Expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Interest expense</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(167,846</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(52,358</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Other expense</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(1,230</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(28</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">Total Other Expense</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(169,076</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(52,386</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Net Loss</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(705,365</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(585,828</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Loss attributable to non-controlling interest</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(120,187</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(76,248</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">Net Loss Attributable to Tenon Medical, Inc.</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(585,178</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(509,580</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net Loss Attributable to Tenon Medical, Inc. Per Share of Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Basic and diluted</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(0.35</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.31</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Weighted-Average Shares of Common Stock Outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Basic and diluted</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">1,660,000</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,660,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Consolidated Statements of Comprehensive Loss:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Net loss</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(705,365</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(585,828</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Change in foreign currency translation adjustment</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(42,958</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(10,300</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Total Comprehensive Loss</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(748,323</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(596,128</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Comprehensive loss attributable to non-controlling interest</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(138,983</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(80,286</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">Total comprehensive loss attributable to Tenon Medical, Inc.</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(609,340</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(515,842</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 111; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->4<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_027"></A>Tenon Medical, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Statements of Convertible
Preferred Stock and Stockholders' Deficit</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Series B Convertible Preferred Stock</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Common Stock</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Additional<BR>
    &nbsp;Paid-In</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Accumulated</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Accumulated<BR>
    Other<BR>
    Comprehensive</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Non-Controlling</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Shares</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Amount</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Shares</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Amount</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Capital</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Deficit</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Income</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Interest</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Total</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; width: 19%">Balance at January 1, 2019</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">491,222</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">1,271,715</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">1,660,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">1,660</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">20,714</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">(3,391,413</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">(26,147</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">1,074,964</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">(2,320,222</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Stock-based compensation expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,570</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,570</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Other comprehensive income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,262</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,038</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(10,300</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(509,580</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(76,248</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(585,828</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">Balance at December 31, 2019</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">491,222</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,271,715</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,660,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,660</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">51,284</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(3,900,993</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(32,409</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">994,678</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(2,885,780</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Conversion of notes payable to Series A preferred stock of subsidiary, net of issuance costs of $21,820</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">763,075</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">763,075</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Beneficial conversion feature on conversion of notes payable to Series A preferred stock of subsidiary</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">88,238</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">88,238</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Warrants issued in connection with consulting agreement</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">57,504</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">57,504</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Stock-based compensation expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,649</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Other comprehensive income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(24,162</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(18,796</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(42,958</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(585,178</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(120,187</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(705,365</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; font-weight: bold">Balance at December 31, 2020</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">491,222</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,271,715</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,660,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,660</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">125,437</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(4,486,171</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(56,571</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,707,008</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2,708,637</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;<I>&nbsp;</I></P>


<!-- Field: Page; Sequence: 112; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->5<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="a_028"></A>Tenon Medical, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Consolidated Statements of Cash Flows</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Year Ended December 31,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-style: normal; font-weight: normal">2020</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Operating Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left">Net loss</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="width: 10%; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(705,365</FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(585,828</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Adjustments to reconcile net loss to net cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Non-cash interest expense</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">167,780</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">51,491</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Stock-based compensation expense</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">16,649</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,570</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Increase (decrease) in cash resulting from changes in:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Accounts receivable</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">39,358</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(53,387</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt">Inventories</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">18,257</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(61,545</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Prepaid expenses</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">1,209</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(771</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Accounts payable</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">141,285</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">271,344</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Accrued expenses</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">153,464</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">124,162</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Due to related party</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(11,239</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Net cash used in operating activities</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(167,363</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(235,203</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Financing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Proceeds from issuance of convertible notes payable</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">306,620</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">251,309</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Proceeds from issuance of convertible notes payable due to related parties</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&mdash;</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Deferred offering costs</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(30,000</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Stock issuance costs on conversion of notes payable to subsidiary preferred stock</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">(21,820</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">)</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net cash provided by financing activities</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">254,800</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">321,309</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-align: left">Effect of foreign currency translation on cash flow</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">6,230</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,373</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Net Increase in Cash and Cash Equivalents</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">93,667</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">87,479</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Cash and Cash Equivalents at Beginning of Period</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">151,968</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">64,489</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">Cash and Cash Equivalents at End of Period</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">245,635</FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">151,968</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Supplemental Disclosures of Cash Flow Information</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Cash paid during the year for:</TD><TD></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"></TD><TD></TD>
    <TD STYLE="text-align: left"></TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt">Interest</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">66</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">867</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Income taxes</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">2,033</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,695</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Non-cash investment and financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Subsidiary preferred stock issued upon conversion of convertible notes and accrued interest</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">784,895</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Beneficial conversion feature on conversion of notes payable to subsidiary preferred stock</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">88,238</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Warrants issued for deferred offering costs</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">57,504</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Conversion of accrued interest to convertible note payable</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">$</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-style: normal; font-weight: normal">&mdash;</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-style: normal; font-weight: normal">&nbsp;</FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">14,912</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 113; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->6<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><A NAME="a_029"></A>1.&nbsp; Organization and Business</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Nature of operations</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Tenon Medical, Inc.</B> (&ldquo;the
Company&rdquo;), was incorporated in the state of Delaware on June 19, 2012 and was headquartered in San Ramon, California until
June 2021 when it relocated to Los Gatos, California. The Company is a medical device company that has developed a novel posterior
approach to sacroiliac joint fusion for treatment of the most common types of sacroiliac joint disorders that cause lower back
pain. The Company received FDA clearance in 2018 for its primary product, The CATAMARAN<SUP>TM </SUP>System. The Company is in
the early stages of its commercial launch with its primary focus being on the US market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Basis of consolidation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The consolidated financial statements of
the Company include the accounts of the Company and its majority-owned subsidiary, Tenon Technology AG (&ldquo;TTAG&rdquo;), a
Swiss company. All intercompany balances and transactions have been eliminated in consolidation. The subsidiary is consolidated
from the date of formation (October 3, 2012), being the date on which the Company has power to govern the financial and operating
policies of TTAG so as to obtain benefits from its activities, and will continue to be consolidated until the date such control
ceases. The financial statements of the subsidiary are prepared for the same reporting period as the parent, using consistent accounting
policies in all material respects. Ownership interests in TTAG held by parties other than the Company are presented separately
from the Company&rsquo;s stockholders&rsquo; deficit on the Consolidated Balance Sheets. The amount of consolidated net loss attributable
to the Company and the non-controlling interests are both presented on the face of the Consolidated Statements of Operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>2.&nbsp; Summary of Significant Accounting Principles</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Basis of presentation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying consolidated financial
statements have been prepared on the accrual basis in accordance with generally accepted accounting principles (&ldquo;GAAP&rdquo;)
as promulgated in the United States of America.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Going concern uncertainty and liquidity requirements</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying consolidated financial
statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of business. There is substantial doubt about the Company&rsquo;s
ability to continue as a going concern for one year after the date that these consolidated financial statements are issued. These
consolidated financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Since inception, the Company has incurred
losses and negative cash flows from operations. Management expects to incur additional operating losses and negative cash flows
from operations in the foreseeable future as the Company continues its product development programs and starts the commercial launch
of The CATAMARAN System. Based on the Company&rsquo;s current level of expenditures and the proceeds from the issuance of convertible
debt during May through July 2021, the Company believes that its existing cash and cash equivalents as of December 31, 2020 will
not provide sufficient funds to enable it to meet its obligations through <FONT>June 2022</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 114; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->7<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company plans to raise additional capital
by selling shares of capital stock or other equity or debt securities. However, except for the completed convertible promissory
note offering described in Note 10, there are no commitments or arrangements for future financings in place at this time, and the
Company can give no assurance that such capital will be available on favorable terms or at all. The Company may need additional
financing thereafter until it can achieve profitability. Although the Company is actively pursuing an initial public offering (&ldquo;IPO&rdquo;)
and other possible financing opportunities, it may not be able to raise cash on terms acceptable to the Company or at all. There
can be no assurance that the Company will be successful in obtaining additional funding. Financings, if available, may be on terms
that are dilutive to shareholders, and the prices at which new investors would be willing to purchase the Company&rsquo;s securities
may be lower than the current price of ordinary shares. The holders of new securities may also receive rights, preferences or privileges
that are senior to those of existing holders of ordinary shares. If additional financing is not available or is not available on
acceptable terms, the Company <FONT STYLE="background-color: white">could be forced to delay, reduce, or eliminate its future commercialization
efforts and product development programs, which could adversely affect its future business prospects and its ability to continue
as a going concern.&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Use of estimates</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of the consolidated financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates. Significant estimates made by management include, but
are not limited to, , realization of deferred tax assets, accrued liabilities, obsolescence of inventory, stock-based compensation
and the fair value of the Company&rsquo;s common stock and preferred stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Impact of COVID-19</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In March 2020, the World Health Organization
declared the COVID-19 outbreak to be a pandemic. During the year ended December 31, 2020, the Company&rsquo;s financial results
were not significantly affected by the COVID-19 outbreak. The Company has considered all information available as of the date of
issuance of these consolidated financial statements and the Company is not aware of any specific events or circumstances that would
require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. These estimates
may change as new events occur and additional information becomes available. The extent to which the COVID-19 outbreak affects
the Company&rsquo;s future financial results and operations will depend on future developments which are highly uncertain and cannot
be predicted, including new information which may emerge concerning the severity of the outbreak, and current or future domestic
and international actions to contain and treat it.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Segments</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company operates in&nbsp;one&nbsp;business
segment. Although the Company&rsquo;s Swiss subsidiary is located in a different geographical area, management uses one measurement
of profitability and does not segregate its business for internal reporting.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Cash and cash equivalents</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company considers all highly liquid
investments with original maturities of 90 days or less at the date of purchase to be cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Accounts receivable and allowance for
doubtful accounts</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accounts receivable are derived from products
delivered to customers and are stated at their net realizable value. The Company records an allowance for estimated uncollectible
accounts in an amount approximating anticipated losses. Individual uncollectible accounts are written off against the allowance
when collection of the individual accounts appears doubtful. In determining the amount of the allowance, the Company considers
its historical level of credit losses. The Company also makes judgments about the creditworthiness of significant customers based
on ongoing credit evaluations, and the Company assesses current economic trends that might impact the level of credit losses in
the future. The Company&rsquo;s allowances have generally been adequate to cover its actual credit losses. However, since the Company
cannot reliably predict future changes in the financial stability of its customers, it cannot guarantee that its allowances will
continue to be adequate. If actual credit losses are significantly greater than the allowance, the Company would increase its general
and administrative expenses and increase its reported net losses. Conversely, if actual credit losses are significantly less than
the Company's reserve, this would eventually decrease the Company&rsquo;s general and administrative expenses and decrease its
reported net losses. Allowances are recorded primarily on a specific identification basis. As of December 31, 2020 and 2019, the
Company&rsquo;s allowance for doubtful accounts was $0.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 115; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->8<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Inventory</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Inventory is stated at lower of cost or
net realizable value. The Company establishes the inventory basis by determining the cost based on standard costs approximating
the&nbsp;purchase costs&nbsp;on a&nbsp;first-in, first-out basis. The excess and obsolete inventory is estimated based on future
demand and market conditions. Inventory write-downs are charged to cost of goods sold.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2020 and 2019, inventory
consisted entirely of finished goods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Deferred offering costs</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred offering costs, which consist
of direct incremental legal, consulting, banking and accounting fees relating to the Company&rsquo;s planned IPO, are capitalized,
and will be offset against proceeds from the IPO upon the effectiveness of the offering. In the event an anticipated offering is
terminated, deferred offering costs will be expensed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Property and equipment</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment are stated at cost
less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets. Equipment, computers, software, and furniture and fixtures are depreciated over periods ranging from three
to seven years, and leasehold improvements over the shorter period of the lease or the life of the asset. The cost of maintenance
and repairs is charged to expense as incurred; significant renewals and betterments are capitalized. Deductions are made for retirements
resulting from renewals or betterments. The balance of property and equipment was $0 at both December 31, 2020 and 2019.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Long-lived assets</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company regularly reviews the carrying
value and estimated lives of all of its long-lived assets, including property and equipment, to determine whether indicators of
impairment may exist that warrant adjustments to carrying values or estimated useful lives. The determinants used for this evaluation
include management&rsquo;s estimate of the asset&rsquo;s ability to generate positive income from operations and positive cash
flow in future periods as well as the strategic significance of the assets to the Company&rsquo;s business objectives.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Fair value measurements</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In accordance with Accounting Standards
Codification (&ldquo;ASC&rdquo;) 820,&nbsp;Fair Value Measurement, fair value is the price that would be received from selling
an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement
date. ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs
and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Observable inputs are those that market
participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.
Unobservable inputs reflect the Company&rsquo;s assumptions about the inputs that market participants would use in pricing the
asset or liability based on the best information available in the circumstances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 116; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->9<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value hierarchy is categorized
into three levels based on the inputs as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Level 1&nbsp;&ndash; Quoted prices are
available in active markets for identical assets or liabilities as of the reported date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Level 2&nbsp;&ndash; Pricing inputs are
other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature
of these financial instruments include cash instruments for which quoted prices are available but are traded less frequently, derivative
instruments whose fair values have been derived using a model where inputs to the model are directly observable in the market and
instruments that are fair valued using other financial instruments, the parameters of which can be directly observed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Level 3&nbsp;&ndash; Instruments that have
little to no pricing observability as of the measurement date. These financial instruments are measured using management&rsquo;s
best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The degree of judgment exercised by the
Company in determining fair value is greatest for assets categorized in Level 3. In certain cases, the inputs used to measure fair
value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair
value hierarchy within which the fair value measurement falls in its entirety is determined by the lowest level input that is significant
to the fair value measurement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Convertible preferred stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company records convertible preferred
stock at fair value on the dates of issuance, net of issuance costs. Convertible preferred stock is recorded as temporary stockholders&rsquo;
equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Income taxes</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the years ended December 31, 2020 and
2019 income taxes are recorded in accordance with Financial Accounting Standards Board (&ldquo;FASB&rdquo;) ASC Topic 740, Income
Taxes (&ldquo;ASC 740&rdquo;), which provides for deferred taxes using an asset and liability approach. Under this method, the
Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the
financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect
when the differences are expected to reverse. Valuation allowances are provided when necessary to reduce net deferred tax assets
to the amount that is more likely than not to be realized. Based on the available evidence, the Company is unable, at this time,
to support the determination that it is more likely than not that its deferred tax assets will be utilized in the future. Accordingly,
the Company recorded a full valuation allowance as of December 31, 2020 and 2019. The Company intends to maintain valuation allowances
until sufficient evidence exists to support its reversal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Current income taxes are based upon the
year's income taxable for federal, state and foreign tax reporting purposes. Deferred income taxes are provided for certain income
and expenses, which are recognized in different periods for tax and financial reporting purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company's policy is not to record deferred
income taxes on the undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Revenue recognition</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s revenue is derived
from the sale of its products to medical groups and hospitals through its independent sales representative and national distributor
in Florida and Texas.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In accordance with Accounting Standards
Codification 606, <I>Revenue from Contracts with Customers</I> (&quot;ASC 606&quot;), which the Company adopted effective January&nbsp;1,
2019, revenue is recognized when control is transferred to the customer, in an amount that reflects the consideration the Company
expects to be entitled to in exchange for the goods or services. The Company had no contracts with customers prior to the date
of adoption. Under ASC 606, the Company applies the following five step approach: (1) identify the contract with a customer, (2)
identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to
the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 117; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->10<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company generates its revenue
from the sale of products through an independent sales representative and national distributor to certain hospital or medical
facilities where the products are delivered in advance of a procedure. The performance obligation is the delivery of the
products along with the completion of the surgery and therefore, revenue is recognized upon delivery to the customers and
completion of the surgery, net of rebates and price discounts. The Company accounts for rebates and price discounts as a
reduction to revenue, calculated based on the terms agreed to with the customer. Historically, there has been no significant
rebates or price discounts. Sales prices are specified in either the customer contract, agreed price list, or purchase order,
which is executed prior to the transfer of control to the customer. As of April 2020, the Company has an agreement in place
with a national distributor, which includes standard terms that do not allow for payment contingent on resale of the product,
obtaining financing, or other terms that could impact the distributor&rsquo;s payment obligation. From April 2020 through May
20, 2021, the distributor billed and collected from the enduser customer, was required to pay the Company on the
5<SUP>th</SUP> day of the calendar month after the customer paid the distributor, and the Company recognized revenue based on
the net amount received from the distributor. Prior to April 2020 and subsequent to May 20, 2021, the Company billed and
collected directly from the enduser customers and recognized revenue based on the gross sales price. For direct sales to
enduser customers, the Company's standard payment terms are generally net&nbsp;30&nbsp;days.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company offers its standard warranty
to all customers. The Company does not sell any warranties on a standalone basis. The Company&rsquo;s warranty provides that its
products are free of material defects and conform to specifications, and includes an offer to replace or refund the purchase price
of defective products. This assurance does not constitute a service and is not considered a separate performance obligation. The
Company estimates warranty liabilities at the time of revenue recognition and records it as a charge to cost of goods sold.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Contract modifications generally do not
occur during the performance of the Company&rsquo;s contracts.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Payments received prior to satisfying the
revenue recognition criteria are recorded as deferred revenue on the consolidated balance sheets. As of December 31, 2020 and 2019,
there were no remaining performance obligations that would give rise to deferred revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Costs associated with product sales include
commissions and are recorded in sales and marketing expenses during the same period as the corresponding revenues.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Research and development</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company engages in improving existing
products and new product development efforts. Research and development expenses relating to these efforts are expensed as incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Leases</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had no lease agreements during
the years ended December 31, 2020 and 2019. See Note 10.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Stock-based compensation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for its stock-based
compensation in accordance with&nbsp;ASC 718, <I>Compensation - Stock Compensation</I>. The Company accounts for all stock-based
compensation awards using a fair-value method on the grant date and recognizes the fair value of each award as an expense over
the requisite service period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2018, the Financial Accounting
Standards Board (&quot;FASB&quot;) issued Accounting Standards Update (&ldquo;ASU&rdquo;) 2018-07,&nbsp;<I>Improvements to Non-employee
Share-Based Payment Accounting</I>. ASU 2018-07&nbsp;expands the scope of ASC 718 to include share-based payments issued to non-employees
for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially
aligned. ASU&nbsp;2018-07 supersedes Subtopic&nbsp;505-50,&nbsp;<I>Equity-Based Payments to&nbsp;Non-Employees</I>. The Company
adopted this standard effective for the year ended December 31, 2019, and the adoption did not have any material impact on the
Company&rsquo;s consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 118; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->11<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Foreign currency translation and other
comprehensive income</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The functional currency of Tenon Technology
AG is the Swiss franc. Accordingly, TTAG&rsquo;s assets and liabilities are translated from their respective functional currency
into U.S. Dollars at period-end rates, and TTAG&rsquo;s revenue and expenses are translated at the weighted-average exchange rate
for the period. Adjustments resulting from this translation process are classified as other comprehensive income or loss and shown
as a separate component of equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">When intercompany foreign currency transactions
between entities included in the consolidated financial statements are of a long-term investment nature (i.e., those for which
settlement is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those
transactions are included in stockholders&rsquo; equity (deficit) as accumulated other comprehensive loss or income. When intercompany
transactions are deemed to be of a short-term nature, translation adjustments are required to be included in the consolidated statements
of operations. The Company has determined that settlement of TTAG&rsquo;s intercompany balances are not anticipated in the foreseeable
future, and therefore such translation adjustments are included in stockholders&rsquo; deficit as accumulated other comprehensive
income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Net loss per share</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Basic net loss per share is based upon
the weighted-average number of common shares outstanding. Diluted net loss per share is based on the assumption that all potential
common stock equivalents (convertible preferred stock, stock options, and warrants) are converted or exercised. The calculation
of diluted net loss per share excludes potential common stock equivalents if the effect is anti-dilutive. The Company&rsquo;s weighted-average
common shares outstanding for basic and diluted are the same because the effect of the potential common stock equivalents is anti-dilutive.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had the following dilutive
common stock equivalents as of December&nbsp;31, 2020 and 2019 which were excluded from the calculation because their effect was
anti-dilutive.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid; padding-bottom: 1pt; font-style: italic">Year Ended December 31,</TD><TD STYLE="font-weight: bold; font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; font-style: italic; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; font-style: italic">&nbsp;</TD><TD STYLE="font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-style: italic; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt; font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Common shares convertible from preferred stock</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-weight: bold; text-align: right">491,222</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">491,222</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Common shares convertible from minority interest</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1,798,905</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,493,764</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Common shares convertible from notes payable</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">245,148</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">144,615</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Outstanding warrants</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">50,000</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Outstanding stock options</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">181,979</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">181,979</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 10pt">Total</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">2,767,254</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,311,580</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Recent accounting standards not yet
adopted</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2016, the FASB issued ASC 842,
&ldquo;<I>Leases</I>&rdquo;. This standard requires lessees to present right-of-use assets and lease liabilities on the balance
sheet. The new guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative periods
in the financial statements and is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted.
The Company early adopted ASC 842 on January 1, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2020, the FASB issued ASU 2020-6,&nbsp;<I>Debt&mdash;Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging&mdash;Contracts in Entity&rsquo;s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity&rsquo;s Own Equity</I>&nbsp;(&ldquo;ASU 2020-6&rdquo;),
which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash
conversion feature and (2) convertible instruments with a beneficial conversion feature. Upon adoption, a convertible debt instrument
will be accounted for as a single liability at amortized cost unless (a) the convertible instrument contains features that require
bifurcation as a derivative under ASC 815,&nbsp;<I>Derivatives and Hedging</I>, or (b) the convertible debt instrument was issued
at a substantial premium. These changes will reduce reported interest expense and increase reported net income for entities that
have issued a convertible instrument that was bifurcated according to previously existing rules. ASU 2020-6 also requires the application
of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available.
The new guidance is effective for public entities excluding smaller reporting companies in fiscal years beginning after December
15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. For public business entities
that meet the definition of a smaller reporting company, the amendments in ASU 2020-6 are effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2023. ASU 2020-6 is effective for the Company in the first quarter
of fiscal 2024. The Company is currently evaluating the impact of adoption of ASU 2020-6 on its consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 119; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->12<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>3.</B>&nbsp; <B>Accrued Expenses</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accrued expenses consisted of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid; padding-bottom: 1pt; font-style: italic">December 31,</TD><TD STYLE="font-weight: bold; font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; font-style: italic; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; font-style: italic">&nbsp;</TD><TD STYLE="font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-style: italic; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt; font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Accrued compensation</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 10%; font-weight: bold; text-align: right">582,906</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">478,505</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accrued commissions</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">32,328</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,456</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other accrued expenses</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">48,423</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,233</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Total accrued expenses</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">663,657</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">507,194</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>4.&nbsp; Debt</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Convertible notes payable &ndash; parent company</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2015, the Company issued a $53,447
convertible promissory note to a consultant that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. In June 2019, the note and its accrued interest to date was replaced by a $68,359 convertible
promissory note that, along with accrued interest at an annual rate of 8.0%, was automatically convertible upon a preferred stock
financing of at least $1,000,000, at a conversion price equal to 90% of the price per share paid by the other cash purchasers in
the future financing. The note had a maturity date of June 12, 2021. In May 2021, the note was again replaced by a $68,359 convertible
promissory note with a maturity date of May 7, 2022 that, along with accrued interest at an annual rate of 8.0%, is automatically
convertible upon an Initial Public Offering (&ldquo;IPO&rdquo;) or a capital stock financing of at least $5,000,000. The conversion
price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000. Since
the conversion is contingent upon an event outside the Company&rsquo;s control, the beneficial conversion feature will be recorded
once the contingency is met. Accrued interest at December 31, 2020 and 2019 totaled approximately $8,000 and $3,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2016, the Company issued a $117,530
convertible promissory note to a vendor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of January 1, 2019 and remained unpaid during 2019 and 2020.
In April 2021, the note was replaced by a $117,530 convertible promissory note with a maturity date of April 30, 2022 that, along
with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least
$5,000,000. The conversion price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing
of at least $5,000,000. Since the conversion is contingent upon an event outside the Company&rsquo;s control, the beneficial conversion
feature will be recorded once the contingency is met. Accrued interest at December 31, 2020 and 2019 totaled approximately $47,000
and $38,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2019, the Company issued a $70,000
convertible promissory note to the Company&rsquo;s Chief Executive Officer that, along with accrued interest at an annual rate
of 8.0%, was automatically convertible upon a preferred stock financing of at least $500,000, at a conversion price equal to 80%
of the price per share paid by the other cash purchasers in the future financing. The note had a maturity date of October 12, 2022.
In April 2021, the note was replaced by a $70,000 convertible promissory note with a maturity date of April 30, 2022 that, along
with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least
$5,000,000. The conversion price is equal to 70% of the IPO price or $1.9565 per share in the event of a capital stock financing
of at least $5,000,000. Since the conversion is contingent upon an event outside the Company&rsquo;s control, the beneficial conversion
feature will be recorded once the contingency is met. Accrued interest at December 31, 2020 and 2019 totaled approximately $7,000
and $1,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 120; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->13<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2019, the Company issued a $50,000
convertible promissory note to an investor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 80% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of October 21, 2022. In May 2021, the note was replaced by
a $50,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest at an annual rate of
8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion price is equal
to 70% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000. Since the conversion
is contingent upon an event outside the Company&rsquo;s control, the beneficial conversion feature will be recorded once the contingency
is met. Accrued interest at December 31, 2020 and 2019 totaled approximately $5,000 and $1,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2020, the Company issued a
$200,000 convertible promissory note to the same investor that, along with accrued interest at an annual rate of 8.0%, was automatically
convertible upon a preferred stock financing of at least $2,000,000, at a conversion price equal to 80% of the price per share
paid by the other cash purchasers in the future financing. The note had a maturity date of November 16, 2022. In May 2021, the
note was replaced by a $200,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest
at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion
price is equal to 70% of the IPO price or 70% of the price per share paid by the other cash purchasers in the future financing.
Since the conversion is contingent upon an event outside the Company&rsquo;s control, the beneficial conversion feature will be
recorded once the contingency is met. Accrued interest at December 31, 2020 totaled approximately $2,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Principal payments on the convertible notes
payable are due as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="vertical-align: middle; width: 87%; text-align: left; padding-left: 0.6pt">2021</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">185,889</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="vertical-align: middle; text-align: left; padding-bottom: 1pt; padding-left: 0">2022</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">320,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 0.6pt">Total principal</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">505,889</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 0.6pt">Accrued interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">69,086</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 0.6pt">Total principal and interest</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">574,975</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Convertible notes payable &ndash; subsidiary</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2018, the Company&rsquo;s subsidiary
issued two convertible promissory notes for an aggregate of $305,084 to TTAG&rsquo;s minority shareholder. In September 2019 and
June 2020, the Company&rsquo;s subsidiary issued additional convertible promissory notes to the same minority shareholder for $201,309
and $106,620, respectively. These notes, along with accrued interest at an annual rate of 10.0%, could be applied to future TTAG
capital increases. Accrued interest on these notes totaled approximately $63,000 at December 31, 2019. In November 2020, notes
payable and accrued interest totaling $784,895 were converted into TTAG Series A preferred stock shares, which increased the minority
shareholder&rsquo;s ownership percentage from 39.2% to 43.8%. In connection with the conversion of the notes, the Company recorded
a beneficial conversion feature of $88,238.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>5.&nbsp; Stockholders&rsquo; Equity</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Amended and Restated Certificate of
Incorporation dated February 18, 2014, authorizes the issuance of 3,937,550 shares of common stock and 2,099,525 shares of preferred
stock, with a par value of $0.001 per share. The Company increased the number of authorized shares in April 2021 (Note 10).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Preferred Stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Shares of the Company&rsquo;s Series A
Convertible Preferred Stock have been set aside for the potential conversion of TTAG Series A shares owned by its minority shareholder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 121; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->14<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In a series of closings from 2012 through
2015, the Company issued an aggregate of 491,222 shares of Series B Convertible Preferred Stock at $2.795 per share for proceeds
of $1,271,715, net of stock issuance costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company classifies the convertible
preferred stock outside of total stockholders&rsquo; deficit because, in the event of certain deemed liquidation events that are
not solely within the control of the Company, the shares would become redeemable at the option of the holders. The Company did
not adjust the carrying values of the convertible preferred stock to the deemed liquidation values of such shares since a liquidation
event was not probable of occurring at December&nbsp;31, 2020. Subsequent adjustments to increase or decrease the carrying values
to the ultimate liquidation values will be made only if, and when, it becomes probable that such a liquidation event will occur.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Conversion</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At the option of the holder, shares of
Series A and Series B Preferred Stock are convertible into Common Stock at a conversion rate of one-to-one, subject to adjustments
for stock dividends, splits, combinations and similar events. Automatic conversion will occur in the event of a firmly underwritten
public offering of Common Stock of the Company at a price of at least $6.00 per share, subject to appropriate adjustments for stock
dividends, splits, combination and similar events, and with total gross proceeds to the Company of at least $25,000,000, before
deduction of underwriters' commissions and expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Redemption</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The shares of the Series A and Series B
Preferred Stock are redeemable only upon acquisition or liquidation of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Liquidation preference</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">With respect to any distributions in connection
with a liquidation, dissolution or winding up of the Company, or in connection with the sale of voting control of all or substantially
all of the assets of the Company, by way of merger, acquisition, consolidation or similar transaction, prior to any distribution
to Common Stockholders, the holders of Series A and Series B Preferred Stock are entitled to receive $0.853 and $2.795 per share,
respectively, plus any declared but unpaid dividends, adjusted to reflect any dividends previously paid. If, upon the occurrence
of such event, the assets and funds distributed among the holders of Series A and Series B Preferred Stock shall be insufficient
to permit the payment to such holders of the full liquidation preference amounts, the entire assets and funds of the Company legally
available shall be distributed ratably among the preferred stockholders in proportion to the preferential amount to which each
holder is entitled.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">After payment of the liquidation preferences,
the holders of Common Stock are entitled to receive the remaining assets of the Company available for distribution to its stockholders
pro rata based on the number of shares of Common Stock held by each holder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Voting rights</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The holders of vested shares of Common
Stock shall be entitled to vote on any matter submitted to a vote of the stockholders and each such holder shall be entitled to
one vote per share of Common Stock held. The holders of Series A and Series B Preferred Stock shall be entitled to vote together
with the Common Stock as a single class on any matter submitted to a vote of the stockholders. Holders of Series A and Series B
Preferred Stock shall be entitled to the number of votes equal to the number of Common Stock issuable upon conversion of their
respective Series A and Series B Preferred Stock at the time such shares are voted. The holders of a majority of the preferred
Stock have additional voting rights as specified in the Company&rsquo;s Amended and Restated Certificate of Incorporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Common stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has reserved shares of common
stock for the following potential future issuances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid; font-style: italic">Year Ended December 31,</TD><TD STYLE="font-weight: bold; font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; font-style: italic; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; font-style: italic">&nbsp;</TD><TD STYLE="font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-style: italic; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt; font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Shares convertible from preferred stock</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-weight: bold; text-align: right">491,222</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">491,222</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Shares convertible from minority interest</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1,798,905</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,493,764</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Outstanding warrants</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">50,000</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Outstanding stock options</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">181,979</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">181,979</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Shares available for future equity award grants</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">191,731</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">191,731</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; padding-left: 10pt">Total</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">2,713,837</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,358,696</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 122; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->15<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Equity awards</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2012, the Board of Directors of the
Company approved the Tenon Medical, Inc. 2012 Equity Incentive Plan (the &ldquo;Plan&rdquo;). The Plan provides for the issuance
of Common Stock options, appreciation rights, and other awards to employees, directors, and consultants. The number of shares that
may be issued under the Plan may not exceed 373,710 shares. Options issued under the Plan generally vest over a four-year period
with cliff vesting for the first year and have a 10-year expiration date. In April, July, and August 2021, the Company increased
the number of shares reserved for issuance under the Plan (Note 10).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company adopted the fair value recognition
provisions in accordance with authoritative guidance related to equity-based payments. Compensation expense in 2020 and 2019 includes
the portion of awards vested in the periods for all equity-based awards granted, based on the grant date fair value estimated using
a Black-Scholes option valuation model, consistent with authoritative guidance, using the weighted-average assumptions in the table
below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid; font-style: italic">Years Ended December 31,</TD><TD STYLE="font-weight: bold; font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; font-style: italic; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; font-style: italic">&nbsp;</TD><TD STYLE="font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-style: italic; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt; font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Expected volatility</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-weight: bold; text-align: right"><FONT STYLE="font-size: 10pt"><B>N/A</B></FONT></TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">49.39</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Dividend yield</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-size: 10pt"><B>N/A</B></FONT></TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Risk-free interest rate</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-size: 10pt"><B>N/A</B></FONT></TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.70</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Expected terms in years</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><FONT STYLE="font-size: 10pt"><B>N/A</B></FONT></TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5.77</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Expected Volatility</I> - The expected
volatility is based on a peer group in the industry in which the Company does business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Dividend Yield</I> - The Company has
not, and does not, intend to pay dividends.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Risk-free Interest Rate</I> - The Company
applies the risk-free interest rate based on the U.S. Treasury yield in effect at the time of the grant consistent with the expected
term of the award.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Expected Term in Years</I> - The Company
calculated the expected term using the Simplified Method. This method uses the average of the contractual term of the option and
the weighted-average vesting period in accordance with authoritative guidance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Forfeitures </I>&ndash; The Company
accounts for forfeitures as they occur.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Estimates of fair value are not intended
to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events
are not indicative of the reasonableness of the original estimates of fair value made by the Company in accordance with authoritative
guidance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt">A summary of the Company&rsquo;s
share option activity is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Number of Shares</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Weighted Average Exercise Price</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Intrinsic Value</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 61%">Options outstanding at December 31, 2018</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">142,070</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.31</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">60,109</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.31</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt">Forfeited</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(20,200</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.31</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Options outstanding at December 31, 2019</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">181,979</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.31</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt">Options outstanding at December 31, 2020</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">181,979</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.31</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">416,732</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Options vested and exercisable at December 31, 2020</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">152,390</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.31</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">348,974</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 123; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->16<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">Additional information regarding
options outstanding as of December 31, 2020 is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Exercise Price</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Number<BR>
 Outstanding</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Weighted-Average<BR>
 Remaining<BR>
 Contractual Life in<BR>
 Years</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Number<BR>
 Exercisable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Weighted-Average<BR>
 Remaining<BR>
 Contractual Life in<BR>
 Years</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="border-bottom: Black 1pt solid; width: 1%; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; width: 18%; text-align: right">0.31</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; width: 1%; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; width: 17%; text-align: right">181,979</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; width: 1%; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; width: 17%; text-align: right">4.93</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; width: 1%; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; width: 17%; text-align: right">152,390</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; width: 1%; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; width: 17%; text-align: right">4.20</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">181,979</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4.93</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">152,390</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4.20</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The intrinsic value for options exercised
represents the difference between the estimate of fair value based on the valuation of the shares on the date of exercise and the
exercise price of the share option.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth stock-based
compensation expense recognized for the years ended December 31, 2020 and 2019:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid; font-style: italic">December 31,</TD><TD STYLE="font-weight: bold; font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; font-style: italic; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; font-style: italic">&nbsp;</TD><TD STYLE="font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-style: italic; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt; font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Research and development</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 10%; font-weight: bold; text-align: right">&mdash;</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">26,408</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Selling, general, and administrative</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">16,649</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,162</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Total stock-based compensation expense</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">16,649</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">30,570</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2020, there was approximately
$46,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements granted under the
Plan. The cost is expected to be recognized over a weighted-average period of 2.68 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The weighted-average fair value of grant
date awards granted in 2019 was $1.55 per share. There were 191,731 stock option shares available to be issued at December 31,
2020.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Warrants</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2020, the Company issued warrants
to purchase 50,000 shares of common stock to a consultant. The warrants are immediately exercisable at an exercise price of $2.60
per share. The fair value of the warrants on the grant date was $1.15 per warrant, which was calculated based on the following
weighted-average assumptions, using a Black-Scholes option valuation model: expected term of 5.00 years; expected volatility of
51.88%; dividend yield of 0%, and risk-free interest rate of 0.30%. The Company recorded deferred offering costs of approximately
$58,000 associated with these warrants during 2020.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>6.&nbsp; Commitments and Contingencies</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Sales Representative Agreement</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2020 the Company entered into
an Exclusive Sales Representative Agreement, under which the counterparty to the agreement (the &ldquo;Representative&rdquo;) received
exclusive rights to market, promote, and distribute The CATAMARAN<SUP>TM </SUP>Systemin the United States and Puerto Rico. The
agreement is for an initial period of five years, and automatically renews for an additional five years unless written notice is
given by either party prior to April 27, 2023. The agreement provides for a bonus to be paid to the Representative upon an acquisition
or IPO. In May 2021 the Company entered into an Amended and Restated Exclusive Sales Representative Agreement. In June 2021 the
Company issued a $50,000 convertible note payable to the CEO of the Representative. See Note 10.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Litigation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the normal course of business, the Company
may possibly be named as a defendant in various lawsuits; there are no such lawsuits currently pending nor is management aware
of any such potential lawsuits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 124; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->17<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>7.&nbsp; Concentrations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Credit risk</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company maintains cash balances at
financial institutions located in California and Switzerland. Accounts at the U.S. financial institutions are secured by the Federal
Deposit Insurance Corporation. At times, balances may exceed federally insured limits. The Company has not experienced any losses
in such accounts. Management believes that the Company is not exposed to any significant credit risk with respect to its cash and
cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company grants unsecured credit to
its customers based on an evaluation of the customer&rsquo;s financial condition and a cash deposit is generally not required.
Management believes its credit policies do not result in significant adverse risk and historically has not experienced significant
credit-related losses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Currency risk</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s subsidiary, Tenon Technology
AG, realizes a portion of its expenses in Swiss francs. Consequently, certain assets and liabilities are exposed to foreign currency
fluctuations. At December 31, 2020 and 2019, approximately $64,000 and $61,000, respectively, of the Company's net monetary assets
were denominated in Swiss francs. The Company has not entered into any hedging transactions to reduce the exposure to currency
risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>8.&nbsp; Income Taxes</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Coronavirus Aid, Relief and Economic
Security Act</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 27, 2020, the Coronavirus Aid,
Relief, and Economic Security Act (the &ldquo;CARES Act&rdquo;) was enacted and signed into law in response to the market volatility
and instability resulting from the COVID-19 pandemic. It includes a significant number of tax provisions and lifts certain deduction
limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the &ldquo;2017 Act&rdquo;). The changes are mainly related
to: (1) the business interest expense disallowance rules for 2019 and 2020; (2) net operating loss rules; (3) charitable contribution
limitations; (4) employee retention credit; and (5) the realization of corporate alternative minimum tax credits. The Company does
not anticipate the application of the CARES Act provisions to materially impact the overall consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The components of loss before income taxes
are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid; font-style: italic">Years Ended December 31,</TD><TD STYLE="font-weight: bold; font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; font-style: italic; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; font-style: italic">&nbsp;</TD><TD STYLE="font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-style: italic; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt; font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">United States</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 10%; font-weight: bold; text-align: right">(429,882</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(390,517</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Foreign</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">(273,450</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(193,616</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Loss before income taxes</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">(703,332</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(584,133</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The components of current income tax expense
are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid; font-style: italic">Years Ended December 31,</TD><TD STYLE="font-weight: bold; font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; font-style: italic; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; font-style: italic">&nbsp;</TD><TD STYLE="font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-style: italic; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt; font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Federal</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">$</TD><TD STYLE="font-weight: bold; text-align: right">&mdash;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%">State</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-weight: bold; text-align: right">800</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">800</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt">Foreign</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">1,233</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">895</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Total income tax expense</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">2,033</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,695</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 125; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->18<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Significant components of the Company's
net deferred tax asset at December 31, 2020 and 2019 are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid; font-style: italic">December 31,</TD><TD STYLE="font-weight: bold; font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; font-style: italic; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; font-style: italic">&nbsp;</TD><TD STYLE="font-style: italic; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-style: italic; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt; font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Deferred tax assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left">Net operating loss</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">$</TD><TD STYLE="width: 10%; font-weight: bold; text-align: right">996,990</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">918,304</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Intangibles</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">260,219</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">291,145</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Accruals and reserves</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">183,654</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">146,737</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Total gross deferred tax asset</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">1,440,863</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,356,186</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Valuation allowance</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">(1,440,863</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,356,186</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net deferred tax assets</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In assessing the realizability of deferred
tax assets at December 31, 2020, management considered whether it is more likely than not that some portion or all of the deferred
tax assets will be realized, and determined that a valuation allowance was required for those deferred tax assets that are not
expected to provide future tax benefits. The ultimate realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become deductible.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A reconciliation of the expected tax computed
at the U.S. statutory federal income tax rate to the total provision for income taxes for the year ended December 31, 2020 and
2019 follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">2019</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Expected tax at 21%</TD><TD STYLE="width: 1%; font-weight: bold">&nbsp;</TD>
    <TD STYLE="width: 1%; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; font-weight: bold; text-align: right">(21.00</TD><TD STYLE="width: 1%; font-weight: bold; text-align: left">%)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(21.00</TD><TD STYLE="width: 1%; text-align: left">%)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">State taxes, net of federal benefit</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">(6.01</TD><TD STYLE="font-weight: bold; text-align: left">%)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6.55</TD><TD STYLE="text-align: left">%)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Foreign taxes</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">0.18</TD><TD STYLE="font-weight: bold; text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.15</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Non-deductible expenses</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">15.08</TD><TD STYLE="font-weight: bold; text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1.01</TD><TD STYLE="text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Change in valuation allowance</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: right">12.04</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left">%</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">26.68</TD><TD STYLE="padding-bottom: 1pt; text-align: left">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Provision for income taxes</TD><TD STYLE="font-weight: bold; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">0.29</TD><TD STYLE="padding-bottom: 2.5pt; font-weight: bold; text-align: left">%</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.29</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At December 31, 2020, the Company has available
net operating loss carryforwards of approximately $1,653,000 for federal income tax purposes, of which approximately $1,431,000
were generated after 2017 and can be carried forward indefinitely under the Tax Cuts and Jobs Act. The remaining federal net operating
loss of approximately $222,000, which was generated prior to 2018, will start to expire in 2034 if not utilized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At December 31, 2020, the net operating
losses for state purposes are approximately $4,338,000 and will begin to expire in 2032 if not utilized. In addition, the Company
had foreign net operating losses of approximately $1,652,000 at December 31, 2020 that will start to expire in 2021 if not utilized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has not completed a study to
determine whether any ownership change per the provisions of Section 382 of the Internal Revenue Code of 1986, as amended, as well
as similar state provisions, has occurred. Utilization of the Company's net operating loss and income tax credit carryforwards
may be subject to a substantial annual limitation due to ownership changes that may have occurred or that could occur in the future.
These ownership changes may limit the amount of the net operating loss and income tax credit carryover that can be utilized annually
to offset future taxable income. In general, an &quot;ownership change&quot; as defined by Section 382 of the Code results from
a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points
of the outstanding stock of a company by certain stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Uncertain tax positions</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In accordance with authoritative guidance,
the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely
than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if
it has less than a 50% likelihood of being sustained. The Company has no material uncertain tax positions as of December 31, 2020.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 126; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->19<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognizes interest and penalties
related to unrecognized tax positions within the income tax expense line in the accompanying consolidated statements of operations.
There were no accrued interest and penalties associated with uncertain tax positions as of December 31, 2020 or 2019.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is subject to U.S. federal
and state income tax, and in the normal course of business, its income tax returns are subject to examination by the relevant taxing
authorities. As of December 31, 2020, the 2017 through 2020 tax years remain subject to examination in the U.S. federal tax and
various state tax jurisdictions. However, to the extent allowed by law, the taxing authorities may have the right to examine the
period from 2013 through 2020 where net operating losses and income tax credits were generated and carried forward and make adjustments
to the amount of the net operating loss and income tax credit carryforward amount. The Company is not currently under examination
by federal or state jurisdictions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>9.&nbsp; Related Party Transactions</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2019 the Company issued a convertible
note payable to the Chief Executive Officer of the Company. See Note 4.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2018 through 2020, the Company&rsquo;s
subsidiary issued convertible promissory notes to TTAG&rsquo;s minority shareholder. In November 2020, these notes payable and
accrued interest were converted into TTAG shares. See Note 4.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has a consulting agreement
with a company owned by the former Chief Executive Officer of the Company. Under this consulting agreement, the Chief Executive
was to provide services from 2015 through June 1, 2021. Total payments under the consulting agreement of $600,000 are to be paid
as follows: (a) $300,000 paid upon closing of financing round of at least $5,000,000, followed by twelve monthly payment of $25,000
per month; (b) $300,000 paid upon achieving at least $3,000,000 of annual revenue and a financing round of less than $5,000,000;
or (c) the entire $600,000 payable immediately upon an acquisition of the Company. During the years ended December 31, 2020 and
2019, the Company recorded consulting expense of approximately $100,000 and $100,000, respectively. As of December 31, 2020 and
2019, approximately $558,000 and $458,000 owed to this party was included in accrued expenses in respect of these services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>10.&nbsp; Subsequent Events</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has evaluated subsequent events
through August 30, 2021, the date which the consolidated financial statements were available to be issued.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2021, the Company issued a promissory
note of $130,560 to a law firm. The note bore interest at 3.0% per annum and had a maturity date of the earlier of July 27, 2021,
the closing of a debt or equity financing, or the closing of a change in control transaction. The interest rate was to increase
to 5.0% if all principal and interest had not been paid by the maturity date. The Company repaid this loan and accrued interest
in May 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During April and May 2021, the Company
replaced convertible promissory notes with aggregate face amounts of $505,889. See Note 4.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2021, the Company issued two convertible
promissory notes of $40,000 and $170,000 to the vendor described in Note 4 that, along with accrued interest at an annual rate
of 8.0%, are automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion price is
equal to 70% of the IPO price or 70% of the price per share paid by the other cash purchasers in the future financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2021, the Company&rsquo;s Board
of Directors increased the number of authorized shares of the Company to 9,460,802, consisting of 7,000,000 shares of common stock
and 2,460,802 shares of preferred stock; increased the number of authorized shares of Series A preferred stock to 1,798,905; and
increased the number of shares of common stock reserved for issuance under the 2012 Equity Incentive Plan to 1,325,031. In July
2021, the Company&rsquo;s Board of Directors increased the number of shares of common stock reserved for issuance under the 2012
Equity Incentive Plan to 1,475,031. In August 2021, the Company&rsquo;s Board of Directors increased the number of shares of common
stock reserved for issuance under the 2012 Equity Incentive Plan from 1,475,031 shares to 1,598,531 shares, and approved the form
of a 2021 Equity Incentive Plan. The 2021 Equity Incentive Plan will be adopted and effective as of the business day immediately
prior to the registration date of the S-1 and in connection with the Company&rsquo;s IPO.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 127; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->20<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In May 2021, the Company entered into an Amended
and Restated Exclusive Sales Representative Agreement, which revised certain terms and conditions in the Exclusive Sales Representative
Agreement described in Note 6. In connection with the amendment agreement, the Company paid $500,000 cash and issued 107,513 shares
of common stock to the Representative. In addition, the Representative received anti-dilution protections to maintain ownership
of 3.0% of the fully diluted equity of the Company through the date of an initial public offering. The amended agreement restructured
the calculation of the bonus paid to the Representative upon an acquisition, removed the bonus payable upon an IPO, and allows
the Company to terminate the amended agreement as long as the bonus paid to the Representative is at least $6,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In June 2021, the Company issued a convertible
promissory note for an aggregate of $108,086 to TTAG&rsquo;s minority shareholder. The note is due upon the earlier of a capital
increase or December 31, 2021. This note, along with accrued interest at an annual rate of 8.0%, can be applied to future TTAG
capital increases.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In June 2021, the Company entered into a facility
lease agreement for its company headquarters in Los Gatos, California with escalating base rent payments of approximately $23,000
to $26,000 per month from June 2021 until the lease termination in June 2026. The total lease commitment over the lease term is
approximately $1,461,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">From May through July 2021, the Company issued
convertible promissory notes to multiple investors for aggregate proceeds of $12,177,328, with maturity dates twelve months from
the issuance dates. Of this amount, $620,000 of notes were issued to related officers, directors, and their family members, and
a $50,000 note was issued to the CEO of the Representative described in Note 6. The notes, along with accrued interest at an annual
rate of 8.0%, are automatically convertible upon an IPO, a capital stock financing of at least $5,000,000, or a change of control
transaction. The conversion price upon an IPO or a capital stock financing is equal to the lesser of 70% of the price per share
paid by the other cash purchasers, or the price per share at a Company valuation of $22,500,000. Upon a change of control, noteholders
will receive the greater of a 100% premium on the outstanding principal, plus accrued interest, or the conversion of the principal
and accrued interest into common stock at a Company valuation of $22,500,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">During August 2021,
the Company issued an aggregate of 123,500 shares of restricted common stock to several individuals under the 2012 Equity Incentive
Plan. The shares are 100% vested.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 128; Value: 1 -->
    <DIV STYLE="border-bottom: Black 1pt solid; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->21<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_030"></A><B>Tenon Medical, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Condensed Consolidated Balance Sheets</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-align: center">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; white-space: nowrap; text-align: center">September 30,<BR> 2021</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; white-space: nowrap; text-align: center"><P STYLE="margin-top: 0; margin-bottom: 0">December 31,<BR> 2020</P></TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center">(Unaudited)</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold">Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: center"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Current Assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left; padding-left: 10pt">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,409,137</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">245,635</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt">Investments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,862,236</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,100</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,474</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt">Inventory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22,429</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43,288</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Prepaid expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">102,115</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,466,017</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">303,397</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Fixed assets - net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,170</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt">Deposits</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Operating lease right-of-use asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,133,756</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Deferred offering costs</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">309,893</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">87,504</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">TOTAL ASSETS</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,953,086</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">390,901</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Liabilities, Convertible Preferred Stock, and Stockholders&rsquo; Deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Current Liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">274,766</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">589,191</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Accrued expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">830,225</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">663,657</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Current portion of operating lease liability</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">213,741</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Convertible notes payable and accrued interest - current, net of debt discount of $50,104 and $0 at September 30, 2021 and December 31, 2020, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,257,184</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">241,397</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt"><FONT STYLE="font-size: 10pt">Convertible notes payable and accrued interest due to related parties <B>&nbsp; &nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">81,027</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total current liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">14,656,943</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,494,245</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Operating lease liability - net of current portion</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">946,939</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Convertible notes payable and accrued interest - net of current portion</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">256,751</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Convertible notes payable and accrued interest due to related parties</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">76,827</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 10pt">Total Liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">15,603,882</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,827,823</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Commitments and Contingencies (Note 8)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Convertible Preferred Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Series A convertible preferred stock, $0.001 par value; 1,798,905 and 1,437,628 shares authorized at September 30, 2021 and December 31, 2020, respectively; 0 shares issued and outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Series B convertible preferred stock, $0.001 par value; 661,897 shares authorized; 491,222 shares issued and outstanding; liquidation preference of $1,372,953</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,271,715</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,271,715</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-left: 10pt">Stockholders&rsquo; Deficit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Common stock, $0.001 par value; 7,000,000 and 3,937,550 shares authorized at September 30, 2021 and December 31, 2020, respectively; 1,891,013 and 1,660,000 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,891</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,660</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 10pt">Additional paid-in capital <B>&nbsp;</B></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,149,157</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">125,437</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 10pt">Accumulated deficit <B>&nbsp;</B></FONT></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(8,692,057</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,486,171</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt"><FONT STYLE="font-size: 10pt">Accumulated other comprehensive income (loss) <B>&nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(55,627</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(56,571</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Total Tenon Medical, Inc. stockholders' deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,596,636</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,415,645</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt"><FONT STYLE="font-size: 10pt">Total non-controlling interest <B>&nbsp; &nbsp;</B></FONT></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,674,125</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,707,008</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Total stockholders&rsquo; deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5,922,511</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,708,637</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' DEFICIT</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,953,086</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">390,901</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 129; Options: NewSection; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->22<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="aa_026"></A>Tenon Medical, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Condensed Consolidated Statements of
Operations and Comprehensive Loss</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap">&nbsp;</TD><TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="white-space: nowrap; text-align: center">Nine Months Ended<BR>
 September 30,</TD><TD STYLE="white-space: nowrap">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">2021</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; font-weight: bold">Revenue</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">107,400</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">30,380</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Cost of sales</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">38,797</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,129</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Gross Profit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">68,603</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,251</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Operating Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Research and development expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">925,076</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">166,192</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Sales and marketing expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,473,227</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,139</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">General and administrative expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,569,239</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">167,888</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Total Operating Expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,967,542</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">359,219</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Loss from Operations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,898,939</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(337,968</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Other Income (Expense)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-left: 10pt">Gain on investments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,379</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 10pt">Interest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(340,944</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(61,376</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Other expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(880</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,193</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Total Other Expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(340,445</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(62,569</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net Loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,239,384</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(400,537</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Loss attributable to non-controlling interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(33,498</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(56,610</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Net Loss Attributable to Tenon Medical, Inc.</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(4,205,886</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(343,927</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net Loss Attributable to Tenon Medical, Inc. Per Share of Common Stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Basic and diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(2.43</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(0.21</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Weighted-Average Shares of Common Stock Outstanding</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Basic and diluted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,733,581</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,660,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Consolidated Statements of Comprehensive Loss:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(4,239,384</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(400,537</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Unrealized gain on investments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">155</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Change in foreign currency translation adjustment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,559</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(32,965</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Total Comprehensive Loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,237,670</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(433,502</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Comprehensive loss attributable to non-controlling interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(32,883</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(69,532</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total comprehensive loss attributable to Tenon Medical, Inc.</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(4,204,787</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(363,970</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 130; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->23<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="aa_027"></A>Tenon Medical, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Condensed Consolidated Statements of
Convertible Preferred Stock and Stockholders' Deficit</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Unaudited)&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Series B<BR> Convertible<BR> &nbsp;Preferred
    Stock</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Common Stock</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Additional<BR> &nbsp;Paid-In</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Accumulated</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Accumulated<BR> Other<BR> Comprehensive</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>Non-<BR> Controlling</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Shares</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Amount</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Shares</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Amount</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Capital</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Deficit</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Income</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Interest</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><B>Total</B></TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; width: 19%">Balance at December 31, 2020</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">491,222</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">1,271,715</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">1,660,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">1,660</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">125,437</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">(4,486,171</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">(56,571</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">1,707,008</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">(2,708,637</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stock-based compensation expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">208,475</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">208,475</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Common stock issued for services</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">231,013</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">231</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">815,245</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">815,476</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other comprehensive income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">944</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">615</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,559</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,205,886</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(33,498</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,239,384</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Balance at September 30, 2021</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">491,222</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,271,715</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,891,013</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,891</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,149,157</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(8,692,057</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(55,627</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,674,125</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(5,922,511</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; text-align: center">Series B<BR>
 Convertible<BR>
 &nbsp;Preferred Stock</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; text-align: center">Common Stock</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Additional<BR>
 Paid-In</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Accumulated</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Accumulated<BR> Other<BR> Comprehensive</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Non-<BR> Controlling</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Shares</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Amount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Shares</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Amount</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Capital</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">Interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; vertical-align: bottom; text-align: center">Total</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 19%; font-weight: bold">Balance at December 31, 2019</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">491,222</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">1,271,715</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 6%; text-align: right">1,660,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">1,660</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">51,284</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">(3,900,993</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">(32,409</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">994,678</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 6%; text-align: right">(2,885,780</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stock-based compensation expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,487</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,487</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Other comprehensive income (loss)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(20,043</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(12,922</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(32,965</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(343,927</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(56,610</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(400,537</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Balance at September 30, 2020</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">491,222</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,271,715</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="border-left: Black 1pt solid; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,660,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,660</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">63,771</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(4,244,920</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(52,452</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">925,146</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(3,306,795</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 131; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><A NAME="aa_028"></A>Tenon Medical, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Condensed Consolidated Statements of
Cash Flows</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(Unaudited)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-align: right">&nbsp;</TD><TD STYLE="white-space: nowrap">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="white-space: nowrap; text-align: center">Nine Months Ended<BR>
 September 30,</TD><TD STYLE="white-space: nowrap">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">2021</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Operating Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 78%; text-align: left">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">(4,239,384</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">(400,537</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Adjustments to reconcile net loss to net cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Gain on investments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,379</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Non-cash interest expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">339,699</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61,327</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stock-based compensation expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">208,475</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,487</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Common stock issued for services</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">815,476</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><P STYLE="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">543</P></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Amortization of operating lease right-to-use asset</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">61,633</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Increase (decrease) in cash resulting from changes in:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(55,657</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,571</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Inventories</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,859</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,129</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Prepaid expenses and other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(128,406</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">646</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">241,854</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48,550</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Accrued expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">168,670</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">82,904</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Operating lease liability</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(34,709</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Net cash used in operating activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,602,326</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(134,923</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Investing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Purchases of investments</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,860,702</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Purchases of fixed assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(17,713</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net cash used in investing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,878,415</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Cash Flows From Financing Activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Proceeds from issuance of convertible notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,072,055</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105,273</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Repayment of notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(130,560</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Debt issuance costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(70,797</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Deferred offering costs</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(222,389</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Net cash provided by financing activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,648,309</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">105,273</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Effect of foreign currency translation on cash flow</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,066</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,244</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Net Increase (Decrease) in Cash and Cash Equivalents</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,163,502</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(26,406</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 1pt">Cash and Cash Equivalents at Beginning of Period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">245,635</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">151,968</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Cash and Cash Equivalents at End of Period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,409,137</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">125,562</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left">Supplemental Disclosures of Cash Flow Information</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Cash paid during the year for:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,245</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">49</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">802</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,134</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left">Non-cash investment and financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Right-of-use assets obtained in exchange for lease liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1,195,389</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Conversion of accounts payable to convertible notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">555,560</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>The accompanying notes are an integral
part of these consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>&nbsp;</I></P>


<!-- Field: Page; Sequence: 132; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->25<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>Tenon Medical, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>Notes to Condensed Consolidated Financial
Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><B>(Unaudited)</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><A NAME="aa_029"></A>1. Organization and Business</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Nature of operations</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Tenon Medical, Inc.</B> (&ldquo;the
Company&rdquo;), was incorporated in the state of Delaware on June 19, 2012 and was headquartered in San Ramon, California until
June 2021 when it relocated to Los Gatos, California. The Company is a medical device company that has developed a novel posterior
approach to sacroiliac joint fusion for treatment of the most common types of sacroiliac joint disorders that cause lower back
pain. The Company received FDA clearance in 2018 for its primary product, The CATAMARAN System. The Company is in the early stages
of its commercial launch with its primary focus being on the US market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Basis of consolidation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The consolidated financial statements of
the Company include the accounts of the Company and its majority-owned subsidiary, Tenon Technology AG (&ldquo;TTAG&rdquo;), a
Swiss company. All intercompany balances and transactions have been eliminated in consolidation. The subsidiary is consolidated
from the date of formation (October 3, 2012), being the date on which the Company has power to govern the financial and operating
policies of TTAG so as to obtain benefits from its activities, and will continue to be consolidated until the date such control
ceases. The financial statements of the subsidiary are prepared for the same reporting period as the parent, using consistent accounting
policies in all material respects. Ownership interests in TTAG held by parties other than the Company are presented separately
from the Company&rsquo;s stockholders&rsquo; deficit on the Consolidated Balance Sheets. The amount of consolidated net loss attributable
to the Company and the non-controlling interests are both presented on the face of the Consolidated Statements of Operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>2. Summary of Significant Accounting Principles </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Basis of presentation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying consolidated financial
statements have been prepared on the accrual basis in accordance with generally accepted accounting principles (&ldquo;GAAP&rdquo;)
as promulgated in the United States of America.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Unaudited Consolidated Financial Statements</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The consolidated balance sheet as of September&nbsp;30,
2021, and the consolidated statements of operations, convertible preferred stock and stockholders&rsquo; deficit, and cash flows
for the nine months ended September&nbsp;30, 2021 and 2020 are unaudited. The unaudited consolidated financial statements have
been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all
adjustments of a normal and recurring nature that are necessary for the fair statement of the Company&rsquo;s financial position
as of September&nbsp;30, 2021 and the results of operations and cash flows for the nine months ended September&nbsp;30, 2021 and
2020. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP
have been condensed or omitted. The financial data and the other financial information disclosed in these notes to the consolidated
financial statements related to the nine months ended September&nbsp;30, 2021 and 2020 are also unaudited. The consolidated results
of operations for the nine months ended September&nbsp;30, 2021 are not necessarily indicative of results to be expected for the
year ending December&nbsp;31, 2021 or for any other future annual or interim period. The consolidated balance sheet as of December&nbsp;31,
2020 included herein was derived from the audited consolidated financial statements as of that date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 133; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->26<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These interim consolidated financial statements
should be read in conjunction with the Company&rsquo;s audited consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Going concern uncertainty and liquidity requirements</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These unaudited interim condensed consolidated
financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course of business. There is substantial doubt about
the Company&rsquo;s ability to continue as a going concern for one year after the date that these consolidated financial statements
are issued. These unaudited interim condensed consolidated financial statements do not include any adjustments that might be necessary
from the outcome of this uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Since inception, the Company has incurred
losses and negative cash flows from operations. Management expects to incur additional operating losses and negative cash flows
from operations in the foreseeable future as the Company starts the commercial launch of The CATAMARAN System and continues product
development programs. Based on the Company&rsquo;s current level of expenditures and the proceeds from the issuance of convertible
debt during May through July 2021, the Company believes that its existing cash and cash equivalents as of September 30, 2021 will
not provide sufficient funds to enable it to meet its obligations through June 2022.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company plans to raise additional capital
by selling shares of capital stock or other equity or debt securities. However, there are no commitments or arrangements for future
financings in place at this time, and the Company can give no assurance that such capital will be available on favorable terms
or at all. The Company may need additional financing thereafter until it can achieve profitability. Although the Company is actively
pursuing an initial public offering (&ldquo;IPO&rdquo;) and other possible financing opportunities, it may not be able to raise
cash on terms acceptable to the Company or at all. There can be no assurance that the Company will be successful in obtaining additional
funding. Financings, if available, may be on terms that are dilutive to shareholders, and the prices at which new investors would
be willing to purchase the Company&rsquo;s securities may be lower than the current price of ordinary shares. The holders of new
securities may also receive rights, preferences or privileges that are senior to those of existing holders of ordinary shares.
If additional financing is not available or is not available on acceptable terms, the Company <FONT STYLE="background-color: white">could
be forced to delay, reduce, or eliminate its future commercialization efforts and product development programs, which could adversely
affect its future business prospects and its ability to continue as a going concern.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Use of estimates</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of the consolidated financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates. Significant estimates made by management include, but
are not limited to, realization of deferred tax assets, accrued liabilities, obsolescence of inventory, stock-based compensation
and the fair value of the Company&rsquo;s common stock and preferred stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Impact of COVID-19</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In March 2020, the World Health Organization
declared the COVID-19 outbreak to be a pandemic. During the nine months ended September 30, 2021 and 2020, the Company&rsquo;s
financial results were not significantly affected by the COVID-19 outbreak. The Company has considered all information available
as of the date of issuance of these consolidated financial statements and the Company is not aware of any specific events or circumstances
that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. These
estimates may change as new events occur and additional information becomes available. The extent to which the COVID-19 outbreak
affects the Company&rsquo;s future financial results and operations will depend on future developments which are highly uncertain
and cannot be predicted, including new information which may emerge concerning the severity of the outbreak, and current or future
domestic and international actions to contain and treat it.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 134; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->27<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Segments</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company operates in&nbsp;one&nbsp;business
segment. Although the Company&rsquo;s Swiss subsidiary is located in a different geographical area, management uses one measurement
of profitability and does not segregate its business for internal reporting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Cash and cash equivalents</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company considers all highly liquid
investments with original maturities of 90 days or less at the date of purchase to be cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Investments</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company classifies its investments
in marketable debt securities as available-for-sale and records them at fair value in its consolidated balance sheets. The net
unrealized gains and losses are recorded as a separate component of stockholders&rsquo; equity. Realized gains and losses are recorded
in the consolidated statements of operations and comprehensive loss. Margin loans for which a right of setoff exists are classified
in the consolidated balance sheets as reductions to the investment value. The Company determines any realized gains or losses on
the sale of marketable debt securities on a specific identification method, and records such gains and losses as a component of
other income (expense), net.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Accounts receivable and allowance for
doubtful accounts</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accounts receivable are derived from products
delivered to customers and are stated at their net realizable value. The Company records an allowance for estimated uncollectible
accounts in an amount approximating anticipated losses. Individual uncollectible accounts are written off against the allowance
when collection of the individual accounts appears doubtful. In determining the amount of the allowance, the Company considers
its historical level of credit losses. The Company also makes judgments about the creditworthiness of significant customers based
on ongoing credit evaluations, and the Company assesses current economic trends that might impact the level of credit losses in
the future. The Company&rsquo;s allowances have generally been adequate to cover its actual credit losses. However, since the Company
cannot reliably predict future changes in the financial stability of its customers, it cannot guarantee that its allowances will
continue to be adequate. If actual credit losses are significantly greater than the allowance, the Company would increase its general
and administrative expenses and increase its reported net losses. Conversely, if actual credit losses are significantly less than
the Company's reserve, this would eventually decrease the Company&rsquo;s general and administrative expenses and decrease its
reported net losses. Allowances are recorded primarily on a specific identification basis. As of September 30, 2021 and December
31, 2020, the Company&rsquo;s allowance for doubtful accounts was $0.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Inventory</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Inventory is stated at lower of cost or
net realizable value. The Company establishes the inventory basis by determining the cost based on standard costs approximating
the&nbsp;purchase costs&nbsp;on a&nbsp;first-in, first-out basis. The excess and obsolete inventory is estimated based on future
demand and market conditions. Inventory write-downs are charged to cost of goods sold.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September 30, 2021 and December 31,
2020, inventory consisted entirely of finished goods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Deferred offering costs</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred offering costs, which consist
of direct incremental legal, consulting, banking and accounting fees relating to the Company&rsquo;s planned IPO, are capitalized,
and will be offset against proceeds from the IPO upon the effectiveness of the offering. In the event an anticipated offering is
terminated, deferred offering costs will be expensed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Property and equipment</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment are stated at cost
less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets. Equipment, computers, software, and furniture and fixtures are depreciated over periods ranging from three
to seven years, and leasehold improvements over the shorter period of the lease or the life of the asset. The cost of maintenance
and repairs is charged to expense as incurred; significant renewals and betterments are capitalized. Deductions are made for retirements
resulting from renewals or betterments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 135; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->28<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Long-lived assets</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company regularly reviews the carrying
value and estimated lives of all of its long-lived assets, including property and equipment, to determine whether indicators of
impairment may exist that warrant adjustments to carrying values or estimated useful lives. The determinants used for this evaluation
include management&rsquo;s estimate of the asset&rsquo;s ability to generate positive income from operations and positive cash
flow in future periods as well as the strategic significance of the assets to the Company&rsquo;s business objectives.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Fair value measurements</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In accordance with Accounting Standards
Codification (&ldquo;ASC&rdquo;) 820,&nbsp;Fair Value Measurement, fair value is the price that would be received from selling
an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement
date. ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs
and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Observable inputs are those that market
participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.
Unobservable inputs reflect the Company&rsquo;s assumptions about the inputs that market participants would use in pricing the
asset or liability based on the best information available in the circumstances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The fair value hierarchy is categorized
into three levels based on the inputs as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Level 1&nbsp;&ndash; Quoted prices are
available in active markets for identical assets or liabilities as of the reported date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Level 2&nbsp;&ndash; Pricing inputs are
other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature
of these financial instruments include cash instruments for which quoted prices are available but are traded less frequently, derivative
instruments whose fair values have been derived using a model where inputs to the model are directly observable in the market and
instruments that are fair valued using other financial instruments, the parameters of which can be directly observed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Level 3&nbsp;&ndash; Instruments that have
little to no pricing observability as of the measurement date. These financial instruments are measured using management&rsquo;s
best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The degree of judgment exercised by the
Company in determining fair value is greatest for assets categorized in Level 3. In certain cases, the inputs used to measure fair
value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair
value hierarchy within which the fair value measurement falls in its entirety is determined by the lowest level input that is significant
to the fair value measurement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Convertible preferred stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company records convertible preferred
stock at fair value on the dates of issuance, net of issuance costs. Convertible preferred stock is recorded as temporary stockholders&rsquo;
equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 136; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->29<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Income taxes</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the nine months ended September 30,
2021 and 2020 income taxes are recorded in accordance with Financial Accounting Standards Board (&ldquo;FASB&rdquo;) ASC Topic
740, Income Taxes (&ldquo;ASC 740&rdquo;), which provides for deferred taxes using an asset and liability approach. Under this
method, the Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences
between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to
be in effect when the differences are expected to reverse. Valuation allowances are provided when necessary to reduce net deferred
tax assets to the amount that is more likely than not to be realized. Based on the available evidence, the Company is unable, at
this time, to support the determination that it is more likely than not that its deferred tax assets will be utilized in the future.
Accordingly, the Company recorded a full valuation allowance as of September 30, 2021 and December 31, 2020. The Company intends
to maintain valuation allowances until sufficient evidence exists to support its reversal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Current income taxes are based upon the
year's income taxable for federal, state and foreign tax reporting purposes. Deferred income taxes are provided for certain income
and expenses, which are recognized in different periods for tax and financial reporting purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company's policy is not to record deferred
income taxes on the undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Revenue recognition</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s revenue is derived
from the sale of its products to medical groups and hospitals through its independent sales representative and national distributor
in Florida and Texas.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In accordance with Accounting Standards
Codification 606, <I>Revenue from Contracts with Customers</I> (&quot;ASC 606&quot;), which the Company adopted effective January&nbsp;1,
2019, revenue is recognized when control is transferred to the customer, in an amount that reflects the consideration the Company
expects to be entitled to in exchange for the goods or services. The Company had no contracts with customers prior to the date
of adoption. Under ASC 606, the Company applies the following five step approach: (1) identify the contract with a customer, (2)
identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to
the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company generates its revenue from
the sale of products through an independent sales representative and national distributor to certain hospital or medical facilities
where the products are delivered in advance of a procedure. The performance obligation is the delivery of the products along with
the completion of the surgery by the surgeon and therefore, revenue is recognized upon delivery to the customers and completion
of the surgery, net of rebates and price discounts. The Company accounts for rebates and price discounts as a reduction to revenue,
calculated based on the terms agreed to with the customer. Historically, there has been no significant rebates or price discounts.
Sales prices are specified in either the customer contract, agreed price list, or purchase order, which is executed prior to the
transfer of control to the customer. As of April 2020, the Company had an agreement in place with a national distributor, which
includes standard terms that do not allow for payment contingent on resale of the product, obtaining financing, or other terms
that could impact the distributor&rsquo;s payment obligation. From April 2020 through May 20, 2021, the distributor billed and
collected from the enduser customer, was required to pay the Company on the 5<SUP>th</SUP> day of the calendar month after the
customer paid the distributor, and the Company recognized revenue based on the net amount received from the distributor. Prior
to April 2020 and subsequent to May 20, 2021, the Company billed and collected directly from the enduser customers and recognized
revenue based on the gross sales price. For direct sales to enduser customers, the Company's standard payment terms are generally
net&nbsp;30&nbsp;days.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company offers its standard warranty
to all customers. The Company does not sell any warranties on a standalone basis. The Company&rsquo;s warranty provides that its
products are free of material defects and conform to specifications, and includes an offer to replace or refund the purchase price
of defective products. This assurance does not constitute a service and is not considered a separate performance obligation. The
Company estimates warranty liabilities at the time of revenue recognition and records it as a charge to cost of goods sold.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Contract modifications generally do not
occur during the performance of the Company&rsquo;s contracts. Payments received prior to satisfying the revenue recognition criteria
are recorded as deferred revenue on the consolidated balance sheets. As of September 30, 2021 and December 31, 2020, there were
no remaining performance obligations that would give rise to deferred revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 137; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->30<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Costs associated with product sales include
commissions and are recorded in sales and marketing expenses during the same period as the corresponding revenues.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Research and development</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company engages in improving existing
products and new product development efforts. Research and development expenses relating to these efforts are expensed as incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Leases</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2016, the FASB issued ASC 842,
&ldquo;<I>Leases</I>&rdquo;. This standard requires lessees to present right-of-use (&ldquo;ROU&rdquo;) assets and lease liabilities
on the balance sheet. The new guidance is to be applied using a modified retrospective approach at the beginning of the earliest
comparative periods in the financial statements and is effective for fiscal years beginning after December 15, 2021 and early adoption
is permitted. The Company early adopted ASC 842 on January 1, 2021 and implemented this guidance upon the inception of its new
Los Gatos facility lease in June 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had no lease agreements during
the nine months ended September 30, 2020.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Stock-based compensation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for its stock-based
compensation in accordance with&nbsp;ASC 718, <I>Compensation - Stock Compensation</I>. The Company accounts for all stock-based
compensation awards using a fair-value method on the grant date and recognizes the fair value of each award as an expense over
the requisite service period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2018, the Financial Accounting
Standards Board (&quot;FASB&quot;) issued Accounting Standards Update (&ldquo;ASU&rdquo;) 2018-07,&nbsp;<I>Improvements to Non-employee
Share-Based Payment Accounting</I>. ASU 2018-07&nbsp;expands the scope of ASC 718 to include share-based payments issued to non-employees
for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially
aligned. ASU&nbsp;2018-07 supersedes Subtopic&nbsp;505-50,&nbsp;<I>Equity-Based Payments to&nbsp;Non-Employees</I>. The Company
adopted this standard effective for the year ended December 31, 2019, and the adoption did not have any material impact on the
Company&rsquo;s consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Foreign currency translation and other
comprehensive income</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The functional currency of Tenon Technology
AG is the Swiss franc. Accordingly, TTAG&rsquo;s assets and liabilities are translated from their respective functional currency
into U.S. Dollars at period-end rates, and TTAG&rsquo;s revenue and expenses are translated at the weighted-average exchange rate
for the period. Adjustments resulting from this translation process are classified as other comprehensive income or loss and shown
as a separate component of equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">When intercompany foreign currency transactions
between entities included in the consolidated financial statements are of a long-term investment nature (i.e., those for which
settlement is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those
transactions are included in stockholders&rsquo; equity (deficit) as accumulated other comprehensive loss or income. When intercompany
transactions are deemed to be of a short-term nature, translation adjustments are required to be included in the consolidated statements
of operations. The Company has determined that settlement of TTAG&rsquo;s intercompany balances are not anticipated in the foreseeable
future, and therefore such translation adjustments are included in stockholders&rsquo; deficit as accumulated other comprehensive
income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Net loss per share</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Basic net loss per share is based upon
the weighted-average number of common shares outstanding. Diluted net loss per share is based on the assumption that all potential
common stock equivalents (convertible preferred stock, stock options, and warrants) are converted or exercised. The calculation
of diluted net loss per share excludes potential common stock equivalents if the effect is anti-dilutive. The Company&rsquo;s weighted-average
common shares outstanding for basic and diluted are the same because the effect of the potential common stock equivalents is anti-dilutive.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 138; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->31<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="margin: 0"></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had the following dilutive
common stock equivalents as of September&nbsp;30, 2021 and 2020 which were excluded from the calculation because their effect was
anti-dilutive.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-align: right">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center">September 30,</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center">September 30,</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-align: right">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2021</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2020</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Common shares convertible from preferred stock</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">491,222</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">491,222</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Common shares convertible from minority interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,798,905</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,493,764</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Common shares convertible from notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,046,502</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">152,269</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Outstanding warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Outstanding stock options</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,415,783</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">181,979</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,802,412</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,319,234</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Recent accounting standards not yet
adopted</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2020, the FASB issued ASU 2020-6,&nbsp;<I>Debt&mdash;Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging&mdash;Contracts in Entity&rsquo;s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity&rsquo;s Own Equity</I>&nbsp;(&ldquo;ASU 2020-6&rdquo;),
which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash
conversion feature and (2) convertible instruments with a beneficial conversion feature. Upon adoption, a convertible debt instrument
will be accounted for as a single liability at amortized cost unless (a) the convertible instrument contains features that require
bifurcation as a derivative under ASC 815,&nbsp;<I>Derivatives and Hedging</I>, or (b) the convertible debt instrument was issued
at a substantial premium. These changes will reduce reported interest expense and increase reported net income for entities that
have issued a convertible instrument that was bifurcated according to previously existing rules. ASU 2020-6 also requires the application
of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available.
The new guidance is effective for public entities excluding smaller reporting companies in fiscal years beginning after December
15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. For public business entities
that meet the definition of a smaller reporting company, the amendments in ASU 2020-6 are effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2023. ASU 2020-6 is effective for the Company in the first quarter
of fiscal 2024. The Company is currently evaluating the impact of adoption of ASU 2020-6 on its consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>3. Investments</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth by level,
within the fair value hierarchy, the Company&rsquo;s investments at fair value as of September 30, 2021:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Level 1</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 87%; text-align: left">Corporate debt securities</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">7,862,236</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cost and fair value of available-for-sale
investments as of September 30, 2021 are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Amortized</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Cost</B></P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><BR>Unrealized</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Gains</B></P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Unrealized</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Losses</B></P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Fair</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Value</B></P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 48%; text-align: left">Corporate debt securities</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">7,862,081</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">307</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(152</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">7,862,236</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table presents fair values
and gross unrealized losses recorded to accumulated other comprehensive income as of September&nbsp;30, 2021, aggregated by investment
category and the length of time that individual securities have been in a continuous loss position:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><B>Less Than<BR> </B></P> <P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><B>12 Months</B></P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid"><P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><B>Unrealized</B></P> <P STYLE="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><B>Losses</B></P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Corporate debt securities</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">1,506,180</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">(152</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
</TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the nine months ended September
30, 2021, the Company did not recognize any significant other-than-temporary impairment losses because the Company does not intend
to sell the investments before recovery of their amortized cost bases.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the nine months ended September
30, 2021, there was a net gain of approximately $1,000 included in the Company&rsquo;s net loss. Accrued interest as of September
30, 2021 was approximately $4,000 and is included in prepaid expenses in the Company&rsquo;s consolidated balance sheet.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Bonds mature from October 2021 to March
2022 and earn interest between 0.11% and 0.17% per annum.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 139; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->32<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>4. Accrued Expenses</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accrued expenses consisted of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-align: right">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center">September 30,</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center">December 31,</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-align: right">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2021</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2020</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Accrued compensation</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">649,808</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">582,906</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accrued professional fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">159,057</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Accrued commissions</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,360</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">32,328</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Other accrued expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">48,423</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total accrued expenses</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">830,225</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">663,657</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>5. Debt</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2015, the Company issued a $53,447
convertible promissory note to a consultant that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. In June 2019, the note and its accrued interest to date was replaced by a $68,359 convertible
promissory note that, along with accrued interest at an annual rate of 8.0%, was automatically convertible upon a preferred stock
financing of at least $1,000,000, at a conversion price equal to 90% of the price per share paid by the other cash purchasers in
the future financing. The note had a maturity date of June 12, 2021. In May 2021, the note was again replaced by a $68,359 convertible
promissory note with a maturity date of May 7, 2022 that, along with accrued interest at an annual rate of 8.0%, is automatically
convertible upon an Initial Public Offering (&ldquo;IPO&rdquo;) or a capital stock financing of at least $5,000,000. The conversion
price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000. Since
the conversion is contingent upon an event outside the Company&rsquo;s control, the beneficial conversion feature will be recorded
once the contingency is met. Accrued interest at September 30, 2021 and December 31, 2020 totaled approximately $13,000 and $8,000,
respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 140; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->33<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2016, the Company issued a $117,530
convertible promissory note to a vendor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of January 1, 2019 and remained unpaid during 2019 and 2020.
In April 2021, the note was replaced by a $117,530 convertible promissory note with a maturity date of April 30, 2022 that, along
with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least
$5,000,000. The conversion price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing
of at least $5,000,000. Since the conversion is contingent upon an event outside the Company&rsquo;s control, the beneficial conversion
feature will be recorded once the contingency is met. Accrued interest at September 30, 2021 and December 31, 2020 totaled approximately
$54,000 and $47,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2021, the Company issued two convertible
promissory notes of $40,000 and $170,000 to the same vendor, along with accrued interest at an annual rate of 8.0%, are automatically
convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion price is equal to 70% of the IPO price
or 70% of the price per share paid by the other cash purchasers in the future financing. Since the conversion is contingent upon
an event outside the Company&rsquo;s control, the beneficial conversion feature will be recorded once the contingency is met. Accrued
interest for these two notes at September 30, 2021 totaled approximately $7,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2019, the Company issued a $70,000
convertible promissory note to the Company&rsquo;s then Chief Executive Officer that, along with accrued interest at an annual
rate of 8.0%, was automatically convertible upon a preferred stock financing of at least $500,000, at a conversion price equal
to 80% of the price per share paid by the other cash purchasers in the future financing. The note had a maturity date of October
12, 2022. In April 2021, the note was replaced by a $70,000 convertible promissory note with a maturity date of April 30, 2022
that, along with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing
of at least $5,000,000. The conversion price is equal to 70% of the IPO price or $1.9565 per share in the event of a capital stock
financing of at least $5,000,000. Since the conversion is contingent upon an event outside the Company&rsquo;s control, the beneficial
conversion feature will be recorded once the contingency is met. Accrued interest at September 30, 2021 and December 31, 2020 totaled
approximately $11,000 and $7,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In October 2019, the Company issued a $50,000
convertible promissory note to an investor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 80% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of October 21, 2022. In May 2021, the note was replaced by
a $50,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest at an annual rate of
8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion price is equal
to 70% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000. Since the conversion
is contingent upon an event outside the Company&rsquo;s control, the beneficial conversion feature will be recorded once the contingency
is met. Accrued interest at September 30, 2021 and December 31, 2020 totaled approximately $8,000 and $5,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2020, the Company issued a
$200,000 convertible promissory note to the same investor that, along with accrued interest at an annual rate of 8.0%, was automatically
convertible upon a preferred stock financing of at least $2,000,000, at a conversion price equal to 80% of the price per share
paid by the other cash purchasers in the future financing. The note had a maturity date of November 16, 2022. In May 2021, the
note was replaced by a $200,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest
at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion
price is equal to 70% of the IPO price or 70% of the price per share paid by the other cash purchasers in the future financing.
Since the conversion is contingent upon an event outside the Company&rsquo;s control, the beneficial conversion feature will be
recorded once the contingency is met. Accrued interest at September 30, 2021 and December 31, 2020 totaled approximately $14,000
and $2,000, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<!-- Field: Page; Sequence: 141; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->34<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In January 2021, the Company issued a promissory
note of $130,560 to a law firm. The note bore interest at 3.0% per annum and had a maturity date of the earlier of July 27, 2021,
the closing of a debt or equity financing, or the closing of a change in control transaction. The interest rate was to increase
to 5.0% if all principal and interest had not been paid by the maturity date. The Company repaid this note and accrued interest
in May 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2018, the Company&rsquo;s subsidiary
issued two convertible promissory notes for an aggregate of $305,084 to TTAG&rsquo;s minority shareholder. In September 2019 and
June 2020, the Company&rsquo;s subsidiary issued additional convertible promissory notes to the same minority shareholder for $201,309
and $106,620, respectively. These notes, along with accrued interest at an annual rate of 10.0%, could be applied to future TTAG
capital increases. Accrued interest on these notes totaled approximately $63,000 at December 31, 2019. In November 2020, notes
payable and accrued interest totaling $784,895 were converted into TTAG Series A preferred stock shares, which increased the minority
shareholder&rsquo;s ownership percentage from 39.2% to 43.8%. In connection with the conversion of the notes, the Company recorded
a beneficial conversion feature of $88,238.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In June 2021, the Company&rsquo;s subsidiary
issued a convertible promissory note for approximately $107,000 to TTAG&rsquo;s minority shareholder. The note is due upon the
earlier of a capital increase or December 31, 2021. This note, along with accrued interest at an annual rate of 8.0%, can be applied
to future TTAG capital increases. Accrued interest at September 30, 2021 totaled approximately $3,000. The Company repaid this
note and accrued interest in October 2021 (Note 12).</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From May through July 2021, in multiple
rounds of closings the Company issued convertible promissory notes to multiple investors for aggregate proceeds of approximately
$12,177,000, with maturity dates twelve months from the issuance dates. Of this amount, $620,000 of notes were issued to related
officers, directors, and their family members, and a $50,000 note was issued to the CEO of the Representative described in Note
8. The notes, along with accrued interest at an annual rate of 8.0%, are automatically convertible upon an IPO, a capital stock
financing of at least $5,000,000, or a change of control transaction. The conversion price upon an IPO or a capital stock financing
is equal to the lesser of 70% of the price per share paid by the other cash purchasers, or the price per share at a Company valuation
of $22,500,000. Upon a change of control, noteholders will receive the greater of a 100% premium on the outstanding principal,
plus accrued interest, or the conversion of the principal and accrued interest into common stock at a Company valuation of $22,500,000.
Since the conversion is contingent upon an event outside the Company&rsquo;s control, the beneficial conversion feature will be
recorded once the contingency is met. The Company recorded debt issuance costs of approximately $71,000 as a discount on the convertible
notes payable balance. As of September 30, 2021, there was a remaining unamortized discount of approximately $50,000. Accrued interest
at September 30, 2021 totaled approximately $279,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>6. Leases</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2021, the Company entered into
a facility lease agreement for its company headquarters in Los Gatos, California. This non-cancelable operating lease expires
in June 2026. The Company includes options that are reasonably certain to be exercised as part of the determination of lease terms.
The Company may negotiate termination clauses in anticipation of any changes in market conditions, but generally these termination
options are not exercised. Residual value guarantees are generally not included within operating leases. In addition to base rent
payments, leases may require the Company to pay directly for taxes and other&nbsp;non-lease&nbsp;components, such as insurance,
maintenance and other operating expenses, which may be dependent on usage or vary&nbsp;month-to-month.&nbsp; Non lease components
were considered and determined not to be material. The Company determined if an arrangement is a lease at inception of the contract
in accordance with guidance detailed in the new standard and performed the lease classification test as of the lease commencement
date. ROU assets represent the Company&rsquo;s right to use an underlying asset for the lease term and lease liabilities represent
the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the
lease&rsquo;s commencement date based on the present value of lease payments over the lease term. When a lease did not provide
an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at the commencement
date in determining the present value of future payments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 142; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->35<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Operating lease costs for the facility
lease during the nine months ended September 30, 2021 were approximately $85,000, and were included in general and administrative
expenses in the consolidated statements of operations and comprehensive loss.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Supplemental balance sheet information
related to leases was as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-align: right">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center">September 30,</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center">December 31,</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-align: right">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2021</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2020</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; width: 74%; text-align: left">Operating lease right-of-use assets</TD><TD STYLE="padding-bottom: 2.5pt; width: 1%"></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; width: 1%; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; width: 10%; text-align: right">1,133,756</TD><TD STYLE="padding-bottom: 2.5pt; width: 1%; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; width: 1%">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; width: 1%; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right; width: 10%">&nbsp;&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Operating lease liability, current</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(213,741</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Operating lease liability, noncurrent</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(946,939</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total operating lease liabilities</TD><TD STYLE="padding-bottom: 2.5pt"></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,160,680</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Future maturities of operating lease liabilities
as of September 30, 2021 were as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 81%; text-align: left"><FONT STYLE="font-size: 10pt">Three months ending December 31, 2021&nbsp;</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 15%; text-align: right">69,969</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2022</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">284,076</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">2023</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">292,596</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">2024</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">301,368</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">2025</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">310,410</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-align: left">2026</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">144,375</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Total lease payments</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,402,794</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">Less: imputed interest</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(242,114</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">Present value of operating lease liabilities&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,160,680</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Other information:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 87%; text-align: left">Cash paid for amounts included in the measurement of lease liabilities for the nine months ended September 30, 2021</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">58,308</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Remaining lease term - operating leases (in years)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.71</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Average discount rate - operating leases</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.0</TD><TD STYLE="text-align: left">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>7. Stockholders&rsquo; Equity</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Amended and Restated Certificate of Incorporation
dated April 30, 2021, authorizes the issuance of 7,000,000 shares of common stock and 2,460,802 shares of preferred stock, with
a par value of $0.001 per share. The Company increased the number of authorized shares in October 2021 (Note 12).</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Preferred Stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Shares of the Company&rsquo;s Series A
Convertible Preferred Stock have been set aside for the potential conversion of TTAG Series A shares owned by its minority shareholder.
See Note 12 for a description of this conversion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In a series of closings from 2012 through
2015, the Company issued an aggregate of 491,222 shares of Series B Convertible Preferred Stock at $2.795 per share for proceeds
of $1,271,715, net of stock issuance costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company classifies the convertible
preferred stock outside of total stockholders&rsquo; deficit because, in the event of certain deemed liquidation events that are
not solely within the control of the Company, the shares would become redeemable at the option of the holders. The Company did
not adjust the carrying values of the convertible preferred stock to the deemed liquidation values of such shares since a liquidation
event was not probable of occurring at December&nbsp;31, 2020. Subsequent adjustments to increase or decrease the carrying values
to the ultimate liquidation values will be made only if, and when, it becomes probable that such a liquidation event will occur.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 143; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->36<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Conversion</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At the option of the holder, shares of
Series A and Series B Preferred Stock are convertible into Common Stock at a conversion rate of one-to-one, subject to adjustments
for stock dividends, splits, combinations and similar events. Automatic conversion will occur in the event of a firmly underwritten
public offering of Common Stock of the Company at a price of at least $6.00 per share, subject to appropriate adjustments for stock
dividends, splits, combination and similar events, and with total gross proceeds to the Company of at least $25,000,000, before
deduction of underwriters' commissions and expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Redemption</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The shares of the Series A and Series B
Preferred Stock are redeemable only upon acquisition or liquidation of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Liquidation preference</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">With respect to any distributions in connection
with a liquidation, dissolution or winding up of the Company, or in connection with the sale of voting control of all or substantially
all of the assets of the Company, by way of merger, acquisition, consolidation or similar transaction, prior to any distribution
to Common Stockholders, the holders of Series A and Series B Preferred Stock are entitled to receive $0.853 and $2.795 per share,
respectively, plus any declared but unpaid dividends, adjusted to reflect any dividends previously paid. If, upon the occurrence
of such event, the assets and funds distributed among the holders of Series A and Series B Preferred Stock shall be insufficient
to permit the payment to such holders of the full liquidation preference amounts, the entire assets and funds of the Company legally
available shall be distributed ratably among the preferred stockholders in proportion to the preferential amount to which each
holder is entitled.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">After payment of the liquidation preferences,
the holders of Common Stock are entitled to receive the remaining assets of the Company available for distribution to its stockholders
pro rata based on the number of shares of Common Stock held by each holder.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Voting rights</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The holders of vested shares of Common
Stock shall be entitled to vote on any matter submitted to a vote of the stockholders and each such holder shall be entitled to
one vote per share of Common Stock held. The holders of Series A and Series B Preferred Stock shall be entitled to vote together
with the Common Stock as a single class on any matter submitted to a vote of the stockholders. Holders of Series A and Series B
Preferred Stock shall be entitled to the number of votes equal to the number of Common Stock issuable upon conversion of their
respective Series A and Series B Preferred Stock at the time such shares are voted. The holders of a majority of the preferred
Stock have additional voting rights as specified in the Company&rsquo;s Amended and Restated Certificate of Incorporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Common stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has reserved shares of common
stock for the following potential future issuances.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-align: right">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center">September 30,</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; font-weight: bold; text-align: center">December 31,</TD><TD STYLE="white-space: nowrap; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-align: right">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2021</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2020</TD><TD STYLE="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Common shares convertible from preferred stock</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">491,222</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">491,222</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Common shares convertible from minority interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,798,905</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,798,905</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Outstanding warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Outstanding stock options</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,415,783</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">181,979</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Shares available for future equity award grants</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">59,248</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">191,731</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,815,158</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,713,837</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 144; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->37<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Equity awards</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In 2012, the Board of Directors of the
Company approved the Tenon Medical, Inc. 2012 Equity Incentive Plan (the &ldquo;Plan&rdquo;). The Plan, as amended in August 2021,
provides for the issuance of Common Stock options, appreciation rights, and other awards to employees, directors, and consultants.
The number of shares that may be issued under the Plan may not exceed 1,598,531 shares. Options issued under the Plan generally
vest over a four-year period with cliff vesting for the first year and have a 10-year expiration date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In August 2021, the Company&rsquo;s Board
of Directors approved the form of the 2021 Equity Incentive Plan. The 2021 Equity Incentive Plan will be adopted and become effective
as of the business day immediately prior to the registration date of the S-1 and in connection with the Company&rsquo;s IPO.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company adopted the fair value recognition
provisions in accordance with authoritative guidance related to equity-based payments. Compensation expense during the nine month
periods ended September 30, 2021 and 2020 includes the portion of awards vested in the periods for all equity-based awards granted,
based on the grant date fair value estimated using a Black-Scholes option valuation model, consistent with authoritative guidance,
using the weighted-average assumptions in the table below:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Nine months ended</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">September 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2021</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Expected volatility</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">52.36</TD><TD STYLE="width: 1%; text-align: left">%</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;N/A&nbsp;</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Dividend yield</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;N/A&nbsp;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Risk-free interest rate</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.99</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;N/A&nbsp;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Expected term in years</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5.75</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;N/A&nbsp;</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif"><I>Expected
Volatility</I> <FONT STYLE="font-style: normal">- The expected volatility is based on a peer group in the industry in which the
Company does business.</FONT></FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif"><I>Dividend
Yield</I> <FONT STYLE="font-style: normal">- The Company has not, and does not, intend to pay dividends.</FONT></FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif"><I>Risk-free
Interest Rate</I> <FONT STYLE="font-style: normal">- The Company applies the risk-free interest rate based on the U.S. Treasury
yield in effect at the time of the grant consistent with the expected term of the award.</FONT></FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif"><I>Expected
Term in Years</I> <FONT STYLE="font-style: normal">- The Company calculated the expected term using the Simplified Method. This
method uses the average of the contractual term of the option and the weighted-average vesting period in accordance with authoritative
guidance.</FONT></FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif"><I>Forfeitures
</I><FONT STYLE="font-style: normal">&ndash; The Company accounts for forfeitures as they occur.</FONT></FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif">Estimates
of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity
awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company
in accordance with authoritative guidance.</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: normal 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif">A
summary of the Company&rsquo;s share option activity for the nine months ended September 30, 2021 is as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Number<BR> of Shares</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Weighted Average<BR> Exercise Price</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="white-space: nowrap; border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Intrinsic Value</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 61%">Options outstanding at December 31, 2020</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">181,979</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">0.31</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,273,804</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2.95</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt">Forfeited</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(40,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2.60</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Options outstanding at September 30, 2021</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,415,783</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2.63</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,592,732</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Options vested and exercisable at September 30, 2021</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">324,501</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1.55</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">715,341</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt">&nbsp;</P>


<!-- Field: Page; Sequence: 145; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->38<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt">Additional information
regarding options outstanding as of September 30, 2021 is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Exercise Price</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Number<BR> Outstanding</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Weighted-Average<BR> Remaining<BR> Contractual Life in<BR> Years</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Number<BR> Exercisable</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Weighted-Average<BR> Remaining<BR> Contractual Life in<BR> Years</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 18%; text-align: right">0.31</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 17%; text-align: right">181,979</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 17%; text-align: right">4.18</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 17%; text-align: right">160,460</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 17%; text-align: right">3.67</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2.60</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">747,595</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.58</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">136,849</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.58</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; text-align: right">3.53</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">486,209</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9.80</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">27,192</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9.80</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,415,783</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.96</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">324,501</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.68</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The intrinsic value for options exercised
represents the difference between the estimate of fair value based on the valuation of the shares on the date of exercise and the
exercise price of the share option.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth stock-based
compensation expense recognized for the nine months ended September 30, 2021 and 2020:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center">Nine months ended</TD><TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">September 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2021</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2020</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 74%; text-align: left">Research and development</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">35,671</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Sales and marketing</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,425</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,487</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">General and administrative</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">154,379</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total stock-based compensation expense</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">208,475</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12,487</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September 30, 2021, there was approximately
$1,620,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements granted under the
Plan. The cost is expected to be recognized over a weighted-average period of 2.67 years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The weighted-average fair value of grant
date awards granted during the nine months ended September 30, 2021 was $1.43 per share. There were 59,248 stock option shares
available to be issued at September 30, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"><I>Common stock issued for
services</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">During May 2021, the
Company issued 107,513 shares of common stock to the Representative described in Note 8, for which the Company recorded sales and
marketing expense of approximately $379,000.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">During August
2021, the Company issued an aggregate of 123,500 shares of restricted common stock to several individuals under the 2012 Equity
Incentive Plan. The shares were 100% vested at the grant date. In connection with the issuance of these restricted common stock
shares, the Company recorded sales and marketing expense totaling approximately $436,000 during the nine months ended September
30, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 9pt"><I>Warrants</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2020, the Company issued warrants
to purchase 50,000 shares of common stock to a consultant. The warrants are immediately exercisable at an exercise price of $2.60
per share. The fair value of the warrants on the grant date was $1.15 per warrant, which was calculated based on the following
weighted-average assumptions, using a Black-Scholes option valuation model: expected term of 5.00 years; expected volatility of
51.88%; dividend yield of 0%, and risk-free interest rate of 0.30%. The Company recorded deferred offering costs of approximately
$58,000 associated with these warrants during 2020.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>8. Commitments and Contingencies</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Sales Representative Agreement</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 146; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->39<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2020 the Company entered into
an Exclusive Sales Representative Agreement, under which the counterparty to the agreement (the &ldquo;Representative&rdquo;) received
exclusive rights to market, promote, and distribute The CATAMARAN System in the United States and Puerto Rico. The agreement is
for an initial period of five years, and automatically renews for an additional five years unless written notice is given by either
party prior to April 27, 2023. The agreement provided for a bonus to be paid to the Representative upon an acquisition or IPO.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In May 2021, the Company entered into an
Amended and Restated Exclusive Sales Representative Agreement, which revised certain terms and conditions in the Exclusive Sales
Representative Agreement. In connection with the amendment agreement, the Company paid $500,000 cash and issued 107,513 shares
of common stock to the Representative, for which the Company recorded a combined total of approximately $880,000 as sales and marketing
expense during the nine months ended September 30, 2021. In addition, the Representative received anti-dilution protections to
maintain ownership of 3.0% of the fully diluted equity of the Company through the date of an initial public offering. The amended
agreement restructured the calculation of the bonus paid to the Representative upon an acquisition, removed the bonus payable upon
an IPO, and allows the Company to terminate the amended agreement as long as the bonus paid to the Representative is at least $6,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 147; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->40<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2021 the Company issued a $50,000
convertible note payable to the CEO of the Representative, as part of the convertible debt offering described in Note 5.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Litigation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the normal course of business, the Company
may possibly be named as a defendant in various lawsuits. As described in Note 11, in September 2021 the former Chief Executive
Officer of the Company filed an arbitration claim against the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>9. Concentrations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Credit risk</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company maintains cash balances at
financial institutions located in California and Switzerland. Accounts at the U.S. financial institutions are secured by the Federal
Deposit Insurance Corporation. At times, balances may exceed federally insured limits. The Company has not experienced any losses
in such accounts. Management believes that the Company is not exposed to any significant credit risk with respect to its cash and
cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company grants unsecured credit to
its customers based on an evaluation of the customer&rsquo;s financial condition and a cash deposit is generally not required.
Management believes its credit policies do not result in significant adverse risk and historically has not experienced significant
credit-related losses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>Currency risk</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s subsidiary, Tenon Technology
AG, realizes a portion of its expenses in Swiss francs. Consequently, certain assets and liabilities are exposed to foreign currency
fluctuations. At September 30, 2021 and December 31, 2020, approximately $90,000 and $64,000, respectively, of the Company's net
monetary assets were denominated in Swiss francs. The Company has not entered into any hedging transactions to reduce the exposure
to currency risk.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>10. Income Taxes</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has operations in both
the United States and Switzerland, as such it is subject to tax in both countries. The income tax expense for the
nine&nbsp;months ended September&nbsp;30, 2021 and 2020 was approximately $1,000 and $1,000 respectively. As of
September&nbsp;30, 2021, the Company had no material uncertain tax positions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company files income tax returns in
the US federal, certain state, and Switzerland with varying statutes of limitations. The Company is not currently subject to tax
examinations by any taxing jurisdiction. However, in the event of any such examination of its tax&nbsp;years 2021 and 2020, there
may or may not be an impact on the Company&rsquo;s net operating loss carryforwards and credits. The Company does not anticipate
that any potential tax adjustments resulting from such examinations will have a significant impact on its financial position or
results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On March 27, 2020, the Coronavirus Aid,
Relief, and Economic Security Act (the &ldquo;CARES Act&rdquo;) was enacted and signed into law in response to the market volatility
and instability resulting from the COVID-19 pandemic. It includes a significant number of tax provisions and lifts certain deduction
limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the &ldquo;2017 Act&rdquo;). The changes are mainly related
to: (1) the business interest expense disallowance rules for 2019 and 2020; (2) net operating loss rules; (3) charitable contribution
limitations; (4) employee retention credit; and (5) the realization of corporate alternative minimum tax credits. The Company does
not anticipate the application of the CARES Act provisions to materially impact the overall consolidated financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>


<!-- Field: Page; Sequence: 148; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->41<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>11. Related Party Transactions</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2019 the Company issued a convertible
note payable to the then Chief Executive Officer of the Company. See Note 5.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2018 through 2020, the Company&rsquo;s
subsidiary issued convertible promissory notes to TTAG&rsquo;s minority shareholder. In November 2020, all of the outstanding notes
payable and accrued interest were converted into TTAG shares. In June 2021, the Company&rsquo;s subsidiary issued an additional
convertible promissory note to the same minority shareholder. See Note 5.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had a consulting agreement
with a company owned by the former Chief Executive Officer of the Company. Under this consulting agreement, the Chief Executive
was to provide services from 2015 through June 1, 2021. Total payments under the consulting agreement of $600,000 are to be paid
as follows: (a) $300,000 paid upon closing of financing round of at least $5,000,000, followed by twelve monthly payments of $25,000
per month; (b) $300,000 paid upon achieving at least $3,000,000 of annual revenue and a financing round of less than $5,000,000;
or (c) the entire $600,000 payable immediately upon an acquisition of the Company. During the nine months ended September 30, 2021
and 2020 the Company recorded consulting expense of approximately $42,000 and $75,000, respectively. As of September 30, 2021 and
December 31, 2020, approximately $600,000 and $558,000 owed to this party was included in accrued expenses in respect of these
services. The consulting agreement expired on June 1, 2021 at which time the consultant resigned as Chief Executive Officer. In
September 2021, the former Chief Executive Officer of the Company filed an arbitration claim against the Company for approximately
$3,346,000 plus attorneys&rsquo; fees and other costs with the American Arbitration Association in the State of California&nbsp;for
unpaid wages and other claims.&nbsp; An arbitrator has been appointed and the Company anticipates that
a preliminary hearing to set a schedule will take place within the next 30 days. While the Company is unable to provide any assurances as to the ultimate outcome of this matter, it believes the claim for
additional compensation is without merit, and intends to vigorously defend against it. The Company is currently unable to estimate
the costs and timing of the arbitration, including any potential damages if the other party were to prevail on its claim. No additional
amounts relating to this matter have been recorded in the consolidated financial statements as of the date these financial statements
were made available for issuance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During May and June 2021, $620,000 of the
convertible notes described in Note 5 were issued to related officers, directors, and their family members.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>12. Subsequent Events</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has evaluated subsequent events
through November 9, 2021, the date which the consolidated financial statements were available to be issued.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In October 2021, the Company&rsquo;s Board
of Directors increased the number of authorized shares of the Company to 13,784,965, consisting of 10,487,904 shares of common
stock and 3,297,061 shares of preferred stock; increased the number of designated shares of Series A preferred
stock to 2,805,839; and decreased the number of designated shares of Series B preferred stock to 491,222.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On October 28, 2021, the Company entered into
an Agreement (the &ldquo;Exchange Agreement&rdquo;) with TTAG&rsquo;s minority shareholder. Pursuant to the Exchange Agreement,
TTAG&rsquo;s minority shareholder agreed to exchange 574,033 shares of Series A Preferred Stock issued by TTAG, representing all
of its ownership interest in TTAG for Tenon Series A Preferred Stock, representing 24% ownership interest in the Company on a fully
diluted basis. Pursuant to the terms of the Exchange Agreement, the Company has issued TTAG&rsquo;s minority shareholder 2,550,763
shares of Tenon Series A Preferred Stock. These shares are subject to anti-dilution protection that maintains TTAG&rsquo;s minority
shareholder&rsquo;s 24% ownership interest in the Company, excluding any shares issued by the Company in an initial public offering
or a qualified offering of at least $5,000,000 at a per share price of at least $3.3737. The anti-dilution protection terminates
upon the earlier of (i) the closing of an initial public offering; (ii) the conversion of the $12,177,000 convertible promissory
notes described in Note 5; (iii) the repayment of the $12,177,000 convertible promissory notes described in Note 5, in the case
of a change in control of the Company; or (iv) the liquidation of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During October 2021 and pursuant to the terms
of the Exchange Agreement, the Company repaid the convertible promissory note issued by TTAG and due to TTAG&rsquo;s minority shareholder
described in Note 5 in full in the amount of $114,000, including accrued interest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During October 2021, the Company issued 88,894
shares of common stock to the Representative described in Note 8 pursuant to the Representative&rsquo;s anti-dilution protections.</P>





<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;&nbsp;</P>

<!-- Field: Page; Sequence: 149; Value: 22 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->42<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="background-color: white">Through
and including, [*], 2021, (the 25th day after the date of this prospectus), all dealers effecting transactions in the Common Stock,
whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition
to a dealer&rsquo;s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or
subscription.</FONT></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><B>[*] Shares</B></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><IMG SRC="img14.jpg" ALT="">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><B>PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;The Benchmark Company</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<!-- Field: Page; Sequence: 150 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><B>Part II</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><B>INFORMATION NOT
REQUIRED IN PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><B>Item 13. Other
Expenses of Issuance and Distribution.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 42.85pt; background-color: white">The
following table indicates the expenses to be incurred in connection with the offering described in this registration statement,
other than underwriting discounts and commissions, all of which will be paid by us. All amounts are estimated except the Securities
and Exchange Commission registration fee and the Financial Industry Regulatory Authority, Inc., or FINRA filing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 42.85pt; background-color: white">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Amount</B></FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 88%; text-align: justify"><FONT STYLE="font-size: 10pt">Securities and Exchange Commission registration fee</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">FINRA filing fee</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">NASDAQ listing fee</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Accountants&rsquo; fees and expenses</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Legal fees and expenses</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Printing and engraving expenses</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Miscellaneous</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Total expenses</FONT></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 2.25pt double"><FONT STYLE="font-size: 10pt">$</FONT></TD>
    <TD STYLE="border-bottom: black 2.25pt double; text-align: right"><FONT STYLE="font-size: 10pt">[*]</FONT></TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><B>Item 14. Indemnification
of Directors and Officers.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 42.85pt; background-color: white">Section
102 of the General Company Law of the State of Delaware (&ldquo;DGCL&rdquo;) permits a Company to eliminate the personal liability
of directors of a Company to the Company or its stockholders for monetary damages for a breach of fiduciary duty as a director,
except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly
violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained
an improper personal benefit. Our charter, as amended provides that no director of the Company shall be personally liable to it
or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing
such liability, except to the extent that the DGCL prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 42.85pt; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 42.85pt; background-color: white">Section
145 of the DGCL provides that a Company has the power to indemnify a director, officer, employee, or agent of the Company, or a
person serving at the request of the Company for another Company, partnership, joint venture, trust or other enterprise in related
capacities against expenses (including attorneys&rsquo; fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with an action, suit or proceeding to which he was or is a party or is threatened to be made
a party to any threatened, ending or completed action, suit or proceeding by reason of such position, if such person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, in any criminal
action or proceeding, had no reasonable cause to believe his conduct was unlawful, except that, in the case of actions brought
by or in the right of the Company, no indemnification shall be made with respect to any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery or other adjudicating
court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 42.85pt; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our charter, as amended
provides that we will indemnify to the fullest extent permitted from time to time by the DGCL or any other applicable laws as presently
or hereafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative, including, without limitation, an action
by or in the right of the Company, by reason of his acting as a director or officer of the Company or any of its subsidiaries (and
the Company, in the discretion of the Board of Directors, may so indemnify a person by reason of the fact that he is or was an
employee or agent of the Company or any of its subsidiaries or is or was serving at the request of the Company in any other capacity
for or on behalf of the Company) against any liability or expense actually and reasonably incurred by such person in respect thereof;
<FONT STYLE="background-color: white"><I>provided</I>, <I>however</I></FONT>, the Company shall be required to indemnify an officer
or director in connection with an action, suit or proceeding (or part thereof) initiated by such person only if (i) such action,
suit or proceeding (or part thereof) was authorized by the Board of Directors and (ii) the indemnification does not relate to any
liability arising under Section 16(b) of the Exchange Act, as amended, or any rules or regulations promulgated thereunder. Such
indemnification is not exclusive of any other right to indemnification provided by law or otherwise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


<!-- Field: Page; Sequence: 151; Options: NewSection; Value: 1 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->1<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If a claim is not paid
in full by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where any undertaking required by the By-laws of the Company has been tendered
to the Company) that the claimant has not met the standards of conduct which make it permissible under the DGCL for the Company
to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Company. Neither the failure
of the Company (including its Board of Directors, legal counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the DGCL, nor an actual determination by the Company (including its Board of Directors, legal
counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action
or create a presumption that the claimant has not met the applicable standard of conduct. Indemnification shall include payment
by the Company of expenses in defending an action or proceeding in advance of the final disposition of such action or proceeding
upon receipt of an undertaking by the person indemnified to repay such payment if it is ultimately determined that such person
is not entitled to indemnification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">In
any underwriting agreement we enter into in connection with the sale of common stock being registered hereby, the underwriters
will agree to indemnify, under certain conditions, us, our directors, our officers and persons who control us within the meaning
of the Securities Act of 1933, as amended, or the Securities Act, against certain liabilities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><B>Item 15. Recent
Sales of Unregistered Securities.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">Set forth below is information regarding shares of capital stock
issued by us within the last three years which was not registered under the Securities Act of 1933, as amended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 42.85pt; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">(a)
Issuance of Capital Stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><I>Common Stock</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On
May 19, 2021, the Company issued 107,513 shares of common stock to an accredited investor.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On
August 10, 2021, the Company issued an aggregate of 123,500 shares of restricted common stock to several individuals under its
2012 Equity Incentive Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">During October 2021, the
Company issued 88,894 shares of common stock to SpineSource, Inc. pursuant to an anti-dilution provision.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0">The issuance of the capital
stock listed above was deemed exempt from registration under Section 4(a)(2) of the Securities Act or Regulation D promulgated
thereunder in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipient
of such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for
sale in connection with any distribution thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


<!-- Field: Page; Sequence: 152; Value: 1 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->2<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">(b)
Option Grants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On
September 8, 2019, the Company issued 43,038 options to an individual at an exercise price of $0.31 per share. The options are
subject to 25% vesting after the first year, and then equal monthly vesting over a three-year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On May 1, 2021, the Company
issued a total of 749,000 options to various individuals at an exercise price of $2.60 per share. The options are subject to equal
monthly vesting over a three-year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On May 7, 2021, the Company
issued a total of 68,595 options to various individuals at an exercise price of $2.60 per share. The options are subject to either
(i) equal monthly vesting over a two-year period or (ii) equal monthly vesting over a three-year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;On July 8, 2021,
the Company issued a total of 25,000 options to an individual at an exercise price of $3.53 per share. The options are subject
to equal monthly vesting over a two-year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On July 19, 2021, the Company
issued a total of 419,209 options to various individuals at an exercise price of $3.53 per share. The options are subject to equal
monthly vesting over a three-year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On August 10, 2021 the
Company issued a total of 42,000 options to various individuals at an exercise price of $3.53 per share. The options are subject
to equal monthly vesting over a two or three-year period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On October 8, 2021 the
Company issued a total of 44,000 options to various individuals at an exercise price of $3.75 per share. The options are subject
to equal monthly vesting over a two or three-year period.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The options described above
were deemed exempt from registration in reliance on Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder
in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipients of
such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for
sale in connection with any distribution thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(c) Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On December 31, 2020, the
Company issued to Exchange Listing, LLC warrants to purchase a total of 50,000 shares of Company common stock at the exercise price
$2.60 per share. This note was paid in fully in May 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The warrant described above
were deemed exempt from registration in reliance on Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder
in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipients of
such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for
sale in connection with any distribution thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(d) Issuance of Notes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On January 27, 2021, the
Company issued a promissory note in the amount of $130,560.34 to Wilson Sonsini Goodrich &amp; Rosati.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On April 30, 2021 the Company
issued the Amended and Restated 2015 Convertible Promissory Note with a principal amount of $117,530 and a per annum interest rate
of 8%. The original note was issued on January 1, 2016 in the same principal amount. Upon the occurrence of an initial public offering
of the Company, the balance of such note will convert immediately prior to the initial public offering at a price equal to 80%
of the price per share of the common stock sold in the initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On April 30, 2021 the Company
issued the Amended and Restated 2019 Convertible Promissory Note with a principal amount of $70,000 and a per annum interest rate
of 8%. The original note was issued on October 12, 2019 in the same principal amount. Upon the occurrence of an initial public
offering of the Company, the balance of such note will convert immediately prior to the initial public offering at a price equal
to 70% of the price per share of the common stock sold in the initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>


<!-- Field: Page; Sequence: 153; Value: 1 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->3<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On April 30, 2021 the Company
issued the Convertible Promissory Note with a principal amount of $40,000 and a per annum interest rate of 8%. Upon the occurrence
of an initial public offering of the Company, the balance of such note will convert immediately prior to the initial public offering
at a price equal to 70% of the price per share of the common stock sold in the initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On April 30, 2021 the Company
issued the Convertible Promissory Note with a principal amount of $170,000 and a per annum interest rate of 8%. Upon the occurrence
of an initial public offering of the Company, the balance of such note will convert immediately prior to the initial public offering
at a price equal to 70% of the price per share of the common stock sold in the initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On May 3, 2021 the Company
issued the Amended and Restated 2019 Convertible Promissory Note with a principal amount of $200,000 and a per annum interest rate
of 8%. The original note was issued on November 20, 2020 in the same principal amount. Upon the occurrence of an initial public
offering of the Company, the balance of such note will convert immediately prior to the initial public offering at a price equal
to 70% of the price per share of the common stock sold in the initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On May 3, 2021 the Company
issued the Amended and Restated 2019 Convertible Promissory Note with a principal amount of $50,000 and a per annum interest rate
of 8%. The original note was issued on October 21, 2019 in the same principal amount. Upon the occurrence of an initial public
offering of the Company, the balance of such note will convert immediately prior to the initial public offering at a price equal
to 70% of the price per share of the common stock sold in the initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">During the period from
May 17, 2021 to July 26, 2021, the Company issued an aggregate $12,177,328 of Convertible Promissory Notes to 125 investors, which
accrues interest at 8% per annum from the date of issuance and are due one year from the date of issuance. Principal and interest
is due in full at maturity on the notes. The notes are not prepayable without the consent of a majority of the holders. Upon an initial public offering of the Company, the balance
of such notes will convert immediately prior to the initial public offering at a price equal to the lesser of (i) the quotient
obtained by dividing (x) $22,500,000 by (y) the fully diluted capitalization of the Company and (ii) 70% of the price per share
of the common stock sold in the initial public offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The notes described above
were deemed exempt from registration in reliance on Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder
in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipients of
such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for
sale in connection with any distribution thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><B>Item 16. Exhibits
and Financial Statement Schedules.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(a) <B><I>Exhibits</I></B>:
Reference is made to the Exhibit Index following the signature pages hereto, which Exhibit Index is hereby incorporated into this
Item.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(b) <B><I>Financial Statement
Schedules</I></B>: All schedules are omitted because the required information is inapplicable or the information is presented in
the financial statements and the related notes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 154; Value: 1 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->4<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><B>Item 17. Undertakings.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The undersigned registrant hereby undertakes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The undersigned registrant
hereby undertakes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(1) To file, during any
period in which offers or sales are being made, a post-effective amendment to this registration statement:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(i) To include any prospectus
required by section 10(a)(3) of the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;);</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(ii) To reflect in the
prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the &ldquo;Calculation of Registration Fee&rdquo; table in the effective registration statement; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(iii) To include any material
information with respect to the plan of distribution not previously disclosed in the registration statement or any material change
to such information in the registration statement; provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii) above do not
apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed
with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus
filed pursuant to Rule 424(b) that is part of the registration statement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(2) That, for the purpose
of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(3) To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(4) That, for the purpose
of determining liability under the Securities Act to any purchaser:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 32.75pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(A) Each prospectus filed
by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration statement; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(B) Each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying
on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such date of first use.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(5) That for the purpose
of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of securities,
the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 155; Value: 1 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->5<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(i) Any preliminary prospectus
or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(ii) Any free writing prospectus
relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(iii) The portion of any
other free writing prospectus relating to the offering containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant; and</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(iv) Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant
pursuant to any charter provision, by law or otherwise, the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The undersigned registrant hereby undertakes
that:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(1) For purposes of determining
any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared
effective.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">(2) For the purpose of
determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 156; Value: 1 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->6<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of New York, State of New York, on November 9, 2021.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: justify"><FONT STYLE="font-size: 10pt"><B>TENON MEDICAL, INC.</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 51%; text-align: justify">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; width: 1%; text-align: justify"><FONT STYLE="font-size: 10pt">By:&nbsp;</FONT></TD>
    <TD STYLE="width: 48%; border-bottom: black 1pt solid"><I>&nbsp;/s/Steven M. Foster</I></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Steven M. Foster</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Chief Executive Officer and President</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(Principal Executive Officer)</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><B><A NAME="ex241_001"></A>POWER OF ATTORNEY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">KNOW ALL PERSONS BY THESE
PRESENTS, that each person whose signature appears below constitutes and appoints Steven M. Foster and Steven Van Dick his true
and lawful attorney-in-fact, with full power of substitution and re-substitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments including pre- and post-effective amendments to this registration statement,
any subsequent registration statement for the same offering which may be filed pursuant to Rule&nbsp;462(b) under the Securities
Act of 1933, as amended, and pre- or post-effective amendments thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact
or his substitute, each acting alone, may lawfully do or cause to be done by virtue thereof.</P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the
dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="width: 36%; border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt"><B>Name</B></FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 42%; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Position</B></FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 20%; border-bottom: black 1pt solid; text-align: center"><FONT STYLE="font-size: 10pt"><B>Date</B></FONT></TD></TR>
<TR>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt"><I>&nbsp;/s/Steven M. Foster</I></FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Chief Executive Officer and President, Director</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">November 9, 2021</FONT></TD></TR>
<TR>
    <TD STYLE="vertical-align: top"><FONT STYLE="font-size: 10pt">Steven M. Foster</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">(Principal Executive Officer and Principal Financial and Accounting Officer)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt"><I>&nbsp;/s/Richard Ginn</I></FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Chief Technology Officer and Director</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">November 9, 2021</FONT></TD></TR>
<TR>
    <TD><FONT STYLE="font-size: 10pt">Richard Ginn</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt"><I>&nbsp;/s/Steven Van Dick</I></FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Chief Financial Officer</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">November 9, 2021</FONT></TD></TR>
<TR>
    <TD><FONT STYLE="font-size: 10pt">Steven Van Dick</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">(Principal Financial and Accounting Officer)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR>
    <TD STYLE="border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt"><I>&nbsp;/s/Richard Ferrari</I></FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Director</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">November 9, 2021</FONT></TD></TR>
<TR>
    <TD><FONT STYLE="font-size: 10pt">Richard Ferrari</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>


<!-- Field: Page; Sequence: 157; Value: 1 -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->7<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B>EXHIBIT INDEX</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 6%; border-bottom: black 1pt solid; text-align: justify"><FONT STYLE="font-size: 10pt">Exhibit No.</FONT></TD>
    <TD STYLE="vertical-align: top; width: 1%; text-align: justify">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 93%; border-bottom: black 1pt solid"><FONT STYLE="font-size: 10pt">Description</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">1.1*</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Form of Underwriting Agreement.</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex3-1.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">3.1</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><A HREF="tm005_ex3-1.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Amended and Restated Certificate of Incorporation of the Registrant.</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex3-2.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">3.2</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><A HREF="tm005_ex3-2.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Bylaws of The Registrant.</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex3-3.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">3.3</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><A HREF="tm005_ex3-3.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Amendment to Certificate of Incorporation of the Registrant</FONT></A></TD></TR>

<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="tm005_ex3-4.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">3.4</FONT></A></TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 92%"><A HREF="tm005_ex3-4.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Amendment to Certificate of Incorporation of the Registrant</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="tm005_ex3-5.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">3.5</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex3-5.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Amendment to Certificate of Incorporation of the Registrant</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="tm005_ex3-6.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">3.6</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex3-6.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Amendment to Certificate of Incorporation of the Registrant</FONT></A></TD></TR>

<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">4.1*</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Form of Underwriter Warrant.</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">5.1*</FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Opinion of Counsel to Registrant.</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-1.htm"><FONT STYLE="font-size: 10pt">10.1</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-1.htm"><FONT STYLE="font-size: 10pt">Promissory Note, dated January 27, 2021 having a principal amount of $130,560.34 and issued to Wilson Sonsini Goodrich &amp; Rosati, Professional Corporation.</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-2.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.2</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-2.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Convertible Promissory Note dated April 30, 2021 having a principal of $170,000 and issued to Phoenix DeVentures Inc..</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-3.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.3</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-3.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Amended and Restated 2015 Convertible Promissory Note dated April 30, 2021 having a principal amount $117,530 and issued to Phoenix DeVentures Inc.</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-4.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.4</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-4.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Convertible Promissory Note dated April 30, 2021 having a principal amount of $40,000 issued to Phoenix DeVentures Inc.</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-5.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.5</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-5.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Amended and Restated 2019 Convertible Promissory Note dated April 30, 2021 having a principal amount $70,000 and issued to Khalid Mentako</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-6.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.6</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-6.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Amended and Restated Convertible Promissory Note dated May 3, 2021 having a principal amount $200,000 and issued to Paul Orofino</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-7.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.7</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD><A HREF="tm005_ex10-7.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Amended and Restated Convertible Promissory Note dated May 3, 2021 having a principal amount $50,000 and issued to Paul Orofino</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-8.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.8</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD><A HREF="tm005_ex10-8.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Amended and Restated 2019 Convertible Promissory Note dated May 7, 2021 having a principal amount $68,359 and issued to Lince Consulting</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-9.htm"><FONT STYLE="font-size: 10pt">10.9</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-9.htm"><FONT STYLE="font-size: 10pt">Convertible Promissory Note dated June 24, 2021 having a principal amount of $50,000 and issued to Thomas J. Mitchell, II and Susan L. Mitchell, Revocable Living Trust dated June 12, 2000, as amended and restated</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-10.htm"><FONT STYLE="font-size: 10pt">10.10</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD><A HREF="tm005_ex10-10.htm"><FONT STYLE="font-size: 10pt">Warrant to Purchase Shares of Common Stock dated December 31, 2020 issued to Exchange Listing, LLC</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-11.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.11</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD><A HREF="tm005_ex10-11.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Tenon Medical, Inc 2012 Equity Incentive Plan</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt"><A HREF="tm005_ex10-12.htm" STYLE="-sec-extract: exhibit">10.12</A></FONT></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD><P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif"><A HREF="tm005_ex10-12.htm" STYLE="-sec-extract: exhibit">Amended and Restated Exclusive Sales Representative Agreement dated May 20, 2021 between SpineSource, Inc. and the Registrant</A></P>


</TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-13.htm" STYLE="-sec-extract: exhibit">10.13</A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD><P STYLE="margin: 0; font: 10pt Times New Roman, Times, Serif"><A HREF="tm005_ex10-13.htm" STYLE="-sec-extract: exhibit">The Common Stock Purchase Agreement between SpineSource, Inc. and the Registrant</A></P>


</TD></TR>

<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="font-size: 10pt"><A HREF="tm005_ex10-14.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.14</FONT></A></TD>
    <TD STYLE="width: 3%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 91%; font-size: 10pt"><A HREF="tm005_ex10-14.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Convertible Promissory Note dated May 18, 2021 having a principal amount of $100,000 and issued to Richard Ginn</FONT></A></TD></TR>

<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-15.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.15</FONT></A></TD>
    <TD STYLE="text-align: justify; width: 1%">&nbsp;</TD>
    <TD STYLE="width: 93%"><A HREF="tm005_ex10-15.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Employment Agreement dated June 1, 2021 between Steven M. Foster and the Registrant </FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-16.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.16</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD><A HREF="tm005_ex10-16.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Employment Agreement dated June 1, 2021 between Richard Ginn and the Registrant</FONT></A></TD></TR>

<TR STYLE="vertical-align: top; background-color: White">
    <TD STYLE="width: 6%; font-size: 10pt"><A HREF="tm005_ex10-17.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.17</FONT></A></TD>
    <TD STYLE="width: 2%; font-size: 10pt">&nbsp;</TD>
    <TD STYLE="width: 92%; font-size: 10pt"><A HREF="tm005_ex10-17.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Consulting Agreement dated May 7, 2021 by and between Richard Ferrari and the Registrant</FONT></A></TD></TR>

<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: justify"><A HREF="tm005_ex10-18.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.18</FONT></A></TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD><A HREF="tm005_ex10-18.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Employment Agreement dated June 1, 2021 between Steven Van Dick and the Registrant</FONT></A></TD></TR>

<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="tm005_ex10-19.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.19</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex10-19.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Agreement and Consent of Director Nominee dated October 8, 2021 from Frank Fischer</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="tm005_ex10-20.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.20</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex10-20.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Agreement and Consent of Director Nominee dated October 8, 2021 from Ivan Howard</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="tm005_ex10-21.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.21</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex10-21.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Agreement and Consent of Director Nominee dated October 8, 2021 from Stephen H. Hochschuler</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="tm005_ex10-22.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.22</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex10-22.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Agreement and Consent of Director Nominee dated October 8, 2021 from Robert Weigle</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="tm005_ex10-23.htm" STYLE="-sec-extract: exhibit">10.23</A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex10-23.htm" STYLE="-sec-extract: exhibit">Exchange Agreement dated as of October 27, 2021 among Zuhlke
Ventures AG, Tenon Technology AG and the Registrant</A></TD></TR>

<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD STYLE="width: 6%"><A HREF="tm005_ex10-24.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.24</FONT></A></TD>
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 91%"><A HREF="tm005_ex10-24.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Convertible Promissory Note dated May 18, 2021 having a principal amount of $100,000 and issued to Richard Ginn</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="tm005_ex10-25.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.25</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex10-25.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Convertible Promissory Note dated May 17, 2021 having a principal amount of $250,000 and issued to Theo Franklin</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="tm005_ex10-26.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.26</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex10-26.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Convertible Promissory Note dated June 17, 2021 having a principal amount of $125,000 and issued to WS Investment Company, LLC (21A)</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="tm005_ex10-27.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.27</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex10-27.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Convertible Promissory Note dated May 18, 2021 having a principal amount of $300,000 and issued to the Ferrari Family Trust</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="tm005_ex10-28.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.28</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex10-28.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Convertible Promissory Note dated May 17, 2021 having a principal amount of $600,000 and issued to Frank M. Fischer</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="tm005_ex10-29.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">10.29</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex10-29.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-size: 10pt">Convertible Promissory Note dated May 17, 2021 having a principal amount of $50,000 and issued to Steven M. Foster</FONT></A></TD></TR>

<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><A HREF="tm005_ex21-1.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">21.1</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex21-1.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">List of Subsidiaries of the Registrant.</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="tm005_ex23-1.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.1</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="tm005_ex23-1.htm" STYLE="-sec-extract: exhibit"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consent of Armanino, LLP, dated November 9, 2021</FONT></A></TD></TR>
<TR STYLE="vertical-align: top; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">23.2*</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consent of Counsel to Registrant (included in Exhibit 5.1).</FONT></TD></TR>
<TR STYLE="vertical-align: top; background-color: White">
    <TD><A HREF="#ex241_001"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">24.1</FONT></A></TD>
    <TD>&nbsp;</TD>
    <TD><A HREF="#ex241_001"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Power of Attorney.</FONT></A></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">* To be filed by Amendment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


<!-- Field: Page; Sequence: 158; Options: Last -->
    <DIV STYLE="margin-top: 6pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="text-align: center; margin-top: 0pt; margin-bottom: 0pt">II-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->8<!-- Field: /Sequence --></P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
</BODY>
</HTML>
[{"type": "S-1", "sequence": "1", "filename": "tm005_s1.htm", "description": "FORM S-1", "secsgml_size_bytes": 1647277}]
{"company-data": {"conformed-name": "Tenon Medical, Inc.", "cik": "0001560293", "assigned-sic": "3841", "irs-number": "455574718", "state-of-incorporation": "DE"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-260931", "film-number": "211393766"}, "business-address": {"street1": "90 WEST MAIN AVE.", "street2": "SUITE 6", "city": "MORGAN HILL", "state": "CA", "zip": "95037", "phone": "863-673-4062"}, "mail-address": {"street1": "90 WEST MAIN AVE.", "street2": "SUITE 6", "city": "MORGAN HILL", "state": "CA", "zip": "95037"}}
As filed with the Securities and
Exchange Commission on November 9, 2021
Registration No. [*]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Tenon
Medical, Inc.
(Exact name of registrant as specified in
its charter)
Delaware
3841
45-5574718
(State or Other Jurisdiction of
Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
104 Cooper Court
Los Gatos, CA 95032
(408) 649-5760
(Address, including zip code, and telephone
number, including area code,
of registrant's principal executive
offices)
Steven M. Foster
Chief Executive Officer and President
Tenon Medical, Inc.
104 Cooper Court
Los Gatos, CA 95032
(408) 649-5760
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copies to
:
Ross D. Carmel, Esq.
Ralph V. De Martino, Esq
Jeffrey P. Wofford, Esq.
Cavas Pavri, Esq
Carmel, Milazzo & Feil LLP
Schiff Hardin LLP
55 West 39
th
Street, 18
th
Floor
901 K Street, NW #700
New York, New York 10018
Washington, DC 20001
Telephone: (212) 658-0458
Telephone: 202-778-6400
Approximate date of commencement of proposed
sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box.
x
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2
of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
x
Emerging growth company
x
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided to Section 7(a)(2)(B) of the Securities Act.
¨
CALCULATION OF REGISTRATION FEE
Title of Each Class of
Securities to be Registered
Proposed
Maximum
Aggregate
Offering
Price
(1)(2)
Amount of
Registration
Fee
Common Stock, $0.00001 par value per share
(3)(4)
$
17,250,000
$
1,599.08
Warrants to purchase Common Stock to be issued to the Underwriter
(4)(5)
---
---
Common Stock issuable upon exercise of Warrants
(3)(4)
$
517,500
$
47.97
Total
$
17,767,500
$
1,647.05
(1)
Includes additional shares (15% of the shares being sold in this offering) that may be purchased by the underwriters pursuant
to their over-allotment option that may be exercised over a 30 period.
(2)
There is no current market for the securities or price at which the shares are being offered. Estimated solely for the purpose
of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(3)
Pursuant to Rule 416 under the Securities Act of 1933, as amended, there is also being registered hereby such indeterminate
number of additional shares as may be issued or issuable because of stock splits, stock dividends and similar transactions.
(4)
We have agreed to issue to the representative of the several underwriters, who we refer to as the representative, warrants
to purchase the number of shares of common stock in the aggregate equal to three percent (3%) of the shares of common stock to
be issued and sold in this offering. The warrants are exercisable for a price per share equal to 100% of the public offering price.
(5)
No fee required pursuant to Rule 457(g).
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section
8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting
pursuant to said Section 8(a), may determine.
The information
in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.
Subject to
Completion, dated November 9
PRELIMINARY PROSPECTUS
[*] Shares of Common Stock
This is an initial public offering of [*]
shares of Tenon Medical, Inc. common stock, par value, $0.001 per share. Prior to this offering, there has been no public market
for our common stock. We anticipate that the initial public offering price will be between $[*] and $[*]. We have applied to have
our common stock listed on the Nasdaq Capital Market under the symbol "[*]" which listing is a condition to this offering.
We intend to use the proceeds from this
offering for sales and marketing activities, including training surgeons to use our products and clinical studies, and general
corporate purposes, including working capital. See "
Use of Proceeds
."
Investing in our common stock involves
a high degree of risk. See "
Risk Factors
" beginning on page
[*]
of this prospectus for a discussion of
information that should be considered in connection with an investment in our common stock.
Neither the Securities and Exchange
Commission ("SEC") nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
We are an "emerging growth company" as that term
is used in the Jumpstart Our Business Startups Act of 2012, and we have elected to comply with certain reduced public company reporting
requirements.
Per Share
Total
Initial public offering price
$
[*]
$
[*]
Underwriting discounts and commissions (1)
$
[*]
$
[*]
Proceeds, before expenses, to us
$
[*]
$
[*]
1
(1)
Does not include a non-accountable expense allowance equal to 1% of the gross proceeds of this offering, payable to The Benchmark
Company, LLC, as representative of the underwriters, or the reimbursement of certain expenses of the underwriters. See "
Underwriting
"
beginning on page [*] of this prospectus for additional information regarding underwriting compensation.
In addition to the underwriting
discounts listed above and the non-accountable expense allowance described in the footnote, we have agreed to issue upon the closing
of this offering to The Benchmark Company, LLC, as representative of the underwriters, warrants that will expire on the fifth
anniversary of the commencement date of sales in this initial public offering entitling the representative to purchase 3% of the
number of shares of common stock sold in this offering. The registration statement of which this prospectus is a part also covers
the underwriters' warrants and the common shares issuable upon the exercise thereof. For additional information regarding
our arrangement with the underwriters, please see "
Underwriting
" beginning on page [*].
We have granted the representative an option, exercisable
for 30 days from the date of this prospectus, to purchase up to an additional [*] shares of common stock on the same terms as the
other shares being purchased by the underwriters from us.
The underwriters expect to deliver the
shares against payment on [*], 2021.
The Benchmark Company
Prospectus dated
[*]
, 2021
2
Table of Contents
ABOUT THIS PROSPECTUS
3
MARKET DATA
4
PROSPECTUS SUMMARY
4
SUMMARY OF THE OFFERING
13
RISK FACTORS
14
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
49
USE OF PROCEEDS
50
DIVIDEND POLICY
50
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
51
CAPITALIZATION
52
DILUTION
53
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
54
BUSINESS
67
MANAGEMENT
84
EXECUTIVE COMPENSATION
89
PRINCIPAL STOCKHOLDERS
91
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
93
DESCRIPTION OF SECURITIES
94
Shares Eligible for Future Sale
100
UNDERWRITING
100
EXPERTS
105
LEGAL MATTERS
105
WHERE YOU CAN FIND MORE INFORMATION
105
INDEX TO FINANCIAL STATEMENTS
F-1
Through and including [*], 2021 (the
25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating
in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus
when acting as underwriter and with respect to their unsold allotments or subscriptions.
You should rely only on the information
contained in this prospectus or any prospectus supplement or amendment. Neither we, nor the underwriters, have authorized any other
person to provide you with information that is different from, or adds to, that contained in this prospectus. If anyone provides
you with different or inconsistent information, you should not rely on it. Neither we nor the underwriters take responsibility
for, and can provide no assurance as to the reliability of, any other information that others may give you. You should assume that
the information contained in this prospectus or any free writing prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, financial condition, results
of operations and prospects may have changed since that date. We are not making an offer of any securities in any jurisdiction
in which such offer is unlawful.
No action is being taken in any jurisdiction
outside the United States to permit a public offering of our common stock or possession or distribution of this prospectus in that
jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform
themselves about and to observe any restrictions as to this public offering and the distribution of this prospectus applicable
to that jurisdiction.
ABOUT
THIS PROSPECTUS
Throughout this prospectus, unless otherwise
designated or the context suggests otherwise,
●
all references to the "Company," the "registrant," "we," "our," or "us"
in this prospectus mean Tenon Medical, Inc.;
3
●
assumes an initial public offering price of our common stock of $[*] per share, the midpoint of
the estimated range of $[*] to $[*] per share;
●
an initial public offering price of our common stock of [*] per share;
●
"year" or "fiscal year" mean the year ending December 31
st
; and
●
all dollar or $ references, when used in this prospectus, refer to United States dollars.
Market
Data
Market data and certain industry data
and forecasts used throughout this prospectus were obtained from internal company surveys, market research, consultant
surveys, publicly available information, reports of governmental agencies and industry publications and surveys. Industry
surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been
obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. To
our knowledge, certain third-party industry data that includes projections for future periods does not take into account the
effects of the worldwide coronavirus pandemic. Accordingly, those third-party projections may be overstated and should not be
given undue weight. We have not independently verified any of the data from third party sources, nor have we ascertained the
underlying economic assumptions relied upon therein. Similarly, internal surveys, industry forecasts and market research,
which we believe to be reliable based on our management's knowledge of the industry, have not been independently
verified. Forecasts are particularly likely to be inaccurate, especially over long periods of time. In addition, we do not
necessarily know what assumptions regarding general economic growth were used in preparing the forecasts we cite. Statements
as to our market position are based on the most currently available data. While we are not aware of any misstatements
regarding the industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to
change based on various factors, including those discussed under the heading "
Risk Factors
" in this
prospectus. We are, however, liable for the information in the prospectus related to the market and industry data.
PROSPECTUS
SUMMARY
This summary provides a brief overview
of the key aspects of our business and our securities. The reader should read the entire prospectus carefully, especially the risks
of investing in our common stock discussed under "Risk Factors." Some of the statements contained in this prospectus,
including statements under "Summary" and "Risk Factors" as well as those noted in the documents incorporated
herein by reference, are forward-looking statements and may involve a number of risks and uncertainties. Our actual results and
future events may differ significantly based upon a number of factors. The reader should not put undue reliance on the forward-looking
statements in this document, which speak only as of the date on the cover of this prospectus.
Unless the context otherwise requires,
references in this prospectus to "Tenon," "Tenon Medical," "the Company," "our company,"
"we," "us" and "our" refer to Tenon Medical, Inc.
About our Company
Tenon Medical, Inc. ("Tenon"), a medical device
company formed in 2012, has developed a proprietary, U.S. Food and Drug Administration ("FDA") cleared surgical implant
system, which is designed to optimize sacroiliac joint ("SI-Joint") fixation / fusion surgery and corresponding outcomes.
Tenon is preparing a national launch of this system to address the greatly underserved market opportunity that exists in this space.
The Opportunity
We estimate that over 30 million American
adults have chronic lower back pain
.
Published clinical studies have shown that 15% to 30% of all chronic lower back
pain is associated with the SI-Joint. For patients whose chronic lower back pain stems from the SI-Joint,
our experience
in both a clinical trial and commercial settings indicates the system to be introduced by Tenon could be beneficial for patients
who are properly diagnosed and screened for surgery by trained healthcare providers.
Based on market research and internal estimates,
Tenon believes the potential market for surgical intervention of the SI-Joint to be 279,000 procedures annually in the US alone,
for a potential annual market in excess of $2.2 billion. These estimates are driven by coding data for SI-Joint injections to
treat pain and informed assumptions relative to surgical intervention candidacy.
4
In 2019, approximately 475,000 patients
in the United States were estimated to have received an aesthetic injection to temporarily alleviate pain emanating from the SI-Joint
and/or to diagnose SI-Joint pain. Additionally, a number of non-surgical technologies have been introduced in the past 10 years
to address patients who do not respond to injection therapy, including systemic oral medications and opioids.
To date, the penetration of a surgical
solution for this market has been relatively low (5-7%). We believe this is due to complex surgical approaches and suboptimal implant
design of existing options. The penetration of this market with an optimized surgical solution is Tenon's focus.
We believe the SI-Joint is the last major
joint to be successfully addressed by the orthopaedic implant industry. Studies have shown that disability resulting from disease
of the SI-Joint is comparable to the disability associated with a number of other serious orthopaedic conditions, such as knee
and hip arthritis and degenerative disc disease, each of which has surgical solutions where an implant is used and a multi-billion-dollar
market exists.
The SI-Joint
The SI-Joint is a strong weight bearing
synovial joint situated between the lumbar spine and the pelvis and is aligned along the longitudinal load bearing axis of the
human spine when in an upright posture. It functions
as a force transfer conduit where it transfers axial loads bi-directionally from the spine to the pelvis and lower extremities
and allows forces to be transmitted from the extremities to the spine. It also provides load sharing between the hip and spine
to contribute towards attenuation of impact shock and stress from activities of daily living.
The SI-Joint is a relatively immobile joint
that connects the sacrum (the spinal segment that is attached to the base of the lumbar spine at the L5 vertebra) and the ilium
of the pelvis. Each SI-Joint is approximately 2mm wide and irregularly shaped.
Motion of the SI-Joint features vertical
shear and rotation. Although the rotational forces about the SI-Joint are relatively low, repetitive motions created by daily activities
such as walking, jogging, twisting at the hips, and jumping can increase the stresses on the SI-Joint. If the SI-Joint is compromised
through injury or degeneration, the load bearing and motion restraints from the surrounding anatomical structures of the SI-Joint
will be compromised resulting in abnormal stress transfers across the joint to these structures, thereby further augmenting the
degenerative cascade of the SI-Joint. Eventual pain and cessation of an individual's normal activities due to a painful and
unstable SI-Joint have led to an increase in the recent development of SI-Joint stabilization devices.
5
Diagnosis
Historically, diagnosing pain from the
SI-Joint was not routinely a focus of orthopaedic or neurosurgery training during medical school or residency programs. Due to
its invasiveness, post-operative pain, and muscle disruption along with a difficult procedure overall, the open SI-Joint fusion
procedure was rarely taught in these settings.
The emergence of various SI Joint surgical
technologies has generated a renewed discussion of SI-Joint issues. Of particular focus is the diagnostic protocol utilized to
properly select patients for SI Joint surgery. Patients with low back pain typically start with primary care physicians who often
refer to pain specialists. Here, the patient will go through traditional physical therapy combined with oral medications (anti-inflammatory,
narcotic, etc.). If the patient fails to respond to these steps the pain specialist may move to therapeutic injections of the SI
Joint. These injections may serve to lessen inflammation to the point that the patient is satisfied. However, the impact from these
injections is often transient. In this case the patient is often referred to a surgeon to determine if the patient may be a candidate
for surgical intervention. A series of provocative tests in clinic, combined with a specific injection protocol to isolate the
SI-Joint as the pain generator is then utilized to confirm the need for surgical intervention. Published literature has shown this
technique to be a very effective step to determine the best treatment to alleviate pain.
Tenon has developed its own protocol to
instruct and train the medical community on how to perform provocative maneuvers in a physician's office that can reveal
the SI-Joint as the source of pain. If the provocative tests are positive, surgeons (or other physicians) confirm the diagnosis
by injecting a small amount of local anesthetic into the joint under fluoroscopic guidance. The SI-Joint is confirmed as a pain
source if the local anesthetic produces immediate and significant pain reduction.
Limitations of Existing Treatment Options
Surgical fixation and fusion of the SI-Joint
with an open surgical technique was first reported in 1908, with further reports in the 1920s. The open procedure uses plates and
screws, requires a 6 to 12-inch incision and is extremely invasive. Due to the high invasiveness and associated
morbidity, the use of this procedure is limited to cases involving significant trauma, tumor, etc.
Less invasive surgical options along with
implant design began to emerge over the past 15 years. These options feature a variety of approaches and implant designs and have
been met with varying degrees of adoption. Lack of a standard and accepted diagnostic approach, complexity of approach, high morbidity
of approach, abnormally high complication rates and inability to radiographically confirm fusion have all been cited as reasons
for low adoption of these technologies.
Non-Surgical Treatment of Sacroiliac Joint Disease
Although a number
of non-surgical treatments exist for sacroiliac joint pain, we believe based on literature that none have delivered
the long-term pain relief that has been seen with SI-Joint fixation. Although not as yet published and not submitted for peer
review, the results experienced by the initial 30 patients treated in our limited release have had a dramatic reduction in
pain relief. Non-surgical treatments include:
·
Drug Therapy
: including opiates and non-steroidal anti-inflammatory medications.
·
Physical Therapy
: which can involve exercises as well as massage.
·
Intra-Articular Injections of Steroid Medications
: which are typically performed by physicians who specialize in pain
treatment or anesthesia.
·
Radiofrequency
                                         Ablation:
or the cauterizing of the lateral branches of the sacral nerve roots.
6
Commercialization
Tenon is planning a commercial launch of
The CATAMARAN™ SIJ Fusion System (The CATAMARAN System) to address what we believe is a large market opportunity with a superior
product. The CATAMARAN System includes instruments and implants designed to prepare and fixate the SI-Joint for fusion. The CATAMARAN
System is distinct from other competitive offerings in the following ways:
·
Posterior / Inferior Sacroiliac Fusion Approach (PiSIF™)
·
Reduced Approach Morbidity
·
Direct And Visualized Approach to the SI Joint
·
Single Implant "One and Done" Technique
·
Insertion Trajectory Away from the Neural Foramen
·
Autologous Bone Grafting in the Ilium, Sacrum and Bridge
·
Radiographic Confirmation of Bridging Bone Fusion of the SI Joint
The fixation device and its key features
are shown below:
Key Features
"Pontoon" in the ilium
"Pontoon" in the sacrum
"Pontoons and Bridge" filled with autologous bone
        from drilling process
Leading edge osteotome creates defect and eases insertion
The CATAMARAN System is a singular implant
designed with several proprietary components which allow for it to be explicitly formatted to address the SI Joint with a single
approach and implant. We refer to this as the "One and Done" feature of the implant. This contrasts with a number of
competitive implant systems that require multiple approach pathways and implants to achieve fixation. In addition, the approach
is direct to the joint and through limited anatomical structures which minimizes the morbidity of the approach. The implant features
a patented dual pontoon open cell design which enables the surgeon to pack the pontoons with the patient's own autologous
bone promoting bone fusion across the joint. The CATAMARAN System is designed specially to resist vertical shear and rotation of
the joint in which it was implanted, helping stabilize the joint in preparation for eventual fusion.
The instruments we have developed are proprietary
to The CATAMARAN System and are designed for the procedure to be performed via the previously described PiSIF™ approach.
Tenon also has developed a proprietary 2D placement
protocol as well as a protocol for 3D navigation utilizing the latest techniques in spine surgery. We believe these Tenon advancements
will further ensure the safety of the procedure and encourage more surgeons to adopt the procedure.
Coinciding with our commercial launch Tenon,
will initiate some clinical marketing studies. Since we have FDA 510K clearance to market The CATAMARAN System, our clinical trial
activities are focused on capturing post-market safety and efficacy data. Preliminary plans for clinical study evaluations may
include a longitudinal cohort study design with approximately 200 patients. Clinical study endpoints may include, but are not limited
to; length of surgical procedure, blood loss, post-op pain, length of stay, duration of non-weight-bearing post-op, radiographic
confirmation of fusion and surgical complication rates. Statistical analysis plans may be designed to demonstrate non-inferiority
to historical control, as reported in published literature, which may be used for submission to peer reviewed articles / posters
/ presentations and the like.
For a description of the challenges we face
and the risks and limitations that could harm our prospects, see
"—Summary Risk Factors" and "Risk Factors."
Recent Developments
Warrants
.
On December 31, 2020,
the Company issued to Exchange Listing, LLC 5-year warrants to purchase 50,000 shares of our common stock at an exercise price
$2.60 per share. Exchange Listing, LLC has registration rights with respect to the shares underlying the warrants.
2021 Financings
·
On January 27, 2021 we issued a Promissory Note in the principal amount of $130,560.34 to Wilson
Sonsini Goodrich & Rosati, Professional Corporation (the "WSGR Note"). The WSGR Note bears interest at 3% per annum
and is due on the earlier of (x) July 27, 2021, (y) the closing of a debt or equity financing of at least $1,000,000 and (z) the
closing of a change in control transaction. The interest rate on the WSGR Note increases to 5% per annum if all principal and interest
is not paid when due. The WSGR Note was paid in full in May 2021.
7
·
On April 30, 2021 we issued the following convertible promissory notes: (i) $170,000 Convertible
Promissory Note issued to Phoenix DeVentures Inc., which accrues interest at 8% per annum from April 30, 2021 and is due on December
31, 2021 (the "Phoenix Note 1"); (ii) $117,530 Amended and Restated 2015 Convertible Promissory Note issued to Phoenix
DeVentures Inc. (the "Phoenix Note 2), which accrues interest at 8% per annum from January 1, 2016 and is due on April 30,
2022; (iii) $40,000 Convertible Promissory Note issued to Phoenix DeVentures Inc., which accrues interest at 8% per annum from
April 30, 2021 and is due on December 31, 2021 (the "Phoenix Note 3"); and (iv) $70,000 Amended and Restated 2019 Convertible
Promissory Note issued to Khalid Mentak (the "Mentak Note" and together with the Phoenix 1 Note, the Phoenix 2 Note
and the Phoenix 3 Note, the "April 30 Notes"), which accrues interest at 8% per annum from October 12, 2019 and is
due on April 30, 2022. Principal and interest is due in full at maturity on the April 30 Notes and are not prepayable.
·
On May 3, 2021 we issued the following convertible promissory notes to Paul Orofino: (i) $200,000
Amended and Restated 2019 Convertible Promissory Note (the "Orofino Note 1"), which accrues interest at 8% per annum
from November 20, 2020 and is due on May 3, 2022; (ii) $50,000 Amended and Restated Promissory Note (the "Orofino Note 2
and together with the Orofino Note 1, the "May 3 Notes"), which accrues interest at 8% per annum from October 21, 2019
and is due on May 3, 2022. Principal and interest is due in full at maturity on the May 3 Notes. The May 3 Notes are prepayable.
·
On May 7, 2021 we issued the $68,359 Amended and Restated 2019 Convertible Promissory Note to Lince
Consulting, LLC (the "Lince Note"), which accrues interest at 8% per annum from June 12, 2019 and is due on May 7,
2022. Principal and interest is due in full at maturity on the Lince Note. The Lince Note is prepayable.
·
During the period from May 17, 2021 to July 26, 2021, the Company issued an aggregate $12,177,328
of Convertible Promissory Notes to 125 investors (the "Private Offering Notes" and together with the April 30 Notes,
the May 3 Notes and the Lince Note, the "Notes"), which accrues interest at 8% per annum from the date of issuance
and are due one year from the date of issuance. Principal and interest is due in full at maturity on the Private Offering Notes.
The Private Offering Notes are not prepayable without the consent of a majority of the holders.
Immediately prior to the closing of this initial public
offering, the Notes will automatically convert into of shares of our common stock as follows:
(i)
each April 30 Note (other than the Phoenix Note 2) and May 3 Note will convert into [*] and
                                                                                  [*] shares of our common stock, respectively, in each case calculated by dividing the outstanding principal and accrued and
                                                                                  unpaid interest on such Note, by 70% of the per share initial public offering price;
(ii)
the Lince Note and the Phoenix Note 2 will convert into [*] and [*] shares of our common
                                                                                   stock, respectively, in each case calculated by dividing the outstanding principal and accrued and unpaid interest on such Note by 80% of the per share initial public offering price;
(iii)
the Private Offering Notes will convert into [*] shares of
our common stock calculated by dividing (x) the outstanding principal and accrued and unpaid interest on the Private Offering
Notes by (y) the lesser of (1) the quotient obtained by dividing (A) $22,500,000 by (B) the fully diluted capitalization of the
Company and (2) 70% of the per share initial public offering price.
Recent issuances of Options and Restricted
Stock under 2012 Equity Incentive Plan (the "Plan")
·
In May 2021 we made eleven grants of non-statutory options to purchase in aggregate 787,595 shares of our common stock under the Plan at an exercise price of $2.60 per share. The options are subject to three-year monthly vesting at a rate of 1/36
th
per month and expire in May 2031.
·
In July 2021 we made three grants of non-statutory options to purchase in aggregate 364,044 shares of our common stock and two grants of incentive stock options to purchase in aggregate 80,165 shares of our common stock under the Plan at an exercise price of $3.53 per share. The options vest monthly over a three-year period at the rate of 1/36
th
per month (except for 25,000 which vest at a rate of 1/24
th
per month). The options expire in July 2031.
·
In August
        2021 we granted non-statutory options to 2 individuals to purchase in aggregate 27,000 shares of our common stock and we granted
        incentive stock options to 2 individuals to purchase in aggregate 15,000 shares of our common stock under the Plan at an exercise
        price of $3.53 per share. Three of these options vest 33% on the first anniversary with the balance of the shares vesting monthly
        over the next two years and one option is subject to two-year monthly vesting and all options expire on August 10, 2031. We also
        granted 123,500 of restricted shares of common stock to 3 individuals under the Plan
, which vested immediately
.
In October
        2021 we granted non-statutory options to 3 individuals to purchase in aggregate 24,000 shares of our common stock and we granted
        incentive stock options to 3 individuals to purchase in aggregate 20,000 shares of our common stock under the Plan at an exercise
        price of $3.75 per share. Three of these options vest 33% on the first anniversary with the balance of the shares vesting monthly
        over the next two years and the remaining options are subject to two-year monthly vesting and all options expire on October 8,
        2031.
8
National Distribution
Agreement
. On May 20, 2021, the Company entered into an Amended and Restated Exclusive Sales Representative Agreement
(the "SpineSource Sales Agreement") by and between the Company and SpineSource, Inc. ("SpineSource")
which became effective when the Company paid SpineSource $500,000 for prior services and issued SpineSource 107,513 shares of
our common stock (the "SpineSource Shares"). Pursuant to the SpineSource Sales Agreement, the Company appointed
SpineSource as its exclusive sales representative for marketing, sales, and support for The CATAMARAM System in the United
States and Puerto Rico in exchange for 60% of net sales invoiced by us from product sales that are completed in the United
States and Puerto Rico. The SpineSource Sales Agreement has a five-year term and automatically renews for five-year periods
unless written notice is provided by either party at least 180 days prior to the expiration of the term. Any extension beyond
ten (10) years requires a written agreement. The SpineSource Sales Agreement may also be terminated by the Company if certain
minimum sales targets are not achieved by SpineSource as set forth in the SpineSource Sales Agreement. Either party may
terminate the SpineSource Sales Agreement for a material breach by the other party, the liquidation, insolvency or bankruptcy
of the other party or if the other party ceases to actively engage in the business to which the SpineSource Sales Agreement
relates. In connection with the issuance of the SpineSource Shares, the Company entered into the Common Stock Purchase
Agreement with SpineSource dated May 19, 2021 (the "SpineSource Stock Purchase Agreement"), which provides
SpineSource with anti-dilution protection that maintains its ownership percentage of the Company, prior to the completion of
this initial public offering, at no less than 3% on a fully diluted basis. As of November 9, 2021, the Company has issued
88,894 shares to SpineSource pursuant to the anti-dilution protection contained in the SpineSource Stock Purchase
Agreement.
Exchange Agreement
.
On October
28, 2021, the Company entered into an Agreement (the "Exchange Agreement") with Zuhlke Ventures AG ("ZV"),
the minority shareholder of Tenon Technology AG ("TTAG"), the Company's Swiss subsidiary. Pursuant to the Exchange
Agreement, ZV agreed to exchange 574,033 shares of Series A Preferred Stock issued by TTAG, representing all of its ownership
interest in TTAG for Tenon Series A Preferred Stock , representing 24% ownership interest in the Company on a fully diluted basis,
taking into account (i) all outstanding shares of common stock of the Company; (ii) shares issuable upon conversion or exchange
of all of the Company's securities directly or indirectly convertible into or exchangeable for our common stock and the
exercise of all outstanding options or warrants; and (iii) the shares of our common stock that are   reserved, but neither
issued nor the subject of outstanding awards, under any Company equity incentive or similar plan. Pursuant to the terms of the
Exchange Agreement, the Company has issued ZV 2,550,763 shares of Tenon Series A Preferred Stock. ZV's shares of Tenon Series
A Preferred Stock are subject to anti-dilution protection that maintains ZV's 24% ownership interest in the Company, excluding
any shares issued by the Company in an initial public offering or a qualified offering of at least $5,000,000 at a per share price
of at least $3.3737. The anti-dilution protection terminates upon the earlier of (i) the closing of this initial public offering;
(ii) the conversion of the Private Offering Notes; (iii) the repayment of the Private Offering Notes in the case of a change in
control of the Company; or (iv) the liquidation of the Company. Also, pursuant to the terms of the Exchange Agreement, the Company
repaid the convertible note between TTAG and ZV in full in the amount of approximately $114,000, including accrued interest.
Information Regarding our Capitalization
As of November 9, 2021, we have (i) 1,979,907
 shares of common stock issued and outstanding of which 54.7% are owned by Richard Ginn, our founder, Chief Technology Officer
and a director of the Company; (ii) 2,550,763 shares of Series A Preferred Stock ("Tenon Series A Preferred Stock")
issued and outstanding, each share of which is convertible at any time at the option of the holder for one share of our common
stock and automatically converts into one share of our common stock immediately prior to the closing of this initial public offering
if the initial offering price is at least $6.00 per share and the gross proceeds to the Company from the offering are at least
$25,000,000 or at the written request of at least a majority of the holders of shares of Series B Preferred Stock, as applicable,
then outstanding (the "Conversion Trigger"); and (iii) 491,222 shares of Series B Preferred Stock ("Tenon Series
B Preferred Stock" and together with the Tenon Series A Preferred Stock, the "Preferred Stock") issued and outstanding,
each share of which is convertible at any time at the option of the holder for one share of our common stock and automatically
converts into one share of our common stock upon the occurrence of the Conversion Trigger. Currently, prior to the conversion of
the Preferred Stock, holders thereof have a right to one vote per share voting with our common stock on all matters submitted to
the shareholders for a vote. Additional information regarding our issued and outstanding securities may be found under "
Market
for Common Equity and Related Stockholder Matters
" and "
Description of Securities
."
Unless otherwise specifically stated, information
throughout this prospectus does not assume the exercise of outstanding options or warrants to purchase shares of our common stock.
Corporate Information
Our principal executive offices are located
at 104 Cooper Court, Los Gatos, CA 95032. Our website address is www.tenonmed.com. The information included on our website is not
part of this prospectus.
Implications of Being an Emerging Growth
Company
We are an "emerging growth company,"
as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). We will remain an emerging growth company
until the earlier of (i) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common
stock pursuant to an effective registration statement under the Securities Act; (ii) the last day of the fiscal year in which we
have total annual gross revenues of $1.07 billion or more; (iii) the date on which we have issued more than $1 billion in nonconvertible
debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under applicable
SEC rules. We expect that we will remain an emerging growth company for the foreseeable future, but cannot retain our emerging
growth company status indefinitely and will no longer qualify as an emerging growth company on or before the last day of the fiscal
year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement
under the Securities Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions
from specified disclosure requirements that are applicable to other public companies that are not emerging growth companies.
9
These exemptions include:
●
being permitted to provide only two years of audited financial statements, in addition to any required
unaudited interim financial statements, with correspondingly reduced "
Management's Discussion and Analysis of Financial
Condition and Results of Operations
" disclosure;
●
not being required to comply with the requirement of auditor attestation of our internal controls
over financial reporting;
●
not being required to comply with any requirement that may be adopted by the Public Company Accounting
Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information
about the audit and the financial statements;
●
reduced disclosure obligations regarding executive compensation; and
●
not being required to hold a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved.
We have taken advantage of certain reduced
reporting requirements in this prospectus. Accordingly, the information contained herein may be different than the information
you receive from other public companies in which you hold stock.
An emerging growth company can take advantage
of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting
standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would
otherwise apply to private companies. We have irrevocably elected to avail ourselves of this extended transition period and, as
a result, we will not be required to adopt new or revised accounting standards on the dates on which adoption of such standards
is required for other public reporting companies.
We are also a "smaller reporting
company" as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
have elected to take advantage of certain of the scaled disclosure available for smaller reporting companies.
Summary Risk Factors
Our business is subject to numerous risks
and uncertainties, any one of which could materially adversely affect our results of operations, financial condition or business.
These risks include, but are not limited to, those listed below. This list is not complete, and should be read together with the
section titled "Risk Factors" below:
·
We have incurred significant operating losses since inception, we expect to continue to incur operating losses in the future
and we may not be able to achieve or sustain future profitability;
·
Epidemic diseases, or the perception of their effects, could have
(or, in the case of the COVID-19 pandemic, will continue to have during its duration) a material adverse effect on our future business,
financial condition, results of operations, or cash flows;
·
If hospitals, surgeons, and other healthcare providers are unable to obtain and maintain coverage and reimbursement from third-party
payors for procedures performed using our products, adoption of our products may be delayed, and it is unlikely that they will
gain further acceptance;
·
If healthcare payors reverse decisions to cover minimally invasive SI-Joint fusion exclusively when performed with The CATAMARAN
System and choose to reimburse for procedures performed with competitive products, our market share could decline, adversely affecting
our revenues;
·
We may not be able to demonstrate to physicians that The CATAMARAN System is an attractive alternative to our competitors'
products and that our procedure is an attractive alternative to existing surgical and non-surgical treatments of the SI-Joint;
10
·
Surgeons and payors may not find our clinical evidence to be compelling, which could limit our sales, and ongoing
and future research may prove our products to be less safe and effective than currently thought;
·
Pricing pressure from our competitors, changes in third-party coverage and reimbursement, healthcare provider consolidation,
payor consolidation and the presence of "physician-owned distributorships" may impact our ability to sell our product
at prices necessary to support our current business strategies;
·
Practice trends or other factors, including the COVID-19 pandemic, may cause procedures to shift from the hospital environment
to ambulatory surgical centers, or ASCs, where pressure on the prices of our products is generally more acute;
·
We will operate in a very competitive business environment and if we are unable to compete
                                                                      successfully against our existing or potential competitors, our sales and operating results may be adversely affected;
·
We currently manufacture (through contract manufacturers) and sell
a single family of products focused on procedures, the goal of which is to stabilize and fuse the SI-Joint. Reliance on a single
family of products and single procedure could negatively affect our results of operations and financial condition;
·
If clinical experience with The CATAMARAN System does not result in positive outcomes for patients, or if clinical trials involving
the use of The CATAMARAN System fail to show meaningful patient benefit, sales of The CATAMARAN System could be adversely impacted;
·
If we are unable to maintain our relationship with our national distributor, we may not be able to generate anticipated sales;
·
We may become dependent on a limited number of contract manufacturers,
some of them single-source and some of them in single locations, for most of our products, and the loss of any of these contract
manufacturers, or their inability to provide us with an adequate supply of product in the future in a timely and cost-effective
manner, could materially adversely affect our business;
·
We and our contract manufacturers are subject to extensive governmental
regulation both in the U.S. and abroad, and failure to comply with applicable requirements could cause our business to suffer;
·
We and our national distributor along with their independent sales
representatives must comply with U.S. federal and state fraud and abuse laws, including those relating to healthcare provider kickbacks
and false claims for reimbursement, and other applicable federal and state healthcare laws, as well as equivalent foreign laws,
and failure to comply could negatively affect our business; and
·
If we fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value
of our intellectual property rights would diminish and our ability to successfully commercialize our products may be impaired
·
We could need to raise additional capital in the future, and if we are unable to secure adequate funds on terms acceptable
to us, we could be unable to execute our business plan.
·
Raising additional capital may cause dilution to our existing stockholders and restrict our operations or require us to relinquish
certain intellectual property rights.
·
Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will
discover them or that our trade secrets will be misappropriated or disclosed.
·
We could be subject to significant product liability obligations if our products are defective, which could have a material
adverse effect on our business, financial condition and results of operations.
11
·
We are increasingly dependent on information technology, and our systems and infrastructure face certain risks, including cybersecurity
and data leakage risks.
·
Product liability claims against us could be costly and could harm our reputation.
·
Litigation against us could be costly and time-consuming to defend and could materially and adversely affect our business,
financial condition and results of operations.
·
If we lose our key management personnel, or are unable to attract or retain qualified personnel, it could adversely affect
our ability to execute our growth strategy.
·
If the quality of our products does not meet the expectations of physicians or patients, then our brand and reputation could
suffer and our business could be adversely impacted.
·
We operate in a very competitive business environment and if we are unable to compete successfully against our existing or
potential competitors, our sales and operating results may be negatively affected and we may not grow.
·
We may seek to grow our business through acquisitions or investments in new or complementary businesses, products or technologies,
through the licensing of products or technologies from third parties or other strategic alliances, and the failure to manage acquisitions,
investments, licenses or other strategic alliances, or the failure to integrate them with our existing business, could have a material
adverse effect on our operating results, dilute our stockholders' ownership, increase our debt or cause us to incur significant
expense.
·
We may be unable to gain the support of leading hospitals and key opinion leaders, which may make it difficult to establish
our products as a standard of care and achieve market acceptance.
·
We may be unable to successfully demonstrate to surgeons the merits of our products compared to those of our competitors.
·
If orthopaedic or neurosurgeons fail to safely and appropriately
use our products, or if we are unable to train orthopaedic or neurosurgeons on the safe and appropriate use of our products, we
may be unable to achieve our expected growth.
·
We have a limited operating history and may face difficulties encountered by early-stage companies in new and evolving markets.
·
If we are unable to convince hospital facilities to approve the use of our products, our sales may not increase.
·
We lack published long-term data supporting superior clinical outcomes enabled by our products, which could limit sales.
·
If coverage and reimbursement from third-party payors for procedures
using our products significantly decline, orthopaedic or neurosurgeons, hospitals and other healthcare providers may be reluctant
to use our products and our sales may not increase.
·
Our insurance policies are expensive and protect us only from some business risks, which will leave us exposed to significant
uninsured liabilities.
·
Rapidly changing standards and competing technologies could harm demand for our products, result in significant additional
costs, and have a material adverse effect on our business, financial condition and results of operations.
12
·
The safety of our products is not yet supported by long-term clinical data and may therefore prove to be less safe and effective
than initially thought.
SUMMARY
OF THE OFFERING
Common stock offered by us
[*] shares.
Common stock outstanding prior to the offering
(1)
[1,979,907] shares of common stock.
Common stock to be outstanding after the offering
(2)(3)
[*] (or [*] shares if the underwriters exercise their option to purchase additional shares in full).
Over-allotment option of common stock offered by us
The underwriters have a 30-day option to purchase up to [*] additional shares of common stock.
Use of Proceeds
We currently intend to use the net proceeds to us from this offering to [*]. See the section of this prospectus titled "
Use of Proceeds
" beginning on page [*].
Proposed Listing
We have applied to have our common stock listed on the Nasdaq Capital Market under the symbol "______" which listing is a condition to this offering.
Underwriters' warrants
Upon the closing of this offering, we have agreed to issue to The Benchmark Company, as representative of the underwriters, warrants, that will expire on the fifth anniversary of the commencement date of sales in this offering, entitling the representative to purchase 3% of the number of shares of common stock sold in this offering. The registration statement of which this prospectus is a part also covers the underwriters' warrants and the common shares issuable upon the exercise thereof. For additional information regarding our arrangement with the underwriters, please see "
Underwriting
."
Lock-up agreements
We and our executive officers, directors and certain of our stockholders have agreed with the underwriters not to sell, transfer or dispose of any shares or similar securities for 180 days following the effective date of the registration statement for this offering. For additional information regarding our arrangement with the underwriters, please see "
Underwriting
."
Risk Factors
You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the "
Risk Factors
" section beginning on page [*] of this prospectus before deciding whether or not to invest in shares of our common stock.
(1)
As of November 9, 2021.
(2)
Includes (i) [*] shares issued to SpineSource pursuant to a common stock purchase
                                                            agreement which entitles them to maintain at least a 3% ownership interest in the Company on a fully diluted basis until the closing
                                                            of this initial public offering; (ii) [*] shares issued to Exchange Listing, LLC at the closing of this initial public
                                                            offering in exchange for consulting services and the automatic cashless exercise of its warrant, and (iii) [*] shares of
                                                            our common stock that are to be issued prior to the closing of this offering as a result of the conversion of our convertible
                                                            promissory notes.
(3)
Does not include (i) 491,222 shares of our common stock that may be issued prior to the
                                                                              closing of this offering as a result of the conversion of our Series B Preferred Stock; (ii) [*] shares of our common stock
                                                                              issuable pursuant to options granted pursuant to our equity incentive plan, including shares issuable under a one-time option
                                                                              grant to our CEO, Steven Foster to maintain his ownership position at 4%; (iii) 2,550,763 shares of our common stock that may
                                                                              be issued prior to the closing of this offering as a result of the conversion of our Series A Preferred Stock and (iv) shares
                                                                              our common stock issuable upon the exercise of the underwriters' warrants..
13
RISK
FACTORS
Our business is subject to many risks
and uncertainties, which may affect our future financial performance. If any of the events or circumstances described below occur,
our business and financial performance could be adversely affected, our actual results could differ materially from our expectations,
and the price of our stock could decline. The risks and uncertainties discussed below are not the only ones we face. There may
be additional risks and uncertainties not currently known to us or that we currently do not believe are material that may adversely
affect our business and financial performance. You should carefully consider the risks described below, together with all other
information included in this prospectus including our financial statements and related notes, before making an investment decision.
The statements contained in this prospectus that are not historic facts are forward-looking statements that are subject to risks
and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements.
If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that
case, the trading price of our common stock could decline, and investors in our securities may lose all or part of their investment.
Risks Related to Our Business and Operations
We have incurred losses in the past and may be unable
to achieve or sustain profitability in the future.
To date, we have financed our operations
primarily through the issuance of equity, convertible notes issued by our Swiss subsidiary and most recently by convertible notes
issued by Tenon. We have devoted substantially all of our resources to research and development, clinical and regulatory matters
for our products. There can be no assurances that we will be able to generate sufficient revenue from our existing products or
from any future product candidates to transition to profitability and generate consistent positive cash flows. Following this offering,
we expect that our operating expenses will continue to increase as we continue to build our commercial infrastructure, develop,
enhance, and commercialize our existing and new products and incur additional operating and reporting costs associated with being
a public company. As a result, we expect to continue to incur operating losses for the foreseeable future and may never achieve
profitability. Furthermore, even if we do achieve profitability, we may not be able to sustain or increase profitability on an
ongoing basis. If we do not achieve profitability, it will be more difficult for us to finance our business and accomplish our
strategic objectives.
Our recurring losses from operations and
negative cash flows raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered
public accounting firm included an explanatory paragraph in its report on our financial statements for the fiscal years ended,
December 31, 2020 and 2019, describing the existence of substantial doubt about our ability to continue as a going concern.
We believe that the successful completion of this offering or the conversion of all of the Private Offering Notes into common stock
prior to this offering will eliminate this doubt and enable us to continue as a going concern; however, if we are unable to raise
sufficient capital in this offering or the holders of the Private Offering Notes do not convert the Private Offering Notes in sufficient
amounts into our common stock, we may need to obtain alternative financing or significantly modify our operational plans for us
to continue as a going concern. Our expected future capital requirements may depend on many factors including expanding our
surgeon base, increasing the rate at which we train surgeons, the number of additional clinical papers initiated, and the timing
and extent of spending on the development of our technology to increase our product offerings. We may need additional funding to
fund our operations but additional funds may not be available to us on acceptable terms on a timely basis, if at all. We may seek
funds through borrowings or through additional rounds of financing, including private or public equity or debt offerings. If we
raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing into which
we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens
or additional debt, pay dividends, repurchase our common stock, make certain investments, and engage in certain merger, consolidation
or asset sale transactions. Any future debt financing or additional equity that we raise may contain terms that are not favorable
to us or our stockholders. Furthermore, we cannot be certain that additional funding will be available on acceptable terms, if
at all. If we are unable to raise additional capital or generate sufficient cash from operations to adequately fund our operations,
we will need to curtail planned activities to reduce costs, which will likely harm our ability to execute on our business plan
and continue operations.
14
Epidemic diseases, or the perception
of their effects have had and could have (or, in the case of the COVID-19 pandemic, will continue to have during its duration)
a material adverse effect on our business, financial condition, results of operations, or cash flows.
Outbreaks of infectious diseases, such
as COVID-19, could divert medical resources and priorities towards the treatment of that disease. An outbreak of an infectious
disease, or continued escalation of the outbreak of COVID-19 could also negatively affect hospital admission rates and the decision
by patients to undergo elective surgery, which could decrease demand for procedures using The CATAMARAN System and cause other
disruptions to our business. Business disruptions could include disruptions or restrictions on our ability to travel or to distribute
our products, government orders suspending the performance of elective surgical procedures such as The CATAMARAN System, inability
of our customers to meet their financial commitments due to strain on the healthcare system, as well as temporary closures of our
facilities or the facilities of our suppliers and their contract manufacturers, and a reduction in the business hours of hospitals
and ambulatory surgery centers. Any disruption of our contract manufacturers or our customers would likely
impact our sales and operating results. In addition, a significant outbreak of an infectious disease in the human population could
result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting
in an economic downturn that could affect demand for our products. Any of these events could negatively impact the number of procedures
using The CATAMARAN System that are performed and have a material adverse effect on our business, financial condition, results
of operations, or cash flows.
COVID-19 may
have, an adverse impact on the timing and success of the commercialization of The CATAMARAN System and our future operations as
a result of preventive and precautionary measures that we may find necessary to take. There are numerous uncertainties associated
with this COVID-19 outbreak, including the number of individuals who will become infected, the level of resistance to taking vaccines
by significant portions of the population in the United States , the extent of the protective and preventative measures that have
been put in place by both governmental entities and other businesses and those that may be put in place in the future, the effect
that general availability of vaccines, testing for COVID-19 and antibodies will enable relaxation of protective measures for a
subset of the population, and numerous other uncertainties. We intend to continue to execute on our product development and strategic
plans during the COVID-19 outbreak. However, the aforementioned uncertainties may result in delays or modifications to our product
development and strategic plans.
In addition, the COVID-19 pandemic has
adversely affected, and may continue to adversely affect, the economies and financial markets of many countries, which may result
in a period of regional, national, and global economic slowdown or regional, national, or global recessions that could curtail
or delay spending by hospitals and affect demand for our products as well as increased risk of customer defaults or delays in payments.
These market disruptions could impair our ability to raise capital, should our business experience a prolonged period of reduced
revenue requiring additional capital to sustain the business. COVID-19 and the current financial, economic, and capital markets
environment, and future developments in these and other areas present material uncertainty and risk with respect to our performance,
financial condition, results of operations, and cash flows. Due to the uncertain scope and duration of the pandemic and uncertain
timing of global recovery and economic normalization, we are unable to estimate the long-term impacts on our operations and financial
results.
The existence and further duration of the
COVID-19 pandemic may also further exacerbate certain of the risks described below.
Practice trends or other factors,
including the COVID-19 pandemic, may cause procedures to shift from the hospital environment to ambulatory surgical centers ("ASCs"),
where pressure on the prices of our products is generally more acute.
To protect health care professionals involved
in surgical care and their patients, we anticipate that more outpatient eligible procedures will be performed in ASCs during the
COVID-19 pandemic, and as its acuity declines and the healthcare system returns to a more normalized state. Since patients do not
stay overnight in ASCs and COVID-19 patients would not otherwise be treated in ASCs, it is likely that the ASC will be viewed as
a safer site of service for patients and health care providers, where the risk of transmission of the novel coronavirus can be
more effectively controlled. Because ASC facility fee reimbursement is typically less than facility fee reimbursement for hospitals,
we typically experience more pressure on the pricing of our products by ASCs than by hospitals, and the average price for which
we sell our products to ASCs is less than the average prices we charge to hospitals. An accelerated shift of procedures using our
products to ASCs as a result of the COVID-19 pandemic could adversely impact the average selling prices of our products and our
revenues could suffer as a result.
15
If hospitals, surgeons, and other
healthcare providers are unable to obtain coverage and reimbursement from third-party payors for procedures performed using our
products, adoption of our products may be delayed, and it is unlikely that they will gain further acceptance.
Growing sales of our product depends on the
availability of adequate coverage and reimbursement from third-party payors, including government programs such as Medicare and
Medicaid, private insurance plans, and managed care programs. Hospitals, surgeons, and other healthcare providers that purchase
or use medical devices generally rely on third-party payors to pay for all or part of the costs and fees associated with the procedures
performed with these devices.
Adequate coverage and reimbursement for procedures
performed with our products is central to the acceptance of our current and future products. We may be unable to sell our products
on a profitable basis if third-party payors deny coverage, continue to deny coverage or reduce their current levels of payment,
or if our costs for the product increase faster than increases in reimbursement levels.
Many private payors refer to coverage decisions
and payment amounts determined by the Centers for Medicare and Medicaid Services, or CMS, which administers the Medicare program,
as guidelines for setting their coverage and reimbursement policies. By June 30, 2016, all Medicare Administrative Contractors
were regularly reimbursing for minimally invasive and/or open SI-Joint fusion. Private payors that do not follow the Medicare guidelines
may adopt different coverage and reimbursement policies for procedures performed with our products. Private commercial payors have
been slower to adopt positive coverage policies for minimally invasive and/or open SI-Joint fusion, and many private payors still
have policies that treat the procedure as experimental or investigational and do not regularly reimburse for the procedure. Future
action by CMS or third-party payors may further reduce the availability of payments to physicians, outpatient surgery centers,
and/or hospitals for procedures using our products.
The healthcare industry in the United States
has experienced a trend toward cost containment as government and private insurers seek to control healthcare costs. Payors are
imposing lower payment rates and negotiating reduced contract rates with service providers and being increasingly selective about
the technologies and procedures they chose to cover. There can be no guarantee that we will be able to provide the scientific and
clinical data necessary to overcome these policies. Payors may adopt policies in the future restricting access to medical technologies
like ours and/or the procedures performed using such technologies. Therefore, we cannot be certain that the procedures performed
with each of our products will be reimbursed. There can be no guarantee that, should we introduce additional products in the future,
payors will cover those products or the procedures in which they are used.
If the reimbursement provided by
third-party payors to hospitals, surgeons, and other healthcare providers for procedures performed using our products is insufficient,
adoption and use of our products and the prices paid for our implants may decline.
When a Tenon procedure utilizing The CATAMARAN
System is performed, both the surgeon and the healthcare facility, a hospital (inpatient or outpatient clinic), submit claims
for reimbursement to the patient's insurer. Generally, the facility obtains a lump sum payment, or facility fee, for SI-Joint
fusions. Our products are purchased by the facility, along with other supplies used in the procedure. The facility must also pay
for its own fixed costs of operation, including certain operating room personnel involved in the procedure, and other medical
services care. If these costs exceed the facility reimbursement, the facility's managers may discourage or restrict surgeons
from performing the procedure in the facility or using certain technologies, such as the The CATAMARAN System, to perform
the procedure.
16
The Medicare 2021 national average hospital
inpatient payment ranges from approximately $25,000 to approximately $59,000 depending on the procedural approach and the presence
of Complication and Comorbidity (
CC
)/Major Complication and Comorbidity
(
MCC
)
.
The Medicare 2021 national average hospital
outpatient clinic payment is $15,888. We believe that insurer payments to facilities are generally adequate for these facilities
to offer The CATAMARAN System. However, there can be no guarantee that these facility payments will not decline in the future. The
number of procedures performed, and the prices paid for our implants may in the future decline if payments to facilities for
SI-Joint fusions decline.
Surgeons are reimbursed separately for
their professional time and effort to perform a surgical procedure. Depending on the surgical approach, the incision size, type
and extent of imaging guidance, indication for procedure, and the insurer, The Catamaran System procedure may be reported by the
surgeon using any one of the applicable following CPT® codes 27279, 27280, 27299.   The Medicare 2021 national average
payment for CPT® 27279 is $888 and $1,399 for 27280. CPT® 27299 has no national valuation. Clinicians, however can present
a crosswalk to another procedure believed to be fairly equivalent and/or comparison to a code for which there is an existing valuation.
For some governmental programs, such as
Medicaid, coverage and reimbursement differ from state to state, and some state Medicaid programs may not pay an adequate amount
for the procedures performed with our products, if any payment is made at all. Similar to Medicaid, many private payors'
coverage and payment may differ from one payer to another as well.
We believe that some surgeons view the
current Medicare reimbursement amount as insufficient for the procedure, given the work effort involved with the procedure, including
the time to diagnose the patient and obtain prior authorization from the patient's health insurer when necessary. Many private
payors require extensive documentation of a multi-step diagnosis before authorizing SI-Joint fusion for a patient. We believe that
some private payors apply their own coverage policies and criteria inconsistently, and surgeons may experience difficulties in
securing approval and coverage for sacroiliac fusion procedures. Additionally, many private payors limit coverage for open SI-Joint
fusion to trauma, tumor or extensive spine fusion procedures involving multiple levels. The perception by physicians that the reimbursement
for SI-Joint fusion is insufficient to compensate them for the work required, including diagnosis, documentation, obtaining payor
approval for the procedure, and burden on their office staff, may negatively affect the number of procedures performed and may
therefore impede the growth of our revenues or cause them to decline.
We may not be able to convince physicians
that The CATAMARAN System is an attractive alternative to our competitors' products and that our procedure is an attractive
alternative to existing surgical and non-surgical treatments of the SI-Joint.
Surgeons play the primary role in determining
the course of treatment in consultation with their patients and, ultimately, the product that will be used to treat a patient.
In order for us to sell The CATAMARAN System successfully, we must convince surgeons through education and training that treatment
with The CATAMARAN System is beneficial, safe, and cost-effective for patients as compared to our competitors' products.
If we are not successful in convincing surgeons of the merits of The CATAMARAN System, they may not use our product, and we will
be unable to increase our sales and achieve or grow profitability.
Historically, most spine surgeons did not
include SI-Joint pain in their diagnostic work-up because they did not have an adequate surgical procedure to perform for patients
diagnosed with the condition. As a result, some patients with lower back pain resulting from SI-Joint dysfunction are misdiagnosed.
We believe that educating surgeons and other healthcare professionals about the clinical merits and patient benefits of The CATAMARAN
System is an important element of our growth. If we fail to effectively educate surgeons and other medical professionals, they
may not include a SI-Joint evaluation as part of their diagnosis and, as a result, those patients may continue to receive unnecessary
or only non-surgical treatment.
Surgeons may also hesitate to change their medical treatment
practices for other reasons, including the following:
17
•
lack of experience with minimally invasive procedures;
•
perceived liability risks generally associated with the use of new products and procedures;
•
costs associated with the purchase of new products; and
•
time commitment that may be required for training.
Furthermore, we believe surgeons may not
widely adopt The CATAMARAN System unless they determine, based on experience, clinical data, and published peer-reviewed publications,
that surgical intervention provides benefits or is an attractive alternative to non-surgical treatments of SI-Joint dysfunction.
In addition, we believe support of our products relies heavily on long-term data showing the benefits of using our product. If
we are unable to provide that data, surgeons may not use our product. In such circumstances, we may not achieve expected sales
and may be unable to achieve profitability.
Surgeons and payors may not find our
clinical evidence to be compelling, which could limit our sales, and on-going and future research may prove our product to be less
safe and effective than initially anticipated.
All of the component parts of the CATAMARAN
System have either received premarket clearance under Section 510(k) of the U.S. Federal Food, Drug, and Cosmetic Act, or
FDCA, or are exempt from premarket review. The 510(k) clearance process of the U.S. Food and Drug Administration, or FDA, requires
us to document that our product is "substantially equivalent" to another 510(k)-cleared product. The 510(k) process
is shorter and typically requires the submission of less supporting documentation than other FDA approval processes, such as a
premarket approval, or PMA, and does not usually require pre-clinical or clinical studies. Additionally, to date, we have not been
required to complete clinical studies in connection with the sale of our product. For these reasons, surgeons may be slow to adopt
our product, third-party payors may be slow to provide coverage, and we may be subject to greater regulatory and product liability
risks. Further, future patient studies or clinical experience may indicate that treatment with our product does not improve patient
outcomes. Such results would slow the adoption of our product by surgeons, significantly reduce our ability to achieve expected
sales, and could prevent us from achieving profitability. Moreover, if future results and experience indicate that our product
causes unexpected or serious complications or other unforeseen negative effects, we could be subject to mandatory product recalls,
suspension, or withdrawal of FDA clearance.
Pricing pressure from our competitors,
changes in third-party coverage and reimbursement, healthcare provider consolidation, payor consolidation and the proliferation
of "physician-owned distributorships" may impact our ability to sell our product at prices necessary to support our
current business strategies.
If competitive forces drive down the prices,
we are able to charge for our product, our profit margins will shrink, which will adversely affect our ability to invest in and
grow our business. The SI-Joint fusion market has attracted numerous new companies and technologies. As a result of this increased
competition, we believe there will be continued and increased pricing pressure, resulting in lower gross margins, with respect to
our product.
Even to the extent our product and procedures
using our product are currently covered and reimbursed by third-party private and public payors, adverse changes in coverage and
reimbursement policies that affect our product, discounts, and number of implants used may also drive our prices down and harm
our ability to market and sell our product.
We are unable to predict what changes will
be made to the reimbursement methodologies used by third-party payors. We cannot be certain that under current and future payment
systems, in which healthcare providers may be reimbursed a set amount based on the type of procedure performed, such as those utilized
by Medicare and in many privately managed care systems, the cost of our product will be justified and incorporated into the overall
cost of the procedure. In addition, to the extent there is a shift from inpatient setting to outpatient settings, we may experience
pricing pressure and a reduction in the number of The CATAMARAN System procedures performed.
18
Consolidation in the healthcare industry,
including both third-party payors and healthcare providers, could lead to demands for price concessions or to the exclusion of
some suppliers from certain of our markets, which could have an adverse effect on our business, results of operations, or financial
condition. Because healthcare costs have risen significantly over the past several years, numerous initiatives and reforms initiated
by legislators, regulators, and third-party payors to curb these costs have resulted in a consolidation trend in the healthcare
industry to aggregate purchasing power. As the healthcare industry consolidates, competition to provide products and services to
industry participants has become and will continue to become more intense. This in turn has resulted and will likely continue to
result in greater pricing pressures and the exclusion of certain suppliers from important market segments as group purchasing organizations,
independent delivery networks, and large single accounts continue to use their market power to consolidate purchasing decisions
for hospitals. We expect that market demand, government regulation, third-party coverage, and reimbursement policies and societal
pressures will continue to change the worldwide healthcare industry, resulting in further business consolidations and alliances
among our customers, which may reduce competition, exert further downward pressure on the price of our product, and adversely impact
our business, results of operations, or financial condition. As we continue to expand into international markets, we will face
similar risks relating to adverse changes in coverage and reimbursement procedures and policies in those markets.
We operate in a very competitive
business environment and if we are unable to compete successfully against our existing or potential competitors, our sales and
operating results may be negatively affected and we may not grow.
Upon commercialization of our product we
will likely be subject to intense competition. Many of our potential competitors are major medical device companies that have substantially
greater financial, technical, and marketing resources than we do, and they may succeed in developing products that would render
our product obsolete or non-competitive. In addition, many of these competitors have significantly longer operating history and
more established reputations than we do. Our field is intensely competitive, subject to rapid change and highly sensitive to the
introduction of new products or other market activities of industry participants. Our ability to compete successfully will depend
on our ability to develop proprietary products that reach the market in a timely manner, receive adequate coverage and reimbursement
from third-party payors, and are safer, less invasive, and more effective than alternatives available for similar purposes as demonstrated
in peer-reviewed clinical publications. Because of the size of the potential market, we anticipate that other companies will dedicate
significant resources to developing competing products.
In the United States, we believe that our primary
competitors currently will be SI-bone, Inc., Globus Medical, Inc., Medtronic plc , XTant Medical Holdings, Inc., and RTI Surgical,
Inc. At any time, these or other industry participants may develop alternative treatments, products or procedures for the treatment
of the SI-Joint that compete directly or indirectly with our product. If alternative treatments are, or are perceived to be, superior
to our product, sales of our product and our results of operations could be negatively affected. Some of our larger competitors
are either publicly traded or divisions or subsidiaries of publicly traded companies. These competitors may enjoy several competitive
advantages over us, including:
•
greater financial, human, and other resources for product research and development, sales and marketing,
and legal matters;
•
significantly greater name recognition;
•
established relationships with surgeons, hospitals, and other healthcare providers;
•
large and established sales and marketing and distribution networks;
•
greater experience in obtaining and maintaining domestic and international regulatory clearances
or approvals, or CE Certificates of Conformity for products and product enhancements;
•
more expansive portfolios of intellectual property rights; and
•
greater ability to cross-sell their products or to incentivize
hospitals or surgeons to use their products.
19
New participants have increasingly entered
the medical device industry. Many of these new competitors specialize in a specific product or focus on a particular market segment,
making it more difficult for us to increase our overall market position. The frequent introduction by competitors of products that
are or claim to be superior to our product or that are alternatives to our existing or planned products may make it difficult to
differentiate the benefits of our product over competing products. In addition, the entry of multiple new products and competitors
may lead some of our competitors to employ pricing strategies that could adversely affect the pricing of our product and pricing
in the market generally.
As a result, without the timely introduction
of new products and enhancements, our product may become obsolete over time. If we are unable to develop innovative new products,
maintain competitive pricing, and offer products that surgeons and other physicians perceive to be as reliable as those of our
competitors, our sales or margins could decrease, thereby harming our business.
We currently manufacture (through
third parties) and sell products used in a single procedure, which could negatively affect our operations and financial condition.
Presently we do not sell any product other
than The CATAMARAN System and related tools and instruments. Therefore, we are solely dependent on widespread market adoption of
The CATAMARAN System and we will continue to be dependent on the success of this single product for the foreseeable future. There
can be no assurance that The CATAMARAN System will gain a substantial degree of market acceptance among surgeons, patients or healthcare
providers. Our failure to successfully increase sales of The CATAMARAN System or any other event impeding our ability to sell The
CATAMARAN System, would result in a material adverse effect on our results of operations, financial condition and continuing operations.
If we are unable to maintain the relationship
with our national distributor, SpineSource, and they do not expand their network of independent sales representatives, we may not
be able to generate anticipated sales.
As of November 9, 2021, SpineSource our U.S.
national distributor has a network of approximately 750 independent sales representatives that specialize in spine products. Our
operating results are directly dependent upon the sales and marketing efforts of both our marketing and social media team and our
national distributor with their network of independent sales representatives.
As we launch The CATAMARAN System, we will
need to work with our national distributor to train and educate their network of independent sales representatives. Our future
success will depend largely on our national distributor's ability to hire, train, retain and motivate independent sales representatives
with significant technical knowledge in various areas, such as spine health and treatment.
Our intention is for our national distributor
and their independent sales representatives to develop long-lasting relationships with the surgeons they serve. If the independent
sales representatives fail to adequately promote, market and sell our product or decide to leave or cease to do business with our
national distributor, our sales could significantly decrease.
We face significant challenges and risks
in managing our national distributor with their geographically dispersed distribution network of independent sales representatives.
If the national distributor were to cease distribution of our product, our sales could be adversely affected. In such a situation,
we may need to seek alternative distribution options or develop our own network of direct sales representatives, which may not
prevent our sales from being adversely affected. If an independent sales representative were to depart and be retained by one of
our competitors, we may be unable to prevent them from helping competitors solicit business from our existing customers, which
could further adversely affect our sales. Because of the intense competition for their services, our national distributor may be
unable to recruit or retain additional qualified independent sales representatives to sell our product. Furthermore, our national
distributor may not be able to enter into agreements with them on favorable or commercially reasonable terms, if at all. Failure
to hire or retain qualified independent sales representatives would prevent us from expanding our business and generating sales.
20
If our national distributor does not incentivize
the independent sales representatives enough to fully promote The CATAMARAN System or we are not be able to influence that decision
on acceptable terms our sales growth could be delayed or slowed. If this occurs it could reduce the scope of any sales or marketing
activities, or cause us to increase our expenditures on commercialization activities. If we elect to increase our expenditures
to fund commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on
acceptable terms or at all
We have a limited operating history
and may face difficulties encountered by early-stage companies in new and rapidly evolving markets.
Even though we were formed in 2012 we are
just beginning to build the infrastructure necessary to commercially launch The CATAMARAN System. Accordingly, we have a limited
operating history upon which to base an evaluation of our business and prospects. In assessing our prospects, you must consider
the risks and difficulties frequently encountered by early-stage companies in new and rapidly evolving markets, particularly companies
engaged in the development and sales of medical devices. These risks include our inability to:
•
obtain coverage by third-party, private, and government payors;
•
establish and increase awareness of our brand and strengthen customer loyalty;
•
attract and retain qualified personnel;
•
find and develop relationships with contract manufacturers that can manufacture the necessary volume of product;
•
manage our national distributor to achieve our sales growth objectives;
•
commercialize new products and enhance our existing product;
•
manage rapidly changing and expanding operations;
•
implement and successfully execute our business and marketing strategy;
•
respond effectively to competitive pressures and developments.
We can also be negatively affected by general
economic conditions. Because of our limited operating history, we may not have insight into trends that could emerge and negatively
affect our business. As a result of these or other risks, our business strategy might not be successful.
Our sales volumes and our operating
results may fluctuate over the course of the year.
Since our national launch is still pending,
we have limited history with respect to how rapidly adoption of The CATAMARAN System will occur. Sales growth could be slower than
we have projected. Our sales and results of operations will be affected by numerous factors, including, among other things:
·
payor coverage and reimbursement;
·
maintaining our training schedule with surgeons;
21
·
the number of procedures performed in the quarter and our ability to drive increased sales of our
product;
·
the performance of our national distributor and their network of independent sales representatives;
·
pricing pressure applicable to our product, including adverse third-party coverage and reimbursement
outcomes;
·
timing of new product offerings, acquisitions, licenses or other significant events by us or our
competitors;
·
our ability to find and develop relationships with contract manufacturers and their ability to
timely provide us with an adequate supply of products;
·
the evolving product offerings of our competitors;
·
the demand for, and pricing of, our product and the products of our competitors;
·
factors that may affect the sale of our product, including seasonality and budgets of our customers;
·
ability of surgeons to do our procedure given possible COVID restrictions;
·
interruption in the manufacturing or distribution of our product;
·
the effect of competing technological, industry and market developments;
·
our ability to expand the geographic reach of our sales and marketing efforts;
·
the costs of maintaining adequate insurance coverage, including product liability insurance;
·
the availability and cost of components and materials needed by our contract manufacturers;
·
the number of selling days in the quarter; and
·
impairment and other special charges.
Some of the products we may seek to develop
and introduce in the future will require FDA clearance or approval before commercialization in the United States. As a result,
it will be difficult for us to forecast demand for these products with any degree of certainty. In addition, we will be increasing
our operating expenses as we expand our commercial capabilities. Accordingly, we may experience significant, unanticipated quarterly
losses. If our quarterly or annual operating results fall below the expectations of investors or securities analysts, the price
of our common stock could decline substantially. Furthermore, any quarterly or annual fluctuations in our operating results may,
in turn, cause the price of our common stock to fluctuate substantially. Quarterly comparisons of our financial results may not
always be meaningful and should not be relied upon as an indication of our future performance.
If we do not successfully implement
our business strategy, our business and results of operations will be adversely affected.
Our business strategy was based on assumptions
about the market that might prove wrong. We believe that various demographics and industry-specific trends will help drive growth
in the market and our business, but these demographics and trends have been and will continue to be uncertain. Actual demand for
our product could differ materially from projected demand if our assumptions regarding these factors prove to be incorrect or do
not materialize, or if alternative treatments to those offered by our product gains widespread acceptance. Also, our strategy of
focusing exclusively on the SI-Joint market may limit our ability to grow. In addition, in order to increase our sales, we will
need to work with our national distributor to expand their independent sales representative network in existing and new regions
as well, in the future, commercialize new products. Moreover, we may decide to alter or discontinue aspects of our business strategy
and may adopt different strategies due to business or competitive factors not currently foreseen, such as new medical technologies
that would make our product obsolete. Any failure to implement our business strategy may adversely affect our business, results
of operations, and financial condition.
22
Our business could suffer if we lose
the services of key members of our senior management, key advisors or personnel.
We are dependent upon the continued services
of key members of our senior management and a number of key advisors and personnel. The loss of members of our senior management
team, key advisors or personnel, or our inability to attract or retain other qualified personnel or advisors, could have a material
adverse effect on our business, results of operations, and financial condition. We do not maintain "key person" insurance
for any of our executives or employees. In addition, several of the members of our executive management team are not subject to
non-competition agreements that restrict their ability to compete with us. Accordingly, the adverse effect resulting from the loss
of certain executives could be compounded by our inability to prevent them from competing with us.
Although it will be subject to lock-up
agreements and other restrictions on trading, a portion of the equity of our management team will not contain other contractual
transfer restrictions at the time of this offering and may become tradable after the expiration of the 180-day lock-up agreement
with the underwriters. This liquidity may represent material wealth to such individuals and impact retention and focus of existing
key members of management.
Various factors outside our direct
control may adversely affect manufacturing and distribution of our product.
The manufacture and distribution of our
product is challenging. Changes that our contract manufacturers may make outside the purview of our direct control can have an
impact on our processes, quality of our product, and the successful delivery of products to our customers. Mistakes and mishandling
are not uncommon and can affect supply and delivery. Some of these risks include:
•
failure to manufacture in compliance with the required regulatory standards;
•
transportation risk;
•
the cost and availability of components and supplies required by our contract manufacturers to
manufacture our products;
•
delays in analytical results or failure of analytical techniques that we will depend on for quality
control and release of products;
•
natural disasters, labor disputes, financial distress, raw material availability, issues with facilities
and equipment, or other forms of disruption to business operations affecting our manufacturers or their suppliers; and
•
latent defects that may become apparent after products have been released and that may result in
a recall of such products.
If any of these risks were to materialize,
our ability to provide our product to customers on a timely basis would be adversely impacted.
We may become dependent on a limited
number of contract manufacturers, some of them single-source and some of them in single locations, for our product, and the loss
of any of these contract manufacturers, or their inability to provide us with an adequate supply of products in a timely and cost-effective
manner, could materially adversely affect our business.
We rely on contract manufacturers to supply
our product. For us to be successful, our contract manufacturers must be able to provide us with product in substantial quantities,
in compliance with regulatory requirements, in accordance with agreed upon specifications, at acceptable prices, and on a timely
basis. We have a limited history with our current contract manufacturers and do not have long-term supply contracts with them.
We are in the process of identifying and evaluating new contract manufacturers for our products. The inability to find the required
contract manufacturers or the time required to switch contract manufacturers could adversely affect sales.
In addition, our anticipated growth could
strain the ability of our contract manufacturers to deliver an increasingly large supply of product. Contract manufacturers often
experience difficulties in scaling up production, including financial issues, or problems with production yields and quality control
and assurance.
23
We use a small number of contract manufacturers
for our instruments. Our dependence on such a limited number of contract manufacturers exposes us to risks, including, among other
things:
•
contract manufacturers may fail to comply with regulatory requirements or make errors in manufacturing
that could negatively affect the safety or effectiveness of our product or cause delays in shipments of our product;
•
some of our contract manufacturers have long lead times of 12 to 16 weeks and we may not be
                                                                    able to respond to unanticipated changes in customer orders, and if orders do not match forecasts, we or our contract
                                                                    manufacturers may have excess or inadequate inventory of materials and components;
•
our contract manufacturers may be subject to price fluctuations due to a lack of long-term
supply arrangements for key components;
•
our contract manufacturers may lose access to critical services and components, resulting
in an interruption in the manufacture, assembly and shipment of our product;
•
we may experience delays in delivery by our contract manufacturers due to changes in demand from
us or their other customers;
•
fluctuations in demand for products that our contract manufacturers manufacture for others may
affect their ability or willingness to deliver our product to us in a timely manner;
•
our contract manufacturers may wish to discontinue supplying products or services to us for risk
management reasons;
•
we may not be able to find new or alternative contract manufacturers in a timely manner if our
current contract manufacturers stop producing products; and
•
our contract manufacturers may encounter financial hardships
unrelated to our demand, which could inhibit their ability to fulfil our orders and meet our requirements.
If any one or more of these risks materialize,
it could significantly increase our costs and impact our ability to meet demand for our product. If we are unable to satisfy commercial
demand for our product in a timely manner, our ability to generate revenue would be impaired, market acceptance of our product
could be adversely affected, and customers may instead purchase or use our competitors' products. Additionally, we could
be forced to seek alternative sources of supply.
Because of the nature of our internal quality
control requirements, regulatory requirements, and the custom and proprietary nature of our product, we may not be able to quickly
engage additional or replacement contract manufacturers for our product and accessories. We may also be required to assess any
potential new contract manufacturer's compliance with all applicable regulations and guidelines, which could further impede
our ability to obtain our product in a timely manner. As a result, we could incur increased product costs, experience delays in
deliveries of our product, suffer damage to our reputation, and experience an adverse effect on our business and financial results.
Failure of any of our contract manufacturers to meet our product demand level would limit our ability to meet our sales commitments
to our customers and could have a material adverse effect on our business.
We may also have difficulty obtaining similar
product from other contract manufacturers that are acceptable to the FDA and the failure of our contract manufacturers to comply
with strictly enforced regulatory requirements could expose us to delays in obtaining clearances or approvals, regulatory action
including warning letters, product recalls, termination of distribution, product seizures, civil, administrative, or criminal penalties.
We could incur delays while we locate and engage qualified alternative contract manufacturers, and we may be unable to engage alternative
contract manufacturers on favorable terms or at all. Any such disruption or increased expenses could harm our commercialization
efforts and adversely affect our ability to generate sales.
24
In addition, we expect that most of our
contract manufacturers will operate at a facility in a single location and substantially all their inventory of component supplies
and finished goods will be held at these locations. We, and our contract manufacturers, will take precautions to safeguard facilities,
including acquiring insurance, adopting health and safety protocols, and utilizing off-site storage of computer data. However,
vandalism, terrorism, or a natural or other disaster, such as an earthquake, fire, or flood, could damage or destroy equipment
or component supplies or finished product, cause substantial delays in our operations, result in the loss of key information, and
cause us to incur additional expenses. Our insurance may not cover our losses in any particular case. In addition, regardless of
the level of insurance coverage, damage to our or our contract manufacturers' facilities could harm our business, financial
condition, and operating results.
As our sales grow, our contract manufacturers
may encounter problems or delays in the manufacturing of our product or fail to meet certain regulatory requirements which could
result in an adverse effect on our business and financial results.
To become profitable, our contract manufactures
must manufacture our product in adequate quantities in compliance with regulatory requirements and at an acceptable cost. Increasing
their capacity to manufacture and inspect our product may require them to improve internal efficiencies or require us to re-design
or change the specifications of our product. Our contract manufacturers may encounter several difficulties in increasing this capacity,
including:
•
managing production yields;
•
maintaining quality control and assurance;
•
providing component and service availability;
•
maintaining adequate control policies and procedures;
•
hiring and retaining qualified personnel; and
•
complying with state, federal, and foreign regulations.
If we are unable to satisfy commercial
demand for The CATAMARAN System due to our contract manufacturer's inability to manufacture and inspect our product, our
ability to generate revenue would be impaired, market acceptance of our product could be adversely affected and customers may instead
purchase or use our competitors' products.
The size and future growth in the
market for the SI-Joint fixation market have not been established based on market reports and our estimates are based on our own
review and analysis of public information and may be smaller than we estimate, possibly materially. In addition, our estimates
of cost savings to the economy and healthcare system as a result of The CATAMARAN System procedure are based on our internal estimates
and market research and could also be smaller than we estimate, possibly materially. If our estimates and projections overestimate
the size of this market or cost savings, our sales growth may be adversely affected.
We are not aware of an independent third-party
study that reliably reports the potential market size for the SI-Joint fixation market. Therefore, our estimates of the size and
future growth in the market for The CATAMARAN System product, including cost savings to the economy overall, including patients
and employers, and to the healthcare system and the number of people currently suffering from lower back pain who may benefit from
and be amenable to our procedure, is based on a number of internal and third-party studies, surveys, reports, and estimates. While
we believe these factors have historically provided and may continue to provide us with effective tools in estimating the total
market for our product and procedures and health cost savings, these estimates may not be correct and the conditions supporting
our estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. For example, we have
consulted with our clinical advisors, our national distributor and utilized public information as the basis for our market projections.
Additionally, the surveys we have conducted are based on a small number of respondents and are not statistically significant and
may have other limitations. The actual incidence of lower back pain, and the actual demand for our product or competitive products,
could differ materially from our projections if our assumptions and estimates are incorrect. As a result, our estimates of the
size and future growth in the market for our product may prove to be incorrect. In addition, actual health cost savings to the
healthcare system as a result of The CATAMARAN System procedure may materially differ from those presented in this prospectus.
If the actual number of people with lower back pain who would benefit from The CATAMARAN System and the size and future growth
in the market and related costs savings to the healthcare system is smaller than we have estimated, it may impair our projected
sales growth and have an adverse impact on our business.
25
In the future our product may become
obsolete, which would negatively affect operations and financial condition.
The medical device industry is characterized
by rapid and significant change. There can be no assurance that other companies will not succeed in developing or marketing devices,
and products that are more effective than The CATAMARAN System or that would render The CATAMARAN System obsolete or non-competitive.
Additionally, new surgical procedures, medications and other therapies could be developed that replace or reduce the importance
of our product. Accordingly, our success will depend in part on our ability to respond quickly to medical and changes through the
development and introduction of new products. Product development involves a high degree of risk and there can be no assurance
that our new product development efforts will result in any commercially successful products.
If we experience significant disruptions
in our information technology systems
,
our business, results of operations, and financial condition could be adversely
affected.
The efficient operation of our business
depends on our information technology systems. We will rely on our information technology systems to effectively manage:
•
sales and marketing, accounting, and financial functions;
•
inventory management;
•
engineering and product development tasks; and
•
our research and development data.
Our information technology systems are
vulnerable to damage or interruption from:
•
earthquakes, fires, floods, and other natural disasters;
•
terrorist attacks and attacks by computer viruses or hackers;
•
power losses; and
•
computer systems, or Internet, telecommunications, or data network failures.
The failure of our information technology
systems to perform as we anticipate or our failure to effectively implement new systems could disrupt our entire operation and
could result in decreased sales, increased overhead costs, excess inventory and product shortages, and legal liability issues,
all of which could have a material adverse effect on our reputation, business, results of operations, and financial condition.
We may seek to grow our business
through acquisitions of or investments in new or complementary businesses, products or technologies, and the failure to manage
acquisitions or investments, or the failure to integrate them with our existing business, could have a material adverse effect
on us.
26
From time to time, we expect to consider
opportunities to acquire or make investments in other technologies, products, and businesses that may enhance our capabilities,
complement our current product, or expand the breadth of our markets or customer base. Potential and completed acquisitions and
strategic investments involve numerous risks, including:
•
problems assimilating the purchased technologies, products, or business operations;
•
issues maintaining uniform standards, procedures, controls, and policies;
•
unanticipated costs and liabilities associated with acquisitions;
•
diversion of management's attention from our core business;
•
adverse effects on existing business relationships with suppliers and customers;
•
risks associated with entering new markets in which we have limited or no experience;
•
potential loss of key employees of acquired businesses; and
•
increased legal and accounting compliance costs.
We have no current commitments with respect
to any acquisition or investment. We do not know if we will be able to identify acquisitions, we deem suitable, whether we will
be able to successfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully
integrate any acquired business, product, or technology into our business or retain any key personnel, suppliers, or distributors.
Our ability to successfully grow through acquisitions depends upon our ability to identify, negotiate, complete, and integrate
suitable target businesses and to obtain any necessary financing. These efforts could be expensive and time consuming and may disrupt
our ongoing business and prevent management from focusing on our operations. If we are unable to successfully integrate any acquired
businesses, products, or technologies effectively, our business, results of operations, and financial condition will be materially
adversely affected.
We may enter into collaborations,
in-licensing arrangements, joint ventures, strategic alliances, or partnerships with third-parties that may not result in the development
of commercially viable products or the generation of significant future revenue.
In the ordinary course of our business,
we may enter collaborations, in-licensing arrangements, joint ventures, strategic alliances, partnerships, or other arrangements
to develop products and to pursue new markets. We have not entered any collaboration arrangements to date. Proposing, negotiating,
and implementing collaborations, in-licensing arrangements, joint ventures, strategic alliances, or partnerships may be a lengthy
and complex process. Other companies, including those with substantially greater financial, marketing, sales, technology, or other
business resources, may compete with us for these opportunities or arrangements. We may not identify, secure, or complete any such
transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all. We have limited institutional
knowledge and experience with respect to these business development activities, and we may also not realize the anticipated benefits
of any such transaction or arrangement. These collaborations may not result in the development of products that achieve commercial
success or result in significant revenue and could be terminated prior to developing any products.
Additionally, we may not be able to exercise
sole decision-making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses
on decisions, and our future collaborators may have economic or business interests or goals that are, or that may become, inconsistent
with our business interests or goals. It is possible that conflicts may arise with our collaborators, such as conflicts concerning
the achievement of performance milestones, or the interpretation of significant terms under any agreement, such as those related
to financial obligations or the ownership or control of intellectual property developed during the collaboration. If any conflicts
arise with any future collaborators, they may act in their self- interest, which may be adverse to our best interest, and they
may breach their obligations to us. In addition, we may have limited control over the amount and timing of resources that any future
collaborators devote to our or their future products.
27
Disputes between us and our collaborators
may result in litigation or arbitration which would increase our expenses and divert the attention of our management. Further,
these transactions and arrangements will be contractual in nature and will generally be terminable under the terms of the applicable
agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or
may need to purchase such rights at a premium. If we enter into in-bound intellectual property license agreements, we may not be
able to fully protect the licensed intellectual property rights or maintain those licenses. Future licensors could retain the right
to prosecute and defend the intellectual property rights licensed to us, in which case we would depend on the ability of our licensors
to obtain, maintain and enforce intellectual property protection for the licensed intellectual property. These licensors may determine
not to pursue litigation against other companies or may pursue such litigation less aggressively than we would. Further, entering
into such license agreements could impose various diligence, commercialization, royalty, or other obligations on us. Future licensors
may allege that we have breached our license agreement with them, and accordingly seek to terminate our license, which could adversely
affect our competitive business position and harm our business prospects.
We are increasingly dependent on
information technology, and our systems and infrastructure face certain risks, including cybersecurity and data leakage risks.
Significant disruptions to our
information technology systems or breaches of information security could adversely affect our business. In the ordinary
course of business, we will collect, store and transmit large amounts of confidential information, and it is critical that we
do so in a secure manner to maintain the confidentiality and integrity of such information. We have also outsourced
significant elements of our information technology infrastructure; as a result, we manage independent vendor relationships
with third parties who are responsible for maintaining significant elements of our information technology systems and
infrastructure and who may or could have access to our confidential information. The size and complexity of our information
technology systems, and those of our third-party vendors, make such systems potentially vulnerable to service interruptions
and security breaches from inadvertent or intentional actions by our employees, partners or vendors. These systems are also
vulnerable to attacks by malicious third parties and may be susceptible to intentional or accidental physical damage to the
infrastructure maintained by us or by third parties. Maintaining the secrecy of confidential, proprietary and/or trade secret
information is important to our competitive business position. While we have taken steps to protect such information and have
invested in systems and infrastructures to do so, there can be no guarantee that our efforts will prevent service
interruptions or security breaches in our systems or the unauthorized or inadvertent wrongful use or disclosure of
confidential information that could adversely affect our business operations or result in the loss, dissemination or misuse
of critical or sensitive information. A breach our security measures or the accidental loss, inadvertent disclosure,
unapproved dissemination, misappropriation or misuse of trade secrets, proprietary information or other confidential
information, whether as a result of theft, hacking, fraud, trickery or other forms of deception, or for any other cause,
could enable others to produce competing products, use our proprietary technology or information, and/or adversely affect our
business position. Further, any such interruption, security breach, loss or disclosure of confidential information could
result in financial, legal, business and reputational harm to us and could have a material adverse effect on our business,
financial position, results of operations and/or cash flow.
Risks Related to Our Legal and Regulatory
Environment
We and our contract manufacturers
are subject to extensive governmental regulation both in the United States and abroad, and failure to comply with applicable requirements
could cause our business to suffer.
The medical device industry is regulated
extensively by governmental authorities, principally the FDA and corresponding state and foreign regulatory agencies. The FDA and
other U.S. and foreign governmental agencies regulate, among other things, with respect to medical devices:
•
design, development, and manufacturing;
•
testing, labeling, content, and language of instructions for use and storage;
•
clinical trials;
28
•
product safety;
•
marketing, sales, and distribution;
•
premarket clearance and approval;
•
conformity assessment procedures;
•
record keeping procedures;
•
advertising and promotion;
•
compliance with good manufacturing practices requirements;
•
recalls and field safety corrective actions;
•
post-market surveillance, including reporting of deaths or serious injuries and malfunctions that,
if they were to recur, could lead to death or serious injury;
•
post-market approval studies; and
•
product import and export.
The regulations to which we are subject
are complex and have tended to become more stringent over time. Regulatory changes could result in restrictions on our ability
to carry on or expand our operations, difficulties achieving new product clearances, higher than anticipated costs or lower than
anticipated sales.
Before we can market or sell a new regulated
product or make a significant modification to an existing product in the United States, with very limited exception, we must obtain
either clearance under Section 510(k) of the FDCA for Class II devices or approval of a premarket approval, or PMA, application
from the FDA for a Class III device. In the 510(k) clearance process, the FDA must determine that a proposed device is "substantially
equivalent" to a device legally on the market, known as a "predicate" device, with respect to intended use, technology,
and safety and effectiveness, in order to clear the proposed device for marketing. Clinical data is sometimes required to support
substantial equivalence. The PMA pathway requires an applicant to demonstrate the safety and effectiveness of the device based,
in part, on extensive data, including, but not limited to, technical, preclinical, clinical trial, manufacturing, and labeling
data. The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life-sustaining, life-supporting,
or implantable devices. Products that are approved through a PMA application generally need FDA approval before they can be modified.
Similarly, some modifications made to products cleared through a 510(k) may require a new 510(k). Both the 510(k) and PMA processes
can be expensive and lengthy and require the payment of significant fees, unless exempt. The FDA's 510(k) clearance process
usually takes from three to 12 months, but may last longer. The process of obtaining a PMA is much more costly and uncertain than
the 510(k) clearance process and generally takes from one to three years, or even longer, from the time the application is submitted
to the FDA until an approval is obtained. The process of obtaining domestic and international regulatory clearances or approvals
to market a medical device can be costly and time consuming, and we may not be able to obtain these clearances or approvals on
a timely basis, if at all.
In the United States, all of the components to The CATAMARAN System
have either received premarket clearance under Section 510(k) of the FDCA or are exempt from premarket review. If
the FDA requires us to go through a lengthier, more rigorous examination for future products or modifications to existing products
than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline.
In addition, the FDA may determine that future products will require the more costly, lengthy, and uncertain PMA process. Although
we do not currently market any devices under PMA, the FDA may demand that we obtain a PMA prior to marketing certain of our future
products. In addition, if the FDA disagrees with our determination that a product we currently market is subject to an exemption
from premarket review, the FDA may require us to submit a 510(k) or PMA in order to continue marketing the product. Further, even
with respect to those future products where a PMA is not required, we cannot assure you that we will be able to obtain the 510(k)
clearances with respect to those products.
29
The FDA can delay, limit or deny clearance
or approval of a device for many reasons, including:
•
we may not be able to demonstrate to the FDA's satisfaction that our product is safe and
effective for their intended users;
•
the data from our pre-clinical studies and clinical trials may be insufficient to support clearance
or approval, where required; and
•
the manufacturing process or facilities we use may not meet applicable requirements.
In addition, the FDA may change its clearance
and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or
delay clearance or approval of our product under development or impact our ability to modify our currently approved or cleared
product on a timely basis.
Any delay in, or failure to receive or
maintain, clearance or approval for our product under development could prevent us from generating revenue from these products
or achieving profitability.
In addition, even after we have obtained
the proper regulatory clearance or approval to market a product, the FDA has the power to require us to conduct post-market surveillance
on our product. These studies can be very expensive and time consuming to conduct. Failure to comply with those studies in a timely
manner could result in the revocation of the 510(k) clearance for a product that is subject to such surveillance and the recall
or withdrawal of the product, which could prevent us from generating sales from that product in the United States.
Additionally, as part of the conformity
assessment process, medical device manufacturers must carry out a clinical evaluation of their medical devices to verify that they
comply with the relevant Essential Requirements covering safety and performance. A clinical evaluation includes an assessment of
whether a medical device's performance is in accordance with its intended use and that the known and foreseeable risks linked
to the use of the device under normal conditions are minimized and acceptable when weighed against the benefits of its intended
purpose. The clinical evaluation conducted by the manufacturer must also address any clinical claims, the adequacy of the device
labeling and information (particularly claims, contraindications, precautions/ warnings) and the suitability of related Instructions
for Use. This assessment must be based on clinical data, which can be obtained from (i) clinical studies conducted on the
devices being assessed; (ii) scientific literature from similar devices whose equivalence with the assessed device can be
demonstrated; or (iii) both clinical studies and scientific literature.
The FDA and other regulatory authorities
have broad enforcement powers. Regulatory enforcement or inquiries, or other increased scrutiny on us, could dissuade some surgeons
from using our product and adversely affect our reputation and the perceived safety and effectiveness of our product.
Failure to comply with applicable regulations
could jeopardize our ability to sell our product and result in enforcement actions such as:
•
warning letters;
•
fines;
•
injunctions;
•
civil penalties;
•
termination of distribution;
•
recalls or seizures of products;
30
•
delays in the introduction of products into the market;
•
total or partial suspension of production;
•
facility closures;
•
refusal of the FDA other regulators to grant future clearances or approvals
•
in the most serious cases, criminal penalties.
Adverse action by an applicable regulatory
agency the FDA could result in inability to produce our product in a cost-effective and timely manner, or at all, decreased sales,
higher prices, lower margins, additional unplanned costs or actions, damage to our reputation, and could have material adverse
effect on our reputation, business, results of operations, and financial condition.
We and our national distributor along
with their independent sales representatives must comply with U.S. federal and state fraud and abuse laws, including those relating
to physician kickbacks and false claims for reimbursement.
Healthcare providers, distributors, physicians,
and third-party payors play a primary role in the distribution, recommendation, ordering, and purchasing of any implant or other
medical device for which we have or obtain marketing clearance or approval. Through our arrangements with customers and third-party
payors, we are exposed to the risk that our employees, independent contractors, principal investigators, consultants, vendors,
or independent sales representatives may engage in fraudulent or other illegal activity. Misconduct by these parties could include,
among other infractions or violations, intentional, reckless and/or negligent conduct or unauthorized activity that violates FDA
regulations, manufacturing standards, federal and state healthcare fraud and abuse laws and regulations, laws that require the
true, complete, and accurate reporting of financial information or data, other commercial or regulatory laws or requirements, and
equivalent foreign rules. We plan to implement a compliance program, Code of Conduct, and associated policies and procedures, but
it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we plan
to take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting
us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or
regulations, and government authorities may conclude that our business practices do not comply with applicable fraud and abuse
or other healthcare laws and regulations or guidance despite our good faith efforts to comply.
There are numerous U.S. federal and state
laws pertaining to healthcare fraud and abuse, including anti-kickback and false claims laws. Our relationships and our distributors'
relationships with surgeons, other healthcare professionals, and hospitals are subject to scrutiny under these laws.
Healthcare fraud and abuse laws and related
regulations are complex, and even minor irregularities can potentially give rise to claims that a statute or prohibition has been
violated. The laws that may affect our ability to operate include:
•
the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully
soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward either
the referral of an individual for, or the purchase, order or recommendation of, items or services for which payment may be made,
in whole or in part, under federal healthcare programs, such as the Medicare and Medicaid programs;
•
the federal False Claims Act, which prohibits, among other things, individuals or entities from
knowingly presenting, or causing to be presented, false or fraudulent claims for payment of government funds; knowingly making,
using, or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease, or conceal an
obligation to pay money to the federal government. A claim including items or services resulting from a violation of the federal
Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. There are also criminal penalties
for making or presenting a false or fictitious or fraudulent claim to the federal government;
31
•
the federal Health Insurance Portability and Accountability Act of 1996, which imposes criminal
and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud
any healthcare benefit program including private third-party payors, or knowingly and willfully falsifying, concealing, or covering
up a material fact or making a materially false, fictitious, or fraudulent statement or representation, or making or using any
false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection
with the delivery of or payment for healthcare benefits, items, or services;
•
the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics
and medical supplies for which payment is available under Medicare, Medicaid, or the Children's Health Insurance Program
to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments or other "transfers
of value" made to physicians and teaching hospitals, and requires applicable manufacturers to report annually to CMS ownership
and investment interests held by physicians and their immediate family members and payments or other "transfers of value"
to such physician owners; and
•
analogous state law equivalents of each of the above federal laws, such as anti-kickback and false
claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws
that require device companies to comply with the industry's voluntary compliance guidelines and the applicable compliance
guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other
potential referral sources; state beneficiary inducement laws, and state laws that require device manufacturers to report information
related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, many of
which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
If we or our employees are found to have
violated any of the above laws we may be subjected to administrative, civil and criminal penalties, including imprisonment, exclusion
from participation in federal healthcare programs, such as Medicare and Medicaid, and significant fines, monetary penalties and
damages, and damage to our reputation. Additional information about these laws is provided in "Business—Regulation."
We have entered into consulting agreements
with surgeons who are also customers. We anticipate entering into additional agreements with surgeons who use our product as we
move into full commercialization. The primary mission of these surgeon advisors is research and development and surgeon education.
Medical device technology development requires thoughtful surgeon input from experienced healthcare professionals. Medical device
surgeon education requires experienced faculty for didactic and anatomic lab activities in a peer-to-peer setting. We believe
these engagements will allow us to successfully meet the expectations of the physician community. In addition, a small number
of surgeons (which are or may become customers) own less than 1.0% of our stock, invested in convertible notes, or granted stock
options which they either purchased in an arm's length transaction on terms identical to those offered to others or received
from us as fair market value consideration for consulting services performed. While all of these transactions were structured
with the intention of complying with all applicable laws, including the federal Anti-Kickback Statute, state anti-kickback laws
and other applicable laws, to the extent applicable, it is possible that regulatory agencies may view these transactions as prohibited
arrangements that must be restructured, or discontinued, or for which we could be subject to significant penalties. We would be
materially and adversely affected if regulatory agencies interpret our financial relationships with surgeons who order our product
to be in violation of applicable laws and we were unable to comply with such laws, which could subject us to, among other things,
monetary penalties for non-compliance, the cost of which could be substantial.
In certain cases, federal and state authorities
pursue actions for false claims on the basis that manufacturers and distributors are promoting unapproved, or "off-label"
uses of their products. Pursuant to FDA regulations, we can only market our product for cleared or approved uses. Although surgeons
are permitted to use medical devices for indications other than those cleared or approved by the FDA, we are prohibited from promoting
products for "off-label" uses. We market our product and provide promotional materials and training programs to surgeons
regarding the use of our product. If it is determined that our marketing, promotional materials or training programs constitute
promotion of unapproved uses, we could be subject to significant fines in addition to regulatory enforcement actions, including
the issuance of a warning letter, injunction, seizure, criminal penalty, and damage to our reputation. Federal and state authorities
also pursue actions for false claims based upon improper billing and coding advice or recommendations, as well as decisions related
to the medical necessity of procedures, including the site-of-service where procedures are performed. Actions under the federal
False Claims Act may also be brought by whistleblowers under its
qui tam
provisions.
32
To enforce compliance with the
federal laws, the U.S. Department of Justice has increased its scrutiny of interactions between healthcare companies and
healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the
healthcare industry. Dealing with investigations can be time and resource consuming and can divert management's
attention from the business. Additionally, if a healthcare company settles an investigation with the Department of Justice or
other law enforcement agencies, it may need to agree to additional onerous compliance and reporting requirements as part of a
consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise
have an adverse effect on our business. Even if we are not determined to have violated these laws, government investigations
into these issues typically require the expenditure of significant resources and generate negative publicity, which could
harm our financial condition and divert resources and the attention of our management from operating our business.
The scope and enforcement of these laws
is uncertain and subject to rapid change. The shifting compliance environment and the need to build and maintain robust and expandable
systems to comply with different compliance and/or reporting requirements in multiple jurisdictions increase the possibility that
we may run afoul of one or more of the requirements or that federal or state regulatory authorities might challenge our current
or future activities under these laws. Additionally, we cannot predict the impact of any changes in these laws, whether or not
retroactive.
Our failure to adequately protect
personal information in compliance with evolving legal requirements could harm our business.
In the ordinary course of our business, we
plan to collect and store sensitive data, including legally protected personally identifiable information. We may collect this
kind of information during the course of future clinical trials and for possible post-marketing safety vigilance, helping enable
surgeons and their patients to pursue claims for reimbursement for procedures using The CATAMARAN System and servicing potential
warranty claims.
There are a number of state, federal, and
international laws protecting the privacy and security of health information and personal data. These data protection and privacy-related
laws and regulations are evolving and may result in ever-increasing regulatory and public scrutiny of companies' data practices
and escalating levels of enforcement and sanctions. As part of the American Recovery and Reinvestment Act 2009, or ARRA, Congress
amended the privacy and security provisions of the Health Insurance Portability and Accountability Act, or HIPAA. HIPAA imposes
certain requirements regarding the privacy, security, use, and disclosure of an individual's protected health information,
or PHI, by certain health care providers, health care clearinghouses, and health insurance plans, collectively referred to as "covered
entities," and their "business associates," or subcontractors who provide services to covered entities that involve
the creation, use, maintenance, or disclosure of PHI. ARRA included significant increases in the penalties for improper use or
disclosure of an individual's PHI under HIPAA and extended enforcement authority to state attorneys general. The amendments
also created notification requirements applicable to covered entities and business associates in certain cases when PHI in their
control has been inappropriately accessed or disclosed. In the case of a breach of unsecured PHI, covered entities may be required
to provide notification to individuals affected by the breach, federal regulators, and, in some cases, local and national media.
In addition to HIPAA, most states have laws requiring notification of affected individuals and state regulators in the event of
a breach of "personal information," which is a broader class of information than the PHI protected by HIPAA. Certain
states also have data privacy requirements applicable to individually identifiable health information. Privacy laws in different
states may contain different requirements, and such laws may not be pre-empted by HIPAA, which could complicate our efforts to
comply.
In addition, even when HIPAA does not apply,
according to the FTC, failing to take appropriate steps to keep consumers' personal information secure constitutes unfair
acts or practices in or affecting commerce in violation of Section 5(a) of the FTCA, 15 U.S.C § 45(a). The FTC expects
a company's data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information
it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
Medical data is considered sensitive data that merits stronger safeguards. The FTC's guidance for appropriately securing
consumers' personal information is similar to what is required by the HIPAA Security Rule.
33
Our failure to comply with applicable laws
and regulations, or to protect such data, could result in enforcement actions against us, including fines, imprisonment of company
officials and public censure, claims for damages by end-customers, and other affected individuals, and the imposition of integrity
obligations and agency oversight, damage to our reputation, and loss of goodwill, any of which could harm on our operations, financial
performance, and business. Evolving and changing definitions of personal data and personal information, within the United States,
and elsewhere, may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that
may involve the sharing of data. Moreover, if the relevant laws and regulations change, or are interpreted and applied in a manner
that is inconsistent with our data practices or the operation of our product, or if we expand into new regions and are required
to comply with new requirements, we may need to expend resources in order to change our business operations, data practices, or
the manner in which our product operates. Even the perception of privacy concerns, whether or not valid, may harm our reputation
and inhibit adoption of our product.
Even if our product is approved by regulatory
authorities if our contract manufacturers fail to comply with ongoing FDA, or if we experience unanticipated problems with our
products, these products could be subject to restrictions or withdrawal from the market.
Any product for which we obtain regulatory
clearance or approval, , and the manufacturing processes, reporting requirements, post-approval clinical data, and promotional
activities for such product, will be subject to continued regulatory review, oversight and periodic inspections by the FDA and
other domestic bodies. In particular, we and our contract manufacturers are required to comply with FDA's Quality System
Regulations ("QSR") for the manufacture of our product and other regulations which cover the methods and documentation
of the design, testing, production, control, quality assurance, labeling, packaging, storage, and shipping of any product for which
we obtain regulatory clearance or approval.
The failure by us or one of our contract manufacturers
to comply with applicable statutes and regulations, or the failure to timely and adequately respond to any adverse inspectional
observations or product safety issues, could result in, among other things, any of the following enforcement actions:
•
untitled letters, warning letters, fines, injunctions, consent, and civil penalties;
•
unanticipated expenditures to address or defend such actions;
•
customer notifications for repair, replacement, refunds;
•
recall, detention, or seizure of our product;
•
operating restrictions or partial suspension or total shutdown of production;
•
refusing or delaying our requests for 510(k) clearance or premarket approval and conformity assessments
of new products or modified products;
•
limitations on the intended uses for which the product may be marketed;
•
operating restrictions;
•
withdrawing 510(k) clearances or PMA approvals that have already been granted;
•
criminal prosecution.
34
In addition, we may be required to conduct
costly post-market testing and surveillance to monitor the safety or effectiveness of our product, and we must comply with medical
device reporting requirements, including the reporting of adverse events and malfunctions related to our product. Later discovery
of previously unknown problems with our product, including unanticipated adverse events or adverse events of unanticipated severity
or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR, may result in changes to labeling,
restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls,
a requirement to repair, replace, or refund the cost of any medical device we manufacture or distribute, fines, suspension, variation,
or withdrawal of regulatory approvals product seizures, injunctions, or the imposition of civil, administrative, or criminal penalties
which would adversely affect our business, operating results, and prospects.
If the FDA determines that our promotional
materials, labeling, training or other marketing or educational activities constitute promotion of an unapproved use, it could
request that we cease or modify our training or promotional materials or subject us to regulatory enforcement actions. It is also
possible that other federal, state or foreign enforcement authorities might take action if they consider our training or other
promotional materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under
other statutory authorities, such as laws prohibiting false or fraudulent claims for payment of government funds.
If any of these actions were to occur it
would harm our reputation and cause our product sales and profitability to suffer and may prevent us from generating revenue. Furthermore,
our key component suppliers may not currently be or may not continue to be in compliance with all applicable regulatory requirements,
which could result in our failure to produce our product on a timely basis and in the required quantities, if at all.
The FDA has not yet inspected our facility
but we expect an inspection in the future.
Our employees, independent contractors,
consultants, contract manufacturers, and national distributor along with their independent sales representatives may engage in
misconduct or other improper activities, relating to regulatory standards and requirements.
We are exposed to the risk that our employees,
independent contractors, consultants, contract manufacturers, and national distributor along with their independent sales representatives
may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or
negligent conduct or disclosure of unauthorized activities to us that violates FDA regulations, including those laws requiring
the reporting of true, complete and accurate information to the FDA, manufacturing standards, federal and state healthcare laws
and regulations, and laws that require the true, complete and accurate reporting of financial information or data. These laws and
regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer
incentive programs, and other business arrangements. Misconduct by these parties could also involve the improper use of individually
identifiable information, including, without limitation, information obtained in the course of clinical trials, which could result
in regulatory sanctions and serious harm to our reputation. We have a compliance program, code of conduct and associated policies
and procedures, but it is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent
this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations
or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are
instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant
impact on our business, including the imposition of significant civil, criminal, and administrative penalties, including, without
limitation, damages, fines, disgorgement of profits, imprisonment, exclusion from participation in government healthcare programs,
such as Medicare and Medicaid, and the curtailment or restructuring of our operations.
We may be subject to enforcement
action, including fines, penalties or injunctions, if we are determined to be engaging in the off-label promotion of our product.
Our promotional materials and training
methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of off-label
use. Physicians may use our product off-label, as the FDA does not restrict or regulate a physician's choice of treatment
within the practice of medicine. In the United States, the full indication for The CATAMARAN System is: "The Tenon Catamaran
Sacroiliac Joint Fixation System (CAT SIJ Fixation System) is intended for sacroiliac joint fusion for conditions including sacroiliac
joint disruptions and degenerative sacroiliitis. Contraindications are patients with the following conditions: skeletally immature
spines; deformities; severe osteoporosis; morbid obesity, tumor resection and active infection at treatment site.
35
We believe that the specific surgical procedures
for which our product are marketed fall within the scope of the surgical applications that have been cleared by the FDA. However,
if the FDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that
we modify our training or promotional materials, require us to stop promoting our product for those specific procedures until we
obtain FDA clearance or approval for them, or subject us to regulatory or enforcement actions, including the issuance of an untitled
letter, a warning letter, injunction, seizure, civil fines, and criminal penalties. It is also possible that other federal, state
or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion
of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting
false or fraudulent claims for payment of government fund. In that event, our reputation could be damaged and adoption of the product
would be impaired. Although our policy is to refrain from statements that could be considered off-label promotion of our product,
the FDA or another regulatory agency could disagree and conclude that we have engaged in off-label promotion. In addition, the
off-label use of our product may increase the risk of injury to patients, and, in turn, the risk of product liability claims. Product
liability claims are expensive to defend and could divert our management's attention, result in substantial damage awards
against us and harm our reputation.
We are required to report certain
malfunctions, deaths, and serious injuries associated with our product, which can result in voluntary corrective actions or agency
enforcement actions.
Further, under the FDA's medical
device reporting, regulations, we are required to report to the FDA any information that our product may have caused or contributed
to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or
contribute to death or serious injury. If we fail to report these events to the FDA within the required timeframes, or at all,
FDA could take enforcement action against us. Any such adverse event involving our product or repeated product malfunctions may
result in a voluntary or involuntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection
or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit could
divert managerial and financial resources, impair our ability to manufacture our product in a cost-effective and timely manner,
and have an adverse effect on our reputation, results of operations, and financial condition.
Any adverse event involving our product
in the United States could result in future voluntary corrective actions, such as recalls, including corrections, or customer notifications,
or agency action, such as inspection or enforcement actions. If malfunctions do occur, we may be unable to correct the malfunctions
adequately or prevent further malfunctions, in which case we may need to cease manufacture and distribution of the affected products,
initiate voluntary recalls, and redesign the products. Regulatory authorities may also take actions against us, such as ordering
recalls, imposing fines, or seizing the affected products. Any corrective action, whether voluntary or involuntary, will require
the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial
results.
A recall of our product, either voluntarily
or at the direction of the FDA or the discovery of serious safety issues or malfunctions with our product, can result in voluntary
corrective actions or agency enforcement actions, which could have a significant adverse impact on us.
The FDA has the authority to require the
recall of commercialized products in the event of material deficiencies or defects in design or manufacture or in the event that
a product poses an unacceptable risk to health. Manufacturers may, under their own initiative, recall a product if any material
deficiency in a device is found.
In the case of the FDA, the authority to
require a recall must be based on an FDA finding that there is an unreasonable risk of substantial public harm. In addition, foreign
governmental bodies have the authority to require the recall of our product in the event of material deficiencies or defects in
design or manufacture. A government-mandated or voluntary recall by us or one of the independent sales representatives could occur
as a result of an unacceptable risk to health, component failures, manufacturing errors, design or labeling defects, or other deficiencies
and issues. Recalls of any of our product would divert managerial and financial resources and have an adverse effect on our reputation,
results of operations, and financial condition, which could impair our ability to produce our product in a cost-effective and timely
manner in order to meet our customers' demands. We may also be required to bear other costs or take other actions that may
have a negative impact on our future sales and our ability to generate profits.
36
The FDA requires that certain classifications
of recalls be reported to FDA within 10 working days after the recall is initiated. Companies are required to maintain certain
records of recalls, even if they are not reportable to the FDA. We may initiate voluntary recalls involving our product in the
future that we determine do not require notification of the FDA. If the FDA disagrees with our determinations, they could require
us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect
our sales. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.
Modifications to our product may
require new 510(k) clearances or premarket approvals may require us to cease marketing or recall the product until clearances
Any modification to a 510(k)-cleared device
that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design,
or manufacture, requires a new 510(k) clearance or, possibly, a PMA. The FDA requires every manufacturer make and document this
determination in the first instance. A manufacturer may determine that a modification could not significantly affect safety or
effectiveness and does not represent a major change in its intended use, so that no new 510(k) clearance is necessary. FDA may
review any manufacturer's decision and may not agree with our decisions regarding whether new clearances or approvals are
necessary. The FDA may also on its own initiative determine that a new clearance or approval is required.
We have modified our product and have determined
based on our review of the applicable FDA guidance that a new 510(k) clearances or PMAs is not required. If the FDA disagrees with
our determination and requires us to submit new 510(k) clearances or PMAs for modifications to our previously cleared products
for which we have concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall
the modified product until we obtain clearance or approval, and we may be subject to significant enforcement action, regulatory
fines, or penalties.
If a manufacturer determines that a modification
to an FDA-cleared device could significantly affect its safety or effectiveness or would constitute a major change in its intended
use, then the manufacturer must file for a new 510(k) clearance or possibly a premarket approval application. Where we determine
that modifications to our product require a new 510(k) clearance or premarket approval application, we may not be able to obtain
those additional clearances or approvals for the modifications or additional indications in a timely manner, or at all. FDA's
ongoing review of the 510(k) programs may make it more difficult for us to make modifications to our previously cleared products,
either by imposing more strict requirements on when a new 510(k) for a modification to a previously cleared product must be submitted
or applying more onerous review criteria to such submissions.
Clinical trials necessary to support a
510(k) or reimbursement may require the enrolment of large numbers of patients, and suitable patients may be difficult to identify
and recruit. Delays or failures in our clinical trials could affect third party reimbursement as many of the payors want to see
Peer reviewed articles to maintain coverage and lack of changes in reimbursement could materially slow down our commercial efforts
and effort our revenue projections.
The results of our future clinical
trials may not support our product candidate claims or may result in the discovery of adverse side effects.
If our anticipated clinical trials are
initiated and completed as planned, we cannot be certain that their results will support our product marketing claims or third
party reimbursors will agree with our conclusions regarding them. The clinical trial process may fail to demonstrate efficacy and
cost effectiveness of our product and may hinder the adoption of our product or ability to obtain payor coverage. It is also possible
that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the product candidate's
profile.
37
We may incur product liability losses,
and insurance coverage may be inadequate or unavailable to cover these losses.
Our business exposes us to potential product
liability claims that are inherent in the testing, design, manufacture, and sale of medical devices for SI-Joint surgery procedures.
SI-Joint surgery involves significant risk of serious complications, including bleeding, nerve injury, paralysis, and even death.
In addition, if longer-term patient results and experience indicates that our product or any component of such product cause tissue
damage, motor impairment, or other adverse effects, we could be subject to significant liability. Surgeons may misuse or ineffectively
use our product, which may result in unsatisfactory patient outcomes or patient injury. We could become the subject of product
liability lawsuits alleging that component failures, manufacturing flaws, design defects, or inadequate disclosure of product-related
risks or product-related information resulted in an unsafe condition or injury to patients. Product liability lawsuits and claims,
safety alerts, or product recalls, regardless of their ultimate outcome, could have a material adverse effect on our business and
reputation, our ability to attract and retain customers and our results of operations or financial condition.
Although we maintain third-party product
liability insurance coverage, it is possible that claims against us may exceed the coverage limits of our insurance policies or
cause us to record a self-insured loss. Even if any product liability loss is covered by an insurance policy, these policies typically
have substantial retentions or deductibles that we are responsible for. Product liability claims in excess of applicable insurance
coverage could have a material adverse effect on our business, results of operations, and financial condition.
In addition, any product liability claim
brought against us, with or without merit, could result in an increase of our product liability insurance rates. Insurance coverage
varies in cost and can be difficult to obtain, and we cannot guarantee that we will be able to obtain insurance coverage in the
future on terms acceptable to us or at all.
We are subject to environmental laws
and regulations that can impose significant costs and expose us to potential financial liabilities.
Our business and facility and those of
our contract manufacturer are subject to foreign, federal, state, and local laws and regulations relating to the protection of
human health and the environment, including those governing the use, manufacture, storage, handling, and disposal of, and exposure
to, such materials and wastes. In addition, under some environmental laws and regulations, we could be held responsible for costs
relating to any contamination at our past or present facilities and at third-party waste disposal sites even if such contamination
was not caused by us. A failure to comply with current or future environmental laws and regulations could result in severe fines
or penalties. Any such expenses or liability could have a significant negative impact on our business, results of operations, and
financial condition.
U.S. tax legislation may materially
affect our financial condition, results of operations and cash flows.
The Tax Cuts and Jobs
Act (the "Tax Act") has significantly changed the U.S. federal income taxation of U.S. businesses, including by reducing
the U.S. corporate income tax rate, limiting interest deductions, permitting immediate expensing of certain capital expenditures,
modifying or repealing many business deductions and credits.
The Coronavirus Aid, Relief, and Economic
Security Act (the "CARES Act") modifies certain provisions of the Tax Act, including increasing the amount of interest
expense that may be deducted.
The Tax Act as modified by the CARES Act
is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations
and implementing regulations by the Treasury and IRS, any of which could lessen or increase certain adverse impacts of the legislation.
In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal
taxable income as a starting point for computing state and local tax liabilities. Our analysis and interpretation of this legislation
is preliminary and ongoing and there may be material adverse effects resulting from the legislation that we have not yet identified.
While some of the changes made by the tax legislation may adversely affect us, other changes may be beneficial. We continue to
work with our tax advisors and auditors to determine the full impact that the recent tax legislation as a whole will have on us.
We urge our investors to consult with their legal and tax advisors with respect to such legislation and its potential effect on
an investment in our common stock.
38
Risks Related to Our Intellectual Property
Our ability to protect our intellectual
property and proprietary technology is uncertain.
We rely primarily on patent, copyright, trademark
and trade secret laws, as well as confidentiality and non- disclosure agreements and other methods, to protect our proprietary
technologies and know-how. As of August 30, 2021, we owned one issued patent, eight pending patent applications and one trade mark.
We have applied for patent protection relating
to certain existing and proposed products and processes. While we generally apply for patents in those countries where we intend
to make, have made, use, or sell patented products, we may not accurately predict all the countries where patent protection will
ultimately be desirable. If we fail to timely file a patent application in any such country, we may be precluded from doing so
later. Furthermore, we cannot assure you that any of our patent applications will be approved. The rights granted to us under our
patents, including prospective rights sought in our pending patent applications, may not be meaningful or provide us with any commercial
advantage. In addition, those rights could be opposed, contested, or circumvented by our competitors or be declared invalid or
unenforceable in judicial or administrative proceedings. The failure of our patents to adequately protect our technology might
make it easier for our competitors to offer the same or similar products or technologies. Competitors may be able to design around
our patents or develop products that provide outcomes which are comparable to ours without infringing on our intellectual property
rights. Due to differences between foreign and U.S. patent laws, our patented intellectual property rights may not receive the
same degree of protection in foreign countries as they would in the United States. Even if patents are granted outside the United
States, effective enforcement in those countries may not be available. Since most of our issued patents are for the United States
only, we lack a corresponding scope of patent protection in other countries. In countries where we do not have significant patent
protection, we may not be able to stop a competitor from marketing products in such countries that are the same as or similar to
our product.
We plan to rely on our trademarks, trade names
and brand names to distinguish our product from the products of our competitors and have registered or applied to register many
of these trademarks. We cannot assure you that our trademark applications will be approved. Third parties may also oppose our trademark
applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we
could be forced to rebrand our product, which could result in loss of brand recognition, and could require us to devote resources
to advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe upon our trademarks,
or that we will have adequate resources to enforce our trademarks.
We also rely on trade secrets, know-how, and
technology, which are not protected by patents, to maintain our competitive position. We try to protect this information by entering
into confidentiality and intellectual property assignment agreements with parties that develop intellectual property for us and/or
have access to it, such as our officers, employees, consultants, contract manufacturers and advisors. However, in the event of
unauthorized use or disclosure or other breaches of such agreements, we may not be provided with meaningful protection for our
trade secrets or other proprietary information. In addition, our trade secrets may otherwise become known or be independently discovered
by competitors. To the extent that our commercial partners, collaborators, employees, and consultants use intellectual property
owned by others in their work for us, disputes may arise as to the rights in related or resulting know- how and inventions. If
any of our trade secrets, know-how or other technologies not protected by a patent were to be disclosed to or independently developed
by a competitor, our business, financial condition, and results of operations could be materially adversely affected.
In the future, we may enter into licensing
agreements to maintain our competitive position. If we enter into in-bound intellectual property license agreements, we may not
be able to fully protect the licensed intellectual property rights or maintain those licenses. Future licensors could retain the
right to prosecute and defend the intellectual property rights licensed to us, in which case we would depend on the ability of
our licensors to obtain, maintain and enforce intellectual property protection for the licensed intellectual property. These licensors
may determine not to pursue litigation against other companies or may pursue such litigation less aggressively than we would. Further,
entering into such license agreements could impose various diligence, commercialization, royalty, or other obligations on us. Future
licensors may allege that we have breached our license agreement with them, and accordingly seek damages or to terminate our license,
which could adversely affect our competitive business position and harm our business prospects.
39
If a competitor infringes upon one of our
patents, trademarks, or other intellectual property rights, enforcing those patents, trademarks, and other rights may be difficult
and time consuming. Even if successful, litigation to defend our patents and trademarks against challenges or to enforce our intellectual
property rights could be expensive and time consuming and could divert management's attention from managing our business.
Moreover, we may not have sufficient resources to defend our patents or trademarks against challenges or to enforce our intellectual
property rights. In addition, if third parties infringe any intellectual property that is not material to the products that we
make, have made, use, or sell, it may be impractical for us to enforce this intellectual property against those third parties.
We may be subject to damages resulting
from claims that we, our employees, or our national distributor along with their independent sales representative have wrongfully
used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with
our competitors.
Many of our employees were previously employed
at other medical device companies, including our competitors or potential competitors, in some cases until recently. Some of the
independent sales representatives of our national distributor sell, or in the past have sold, products of our competitors. We may
be subject to claims that we, our employees, or the independent sales representatives of our national distributor have inadvertently
or otherwise used or disclosed trade secrets or other proprietary information of these former employers or competitors. In addition,
we have been and may in the future be subject to claims that we caused an employee to breach the terms of his or her non-competition
or non-solicitation agreement. Even if we are successful in defending against these claims, litigation could result in substantial
costs, divert the attention of management from our core business and harm our reputation. If our defense to those claims fails,
in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. There can be no assurance
that this type of litigation will not continue, and any future litigation or the threat thereof may adversely affect our ability
to hire additional direct sales representatives. A loss of key personnel or their work product could hamper or prevent our ability
to commercialize product candidates, which could have an adverse effect on our business, results of operations, and financial condition.
The medical device industry is characterized
by patent litigation and we could become subject to litigation that could be costly, result in the diversion of management's
time and efforts, require us to pay damages, and/or prevent us from developing or marketing our existing or future products.
Our commercial success will depend in part
on not infringing the patents or violating the other proprietary rights of third parties. Significant litigation regarding patent
rights exists in our industry. Our competitors in both the United States and abroad, many of which have substantially greater resources
and have made substantial investments in competing technologies, may have applied for or obtained or may in the future apply for
and obtain, patents that will prevent, limit, or otherwise interfere with our ability to make and sell our product. We have conducted
a limited review of patents issued to third parties. The large number of patents, the rapid rate of new patent issuances, the complexities
of the technology involved, and the uncertainty of litigation increase the risk of business assets and management's attention
being diverted to patent litigation. Any litigation or claim against us, even those without merit, may cause us to incur substantial
costs, and could place a significant strain on our financial resources, divert the attention of management from our core business,
and harm our reputation. Further, as the number of participants in the medical device industry grows, the possibility of intellectual
property infringement claims against us increases. If we are found to infringe the intellectual property rights of third parties,
we could be required to pay substantial damages, including treble, or triple, damages if an infringement is found to be wilful,
and/or royalties and could be prevented from selling our product unless we obtain a license or are able to redesign our product
to avoid infringement. Any such license may not be available on reasonable terms, if at all, and there can be no assurance that
we would be able to redesign our product in a way that would not infringe the intellectual property rights of others. If we fail
to obtain any required licenses or make any necessary changes to our product or technologies, we may have to withdraw our existing
product from the market or may be unable to commercialize one or more of our future products, all of which could have a material
adverse effect on our business, results of operations, and financial condition. If passed into law, patent reform legislation currently
pending in the U.S. Congress could significantly change the risks associated with bringing or defending a patent infringement lawsuit.
For example, fee shifting legislation could require a non-prevailing party to pay the attorney fees of the prevailing party in
some circumstances.
40
Patent terms are limited and we may
not be able to effectively protect our product and business.
Patents have a limited lifespan. In the
U.S., the natural expiration of a patent is generally 20 years after it is filed. Although various extensions may be available,
the life of a patent, and the protection it affords, is limited. In addition, upon issuance in the U.S., the patent term may be
extended based on certain delays caused by the applicant(s) or the USPTO. Even if we obtain effective patent rights for all our
current patent applications, we may not have sufficient patent terms or regulatory exclusivity to protect our product, and our
business and results of operations would be adversely affected.
Changes in U.S. patent law could
diminish the value of patents in general, thereby impairing our ability to protect our product.
As is the case with other medical devices
companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in
the medical devices industry involves both technological and legal complexity. Therefore, obtaining and enforcing patents is costly,
time-consuming and inherently uncertain. In addition, the U.S. has recently enacted and is currently implementing wide-ranging
patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain
circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard
to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of
patents, once obtained. Depending on future actions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations
governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing
patents and patents that we might obtain in the future.
We may not be able to protect our
intellectual property rights throughout the world.
Filing, prosecuting and defending patents
on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights
in some countries outside the U.S. can be less extensive than those in the U.S. In addition, the laws of some foreign countries
do not protect intellectual property rights to the same extent as federal and state laws in the U.S. Competitors may use our technologies
in jurisdictions where we have not obtained patent protection to develop their own products and may also export otherwise infringing
products to territories where we have patent protection, but enforcement is not as strong as that in the U.S. These products may
compete with our product and our patents or other intellectual property rights may not be effective or sufficient to prevent them
from competing.
Many companies have encountered significant
problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries,
particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property
protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement
of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our
patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and
attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our
patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any
lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our
efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage
from the intellectual property that we develop or license.
41
If we are unable to protect the confidentiality
of our trade secrets, our business and competitive position could be harmed.
In addition to patent protection, we also rely
upon copyright and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees,
consultants, contract manufacturers and third parties, to protect our confidential and proprietary information. In addition to
contractual measures, we try to protect the confidential nature of our proprietary information using commonly accepted physical
and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an
employee or third party with authorized access, provide adequate protection for our proprietary information. Our security measures
may not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor, and recourse
we take against such misconduct may not provide an adequate remedy to protect our interests fully. Unauthorized parties may also
attempt to copy or reverse engineer certain aspects of our product that we consider proprietary. Enforcing a claim that a party
illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable.
Even though we use commonly accepted security measures, trade secret violations are often a matter of state law, and the criteria
for protection of trade secrets can vary among different jurisdictions. In addition, trade secrets may be independently developed
by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our
trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor,
our business and competitive position could be harmed.
Third parties may assert that our
employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
We employ individuals who previously worked
with other companies, including our competitors or potential competitors. Although we try to ensure that our employees and consultants
do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees,
consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade
secrets or other proprietary information, of a former employer or other third party. Litigation may be necessary to defend against
these claims. If we fail in defending any such claims or settling those claims, in addition to paying monetary damages or a settlement
payment, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims,
litigation could result in substantial costs and be a distraction to management and other employees.
Risks Related to this Offering and Ownership
of our Common Stock
Our management will have broad discretion
over the use of any net proceeds from this offering and you may not agree with how we use the proceeds, and the proceeds may not
be invested successfully.
Our management will have broad discretion as
to the use of any net proceeds from this offering and could use them for purposes other than those contemplated at the time of
this offering. Accordingly, you will be relying on the judgment of our management with regard to the use of any proceeds from this
offering and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used
appropriately. It is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for you.
Investors in this offering may experience
future dilution as a result of this and future equity offerings.
In order to raise additional capital, we
may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common
stock. Investors purchasing our shares or other securities in the future could have rights superior to existing common stockholders,
and the price per share at which we sell additional shares of our common stock or other securities convertible into or exchangeable
for our common stock in future transactions may be higher or lower than the price per share in this offering.
Sales of a significant number of
shares of our common stock in the public markets, or the perception that such sales could occur, could depress the market price
of our common stock.
Sales of a substantial number of shares
of our common stock in the public markets could depress the market price of our common stock and impair our ability to raise capital
through the sale of additional equity securities. We cannot predict the effect that future sales of our common stock would have
on the market price of our common stock.
42
If securities or industry analysts
do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could
decline.
The trading market for our common stock
will depend in part on the research and reports that securities or industry analysts publish about us or our business. If no or
too few securities or industry analysts provide coverage or if one or more of the analysts who cover us downgrade our stock or
publish inaccurate or unfavorable research about our business, the price of our stock would likely decline. If one or more of these
analysts cease coverage of us or fail to publish reports on us regularly, demand for our stock could decrease, which might cause
the price of our stock and trading volume to decline.
There is no existing market
for our common stock, and we cannot assure you that a market will develop for our common stock or what the market price of our
common stock will be.
Prior to this offering, there has been
no public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the
development of an active trading market on the Nasdaq Capital Market or otherwise or how liquid that market might become. If an
active trading market does not develop, you may have difficulty selling any shares of our common stock that you purchase, and the
value of such shares might be materially impaired.
In addition, we cannot predict the prices
at which our common stock will trade. The initial public offering price for our common stock will be determined by negotiations
between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market
following this initial public offering. Consequently, you may not be able to sell shares of our common stock at prices equal to
or greater than the price you paid in this initial public offering.
The price of our common stock may
be volatile, and you may be unable to resell your shares at or above the initial public offering price.
Prior to this offering, there has been
no public market for our common stock, and medical device stocks have historically experienced volatility. The trading price of
our common stock following this offering may fluctuate substantially. Following the closing of this initial public offering, the
market price of our common stock may be higher or lower than the price you pay in the offering, depending on many factors, some
of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose
all or part of your investment in our common stock. Factors that could cause fluctuations in the trading price of our common stock
include the following:
•
actual or anticipated fluctuations in our financial condition and operating results;
•
actual or anticipated changes in our growth rate relative to our competitors;
•
commercial success and market acceptance of our product;
•
success of our competitors in developing or commercializing products;
•
ability to commercialize or obtain regulatory approvals for our product, or delays in commercializing or obtaining regulatory
approvals;
•
strategic transactions undertaken by us;
•
additions or departures of key personnel;
•
product liability claims;
•
prevailing economic conditions;
•
disputes concerning our intellectual property or other proprietary rights;
•
FDA or other U.S. or foreign regulatory actions affecting us or the healthcare industry;
•
healthcare reform measures in the United States;
•
sales of our common stock by our officers, directors or significant stockholders;
•
future sales or issuances of equity or debt securities by us;
•
business disruptions caused by earthquakes, fires or other natural disasters; and
•
issuance of new or changed securities analysts' reports or recommendations regarding us.
•
Covid-19 restrictions on elective surgeries
43
In addition, if the market for healthcare
stocks or the stock market, in general, experience a loss of investor confidence, the trading price of our common stock could decline
for reasons unrelated to our business, results of operations, or financial condition. The trading price of our common stock might
also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us.
In the past, following periods of volatility in the market price of a company's securities, securities class action litigation
has often been brought against that company. If our stock price is volatile, we may become the target of securities litigation.
Securities litigation could result in substantial costs and divert our management's attention and resources from our business.
This could have a material adverse effect on our business, results of operations, and financial condition.
Because the initial public offering
price of our common stock will be substantially higher than the pro forma as adjusted net tangible book value per share of our
outstanding common stock following this offering, new investors will experience immediate and substantial dilution.
The initial public offering price of our
common stock is substantially higher than the pro forma as adjusted net tangible book value per share of our common stock immediately
following this offering based on the total value of our tangible assets less our total liabilities. Therefore, if you purchase
shares of our common stock in this offering, you will experience immediate dilution of $[*] per share, the difference between the
assumed limited public offering price of $[*] per share, which is the midpoint of the range as set forth on the cover page of this
prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, and the pro forma
as adjusted net tangible book value per share of our common stock as of $[*], immediately after giving effect to the issuance of
shares of our common stock in this offering. See "Dilution."
Sales of substantial amounts of our
common stock in the public markets, including when the "lock-up" or "market standoff" period ends, or the
perception that sales might occur, could reduce the price of our common stock and may dilute your voting power and your ownership
interest in us.
Sales of a substantial number of shares
of our common stock in the public market after this offering, or the perception that these sales could occur, could adversely affect
the market price of our common stock, and may make it more difficult for you to sell your common stock at a time and price that
you deem appropriate. Subject to certain exceptions, the Company, our directors and officers and certain of our stockholders have
agreed not to offer, sell or agree to sell, directly or indirectly, any shares of common stock without the permission of the representative
of the underwriters for a period of 180 days from the date of this prospectus. When the lock-up period expires, our security holders
will be able to sell shares in the public market subject to any restrictions under the securities laws. In addition, the representative
of the underwriters may, in its discretion, release all or some portion of the shares subject to lock-up agreements prior to the
expiration of the lock-up period. See "Shares Eligible for Future Sale" for more information. Sales of a substantial
number of such shares upon expiration, or the perception that such sales may occur, or early release of the lock-up, could cause
our share price to fall, or make it more difficult for you to sell your common stock at a time and price that you deem appropriate.
We also may register the offer and sale
of all shares of common stock that we may issue under our equity compensation plans.
We may issue our shares of common stock
or securities convertible into our common stock from time to time in connection with a financing, acquisition, investments or
otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the trading price of
our common stock to decline.
44
We may be subject to securities litigation,
which is expensive and could divert our management's attention.
The market price of our securities may
be volatile, and in the past companies that have experienced volatility in the market price of their securities have been subject
to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against
us could result in substantial costs and divert our management's attention from other business concerns.
If there is no viable public market
for our common stock, you may be unable to sell your shares at or above the initial public offering price.
Prior to this offering there has been no
public market for shares of our common stock. Although we expect our common stock will be approved for listing on NASDAQ, an active
trading market for our shares may never develop or be sustained following this offering. You may be unable to sell your shares
quickly or at the market price if trading in shares of our common stock is not active. The initial public offering price for our
common stock will be determined through negotiations with the underwriters, and the negotiated price may not be indicative of the
market price of the common stock after the offering. As a result of these and other factors, you may be unable to resell your shares
of our common stock at or above the initial public offering price. Further, an inactive market may also impair our ability to raise
capital by selling shares of our common stock and may impair our ability to enter into strategic partnerships or acquire companies
or products by using our shares of common stock as consideration.
The public price of our common stock
may be volatile, and could, following a sale decline significantly and rapidly.
The initial public offering price for the
shares will be determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail
in the open market following this offering. The market price of our common stock may decline below the initial offering price,
and you may not be able to sell your shares of our common stock at or above the price you paid in the offering, or at all. Following
this Offering, the public price of our common stock in the secondary market will be determined by private buy and sell transaction
orders collected from broker-dealers.
We may not be able to satisfy listing
requirements of Nasdaq to maintain a listing of our common stock.
If our common stock is listed on Nasdaq,
we must meet certain financial and liquidity criteria to maintain such listing. If we violate the maintenance requirements for
continued listing of our common stock, our common stock may be delisted. In addition, our board may determine that the cost of
maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our common stock
from Nasdaq may materially impair our stockholders' ability to buy and sell our common stock and could have an adverse effect
on the market price of, and the efficiency of the trading market for, our common stock. In addition, the delisting of our common
stock could significantly impair our ability to raise capital.
This offering has not been reviewed
by independent professionals.
We have not retained any independent professionals
to review or comment on this prospectus or otherwise protect the interest of the investors hereunder. Although we have retained
our own counsel, neither such counsel nor any other counsel has made, on behalf of the investors, any independent examination of
any factual matters represented by management herein. Therefore, for purposes of making a decision to purchase our common stock,
you should not rely on our counsel with respect to any matters herein described. Prospective investors are strongly urged to rely
on the advice of their own legal counsel and advisors in making a determination to purchase our shares of common stock.
45
Our failure to maintain effective
internal controls over financial reporting could have an adverse impact on us
.
We are required to establish and maintain
appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once
established, could adversely impact our public disclosures regarding our business, financial condition or results of operations.
In addition, management's assessment of internal controls over financial reporting may identify weaknesses and conditions
that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors.
Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure
of management's assessment of our internal controls over financial reporting or disclosure of our public accounting firm's
attestation to or report on management's assessment of our internal controls over financial reporting may have an adverse
impact on the price of our common stock.
A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition,
the design of a control system must reflect the fact that there are resource constraints and the benefit of controls must be relative
to their costs. Because of the inherent limitations in all control systems, no system of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Further, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management
override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with
policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to
error or fraud may occur and may not be detected.
At present, management has identified material
weaknesses due to lack of segregation of duties and lack of sufficient supporting documentation for certain transactions. The
lack of segregation of duties existed as a result of the Company having no employees until June 2021. Management has taken initial
steps to remedy this weakness by hiring a Chief Financial Officer, a senior accountant and external financial consultants, and
plans to continue to add additional resources, technology and headcount as warranted by the growth of the Company and our plans
to become a public company. The lack of sufficient supporting documentation was primarily related to transactions taking place
in our foreign subsidiary and to agreements that were not formalized until after the underlying services had already taken place.
Management has taken initial steps to remedy this weakness by hiring a Chief Financial Officer as well as a Chief Executive
Officer, and we are in the process of putting proper policies and procedures in place to ensure proper documentation is established
and maintained for transactions that the Company enters into. While we believe these efforts will improve our internal controls
and address the underlying causes of the material weaknesses, such material weaknesses will not be remediated until our remediation
plan has been fully implemented and we have concluded that our controls are operating effectively for a sufficient period of time.
We cannot be certain that the steps we are taking will be sufficient to remediate the control deficiencies that led to our material
weaknesses in our internal control over financial reporting or prevent future material weaknesses or control deficiencies from
occurring. While we are working to remediate the material weaknesses as timely and efficiently as possible, at this time
we cannot provide an estimate of costs expected to be incurred in connection with the implementation of this remediation plan,
nor can we provide an estimate of the time it will take to complete this remediation plan. Even if management does establish effective
remedial measures, we cannot guarantee that those internal controls and disclosure controls that we put in place will prevent
all possible errors, mistakes or all fraud.
Our financial controls and procedures
may not be sufficient to ensure timely and reliable reporting of financial information, which, as a public company, could materially
harm our stock price.
We will require significant financial resources
to maintain our public reporting status. We cannot assure you we will be able to maintain adequate resources to ensure that we
will not have any future material weakness in our system of internal controls. The effectiveness of our controls and procedures
may in the future be limited by a variety of factors including:
·
faulty human judgment and simple errors, omissions or mistakes;
·
fraudulent action of an individual or collusion of two or more people;
·
inappropriate management override of procedures; and
·
the possibility that any enhancements to controls and procedures may still not be adequate to assure timely and accurate financial
information.
Our internal control over financial
reporting will be a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the
United States of America. Our internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the Company's assets that could have a material effect on the financial statements.
46
Despite these anticipated controls,
because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control
objectives. Furthermore, smaller reporting companies like us face additional limitations. Smaller reporting companies employ
fewer individuals and can find it difficult to employ resources for complicated transactions and effective risk management.
Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of
software controls.
If we fail to have effective controls and
procedures for financial reporting in place, we could be unable to provide timely and accurate financial information and be subject
to investigation by the Securities and Exchange Commission and civil or criminal sanctions.
We must implement additional and
expensive procedures and controls in order to grow our business and organization and to satisfy new reporting requirements, which
will increase our costs and require additional management resources.
Upon becoming a fully public reporting company,
we will be required to comply with the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and the related rules
and regulations of the SEC, including the requirements that we maintain disclosure controls and procedures and adequate internal
control over financial reporting. Compliance with the Sarbanes-Oxley Act and other SEC and national exchange requirements will
increase our costs and require additional management resources. We plan to begin the process of upgrading our procedures and controls
and will need to begin implementing additional procedures and controls as we grow our business and organization and to satisfy
new reporting requirements. If we are unable to complete the required assessment as to the adequacy of our internal control over
financial reporting, as required by Section 404 of the Sarbanes-Oxley Act or if we fail to establish and maintain internal control
over financial reporting, our ability to produce timely, accurate and reliable periodic financial statements could be impaired.
If we do not establish and maintain adequate
internal control over financial reporting, investors could lose confidence in the accuracy of our periodic reports filed under
the Exchange Act. Additionally, our ability to obtain additional financing could be impaired or a lack of investor confidence in
the reliability and accuracy of our public reporting could cause our stock price to decline.
We are an "emerging growth
company" under the JOBS Act of 2012 and we cannot be certain if the reduced disclosure requirements applicable to emerging
growth companies will make our common stock less attractive to investors.
We are an "emerging growth company,"
as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and we 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, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder
approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less
attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there
may be a less active trading market for our common stock and our stock price may be more volatile.
In addition, Section 107 of the JOBS Act
also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act of 1933 (the "Securities Act") for complying with new or revised accounting standards.
In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with
new or revised accounting standards.
47
We will remain an "emerging growth
company" until the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common
stock pursuant to an effective registration statement under the Securities Act, although we will lose that status sooner if our
revenues exceed $1.07 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market
value of our common stock that is held by non-affiliates exceeds $700 million as of the last day of our most recently completed
second fiscal quarter.
Our status as an "emerging
growth company" under the JOBS Act may make it more difficult to raise capital as and when we need it.
Because of the exemptions from various
reporting requirements provided to us as an "emerging growth company" and because we will have an extended transition
period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult
for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies
in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are
unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially
and adversely affected.
We have not paid dividends in the
past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock.
We have never paid cash dividends on our
common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future. We currently intend to
retain any future earnings to support the development of our business and do not anticipate paying cash dividends in the foreseeable
future. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various
factors, including, but not limited to, our financial condition, operating results, cash needs, growth plans and the terms of any
credit agreements that we may be a party to at the time. In addition, our ability to pay dividends on our common stock may be limited
by Delaware state law. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never
occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our common
stock.
The elimination of personal liability
against our directors and officers under Delaware law and the existence of indemnification rights held by our directors, officers
and employees may result in substantial expenses.
Our amended and restated certificate of incorporation,
as amended and our Bylaws eliminate the personal liability of our directors and officers to us and our stockholders for damages
for breach of fiduciary duty as a director or officer to the extent permissible under Delaware law. Further, our amended and restated
certificate of incorporation allow for us to and our Bylaws provide that we are obligated to indemnify each of our directors or
officers to the fullest extent authorized by the Delaware law and, subject to certain conditions, advance the expenses incurred
by any director or officer in defending any action, suit or proceeding prior to its final disposition. Those indemnification obligations
could expose us to substantial expenditures to cover the cost of settlement or damage awards against our directors or officers,
which we may be unable to afford. Further, those provisions and resulting costs may discourage us or our stockholders from bringing
a lawsuit against any of our current or former directors or officers for breaches of their fiduciary duties, even if such actions
might otherwise benefit our stockholders.
Our certificate of incorporation
will designate the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated
by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us.
Our amended and restated certificate of incorporation,
as amended specifies that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the
State of Delaware shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company,
(b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Company
to the Company or the Company's stockholders, (c) any action asserting a claim arising pursuant to any provision of the Delaware
General Corporation Law, the Company's Amended and Restated Certificate of Incorporation or the Bylaws, or (d) any action
asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction
over the indispensable parties named as defendants therein. However, prior to the effectiveness of the registration statement related
to this prospectus, we will amend our Amended and Restated Certificate of Incorporation to include a statement that this exclusive
forum provision does not apply to claims arising under federal securities laws. Any person or entity purchasing or otherwise acquiring
any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our amended
and restated certificate of incorporation, as amended, as described above.
This choice of forum provision may limit a
stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors,
officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. As such, stockholders of
the Company seeking to bring a claim regarding the internal affairs of the Company may be subject to increased costs associated
with litigating in Delaware as opposed to their home state or other forum, precluded from bringing such a claim in a forum they
otherwise consider to be more favorable, and discouraged from bringing such claims as a result of the foregoing or other factors
related to forum selection. Alternatively, if a court were to find the choice of forum provision contained in our amended and
restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated
with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
48
We believe these provisions benefit us
by providing increased consistency in the application of Delaware law by chancellors particularly experienced in resolving corporate
disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens
of multi-forum litigation. However, the provision may have the effect of discouraging lawsuits against our directors, officers,
employees and agents as it may limit any stockholder's ability to bring a claim in a judicial forum that such stockholder
finds favorable for disputes with us or our directors, officers, employees or agents. The enforceability of similar choice of forum
provisions in other companies' certificates of incorporation has been challenged in legal proceedings, and it is possible
that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained
in our amended and restated certificate of incorporation, as amended, to be inapplicable or unenforceable in such action. If a
court were to find the choice of forum provision contained in our amended and restated certificate of incorporation, as amended,
to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other
jurisdictions, which could adversely affect our business, financial condition or results of operations.
You should consult your own independent
tax advisor regarding any tax matters arising with respect to the securities offered in connection with this offering.
Participation in this offering could result
in various tax-related consequences for investors. All prospective purchasers of the resold securities are advised to consult their
own independent tax advisors regarding the U.S. federal, state, local and non-U.S. tax consequences relevant to the purchase, ownership
and disposition of the resold securities in their particular situations.
IN ADDITION TO THE ABOVE RISKS, BUSINESSES
ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING THIS FILING, POTENTIAL INVESTORS SHOULD
KEEP IN MIND THAT OTHER POSSIBLE RISKS MAY ADVERSELY IMPACT THE COMPANY'S BUSINESS OPERATIONS AND THE VALUE OF THE COMPANY'S
SECURITIES.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking
statements." Forward-looking statements reflect the current view about future events. When used in this prospectus, the words
"anticipate," "believe," "estimate," "expect," "future," "intend,"
"plan," or the negative of these terms and similar expressions, as they relate to us or our management, identify forward-looking
statements. Such statements, include, but are not limited to, statements contained in this prospectus relating to our business
strategy, our future operating results and liquidity and capital resources outlook. Forward-looking statements are based on our
current expectations and assumptions regarding our business, the economy and other future conditions. Because forward–looking
statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult
to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither
statements of historical fact nor guarantees of assurance of future performance. We caution you therefore against relying on any
of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking
statements include, without limitation:
Our ability to effectively operate our business segments;
Our ability to manage our research, development, expansion,
growth and operating expenses;
Our ability to evaluate and measure our business,
prospects and performance metrics;
Our ability and our national distributor's ability
to compete, directly and indirectly, and succeed in the highly competitive medical devices industry;
49
Our ability to respond and adapt to changes in technology
and customer behavior;
Our ability to protect our intellectual property and
to develop, maintain and enhance a strong brand; and
Other factors (including the risks contained in the
section of this prospectus entitled "
Risk Factors
") relating to our industry, our operations and results of
operations.
Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated,
believed, estimated, expected, intended or planned.
Factors or events that could cause our
actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee
future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual
results.
USE
OF PROCEEDS
We estimate that we will receive net proceeds
of approximately [*] (or approximately [*] if the underwriters' option to purchase additional shares is exercised in full)
from the sale of the common stock offered by us in this offering, based on public offering price of [*] per share, and after deducting
the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
The principal purposes of this offering
are to increase our capitalization and financial flexibility, increase our visibility in the marketplace and create a public
market for our common stock. As of the date of this prospectus, we cannot specify with certainty all of the particular uses
for the net proceeds to us from this offering. However, we currently intend to use the net proceeds from this offering to
hire additional employees, commence the commercial launch of our product including training surgeons on The CATAMARAN
System procedure, initiating clinical marketing studies that are focused on capturing post-market safety data, gathering
system feedback and initiating product refinements, other sales and marketing activities and for working capital and general
corporate purposes.
See "Business—Research & Development
."
We will retain broad discretion in the
allocation of the net proceeds from this offering and could utilize the proceeds in ways that do not necessarily improve our results
of operations or enhance the value of our common stock.
The table below sets forth the manner in
which we expect to use the net proceeds we receive from this offering. All amounts included in the table below are estimates.
Description
Amount
Surgeon Training
$
[*]
Clinical Marketing Studies
Hiring Staff
$
[*]
Product development
$
[*]
Other Sales and Marketing
Working Capital and General Corporate Purposes
$
[*]
Total
$
[*]
The foregoing information is an estimate
based on our current business plan. We may find it necessary or advisable to re-allocate portions of the net proceeds reserved
for one category to another, and we will have broad discretion in doing so. Pending these uses, we intend to invest the net proceeds
of this offering in a money market or other interest-bearing account.
DIVIDEND POLICY
We have not declared any cash dividends
since inception and we do not anticipate paying any dividends in the foreseeable future. Instead, we anticipate that all of our
earnings will be used to provide working capital, to support our operations, and to finance the growth and development of our business,
including potentially the acquisition of, or investment in, businesses, technologies or products that complement our existing business.
The payment of dividends is within the discretion of the board of directors and will depend on our earnings, capital requirements,
financial condition, prospects, applicable Delaware law, which provides that dividends are only payable out of surplus or current
net profits, and other factors our board might deem relevant. There are no restrictions that currently limit our ability to pay
dividends on our common stock other than those generally imposed by applicable state law.
50
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Prior to this offering, our common stock
has not been listed on any stock exchange or quoted on any over-the-counter market or quotation system and there has been no public
market for our common stock. We have applied to have our common stock listed on the Nasdaq Capital Market under the symbol _________which
listing is a condition to this offering. For more information see the section "
Risk Factors
."
As of November 9, 2021, we have issued
and outstanding 1,979,907 shares of common stock issued and outstanding held by 7 stockholders of record.
We also have outstanding:
·
2,550,763 shares of Series A Preferred Stock held by 1 stockholder of record, which are voluntarily
convertible by the holder at any time or automatically convertible immediately prior to the closing of this initial public
offering under certain conditions, in each case, into 2,550,763 shares of our common stock;
●
491,222 shares of Series B
Preferred Stock held by 17 stockholders of record, which are voluntarily convertible by the holder at any time or automatically
convertible immediately prior to the closing of this initial public offering under certain conditions, in each case, into 491,222
shares of our common stock;
●
A warrant issued to Exchange
Listing, LLC to purchase up to 50,000 shares of our common stock at an exercise price equal to $2.60 per share;
●
Options to purchase 1,459,783 shares of our common stock, 326,689 shares of which are vested.
●
$12,893,217 of Convertible Notes plus $[*] of
    accrued and unpaid interest, which convert into [*] shares of our common stock at the closing of this initial public
    offering.
51
Securities Authorized for Issuance under Equity Incentive
Plan
On October 1, 2012, the Board of Directors
of the Company adopted the 2012 Equity Incentive Plan (the "Plan"). The Plan governs equity awards to our employees,
directors, officers, consultants and other eligible participants. Under the 2012 Plan there are 1,598,531 shares of common stock
reserved for issuance.
The types of awards permitted under the
Plan include nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock
units, performance shares, performance units and other awards. Each option shall be exercisable at such times and subject to such
terms and conditions as the Board may specify.
The Board of Directors has the power to
amend, suspend or terminate the Plan without stockholder approval or ratification at any time or from time to time. No change may
be made that increases the total number of shares of our common stock reserved for issuance pursuant to incentive awards or reduces
the minimum exercise price for options or exchange of options for other incentive awards, unless such change is authorized by our
stockholders within one year.
Under the Plan, the Company has granted a total
of (i) 1,434,818 (of which 90,200 have been canceled) nonqualified stock options to 21 individuals and one entity; (ii) 115,165
incentive stock options to 7 individuals and (iii) 123,500 shares of fully vested restricted stock to three individuals. Upon an
initial public offering of the Company, the Company will provide a one-time option grant to Steven M. Foster to maintain his ownership
position at 4% of the fully diluted outstanding equity.
CAPITALIZATION
The following table sets forth our consolidated
cash and capitalization, as of September 30, 2021. Such information is set forth on the following basis:
•
on an actual basis;
•
on a pro forma basis to reflect the (i) the issuance of
                                                                                                    [●] shares of our common stock by us after September 30, 2021, but prior to the offering; and (ii) the issuance of [*]
                                                                                                    shares of our common stock to SpineSource, Inc.
•
on a pro forma as adjusted basis to reflect the pro forma adjustments
discussed in the prior bullet and (i) our receipt of the net proceeds our sale and issuance of [*] shares of common stock in this
offering at an assumed initial public offering price of $[*] per share (the midpoint of the price range set forth on the front
cover page of this prospectus), after deducting estimated underwriting discounts and commissions and estimated offering expenses
payable by us and after the use of net proceeds therefrom; (ii) the conversion of all outstanding balances of our convertible notes
into [*] shares of common stock in connection with the closing of this offering and (iii) the issuance of [*] shares of common
stock to Exchange Listing, LLC at the closing of this initial public offering pursuant to the automatic cashless exercise of its
warrant.
You should read the following table in
conjunction with "
Use of Proceeds
," "
Management's Discussion and Analysis of Financial Condition
and Results of Operations
" and our financial statements and related notes included in this prospectus. The following
table sets forth our cash and cash equivalents and capitalization as of September 30, 2021:
52
Actual
Pro
Forma(1)
Pro Forma
as
adjusted(2)
Cash and Investments
$
9,271,373
$
[*]
$
[*]
Convertible notes payable and accrued interest
$
13,338,211
$
[*]
$
[*]
Convertible Preferred Stock:
Series A convertible preferred stock, $0.001 par value; 1,798,905
and 1,437,628 shares authorized at September 30, 2021 and December 31, 2020, respectively; 2,805,839 shares authorized pro forma;
2,550,763 shares issued and outstanding, pro forma; 0 shares issued and outstanding, pro forma as adjusted
$
-
Series B convertible preferred stock, $0.001 par value; 661,897 shares authorized; 491,222 shares issued and outstanding, pro forma as adjusted
1,271,715
Stockholders' Equity:
Common stock, $0.001 par value, 7,000,000 shares authorized; 1,891,013
shares issued and outstanding, actual; 13,784,965 shares authorized, 1,979,907 shares issued and outstanding, pro forma; [*] shares
authorized, [*] shares issued and outstanding, pro forma as adjusted
$
1,891
[*]
[*]
[*]
[*]
Additional paid-in capital
$
1,149,157
[*]
[*]
Accumulated deficit
$
(8,692,057
)
[*]
[*]
Accumulated other comprehensive loss
$
(55,627
)
Non-controlling interest
$
1,674,125
Total stockholders' deficit
$
(5,922,511
)
[*]
[*]
Total capitalization
$
8,687,415
$
[*]
$
[*]
DILUTION
Purchasers of our common stock in this
offering will experience an immediate and substantial dilution in the as adjusted net tangible book value of their shares of our
common stock. Dilution in as adjusted net tangible book value represents the difference between the public offering price per share
and the as adjusted net tangible book value per share of our common stock immediately after the offering.
The historical net tangible book value
of our common stock as of September 30, 2021, was [●] or $[●] per share. Historical net tangible book value per share of
our common stock represents our total tangible assets (total assets less intangible assets) less total liabilities divided by the
number of shares of our common stock outstanding as of that date. After giving effect to the sale of [*]
shares in this offering at an initial public offering price of $[●] per share for net proceeds of approximately $[●]
as if such offering and such share issuances had occurred on December 31, 2020, our pro forma net tangible book value as of [●],
would have been $[net tangible book value change] or approximately $[●] per share of our common stock. This represents an
immediate increase in as adjusted pro forma, net tangible book value per share of $[●] to the existing stockholders and an
immediate dilution in as adjusted pro forma net tangible book value per share of $[●] to new investors who purchase shares
of our common stock in the offering. The following table illustrates this per share dilution to new investors:
Public offering price per share
$
Historical net tangible book value per share as of September 30, 2021
$
Increase in as adjusted pro forma net tangible book value per share attributable to the offering
Pro forma net tangible book value (deficit) per share as of September 30, 2021
Dilution in net tangible book value per share to new investors
$
53
After completion of this offering, our
existing stockholders would own approximately [●]% and our new investors would own approximately [●]% of the total
number of shares of our common stock outstanding after this offering.
To the extent that outstanding options
or warrants are exercised, you will experience further dilution. In addition, we may choose to raise additional capital due to
market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these
securities may result in further dilution to our stockholders.
Capitalization Table
Shares Purchased
Total Consideration
Number
Percent
Amount
Percent
Per Share
Existing stockholders
%
$
(2)
%
$
New Investors
%
$
%
$
%
$
%
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion
and analysis of our financial condition and results of operations together with "Selected Consolidated Financial Data"
and our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion and other parts
of this prospectus contain forward-looking statements that involve risks, uncertainties, and assumptions, such as our plans, objectives,
expectations, intentions, and beliefs. Our actual results could differ materially from those discussed in these forward-looking
statements. Some of the numbers included herein have been rounded for convenience of presentation. Factors that could cause or
contribute to such differences include, but are not limited to, those identified below and those discussed in the section "Risk
Factors" included elsewhere in this prospectus.
Overview
Tenon, a medical device company formed
in 2012, has developed a proprietary, U.S. Food and Drug Administration ("FDA") approved surgical
implant system, which we call The CATAMARAN
TM
SIJ Fusion System (The CATAMARAN System) designed to fuse one or both
sacroiliac joints ("SI-Joint") to treat SI-Joint dysfunction that often causes severe lower back pain. Published clinical
studies have shown that 15% to 30% of all chronic lower back pain is associated with the SI-Joint. Tenon believes that the implant
design and procedure we have developed, along with the 2D and 3D protocols for proper implantation will be received well by the
surgeon community who have been looking for a next generation device. Our initial clinical results indicate that The CATAMARAN
System implant is promoting fusion across the joint as evidenced by CT scans which is the gold standard widely accepted by the
surgeon community. Tenon is preparing for a national launch of The CATAMARAN System through a national distributor to address the
greatly underserved market opportunity that exists.
We have incurred net losses since our inception
in 2012. During 2019 and 2020 and for the nine months ended September 30, 2021 we had net losses of approximately $586,000, $705,000,
and $4,239,000, respectively. As of September 30, 2021, we had an accumulated deficit of approximately $8.7 million.
To date, we have financed our operations primarily through private placements of equity securities, certain debt-related financing
arrangements, and sales of our product. We have devoted substantially all of our resources to research and development, regulatory
matters and sales and marketing of our product.
54
Components of Results of Operations
Revenue
We derive substantially all our revenue
from sales of The CATAMARAN System to limited number of surgeons. Revenue from sales of The CATAMARAN System fluctuates based on
volume of cases (procedures performed), discounts, and the number of implants used for a particular patient. Similar to other orthopaedic
companies, our revenue can also fluctuate from quarter to quarter due to a variety of factors, including reimbursement, changes
in independent sales representatives and physician activities.
Cost of Goods Sold, Gross Profit,
and Gross Margin
We utilize contract manufacturers for production
of The CATAMARAN System implants and instrument sets. Cost of goods sold consists primarily of costs of the components of The CATAMARAN
System implants and instruments, quality inspection, packaging, scrap and inventory obsolescence, as well as distribution-related
expenses such as logistics and shipping costs. We anticipate that our cost of goods sold will increase in absolute dollars as case
levels increase.
Our gross margins have been and will continue
to be affected by a variety of factors, including the cost to have our product manufactured for us, pricing pressure from increasing
competition, and the factors described above impacting our revenue.
Operating Expenses
Our operating expenses consist of sales
and marketing, research and development, and general and administrative expenses. Personnel costs are the most significant component
of operating expenses and consist of consulting expenses, salaries, sales commissions and other cash and stock-based compensation
related expenses. We expect operating expenses to increase in absolute dollars, as we continue to invest and grow our business.
Sales and Marketing Expenses
Sales and marketing expenses primarily
consist of stock-based compensation expense and commissions to our independent sales representative. Starting in May 2021 commissions
to our national distributor have been based on a percentage of sales and we anticipate that these commissions will make up a significant
portion of our sales and marketing expenses. We expect our sales and marketing expenses to increase in absolute dollars with the
commercial launch of The CATAMARAN System resulting in higher commissions, initiation of The CATAMARAN System surgeon and sales
representative training and the start of clinical studies to gain wider surgeon adoption of The CATAMARAN System. Our sales and
marketing expenses may fluctuate from period to period due to timing of sales and marketing activities related to the commercial
launch of our product.
Research and Development Expenses
Our research and development expenses primarily
consist of engineering, product development, regulatory expenses, and consulting services, outside prototyping services, outside
research activities, materials, and other costs associated with development of our product. Research and development expenses also
include related personnel and consultants' compensation and stock-based compensation expense. We expense research and development
costs as they are incurred. We expect research and development expense to increase in absolute dollars as we improve The CATAMARAN
System, develop new products, add research and development personnel, and undergo clinical activities that may be required for
regulatory clearances of future products.
General and Administrative Expenses
General and administrative expenses
primarily consist of salaries, consultants' compensation, stock-based compensation expense, and other costs for
finance, accounting, legal, compliance, and administrative matters. We expect our general and administrative expenses to
increase in absolute dollars to as we add personnel and IT infrastructure to support the growth of our business. We also
expect to incur additional general and administrative expenses as a result of operating as a public company, including but
not limited to: expenses related to compliance with the rules and regulations of the Securities and Exchange Commission and
those of the Nasdaq Capital Market on which our securities will be traded; additional insurance expenses; investor relations
activities; and other administrative and professional services. While we expect the general and administrative expenses to
increase in absolute dollars, we anticipate that it will decrease as a percentage of revenue over time.
55
Gain (Loss) on Investments
Gain (loss) on investments consists of
interest income and realized gains and losses from the sale of our investments in money market and corporate debt securities.
Interest Expense
Interest expense is related to borrowings
and includes deemed interest derived from the beneficial conversion prices of notes payable.
Other Income (Expense), Net
Other income and expenses have not been significant to date.
Results of Operations
The following table sets forth our results
of operations for the period presented:
Year Ended December 31,
Nine Months Ended
September 30,
Consolidated Statements of Operations Data:
2019
2020
2020
2021
Revenue
$
53,640
$
43,820
$
30,380
$
107,400
Cost of goods sold
18,257
18,257
9,129
38,797
Gross profit
35,383
25,563
21,251
68,603
Operating expenses:
Research and development
371,545
220,884
166,192
925,076
Sales and marketing
25,618
29,301
25,139
1,473,227
General and administrative
171,662
311,667
167,888
1,569,239
Total operating expenses
568,825
561,852
359,219
3,967,542
Loss from operations
(533,442
)
(536,289
)
(337,968
)
(3,898,939
)
Interest and other income (expense), net:
Gain on investments
—
—
—
1,379
Interest expense
(52,358
)
(167,846
)
(61,376
)
(340,944
)
Other expense
(28
)
(1,230
)
(1,193
)
(880
)
Net loss
(585,828
)
(705,365
)
(400,537
)
(4,239,384
)
Loss attributable to non-controlling interest
(76,248
)
(120,187
)
(56,610
)
(33,498
)
Net loss attributable to Tenon Medical, Inc.
$
(509,580
)
$
(585,178
)
$
(343,927
)
$
(4,205,886
)
The following table sets forth our results of operations as
a percentage of revenue:
Year Ended December 31,
Nine Months Ended September 30,
Consolidated Statements of Operations Data:
2019
2020
2020
2021
Revenue
100
%
100
%
100
%
100
%
Cost of goods sold
34
42
30
36
Gross profit
66
58
70
64
Operating expenses:
Research and development
693
504
547
861
Sales and marketing
48
67
83
1,372
General and administrative
320
711
553
1,461
Total operating expenses
1,060
1,282
1,182
3,694
Loss from operations
(994
)
(1,224
)
(1,112
)
(3,630
)
Interest and other income (expense), net:
Gain on investments
—
—
—
1
Interest expense
(98
)
(383
)
(202
)
(317
)
Other expense
(0
)
(3
)
(4
)
(1
)
Net loss
(1,092
)
(1,610
)
(1,318
)
(3,947
)
Loss attributable to non-controlling interest
(142
)
(274
)
(186
)
(31
)
Net loss attributable to Tenon Medical, Inc.
(950
)%
(1,335
)%
(1,132
)%
(3,916
)%
56
Comparison of the Nine Months Ended September 30, 2020 and
2021
Revenue, Cost of Goods Sold, Gross Profit, and Gross Margin
Nine Months Ended September 30,
2020
2021
$ Change
% Change
Revenue
$
30,380
$
107,400
$
77,020
254
%
Cost of goods sold
9,129
38,797
29,668
325
%
Gross profit
$
21,251
$
68,603
$
47,352
223
%
Gross margin
70
%
64
%
Revenue.
Revenue increased approximately
$77,000, or 254%, for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.
The increase was primarily due to a 325% increase in the number of surgical procedures in which The CATAMARAN System was used,
offset by lower revenue per procedure due to a national distribution agreement in effect for sales from July 2020 through April
of 2021 that decreased the amount of revenue that the Company was able to recognize per surgical procedure.
Cost of Goods Sold, Gross Profit, and Gross
Margin.
Total cost of goods sold increased approximately $30,000, or 325%, for the nine months ended September 30,
2021 as compared to the nine months ended September 30, 2020. The increase in cost of goods sold is due to a 325% increase
in the number of surgical procedures. Gross profit increased approximately $47,000, or 223%, to approximately $69,000 due to the
increase in the number of surgical procedures. Gross margin percentage decreased from 70% to 64% due to lower revenue per procedure
during the first four months of 2021 due to a national distribution agreement in effect for sales from July 2020 through April
of 2021 that decreased the amount of revenue that the Company was able to recognize per surgical procedure.
Operating Expenses
Nine Months Ended September 30,
2020
2021
$ Change
% Change
Research and development
$
166,192
$
925,076
$
758,884
457
%
Sales and marketing
25,139
1,473,227
1,448,088
5,760
%
General and administrative
167,888
1,569,239
1,401,351
835
%
Total operating expenses
$
359,219
$
3,967,542
$
3,608,323
Research and Development Expenses.
Research
and development expenses increased approximately $759,000, or 457%, for the nine months ended September 30, 2021, compared
to the nine months ended September 30, 2020. The increase was primarily due to a $339,000 increase in consulting expenses
and $208,000 in payroll expenses. We did not have any employees during the nine months ended September 30, 2020.
Sales and Marketing Expenses.
Sales
and marketing expenses increased approximately $1,448,000, or 5,760%, for the nine months ended September 30, 2021, compared
to the nine months ended September 30, 2020. The increase was primarily due to a one-time cash payment of $500,000 plus $380,000
in shares of common stock in connection with the amendment of our sales representative agreement, and approximately $436,000 in
shares of restricted stock to consultants.
General and Administrative Expenses
.
General and administrative expenses increased approximately $1,401,000, or 835%, for the nine months ended September 30, 2021,
compared to the nine months ended September 30, 2020. The increase was primarily due to an increase of approximately $437,000
in legal and accounting fees, $303,000 in consulting fees, $264,000 in payroll expenses, and $154,000 in stock-based compensation.
The significant increase in general and administrative expenses was a result of the Company's transition to an operating
company with formalization and amendment of consulting and sales representative agreements, an audit of the Company's 2019
and 2020 consolidated financial statements, and the creation of an infrastructure to support future growth through the hiring of
employees and establishment of a facility lease.
57
Interest and Other Income (Expense),
Net
Nine Months Ended September 30,
2020
2021
$ Change
%
Change
Gain on investments
$
—
$
1,379
$
1,379
N/A
Interest expense
(61,376
)
(340,944
)
(279,568
)
456
%
Other expense
(1,193
)
(880
)
313
(26
%)
Gain on Investments.
Gain on investments
increased approximately $1,000 for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020,
due to interest on our investments in money market and corporate debt securities. We did not have any investments in corporate
debt securities during the nine months ended September 30, 2021.
Interest Expense
. Interest expense increased
approximately $280,000, or 456%, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020,
primarily due to an $12.2 million increase in the level of borrowings associated with closing a new convertible debt offering
during May through July 2021.
Other Income (Expense), Net.
Other
income and expenses were not significant during the nine months ended September 30, 2021 and 2020.
Comparison of the Years Ended December 31,
2019 and 2020
Revenue, Cost of Goods Sold, Gross
Profit, and Gross Margin
Years Ended December 31,
2019
2020
$ Change
% Change
Revenue
$
53,640
$
43,820
$
(9,820
)
(18
)%
Cost of goods sold
18,257
18,257
—
0
%
Gross profit
$
35,383
$
25,563
$
(9,820
)
(28
)%
Gross margin
66
%
58
%
Revenue.
Revenue decreased
approximately $10,000, or 18%, from 2019 to 2020. The decrease was primarily due to a national distribution agreement in effect
for sales from July 2020 through April of 2021 that decreased the amount of revenue that the Company was able to recognize per
surgical procedure.
Cost of Goods Sold, Gross Profit, and
Gross Margin.
Total cost of goods sold remained the same from 2019 to 2020. This is primarily due to the Company's
inventory used in a similar number of surgical procedures during each year. Gross profit decreased approximately $10,000, or 28%,
to $26,000 from 2019 to 2020 due to lower revenue and flat cost of goods sold.
Operating Expenses
Years Ended December 31,
2019
2020
$ Change
% Change
Research and development
$
371,545
$
220,884
$
(150,661
)
(41
)%
Sales and marketing
25,618
29,301
3,683
14
%
General and administrative
171,662
311,667
140,005
82
%
Total operating expenses
$
568,825
$
561,852
$
(6,973
)
Research and Development Expenses.
Research
and development expenses decreased approximately $151,000, or 41%, from 2019 to 2020. The decrease was primarily due to a $147,000
reduction in prototype materials expenditures.
58
Sales and Marketing Expenses.
Sales
and marketing expenses increased approximately $4,000, or 14%, from 2019 to 2020. The increase was primarily due to $13,000 in
increased stock-based compensation to an outside sales representative, offset by an $11,000 decrease in commissions expense.
General and Administrative Expenses
.
General and administrative expenses increased approximately $140,000, or 82%, from 2019 to 2020. The increase was primarily due
to an increase of $82,000 in consulting fees and $41,000 in legal fees as the Company began preparations to position itself for
its convertible note offering and an initial public offering.
Interest and Other Income (Expense), Net
Years Ended December 31,
2019
2020
$ Change
% Change
Interest expense
$
(52,358
)
$
(167,846
)
$
(115,488
)
221
%
Other expense
(28
)
(1,230
)
(1,202
)
4,293
%
Interest Expense
. Interest expense
increased approximately $115,000, or 221%, from 2019 to 2020 primarily due to $88,000 of deemed interest on conversion of debt,
as well as the impact of $307,000 of new notes payable issued during 2020 resulting in higher average balances during the year.
Other Income (Expense), Net.
Other
income and expenses were not significant during 2019 and 2020.
Liquidity and Capital Resources
As of September 30, 2021, we had cash,
cash equivalents, and investments of $9.3 million. Since inception, we have financed our operations through private placements
of preferred stock, debt financing arrangements, and the sale of our products. As of September 30, 2021, we had $13.0 million
principal amount of outstanding debt, net of debt discounts.
As of September 30, 2021, we had an accumulated
deficit of $8.7 million. During 2020 and the nine months ended September 30, 2021 we incurred net losses of $0.7 million
and $4.2 million, respectively, and expect to incur additional losses in the future. We have not achieved positive cash flow from
operations to date. We evaluated our current cash position, historical results, forecasted cashflows, and plans in regards to liquidity.
Considering all of these factors, we believe, absent this offering, that there is substantial doubt about our ability to continue
as a going concern for the next 12 months.
Based upon our current operating plan,
we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will enable us to fund
our operating expenses and capital expenditure requirements through at least the next 12 months from the date of this offering.
We continue to face challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly
than currently expected due to (a) the uncertainty of future revenues from The CATAMARAN System; (b) changes we may make to
the business that affect ongoing operating expenses; (c) changes we may make in our business strategy; (d) regulatory
developments affecting our existing products; (e) changes we may make in our research and development spending plans; and
(f) other items affecting our forecasted level of expenditures and use of cash resources.
If we need to raise additional capital
to fund our operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate
financing when needed, we may have to delay, reduce the scope of or suspend one or more of our sales and marketing efforts, research
and development activities, or other operations. We may seek to raise any necessary additional capital through a combination of
public or private equity offerings, debt financings, and collaborations or licensing arrangements. If we do raise additional capital
through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms
of these securities may include liquidation or other preferences that adversely affect our stockholders' rights. If we raise
additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we are unable to raise capital,
we will need to delay, reduce, or terminate planned activities to reduce costs. Doing so will likely harm our ability to execute
our business plans.
59
Borrowings
During 2015, the Company issued a $53,447
convertible promissory note to a consultant that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. In June 2019, the note and its accrued interest to date was replaced by a $68,359 convertible
promissory note that, along with accrued interest at an annual rate of 8.0%, was automatically convertible upon a preferred stock
financing of at least $1,000,000, at a conversion price equal to 90% of the price per share paid by the other cash purchasers in
the future financing. The note had a maturity date of June 12, 2021. In May 2021, the note was again replaced by a $68,359 convertible
promissory note with a maturity date of May 7, 2022 that, along with accrued interest at an annual rate of 8.0%, is automatically
convertible upon an Initial Public Offering ("IPO") or a capital stock financing of at least $5,000,000. The conversion
price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000.
During 2016, the Company issued a $117,530
convertible promissory note to a vendor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of January 1, 2019 and remained unpaid during 2019 and 2020.
In April 2021, the note was replaced by a $117,530 convertible promissory note with a maturity date of April 30, 2022 that, along
with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least
$5,000,000. The conversion price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing
of at least $5,000,000.
During 2018, the Company issued two convertible
promissory notes for an aggregate of $305,084 to the minority shareholder of its subsidiary. In September 2019 and June 2020, the
Company issued additional convertible promissory notes to the same minority shareholder for $201,309 and $106,620, respectively.
These notes, along with accrued interest at an annual rate of 10.0%, could be applied to future capital increases for the subsidiary.
In November 2020, notes payable and accrued interest totaling $784,895 was converted into the subsidiary's Series A preferred
stock shares, which increased the minority shareholder's ownership percentage from 39.2% to 43.8%. In connection with the
conversion of the notes, the Company recorded deemed interest on beneficial conversion in the amount of $88,238.
In October 2019, the Company issued a $70,000
convertible promissory note to the Company's Chief Executive Officer that, along with accrued interest at an annual rate
of 8.0%, was automatically convertible upon a preferred stock financing of at least $500,000, at a conversion price equal to 80%
of the price per share paid by the other cash purchasers in the future financing. The note had a maturity date of October 12, 2022.
In April 2021, the note was replaced by a $70,000 convertible promissory note with a maturity date of April 30, 2022 that, along
with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least
$5,000,000. The conversion price is equal to 70% of the IPO price or $1.9565 per share in the event of a capital stock financing
of at least $5,000,000.
In October 2019, the Company issued a $50,000
convertible promissory note to an investor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 80% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of October 21, 2022. In May 2021, the note was replaced by
a $50,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest at an annual rate of
8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion price is equal
to 70% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000.
In November 2020, the Company issued a
$200,000 convertible promissory note to the same investor that, along with accrued interest at an annual rate of 8.0%, was automatically
convertible upon a preferred stock financing of at least $2,000,000, at a conversion price equal to 80% of the price per share
paid by the other cash purchasers in the future financing. The note had a maturity date of November 16, 2022. In May 2021, the
note was replaced by a $200,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest
at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion
price is equal to 70% of the IPO price or 70% of the price per share paid by the other cash purchasers in the future financing.
60
In January 2021, the Company issued a promissory
note of $130,560 to a law firm. The note bore interest at 3.0% per annum and had a maturity date of the earlier of July 27, 2021,
the closing of a debt or equity financing, or the closing of a change in control transaction. The interest rate was to increase
to 5.0% if all principal and interest had not been paid by the maturity date. The Company repaid this note and accrued interest
in May 2021.
In April 2021, the Company issued two convertible
promissory notes of $40,000 and $170,000, respectively, to the same vendor described above that, along with accrued interest at
an annual rate of 8.0%, are automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion
price is equal to 70% of the IPO price or 70% of the price per share paid by the other cash purchasers in the future financing.
In June 2021, the Company's subsidiary
issued a convertible promissory note for approximately $107,000 to the minority shareholder of its subsidiary. The note was due
upon the earlier of a capital increase or December 31, 2021. This convertible promissory note, along with accrued interest at an
annual rate of 8.0%, was convertible into the subsidiary's Series A Preferred Stock. The Company repaid this note and accrued
interest in October 2021.
During the period May through July 2021,
the Company issued convertible promissory notes to multiple investors for aggregate proceeds of $12.2 million. The notes, along
with accrued interest at an annual rate of 8.0%, are automatically convertible upon an IPO, a capital stock financing of at least
$5,000,000, or a change of control transaction. The conversion price upon an IPO or a capital stock financing is equal to the lesser
of 70% of the price per share paid by the other cash purchasers, or the price per share at a Company valuation of $22,500,000.
Upon a change of control, noteholders will receive the greater of a 100% premium on the outstanding principal, plus accrued interest,
or the conversion of the principal and accrued interest into common stock at a Company valuation of $22,500,000.
As of December 31, 2020 and September 30, 2021 we were
in compliance with all of our debt obligations and covenants.
Contractual Obligations
The following table summarizes our contractual obligations as
of December 31, 2020:
Payments Due By Period
Less than
More
than
Total
1 year
1-3 years
4-5 years
5 years
Principal obligations on the debt arrangements (1)
$
505,889
$
185,889
$
320,000
$
—
$
—
Interest obligations on the debt arrangements (2)
69,086
55,508
13,578
—
—
Operating leases
—
—
—
—
—
Purchase obligations
—
—
—
—
—
Total
$
574,975
$
241,397
$
333,578
$
—
$
—
(1)
For further discussion, see Note 4 to our consolidated financial statements.
(2)
We had no operating lease obligations as of December 31, 2020.
61
In June 2021, we entered into a new five-year
lease for our Los Gatos, California facility. The total commitment is $1,461,000.
Cash Flows
The following table sets forth the primary
sources and uses of cash for each of the periods presented below:
Nine Months Ended September 30,
2020
2021
$ Change
% Change
Net cash (used in) provided by:
Operating activities
$
(134,923
)
$
(2,602,326
)
$
(2,467,403
)
1,829
%
Investing activities
—
(7,878,415
)
(7,878,415
)
N/A
Financing activities
105,273
11,648,309
11,543,036
10,965
%
Effect of foreign currency translation on cash flow
3,244
(4,066
)
(7,310
)
(225
)%
Net increase (decrease) in cash and cash equivalents
$
(26,406
)
$
1,163,502
$
1,189,908
Years Ended December 31,
2019
2020
$ Change
% Change
Net cash (used in) provided by:
Operating activities
$
(235,203
)
$
(167,363
)
$
67,840
(29
)%
Investing activities
—
—
—
N/A
Financing activities
321,309
254,800
(66,509
)
(21
)%
Effect of foreign currency translation on cash flow
1,373
6,230
4,857
354
%
Net increase in cash and cash equivalents
$
87,479
$
93,667
$
6,188
Cash Used in Operating Activities
Net cash used in operating activities increased
$2.5 million, or 1,829%, from the nine months ended September 30, 2020 to the nine months ended September 30, 2021.
The increase in the net cash used in operating activities was primarily due to an increase of $3.8 million in our net loss
during the nine months ended September 30, 2021 as we began to utilize the cash received from our convertible debt offering during
May through July of 2021, offset by an increase in non-cash interest and stock-based expenses totaling approximately $1.3 million.
Net cash used in operating activities decreased
approximately $68,000, or 29%, from 2019 to 2020. The decrease in the net cash used in operating activities was primarily due to
2019 sales collected during 2020, and a greater portion of operating expenses remaining in accounts payable and accrued expenses
at the end of 2020, as compared to 2019.
Cash Used in Investing Activities
Net cash used in investing activities increased
$7.9 million from the nine months ended September 30, 2020 to the nine months ended September 30, 2021. Cash used in
investing activities for the nine months ended September 30, 2021 was primarily due to the purchase of $7.9 million of corporate
debt securities using the proceeds from our convertible debt offering during May through July of 2021.
There was no cash used in investing activities
during the years ended December 31, 2019 and 2020.
Cash Provided by Financing Activities
Cash provided by financing activities increased
$11.5 million, or 10,965%, from the nine months ended September 30, 2020 to the nine months ended September 30,
2021. Cash provided by financing activities for the nine months ended September 30, 2020 consisted primarily of net proceeds
of $0.1 million from the issuance of convertible notes payable. Cash provided by financing activities for the nine months
ended September 30, 2021 consisted of $12.1 million proceeds from our convertible debt offering, offset by notes payable repayments
of $131,000, debt issuance costs of $71,000, and deferred IPO offering costs of $222,000.
62
Cash provided by financing activities decreased
approximately $67,000, or 21%, from 2019 to 2020. Cash provided by financing activities during 2019 consisted of net proceeds of
$321,000 from the issuance of convertible notes payable. Cash provided by financing activities during 2020 consisted of net proceeds
of $307,000 from the issuance of convertible notes payable, offset by payments of debt issuance costs of $22,000, and payments
of public offering costs of $30,000.
Critical Accounting Policies, Significant
Judgments, and Use of Estimates
This discussion and analysis of our financial
condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with
U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated
financial statements, as well as the reported revenue generated, and expenses incurred during the reporting periods. Our estimates
are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates. We believe that the accounting policies discussed below are
critical to understanding our historical and future performance, as these policies relate to the more significant areas involving
management's judgments and estimates. For more detail on our critical accounting policies, see Note 2 to our consolidated
financial statements appearing elsewhere in this prospectus.
Investments
The Company classifies its investments
in marketable debt securities as available-for-sale and records them at fair value in its consolidated balance sheets. The net
unrealized gains and losses are recorded as a separate component of stockholders' equity. Realized gains and losses are recorded
in the consolidated statements of operations and comprehensive loss. Margin loans for which a right of setoff exists are classified
in the consolidated balance sheets as reductions to the investment value. The Company determines any realized gains or losses on
the sale of marketable debt securities on a specific identification method, and records such gains and losses as a component of
other income (expense), net.
Revenue Recognition
The Company's revenue is derived
from the sale of its products to medical groups and hospitals through its independent sales representative and national distributor
in Florida and Texas.
In accordance with Accounting Standards
Codification 606, Revenue from Contracts with Customers ("ASC 606"), which the Company adopted effective January 1,
2019, revenue is recognized when control is transferred to the customer, in an amount that reflects the consideration the Company
expects to be entitled to in exchange for the goods or services. The Company had no contracts with customers prior to the date
of adoption. Under ASC 606, the Company applies the following five step approach: (1) identify the contract with a customer, (2)
identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to
the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.
The Company generates its revenue from
the sale of products through an independent sales representative and national distributor to certain hospitals or medical facilities
where the products are delivered in advance of a procedure. The performance obligation is the delivery of the products along with
the completion of the surgery and therefore, revenue is recognized upon delivery to the customers and completion of the surgery,
net of rebates and price discounts. The Company accounts for rebates and price discounts as a reduction to revenue, calculated
based on the terms agreed to with the customer. Historically, there has been no significant rebates or price discounts. Sales prices
are specified in either the customer contract, agreed price list, or purchase order, which is executed prior to the transfer of
control to the customer. As of April 2020, the Company has an agreement in place with a national distributor, which includes standard
terms that do not allow for payment contingent on resale of the product, obtaining financing, or other terms that could impact
the distributor's payment obligation. From April 2020 through May 20, 2021, the distributor billed and collected from the
end-user customer, was required to pay the Company on the 5th day of the calendar month after the customer paid the distributor,
and the Company recognized revenue based on the net amount received from the distributor. Prior to April 2020 and subsequent to
May 20, 2021, the Company billed and collected directly with the end-user customers and recognized revenue based on the gross sales
price. For direct sales to end-user customers, the Company's standard payment terms are generally net 30 days.
The Company offers its standard warranty
to all customers. The Company does not sell any warranties on a standalone basis. The Company's warranty provides that its
products are free of material defects and conform to specifications, and includes an offer to replace or refund the purchase price
of defective products. This assurance does not constitute a service and is not considered a separate performance obligation. The
Company estimates warranty liabilities at the time of revenue recognition and records it as a charge to cost of goods sold.
63
Stock-Based Compensation
We account for stock-based compensation
in accordance with ASC 718, Compensation - Stock Compensation. We account for all stock-based compensation awards using a
fair-value method on the grant date and recognizes the fair value of each award as an expense over the requisite service period.
We recorded total non-cash stock-based
compensation expense of $30,570, $16,649, and $1,023,951 during 2019, 2020, and the nine months ended September 30, 2021, respectively.
At September 30, 2021, we had $1.6 million of total unrecognized stock-based compensation expense related to stock option
grants. This amount will be recognized as expense over a weighted-average period of 2.7 years. We expect to continue to grant
stock options in the future, and, to the extent that we do, our actual stock-based compensation expense recognized in future periods
will likely increase.
The intrinsic value of all outstanding options
as of September 30, 2021 was $_______ million based on the assumed initial public offering price of $_______ per share,
which is the midpoint of the price range set forth on the cover page of this prospectus, of which $______ million related
to vested options and $______ million related to unvested options.
Determining Fair Value of Stock Options
We recognize compensation costs related
to stock-based awards granted to employees, directors, and consultants including stock options, based on the estimated fair value
of the awards on the date of grant. We estimate the grant date fair value, and the resulting stock-based compensation, using the
Black-Scholes option-pricing model. The grant date fair value of the stock-based awards is generally recognized on a straight-line
basis over the requisite service period, which is generally the vesting period of the respective awards.
The Black-Scholes option-pricing model requires the use of subjective
assumptions to determine the fair value of stock-based awards. These assumptions include:
·
Expected Term
—The expected term represents the period that stock-based awards are expected to be outstanding.
The expected term for option grants is determined using the simplified method. The simplified method deems the expected term to
be the midpoint between the vesting date and the contractual life of the stock-based awards.
·
Expected Volatility
—Since we have been privately held and do not have any trading history for our common stock,
the expected volatility was estimated based on the average volatility for comparable publicly traded companies over a period equal
to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the
life cycle, or area of specialty.
·
Risk-Free Interest Rate
—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect
at the time of grant for periods corresponding with the expected term of option.
·
Expected Dividend
—We have never paid dividends on our common stock and have no plans to pay dividends on our common
stock. Therefore, we used an expected dividend yield of zero.
·
Forfeitures
—We account for forfeitures as they occur.
64
Our board of directors intends all options
granted to be exercisable at a price per share not less than the per share fair value of our common stock underlying those options
on the date of grant. The estimated fair value of our common stock was determined at each valuation date by a third-party independent
valuation firm in accordance with the guidelines outlined in the
American Institute of Certified Public Accountants Practice
Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation
. These valuations took into account numerous
factors, including developments at our company and market conditions.
The valuations as of December 31 2018,
2019, and 2020 used the income approach to determine the Company's enterprise value. The income approach recognizes
that the value of an investment is premised on the receipt of future economic benefits. Within the income approach, the
Discounted Cash Flow ("DCF") method, estimates the value of the future cash flows that a company will generate in
two stages: (1) a discrete projection period; and (2) a terminal value, capturing the value of all cash flows beyond the
discrete projection period. The DCF was weighted 100% in these valuations and was based on financial projections provided by
management. The key assumptions in the financial projections are the annual revenue, gross margins, annual operating
expenses, and investments in working capital and capital equipment. The terminal values were estimated by applying an
enterprise value to a revenue multiple. The discrete projected free cash flows and terminal value were discounted to present
value using a Weighted Average Cost of Capital ("WACC") of 22.9% for 2018, 20.5% for 2019, and 21.7% for 2020.
These discounted figures were summed to arrive at the enterprise values.
Adjustments were made to the enterprise values
for the Company's cash and debt as of the valuation dates to determine the applicable equity values. The option pricing method
("OPM") was used to allocate the equity values to our various equity securities including our common stock. The OPM
treats common stock and preferred stock as call options on the Company's equity value, with exercise prices based on the
liquidation preferences and conversion rights of the preferred stock. The OPM relies on the Black-Scholes option pricing model
and requires assumptions for equity volatility. The equity volatility was determined to be 70.0% based on the volatility rate of
certain comparable public companies. A discount for lack of marketability ("DLOM") of 35% was applied to the common
stock in the valuations for years 2018 and 2019. A 30% DLOM was applied in the 2020 valuation.
The May 21, 2021 valuation used a hybrid method
which combines the Probability Weighted Expected Return Method ("PWERM") with the OPM. The PWERM considers a set of
discrete potential liquidity scenarios for the Company, the value common stock would receive in each scenario, and the time required
and risk inherent in achieving those values. The May 21, 2021 valuation examined the following scenarios for the Company: (i) an
IPO; (ii) remaining private and raising capital; and (iii) dissolution. Within the IPO scenario, 100% weighting was placed on the
Market Approach for determining the enterprise value. The Market Approach assumes that businesses operating in the same industry
will share similar characteristics, and therefore a comparison of the business to similar businesses whose financial information
is publicly available may provide a reasonable basis to estimate a subject business's value. The equity value in the IPO
scenario was estimated considering guideline IPOs, the anticipated size of the Company's offering, and forecasted cash and
debt. The estimated common stock value as of the IPO was present valued using a discount rate of 22.4% based on Company's
WACC, less an adjustment of 2.0% to reflect the risk reduction of an IPO event.
The August 31, 2021 valuation used a hybrid
method which combines the Probability Weighted Expected Return Method ("PWERM") with the OPM. The PWERM considers a
set of discrete potential liquidity scenarios for the Company, the value common stock would receive in each scenario, and the time
required and risk inherent in achieving those values. The August 31, 2021 valuation examined the following scenarios for the Company:
(i) an IPO; (ii) remaining private and raising capital; and (iii) dissolution. Within the IPO scenario, 100% weighting was placed
on the Market Approach for determining the enterprise value. The Market Approach assumes that businesses operating in the same
industry will share similar characteristics, and therefore a comparison of the business to similar businesses whose financial information
is publicly available may provide a reasonable basis to estimate a subject business's value. The equity value in the IPO
scenario was estimated considering guideline IPOs, the anticipated size of the Company's offering, and forecasted cash and
debt. The estimated common stock value as of the IPO was present valued using a discount rate of 32.0% based on Company's
WACC, less an adjustment of 5.0% to reflect the risk reduction of an IPO event.
In determining the enterprise value within
the remain private scenario, 100% weighting was applied to the DCF Method under the income approach, in the same manner as in
the December 31, 2018, 2019, and 2020 valuations. The discount rate in this scenario was determined to be 22.4% based on Company's
WACC. Adjustments were made to the enterprise value for the Company's cash and debt as of the valuation date to determine
the equity value in this scenario. The OPM was used to allocate the equity value to our common stock. The equity volatility rate
was determined to be 70.0% based on the volatility rate of certain comparable public companies. DLOMs of (i) 10.0% in the IPO
scenario and (ii) 30.0% in the remaining private scenario were applied to the common stock.
Following the closing of this offering,
the fair value of our common stock will be determined based on the closing price of our common stock on the Nasdaq Capital Market.
Common Stock Warrants
We account for warrants for shares of common
stock as equity in accordance with the accounting guidance for derivatives. The accounting guidance provides a scope exception
from classifying and measuring as a financial liability a contract that would otherwise meet the definition of a derivative if
the contract is both (i) indexed to the entity's own stock and (ii) classified in the stockholders' deficit
section of the consolidated balance sheet. We estimate the fair value of our warrants for shares of common stock by using the Black-Scholes
option pricing model. Warrants classified as equity are recorded as additional paid-in capital on the consolidated balance
sheet and no further adjustments to their valuation are made after the issuance of the warrants.
Income Taxes
We account for income taxes under the asset
and liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are
expected to affect taxable income. We assess the likelihood that the resulting deferred tax assets will be realized. A valuation
allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.
65
As of December 31, 2020, we had net
operating loss carryforwards of approximately $1.7 million, $4.3 million, and $1.7 million available to reduce future taxable
income, if any, for federal, state, and foreign income tax purposes, respectively. If not utilized, our federal, state, and foreign
net operating loss carryforwards begin to expire in 2034, 2032, and 2021, respectively, and valuation allowances have been established,
where necessary. These net operating loss carryforwards could expire unused and be unavailable to reduce future income tax liabilities,
which could materially and adversely affect our results of operations.
We did not record a provision or benefit for
income taxes during the nine months ended September 30, 2021 or 2020. We continue to maintain a full valuation allowance against
our net deferred tax assets.
We assess all material positions taken
in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment
or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the positions
sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon
ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and we will determine
whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax
benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning
the recognition and measurement of a tax benefit may change as new information becomes available.
The Tax Reform Act of 1986 limits the use
of net operating loss and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company.
We have not completed a study to determine whether any ownership changes per the provisions of Section 382 of the Tax Reform
Act of 1986, as amended, as well as similar state provisions, has occurred.
Off-Balance Sheet Arrangements
During 2019 and 2020 and for the nine
months ended September 30, 2021, we did not have any relationships with unconsolidated organizations or financial partnerships,
such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes.
Seasonality
Our business could be affected by seasonal
variations. For instance, we expect to experience lower sales in the summer months and higher sales in the last quarter of the
fiscal year. However, taken as a whole, seasonality does not have a material impact on our financial results.
JOBS Act Accounting Election
In April 2012, the JOBS Act was enacted.
Section 107(b) of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus,
an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to
private companies. We have elected to avail ourselves of this exemption and, therefore, we will not be subject to the same new
or revised accounting standards as other public companies that are not emerging growth companies.
Quantitative and Qualitative Disclosures
about Market Risk
Interest Rate Risk
We are exposed to interest rate risks related
to our cash and cash equivalents. We had cash and cash equivalents of $246,000 and $1.4 million as of December 31, 2020
and September 30, 2021, respectively, which consist of bank deposits and money market funds. Our cash balance consisted
of bank deposits in 2020. Such interest-earning instruments carry a degree of interest rate risk; however, historical fluctuations
in interest income have not been significant.
66
We
had outstanding debt of $575,000 and $13.0 million as of December 31, 2020 and September 30, 2021, which accrues interest
at a fixed rate of 8.0%. In the ordinary course of business, we may enter into contractual arrangements to reduce our exposure
to interest rate risks. We do not believe that a 10% change in interest rates would have a significant impact on our consolidated
financial statements.
Foreign Currency Exchange Risk
We operate in one country other than the
United States, and, therefore, we are exposed to foreign currency risks. All of our sales to date have been inside of the United
States in US Dollars. Operating expenses related to our Swiss subsidiary are largely denominated in the local currency, Swiss Francs.
We do not believe that a 10% change in foreign currency exchange rates would have a significant impact on our net income. We do
not currently hedge our exposure to foreign currency exchange rate fluctuations; however, we may choose to hedge our exposure in
the future.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASC 842,
"
Leases
". This standard requires lessees to present right-of-use assets and lease liabilities on the balance
sheet. The new guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative periods
in the financial statements and is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted.
We early adopted ASC 842 upon the inception of our facility lease in June 2021.
In August 2020, the FASB issued ASU 2020-6,
Debt—Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity
("ASU 2020-6"),
which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash
conversion feature and (2) convertible instruments with a beneficial conversion feature. Upon adoption, a convertible debt instrument
will be accounted for as a single liability at amortized cost unless (a) the convertible instrument contains features that require
bifurcation as a derivative under ASC 815,
Derivatives and Hedging
, or (b) the convertible debt instrument was issued
at a substantial premium. These changes will reduce reported interest expense and increase reported net income for entities that
have issued a convertible instrument that was bifurcated according to previously existing rules. ASU 2020-6 also requires the application
of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available.
The new guidance is effective for public entities excluding smaller reporting companies in fiscal years beginning after December
15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. For public business entities
that meet the definition of a smaller reporting company, the amendments in ASU 2020-6 are effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2023. ASU 2020-6 is effective for us in the first quarter of fiscal
2024. We are currently evaluating the impact of adoption of ASU 2020-6 on our consolidated financial statements.
BUSINESS
Introduction
Tenon Medical, Inc. ("Tenon"),
a medical device company formed in 2012, has developed a proprietary, U.S. Food and Drug Administration ("FDA") cleared
surgical implant system, which is designed to optimize sacroiliac joint fixation / fusion surgery and corresponding outcomes. Tenon
is preparing a national launch of this system to address the greatly underserved market opportunity that exists in this space.
The Opportunity
We estimate that over 30 million American
adults have chronic lower back pain
.
Published clinical studies have shown that 15% to 30% of all chronic lower back
pain is associated with the SI-Joint. For patients whose chronic lower back pain stems from the Sacroiliac Joint ("SI-Joint"),
our
experience in both clinical trials and commercial settings indicates the system to be introduced by Tenon could be beneficial for
patients who are properly diagnosed and screened for surgery by trained healthcare providers.
67
In 2019, approximately 475,000 patients
in the United States were estimated to have received an aesthetic injection to temporarily alleviate pain emanating from the SI-Joint
and/or to diagnose SI-Joint pain. Additionally, a number of non-surgical technologies have been introduced in the past 10 years
to address patients who do not respond to injection therapy, including systemic oral medications and opioids.
To date, the penetration of a surgical
solution for this market has been relatively low (5-7%). We believe this is due to complex surgical approaches and suboptimal implant
design of existing options. The penetration of this market with an optimized surgical solution is Tenon's focus.
We believe the SI-Joint is the last major joint
to be successfully addressed by the orthopaedic implant industry. Studies have shown that disability resulting from disease of
the SI-Joint is comparable to the disability associated with a number of other serious orthopaedic conditions, such as knee and
hip arthritis and degenerative disc disease, each of which has surgical solutions where an implant is used and a multi-billion-dollar
market exists.
The SI-Joint
The SI-Joint is a strong weight bearing synovial
joint situated between the lumbar spine and the pelvis and is aligned along the longitudinal load bearing axis of the human spine
when in an upright posture. It functions as a force transfer conduit where it transfers axial loads bi-directionally from the spine
to the pelvis and lower extremities and allows forces to be transmitted from the extremities to the spine. It also provides load
sharing between the hip and spine to contribute towards attenuation of impact shock and stress from activities of daily living.
The SI-Joint is a relatively immobile joint
that connects the sacrum (the spinal segment that is attached to the base of the lumbar spine at the L5 vertebra) and the ilium
of the pelvis. Each SI-Joint is approximately 2mm wide and irregularly shaped.
Motion of the SI-Joint features vertical
shear and rotation. Although the rotational forces about the SI-Joint are relatively low, repetitive motions created by daily activities
such as walking, jogging, twisting at the hips, and jumping can increase the stresses on the SI-Joint. If the SI-Joint is compromised
through injury or degeneration, the load bearing and motion restraints from the surrounding anatomical structures of the SI-Joint
will be compromised resulting in abnormal stress transfers across the joint to these structures, thereby further augmenting the
degenerative cascade of the SI-Joint. Eventual pain and cessation of an individual's normal activities due to a painful and
unstable SI-Joint have led to an increase in the recent development of SI-Joint stabilization devices.
68
Diagnosis
Historically, diagnosing pain from the
SI-Joint was not routinely a focus of orthopaedic or neurosurgery training during medical school or residency programs. Due to
its invasiveness, post-operative pain, and muscle disruption along with a difficult procedure overall, the open SI-Joint fusion
procedure was rarely taught in these settings.
The emergence of various SI-Joint surgical
technologies has generated a renewed discussion of SI-Joint issues. Of particular focus is the diagnostic protocol utilized to
properly select patients for SI-Joint surgery. Patients with low back pain typically start with primary care physicians who often
refer to pain specialists. Here, the patient will go through traditional physical therapy combined with oral medications (anti-inflammatory,
narcotic, etc.). If the patient fails to respond to these steps the pain specialist may move to therapeutic injections of the SI-Joint.
These injections may serve to lessen inflammation to the point that the patient is satisfied. However, the impact from these injections
is often transient. In this case the patient is often referred to a surgeon to determine if the patient may be a candidate for
surgical intervention. A series of provocative tests in clinic, combined with a specific injection protocol to isolate the SI-Joint
as the pain generator is then utilized to confirm the need for surgical intervention. Published literature has shown this technique
to be a very effective step to determine the best treatment to alleviate pain.
Tenon has developed its own protocol to
instruct and train the medical community on how to perform provocative maneuvers in a physician's office that can reveal
the SI-Joint as the source of pain. If the provocative tests are positive, surgeons (or other physicians) confirm the diagnosis
by injecting a small amount of local anesthetic into the joint under fluoroscopic guidance. The SI-Joint is confirmed as a pain
source if the local anesthetic produces immediate and significant pain reduction.
Limitations of Existing Treatment Options
Surgical fixation and fusion of the SI-Joint
with an open surgical technique was first reported in 1908, with further reports in the 1920s. The open procedure uses plates and
screws, requires a 6 to 12-inch incision and is extremely invasive. Due to the high invasiveness and associated
morbidity, the use of this procedure is limited to cases involving significant trauma, tumor, etc.
Less invasive surgical options along with
implant design began to emerge over the past 15 years. These options feature a variety of approaches and implant designs and have
been met with varying degrees of adoption. Lack of a standard and accepted diagnostic approach, complexity of approach, high morbidity
of approach, abnormally high complication rates and inability to radiographically confirm fusion have all been cited as reasons
for low adoption of these technologies.
Non-Surgical Treatment of Sacroiliac Joint Disease
Although a number of non-surgical treatments exist
for sacroiliac joint pain, we believe based on literature that none have delivered the long-term pain relief that has been seen
with SI-Joint fixation. Although not as yet published, the results experienced by the initial 30 patients treated in our limited
release have had a dramatic reduction in pain relief. Non-surgical treatments include:
•
Drug Therapy
: including opiates and non-steroidal anti-inflammatory medications.
•
Physical Therapy
: which can involve exercises as well as massage.
•
Intra-Articular Injections of Steroid Medications
: which are typically performed by physicians who specialize in pain
treatment or anesthesia.
•
Radiofrequency Ablation
: or the cauterizing of the lateral branches of the sacral nerve roots.
69
The Market
Based on market research and internal estimates,
Tenon believes the potential market for surgical intervention of the SI-Joint to be 279,000 procedures annually in the US alone,
for a potential annual market in excess of $2.2 billion. These estimates are driven by coding data for SI-Joint injections to treat
pain and informed assumptions relative to surgical intervention candidacy
Based on public information, we believe
that the largest clinical device supplier in this market does approximately 10-11,000 SI-Joint fixations a year representing the
largest market share. The other competitive devices that are offered are all products generally part of much larger companies with
a variety of orthopaedic devices and as such do not specifically call out the number of specific SI-Joint procedures performed with
their products. It is our belief that all other competitive devices represent approximately another 5,000 potential SI-Joint procedures.
Based on this analysis we believe the market
is vastly underserved and only penetrated 5-7%, leaving tremendous upside for a next generation device that meets the needs of
this market.
Competitive Landscape
We believe Tenon is the first company to
develop and manufacture a novel posterior/inferior approach featuring a dual pontoon fixation technology cleared by the FDA expressly
for SI-Joint fusion. The approach, referred to as PiSIF™ (Posterior Inferior Sacroiliac Fusion) is focused on these critical
aspects of the surgical procedure:
1.
Safety: the approach trajectory and angle are away from the neural foramen
2.
Efficiency: the approach is direct to the SI Joint, which allows for visualization of the joint
and passes through minimal muscle structures, resulting in a faster and more efficient surgical procedure and reduced post-op pain
for the patient
3.
Targeted Anatomy: the approach places the implant in the aspect of the SI-Joint with the densest
bone, providing maximum fixation and resistance to vertical shear. This ensures a secure press fit of the implant, reducing the
incidence of revision surgery due to implant loosening, which we believe is the reason for many competitive device failures as
reported to the FDA Medical Device Reporting (MDR).
Note the trajectory used in the PiSIF™
approach:
70
Over the past several years, other companies
have recognized the opportunity and have entered the minimally invasive SI-Joint fixation market. However, all these products are
either screw / triangular rod-based or allograft products.
In the United States, we believe that
our primary competitors will be SI-Bone, Inc., Globus Medical, Inc., Medtronic plc and RTI Surgical, Inc. We also
compete against non-hardware products, such as allograft bone implants. These allograft products are comprised of human cells
or tissues and are regulated by the FDA differently from implantable medical devices made of metallic or other
non-tissue-based materials.  The following chart is a comparison of specifications and features among the various
available clinical devices:
Current Clinical Device Comparison –
SI-Joint
71
We believe from our study of the market
that many physicians who have been trained to use one of the existing clinical devices have not adopted the procedure for a variety
of reasons. Complexity of approach, high morbidity of approach, abnormally high complication rates and inability to radiographically
confirm fusion have all been cited as reasons for low adoption of these technologies
The following are the primary factors on which companies compete
in our industry:
•
product and clinical procedure effectiveness;
•
ease of surgical technique and use of associated instruments;
•
safety;
•
published clinical outcomes and evidence;
•
sales force knowledge and service levels;
•
product support and service, and customer service;
•
comprehensive training, including disease, anatomy, diagnosis and treatment;
•
product innovation and the speed of innovation;
•
intellectual property;
•
accountability and responsiveness to customers' demands;
•
pricing and reimbursement;
•
scientific (biomechanics) data; and
•
attracting and retaining key personnel.
Tenon believes that refined approaches
and improved implant design will open the door to enhanced adoption and further penetration of this important market.
The CATAMARAN™ SIJ Fusion System
Solution
Tenon currently sells The CATAMARAN™
SIJ Fusion System ("The CATAMARAN System") to a limited number of surgeon advisors to develop the product for a commercial
launch. Tenon is planning a limited of The CATAMARAN System in the fourth quarter of 2021 and a full commercial launch in the first
quarter of 2022, which will address what we believe is a large market opportunity with a superior product. The CATAMARAN System
includes instruments and implants designed to prepare and fixate the SI-Joint for fusion. The CATAMARAN System is distinct from
other competitive offerings in the following ways:
·
Posterior / Inferior Sacroiliac Fusion Approach (PiSIF™)
·
Reduced Approach Morbidity
·
Direct And Visualized Approach to the SI-Joint
·
Single Implant "One and Done" Technique
·
Insertion Trajectory Away from the Neural Foramen
·
Autologous Bone Grafting in the Ilium, Sacrum and Bridge
·
Radiographic Confirmation of Bridging Bone Fusion of the SI-Joint
The fixation device and its key features
are shown below:
Key Features
"Pontoon" in the ilium
"Pontoon" in the sacrum
"Pontoons and Bridge" filled with autologous bone
        from drilling process
Leading edge osteotome creates defect and eases insertion
72
The CATAMARAN System is a singular implant
designed with several proprietary components which allow for the "One and Done" feature of the implant. With its patented
dual pontoon open cell design which enables the surgeon to pack the pontoons with the patient's own autologous bone promoting
bone fusion across the joint, The CATAMARAN System is designed specially to resist vertical shear and rotation of the joint in
which it was implanted, helping stabilize the joint in preparation for eventual fusion.
The instruments we have developed are proprietary
to The CATAMARAN System and are designed for the procedure to be performed via the previously described PiSIF™ approach.
Tenon also has developed a proprietary
2D placement protocol as well as a protocol for 3D navigation utilizing the latest techniques in spine surgery. We believe these
Tenon advancements will further ensure the safety of the procedure and encourage more surgeons to adopt the procedure.
The CATAMARAN System, as mentioned previously,
is placed in the densest aspect of the SI-Joint as confirmed by the pre-op planning images below:
Surgical Plan Key:
Yellow: Guidewire
Purple: Lateral Pontoon (Ilium)
Green: Medial Pontoon
        (Sacrum)
Notes:
Upper Right Quadrant: The green and purple pontoons represent
        the placement in the dense bone inferior – contrasted with the gap superiorly where competitive systems are most often placed,
        often times resulting in revision surgery.
Lower Right Quadrant: The yellow and purple outlines represent
        The CATAMARAN System pontoons, illustrating the angle of insertion is
away
from the sacral neuro foramen providing for a
        much safter trajectory for device implantation.
The Procedure
The CATAMARAN System and its differentiated
characteristics allow for an efficient and effective procedure that delivers short-term stabilization and long-term fusion that
can be confirmed radiographically. Shown below is an illustration showing the unique placement of The CATAMARAN System inserted
posterior / inferior and coming directly down to the joint
73
The CATAMARAN System procedure is typically
performed under general anaesthesia using a specially designed instrument set we provide to prepare for the posterior/inferior access
to the SI-Joint. Specially designed imaging and navigation protocols ensure the surgeon has the proper Entry Point, Trajectory,
Angle and Depth (ETAD™) so that the pontoons of The CATAMARAN System are placed for maximum fixation. The CATAMARAN System
incorporates two pontoons and is designed so that when the system is impacted into the bone one pontoon is on the Illum side and
the other is in the Sacrum side with the bridge spanning the joint, preventing shear and rotation of the joint. The device also
features an open cell design where the patient's own (autologous) bone is packed into the pontoons and the bridge to facilitate
fusion across the joint. The leading edge of the bridge is designed to act as an osteotome, providing a self-created deficit upon
insertion. These features create an ideal environment for bone ingrowth and fusion. Below is a fluoroscopic image of an implanted
CATAMARAN Fixation Device spanning the SI Joint.
Tenon believes the surgical approach and
implant design it has developed, along with the 2D and 3D protocols for proper implantation will be received well by the surgeon
community who have been looking for a next generation device. Our initial clinical results indicate that The CATAMARAN System is
promoting fusion across the joint as evidenced by post-op CT scans (the recognized gold standard widely accepted by the surgeon
community).
Post-Op fluoroscopic image of
implant spanning the SI Joint
6-Month CT-Scan showing clear
bridging bone fusion
A preliminary 20 case series (Michael Joseph
Chaparro, MD, F.A.A.N.S., F.A.C.S.) has documented that The CATAMARAN System does in fact promote fusion across the SI-Joint, which
many of our competitors have not been able to demonstrate. While products from our competitors use screws and triangular wedges
to treat the SI-Joint, most do not effectively resist the vertical shear and twisting within the joint.
74
An independent biomechanical study (Lisa Ferrara,
Ph.D. OrthoKinetic Technologies, LLC now part of Element) demonstrated that a single CATAMARAN SIJ Fixation Device was superior
to predicate device in the areas of Fixation Strength, Shear Stiffness, Dynamic Endurance and Pullout Strength. We hold issued
patents on The CATAMARAN System and its unique features including the dual pontoons and the open cell structure for bone graft
packing. We also hold an issued patent for the method of placing The CATAMARAN System into the SI-Joint where one pontoon is in
the ilium and the other in the sacrum.
The CATAMARAN System's unique design
has already demonstrated radiographically confirmed fusion in initial patients. We believe that this beneficial advantage along
with a simpler, safer and less painful procedure will make this the procedure of choice for most surgeons. As more surgeons are
trained, Tenon intends to run head-to-head clinical trials against other devices to further document the unique attributes of The
CATAMARAN System.
Coverage and Reimbursement
When a Tenon procedure utilizing The CATAMARAN System is
performed, the healthcare facility, either a hospital (inpatient or outpatient clinic), and the surgeon submit claims for reimbursement
to the patient's insurer. Generally, the facility obtains a lump sum payment, or facility fee, for SI-Joint fusions. Our
products are purchased by the facility, along with other supplies used in the procedure. The facility must also pay for its own
fixed costs of operation, including certain operating room personnel involved in the procedure, ICD and other medical services
care. If these costs exceed the facility reimbursement, the facility's managers may discourage or restrict surgeons from
performing the procedure in the facility or using certain technologies, such as The CATAMARAN System, to perform the procedure.
The Medicare 2021 national average hospital
inpatient payment for SI-Joint Procedures ranges from approximately $25,000 to approximately $59,000 depending on the procedural
approach and the presence of Complication and Comorbidity/Major Complication and Comorbidity.
The Medicare 2021 national average hospital
outpatient clinic payment is $15,888. We believe that insurer payments to facilities are generally adequate for these facilities
to offer The CATAMARAN System procedure.
Surgeons are reimbursed separately for
their professional time and effort to perform a surgical procedure. Depending on the surgical approach, the incision size, type
and extent of imaging guidance, indication for procedure, and the insurer, The CATAMARAN System procedure may be reported by the
surgeon using any one of the applicable following CPT® codes 27279, 27280, 27299.   The Medicare 2021 national average
payment for CPT® 27279 is $888 and $1,399 for 27280. CPT® 27299 has no national valuation. Clinicians, however, can present
a crosswalk to another procedure believed to be fairly equivalent and/or comparison to a code for which there is an existing valuation.
For some governmental programs, such as
Medicaid, coverage and reimbursement differ from state to state, and some state Medicaid programs may not pay an adequate amount
for the procedures performed with our products, if any payment is made at all. Similar to Medicaid, many private payors'
coverage and payment may differ from one payer to another.
We believe that some surgeons view the
current Medicare reimbursement amount as insufficient for current SI-Joint procedures, given the work effort involved with the
procedure, including the time to diagnose the patient and obtain prior authorization from the patient's health insurer when
necessary. Many private payors require extensive documentation of a multi-step diagnosis before authorizing SI-Joint fusion for
a patient. We believe that some private payors apply their own coverage policies and criteria inconsistently, and surgeons may
experience difficulties in securing approval and coverage for sacroiliac fusion procedures. Additionally, many private payors limit
coverage for open SI-Joint fusion to trauma, tumor or extensive spine fusion procedures involving multiple levels.
75
We believe the unique design of The CATAMARAN
System and the fact The CATAMARAN System may be placed both via an open procedure based on the surgeon's determination of
trauma induced SI-Joint pain or as a minimally invasive approach provides a unique and differentiated approach for the surgeon
to determine the reimbursement code that best fits the clinical problem. We believe this is a significant advantage over competitive
devices by providing the surgeon the clinical flexibility of offering the best clinical solution and approach for patients.
Sales and Marketing
We will market and sell The CATAMARAN System
primarily through an out-sourced national distribution network specializing in orthopaedics and spine sales. This exclusive distributor
relationship with SpineSource® provides Tenon access to a large independent sales representative network comprising as many
as 750 independent sales representatives that specialize in spine products. Our target customer base includes approximately 12,000
physicians who perform spine and/or pelvic surgical procedures.
SpineSource has over 30 years of experience
distributing spine and orthopaedic products. Over that period of time, they have developed national contracts which speeds the
ability to sell within large hospital networks. SpineSource has also developed close relationships with the independent sales representatives
in their network. These relationships are important contact points within the United States as much of the sales of spine and orthopaedic
products are sold through close surgeon to sales rep consultative relationships developed over many years. Our national distributor
and network of independent sales representatives has extensive training and experience selling medical devices for spine problems
and pain management, generally focusing on emerging technologies and markets.
In addition to general sales and marketing
training, we provide our distribution organization with comprehensive, hands-on cadaveric and dry-lab training sessions focusing
on the clinical benefits of The CATAMARAN System and the importance of using the 2D and 3D protocols we have developed. We believe
many surgeons have already been trained using one of the alternative products but have not been satisfied with the approach and
technology. This provides Tenon with an opportunity to demonstrate to an already-trained-surgeon the unique attributes of The
CATAMARAN System.
Our business objective is to introduce
the Next Generation Implant for Si-Joint Fixation. The past 10 years has seen an acceleration in recognition and discussion of
the SI-Joint as a cause of pain that can be treated. However, adoption has been hindered by complexity of the procedure as evidenced
by the significant number of reported Medical Device Records (MDR's). The need for multiple implants and resulting post-op
pain has also contributed to low adoption numbers. Our strategy is to provide a safer, faster, and better surgical experience and
a significant pain reduction benefit for the patient. Our goals are simple but impactful and as such we plan on the following:
·
Educate and inform physicians and other healthcare providers, payors, and patients about the
                                                                                                                                            growing body of evidence supporting what we believe is the safety, durable clinical effectiveness, economic benefit, and
                                                                                                                                            reduction in opioid use associated with SI-Joint fixation and The CATAMARAN System procedure
·
Utilize the most effective means of training via video and in-person labs demonstrating the ease of use with 2D and 3D navigation.
Since many physicians have already been trained but have not incorporated SI-Joint fixation into their practices we will work with
these physicians to reengage and train them on the Next Generation of an SI-Joint implant which incorporates a safer and simpler
approach
·
Utilize the best approaches of direct-to-consumer outreach to educate patients that there is a safe solution to help them improve
their quality of life. Additionally, to reach the broadest physician and patient audience on case study results from around the
United States we plan to implement an active social media campaign incorporating Facebook, Instagram, YouTube, etc.
·
Invest in our distributor network to ensure that all Tenon representatives have the latest in marketing and education tools
to reduce the time from training to adoption
·
Remain true to our next generation product development strategy by continually bringing out new advancements in and around
the SI-Joint and pelvic region.
76
·
Continue to grow our existing intellectual property portfolio.
Regulatory Status
Tenon has received 510K clearance to market
and sell the Catamaran System. The company plans to begin initial sales in late Q-4 2021 with a full domestic product launch beginning
Q-1 2022.
Research & Development
Our initial development of The CATAMARAN
System has incorporated several differentiating features which we believe will make an important contribution for many patients
suffering from SI-Joint pain. To our knowledge no other competitive product incorporates these Next Generation features:
·
Dual Pontoon implant that bridges the targeted joint;
·
Open cell design designed for utilizing the patient's own autologous bone for promotion of fusion;
·
Bridge design between the dual pontoons for enhanced strength;
·
Leading edge of the implant designed to function as an osteotome providing a self-creating defect feature not available with
competitive systems;
·
Single implant designed with varying pontoon sizes to ensure a robust fixation based on
                                                                     anatomy; and
·
Additional smaller Catamaran designed for smaller anatomy and/or revision surgery.
The Tenon development plan is to expand
The CATAMARAN System offering by introducing a series of progressively longer pontoons so that the surgeon has a full complement
of sized implants to choose from depending on the patient's anatomy. These product enhancements will enable the surgeon to
optimize the size of each implant to ensure full fixation based on anatomy. Tenon believes based on literature searches of prior
SI-Joint fixation technologies that there may be as much as 20% of the implants performed to date where the implant has loosened
or been misplaced thereby requiring a revision surgery. Tenon believes that its ability to make The CATAMARAN System a specifically
sized fixation device will benefit many patients requiring a revision surgery.
The CATAMARAN System shown below has been
cleared by the FDA for commercialization. This patented titanium implant incorporates The CATAMARAN SIJ Fixation Device pontoon
design and the open cell configuration which we believe, when filled with the patient's autologous bone, promotes fusion.
The 2 images below show a comparison of a competitive implant requiring 3 implants and The CATAMARAN System unique pontoon design
showing the need of only 1 implant to cover the same amount of the SI-Joint.
The CATAMARAN™ SIJ Fusion
System Single Implant
SI Bone iFuse® Three Implants
77
Our mission will be to continue developing
enhancements to The CATAMARAN System to meet our customers' changing needs and to improve the surgery's effectiveness.
This includes revision surgery options as well as options to complete long fusion constructs in the lumbar spine.
Coinciding with our commercial launch, Tenon
will initiate some clinical marketing studies. Since we have FDA 510K clearance to market The CATAMARAN System our clinical trial
activities are focused on capturing post-market safety and efficacy data. Preliminary plans for clinical study evaluations may
include a longitudinal cohort study design with approximately 200 patients. Clinical study endpoints may include, but are not limited
to; length of surgical procedure, blood loss, post-op pain, length of stay, duration of non-weight-bearing post-op, radiographic
confirmation of fusion and surgical complication rates. Statistical analysis plans may be designed to demonstrate non-inferiority
to historical control, as reported in published literature, which may be used for submission to peer reviewed articles / posters
/ presentations and the like.
Intellectual Property
Developing and maintaining a strong intellectual
property position is an important element of our business. Currently we own all of our intellectual property though our subsidiary,
Tenon Technology AG ("TTAG"). We maintain the intellectual property through a combination of patent protection, trademarks,
and trade secrets. We have sought, and will continue to seek, patent protection for our technology, for improvements to our technology,
as well as for any of our other technologies where we believe such protection will be advantageous.
As of September 30, 2021, we own one (1) issued
U.S. utility patent, six (6) pending U.S. utility patent applications, three (3) issued foreign utility patents in Australia, Canada
and Israel, and three (3) pending foreign utility patent applications in the European Community, Brazil and Japan. The patent claims
in one (1) U.S. utility patent application have been allowed and the U.S. utility patent based thereon is scheduled to be issued
on October 19, 2021.
Our utility patents and patent applications
are directed to several different aspects of our sacroiliac (SI) joint stabilization technology and related patent platform. By
way of example, our granted patents and pending patent applications cover various structural features of our unique Catamaran
TM
SI joint prosthesis and means for employing same to stabilize a dysfunctional SI joint.
The term of individual patents depends on the
legal term for patents in the countries in which they are granted. In most countries, including the United States, the patent term
for a utility patent is generally 20 years from the earliest claimed filing date of a nonprovisional patent application in the
applicable country. Our issued U.S. and foreign utility patents are anticipated to naturally expire around 2031, and our U.S. pending
utility patent applications, if issued into patents, are similarly anticipated to naturally expire around 2031, excluding any additional
patent term adjustment(s) or extension(s), and assuming payment of all applicable maintenance or annuity fees. Once a patent expires,
patent protection ends and an invention enters the public domain allowing anyone to commercially exploit the invention without
infringing the patent.
We cannot guarantee that patents will be issued
from any of our pending applications or that issued patents will be of sufficient scope or strength to provide meaningful protection
for our technology. Notwithstanding the scope of the patent protection available to us, a competitor could develop methods or devices
that are not covered by our patents or circumvent these patents. Furthermore, although, at present, we are unaware of any patent
applications that may result in one or more issued patents that our existing products or technologies may be alleged to infringe,
since U.S. and foreign applications can take many months to publish, there may be applications unknown to us that may result in
one or more issued patents that our existing products or technologies may be alleged to infringe.
As of September 30, 2021, we also have priority
rights in and to several significant trademarks that support our products and brand, including eight (8) U.S. trademark applications
and four (4) foreign trademark applications in the European Community, Australia and Japan.
Regulation
Domestic Regulation of Our Products and
Business.
Our research, development and clinical programs, as well as our manufacturing and marketing operations, are subject
to extensive regulation in the United States and other countries. Most notably, all of our products sold in the United States are
subject to the Federal Food, Drug and Cosmetic Act (the "FDCA"), as implemented and enforced by the FDA. The FDA governs
the following activities that we perform or that are performed on our behalf, to ensure that medical products distributed domestically
or exported internationally are safe and effective for their intended uses:
·
product design, development, and manufacture;
·
product safety, testing, labeling, and storage;
·
record keeping procedures;
·
product marketing, sales, distribution and export; and
·
post-marketing surveillance, complaint handling, medical device reporting, reporting of deaths,
serious injuries or device malfunctions, and repair or recall of products.
There are numerous FDA regulatory requirements
governing the clearance or approval and marketing of our products. These include:
·
product listing and establishment registration, which helps facilitate FDA inspections and other
regulatory action;
·
investigational device exemptions to conduct premarket clinical trials, which include extensive
monitoring, recordkeeping, and reporting requirements;
·
QSR, which requires manufacturers, including contract manufacturers,
to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing
process;
·
labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved
or off-label use or indication;
78
·
clearance of product modifications that could significantly affect safety or effectiveness or that
would constitute a major change in intended use of one of our cleared devices;
·
approval of product modifications that affect the safety or effectiveness of one of our approved
devices;
·
medical device reporting regulations, which require that manufacturers comply with FDA requirements
to report if their device may have caused or contributed to a death or serious injury, or has malfunctioned in a way that would
likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur;
·
post-approval restrictions or conditions, including post-approval study commitments;
·
post-market surveillance regulations, which apply when necessary to protect the public health or
to provide additional safety and effectiveness data for the device;
·
the FDA's recall authority, whereby it can ask, or under certain conditions order, device
manufacturers to recall from the market a product that is in violation of governing laws and regulations;
·
regulations pertaining to voluntary recalls; and
·
notices of corrections or removals.
The FDA has broad post-market and regulatory
enforcement powers. We and our contract manufacturers are subject to announced and unannounced inspections by the FDA to determine
our compliance with the QSR and other regulations and these inspections may include the manufacturing facilities of our suppliers.
Tenon has a robust Supplier Qualification and Audit process as part of our quality system that ensures contract manufacturers,
and their suppliers meet all requirements.
An FDA pre-approval inspection is not required
for the The CATAMARAN System due to its lower device classification, class II versus the higher class III.  As is the
case for most medical device firms, Tenon is subject to routine and "for cause" FDA inspections. Routine inspections
are
mandated by law every 2 years for class II and class III device manufacturers and make up the majority of FDA's inspections. 
If a serious public health risk is identified during a routine inspection, the inspection may convert to a "for cause"
inspection.  In the current environment, FDA has limited compliance resources and has not been able to perform routine
inspections in accordance with the 2-year mandate.  Therefore, FDA uses a risk-based approach when deciding which firms
should be selected for a routine inspection. Using the Establishment Registration and Device Listing databases, FDA identifies
who manufactures and/or distributes which devices. The firms are then prioritized by risk, class III > class II > class I.
Firms that have recently introduced a new device to the market also are given higher priority, as well as those that have had significant
prior violations and complaints.  At present, Tenon has not been selected for an FDA inspection.  Tenon uses
best practices to secure and maintain regulatory compliance by engaging with suppliers and contract manufacturing firms that are
ISO 13485 (or equivalent) compliant and by periodically performing internal, external, and third-party inspections and audits of
the facilities and systems to assess compliance.
FDA Premarket Clearance and Approval
Requirements.
Unless an exemption applies, each medical device we wish to commercially distribute in the United States
will require either premarket notification, or 510(k), clearance or approval of a PMA from the FDA. The FDA classifies medical
devices into one of three classes. Devices deemed to pose lower risks are placed in either Class I or II, which typically
requires the manufacturer to submit to the FDA a premarket notification requesting permission to commercially distribute the device.
This process is generally known as 510(k) clearance. Some low-risk devices are exempted from this requirement. Devices deemed by
the FDA to pose the greatest risks, such as life-sustaining, life- supporting or implantable devices, or devices deemed not substantially
equivalent to a previously cleared 510(k) device, are placed in Class III, requiring a PMA. If the FDA agrees that the device
is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market
the device. If the FDA determines that the device is "not substantially equivalent" to a previously cleared device,
the device is automatically designated as a Class III device. The device sponsor must then fulfill more rigorous PMA requirements
or can request a risk-based classification determination for the device in accordance with the "de novo" process, which
is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate
device. All of our currently marketed products are Class II devices, subject to 510(k) clearance.
79
After a device receives 510(k) marketing
clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change
or modification in its intended use, will require a new 510(k) marketing clearance or, depending on the modification, PMA approval.
The determination as to whether or not a modification could significantly affect the device's safety or effectiveness is
initially left to the manufacturer using available FDA guidance. Many minor modifications today are accomplished by a "letter
to file" in which the manufacture documents the rationale for the change and why a new 510(k) is not required. However, the
FDA may review such letters to file to evaluate the regulatory status of the modified product at any time and may require the manufacturer
to cease marketing and recall the modified device until 510(k) clearance or PMA approval is obtained. The manufacturer may also
be subject to significant regulatory fines or penalties.
Clinical Trials.
Clinical trials
are generally required to support a PMA application and are sometimes required for 510(k) clearance. Such trials for implanted
devices such as the CATAMARAN™ SIJ Fixation Device generally require an investigational device exemption application, or
IDE, approved in advance by the FDA for a specified number of subjects and study sites, unless the product is deemed a nonsignificant
risk device eligible for more abbreviated IDE requirements. Clinical trials are subject to extensive monitoring, recordkeeping,
and reporting requirements. Clinical trials must be conducted under the oversight of an institutional review board, or IRB, for
the relevant clinical trial sites and must comply with FDA regulations, including but not limited to those relating to good clinical
practices. To conduct a clinical trial, we also are required to obtain the subjects' informed consent in form and substance
that complies with both FDA requirements and state and federal privacy and human subject protection regulations. We, the FDA, or
the institutional review board, or IRB, could suspend a clinical trial at any time for various reasons, including a belief that
the risks to study subjects outweigh the anticipated benefits. Even if a trial is completed, the results of clinical testing may
not adequately demonstrate the safety and effectiveness of the device or may otherwise not be sufficient to obtain FDA clearance
or approval to market the product in the United States.
Pervasive and Continuing Regulation.
After a device is placed on the market, numerous regulatory requirements continue to apply. These include:
•
Product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action;
•
QSR, which requires manufacturers, including contract manufacturers,
to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the manufacturing
process;
•
labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label use or indication;
•
clearance of product modifications that could significantly affect safety or effectiveness or that would constitute a major
change in intended use of one of our cleared devices;
•
approval of product modifications that affect the safety or effectiveness of one of our approved devices;
•
post-approval restrictions or condition, including post-approval study commitments;
•
post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety
and effectiveness data for the device;
•
the FDA's recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from
the market a product that is in violation of governing laws and regulations;
•
regulations pertaining to voluntary recalls; and
•
notices of corrections or removals.
The FDA has broad post-market and regulatory enforcement powers.
We are subject to unannounced inspections by the FDA to determine our compliance with the QSR and other regulations, and these
inspections may include the manufacturing facilities of some of our subcontractors. Failure by us or by our suppliers to comply
with applicable regulatory requirements can result in enforcement action by the FDA or other regulatory authorities, which may
result in sanctions including, but not limited to:
80
•
untitled letters, warning letters, fines, injunctions, consent decrees, and civil penalties;
•
unanticipated expenditures to address or defend such actions
•
customer notifications for repair, replacement, refunds;
•
recall, detention or seizure of our products;
•
operating restrictions or partial suspension or total shutdown of production;
•
refusing or delaying our requests for 510(k) clearance or PMA approval of new products or modified products;
•
operating restrictions;
•
withdrawing 510(k) clearances or PMA approvals that have already been granted:
•
refusal to grant export approval for our products; or
•
criminal prosecution.
The FDA has not yet inspected our contract manufacturer's
manufacturing facilities.
Promotional Materials "Off-Label"
Promotion.
Advertising and promotion of medical devices, in addition to being regulated by the FDA, are also regulated
by the Federal Trade Commission and by state regulatory and enforcement authorities. If the FDA determines that our promotional
materials or training constitutes promotion of an unapproved use, it could request that we modify our training or promotional materials
or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction,
seizure, civil fine, or criminal penalties. It is also possible that other federal, state, or foreign enforcement authorities might
take action if they consider our promotional or training materials to constitute promotion of an unapproved use, which could result
in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In
that event, our reputation could be damaged, and adoption of the products would be impaired.
In addition, under the federal Lanham Act
and similar state laws, competitors, and others can initiate litigation relating to advertising claims.
Healthcare Fraud and Abuse
Federal and state governmental agencies
and equivalent foreign authorities subject the healthcare industry to intense regulatory scrutiny, including heightened civil and
criminal enforcement efforts. These laws constrain the sales, marketing and other promotional activities of medical device manufacturers
by limiting the kinds of financial arrangements we may have with hospitals, physicians and other potential purchases of our products.
Federal healthcare fraud and abuse laws apply to our business when a customer submits a claim for an item or service that is reimbursed
under Medicare, Medicaid, or other federally funded healthcare programs. Descriptions of some of the laws and regulations that
may affect our ability to operate follows.
81
The federal Anti-Kickback Statute prohibits,
among other things, persons from knowingly and willfully soliciting, receiving, offering, or paying remuneration, directly or indirectly,
in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of,
items or services for which payment may be made, in whole or in part, under federal healthcare programs. The term "remuneration"
has been broadly interpreted to include anything of value, and the government can establish a violation of the Anti-Kickback Statute
without proving that a person or entity had actual knowledge of, or a specific intent to violate, the law. The Anti-Kickback Statute
is subject to evolving interpretations and has been applied by government enforcement officials to a number of common business
arrangements in the medical device industry. There are a number of statutory exceptions and regulatory safe harbors protecting
some common activities from prosecution; however, those exceptions and safe harbors are drawn narrowly, and there is no exception
or safe harbor for many common business activities. Failure to meet all of the requirements of a particular statutory exception
or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute, but the legality of the arrangement
will be evaluated on a case-by-case basis based on the totality of the facts and circumstances. A number of states also have anti-kickback
laws that establish similar prohibitions that may apply to items or services reimbursed by government programs, as well as by any
third-party payors, including commercial payors.
The civil False Claims Act prohibits, among
other things, knowingly presenting or causing the presentation of a false or fraudulent claim for payment of federal funds, or
knowingly making, or causing to be made, a false record or statement material to a false or fraudulent claim to avoid, decrease
or conceal an obligation to pay money to the federal government. A claim including items or services resulting from a violation
of the Anti- Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. Actions under the False
Claims Act may be brought by the government or as a
qui tam
action by a private individual in the name of the government.
Qui tam
actions are filed under seal and impose a mandatory duty on the U.S. Department of Justice to investigate such allegations.
Most private citizen actions are declined by the Department of Justice or dismissed by federal courts. However, the investigation
costs for a company can be significant and material even if the allegations are without merit. There are also criminal penalties,
including imprisonment and criminal fines, for making or presenting a false or fictitious or fraudulent claim to the federal government.
False Claims Act liability is potentially
significant in the healthcare industry because the statute provides for treble damages and mandatory penalties of $11,181 to $22,363
per claim (adjusted annually for inflation). Because of the potential for large monetary exposure, healthcare companies often resolve
allegations without admissions of liability for significant and sometimes material amounts to avoid the uncertainty of treble damages
and per claim penalties that may awarded in litigation proceedings. Moreover, to avoid the risk of exclusion from federal healthcare
programs as a result of a False Claims Act settlement, companies may enter into corporate integrity agreements with the government,
which may impose substantial costs on companies to ensure compliance.
In addition, HIPAA created federal criminal
statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any
healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare
benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying,
concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with
the delivery of or payment for healthcare benefits, items or services.
The federal Physician Payment Sunshine
Act, implemented by CMS as the Open Payments program, requires manufacturers of drugs, devices, biologics and medical supplies
for which payment is available under Medicare, Medicaid, or the Children's Health Insurance Program to report annually to
CMS information related to payments or other "transfers of value" made to physicians and teaching hospitals, and requires
applicable manufacturers to report annually to CMS ownership and investment interests held by physicians and their immediate family
members and payments or other "transfers of value" to such physician owners.
Certain states also mandate implementation
of corporate compliance programs, impose restrictions on device manufacturer marketing practices, and/or require tracking and reporting
of gifts, compensation, and other remuneration to healthcare professionals and entities.
The Foreign Corrupt Practices Act and similar
anti-bribery laws in other countries, such as the UK Bribery Act, generally prohibit companies and their intermediaries from making
improper payments to government officials and/or other persons for the purpose of obtaining or retaining business. Our policies
mandate compliance with these anti-bribery laws.
Violations of these federal and state fraud
abuse laws can subject us to administrative, civil, and criminal penalties, including imprisonment, substantial fines, penalties,
damages, and exclusion from participation in federal healthcare programs, including Medicare and Medicaid.
82
Data Privacy and Security Laws
HIPAA requires the notification of patients,
and other compliance actions, in the event of a breach of unsecured PHI. If notification to patients of a breach is required, such
notification must be provided without unreasonable delay and in no event later than 60 calendar days after discovery of the breach.
In addition, if the PHI of 500 or more individuals is improperly used or disclosed, we could be required to report the improper
use or disclosure to the U.S. Department of Health and Human Services, or HHS, which would post the violation on its website, and
to the media. Failure to comply with the HIPAA privacy and security standards can result in civil monetary penalties up to $55,910
per violation, not to exceed $1.68 million per calendar year for non-compliance of an identical provision, and, in certain
circumstances, criminal penalties with fines up to $250,000 per violation and/or imprisonment.
In addition, even when HIPAA does not apply,
according to the FTC, failing to take appropriate steps to keep consumers' personal information secure constitutes unfair
acts or practices in or affecting commerce in violation of Section 5(a) of the FTCA, 15 U.S.C § 45(a). The FTC expects
a company's data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information
it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
Medical data is considered sensitive data that merits stronger safeguards. The FTC's guidance for appropriately securing
consumers' personal information is similar to what is required by the HIPAA Security Rule.
We are subject to the supervision of local
data protection authorities in those jurisdictions where we are established or otherwise subject to applicable law. We depend on
a number of third parties in relation to our provision of our services, a number of which process personal data on our behalf.
With each such provider we enter into contractual arrangements to ensure that they only process personal data according to our
instructions, and that they have sufficient technical and organizational security measures in place. Where we transfer personal
data outside the EEA, we do so in compliance with the relevant data export requirements. We take our data protection obligations
seriously, as any improper disclosure, particularly with regard to our customers' sensitive personal data, could negatively
impact our business and/or our reputation.
Manufacturing and Supply
We do not manufacture any products or component
parts and currently use five contract manufacturers to produce all of our instruments, implants and sterilization cases. The majority
of our instruments have a secondary manufacturing supplier, and we continually work with additional manufacturers to establish
secondary manufacturing suppliers. Our contract manufacturers source and purchase all raw materials used in the manufacture of
The CATAMARAN System which includes mainly stainless steel and aluminum for our instruments and sterilization cases and titanium
for our implants.
We do not currently have manufacturing agreements
with any of our contract manufacturers and orders are controlled through purchase orders. The Company does not believe its relationship
with any one contract manufacturer is material to its business.
We believe the manufacturing operations of
our contract manufacturers, and those of the suppliers of our manufacturers, comply with regulations mandated by the FDA, as well
as Medical Devices Directive regulations in the EEA. Manufacturing facilities that produce medical devices or component parts intended
for distribution world-wide are subject to regulation and periodic planned and unannounced inspection by the FDA and other domestic
and international regulatory agencies.
In the United States, the product we sell is
required to be manufactured in compliance with the QSR, which covers the methods used in, and the facilities used for, the design,
testing, control, manufacturing, labelling, quality assurance, packaging, storage, and shipping.
We are required to demonstrate continuing compliance
with applicable regulatory requirements and will be subject to FDA inspections. Further, we and certain of our contract manufacturers
are required to comply with all applicable regulations and current good manufacturing practices. As set forth above, these FDA
regulations cover, among other things, the methods and documentation of the design, testing, production, control, quality assurance,
labelling, packaging, sterilization, storage, and shipping of our products. Compliance with applicable regulatory requirements
is subject to continual review and is monitored rigorously through periodic inspections. If we or our manufacturers fail to adhere
to current good manufacturing practice requirements, this could delay production of our products and lead to fines, difficulties
in obtaining regulatory approvals, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences,
which could, in turn, have a material adverse effect on our financial condition or results of operations.
83
Product Liability and Insurance
The manufacture and sale of our products
subjects us to the risk of financial exposure to product liability claims. Our products are used in situations in which there is
a risk of serious injury or death. We carry insurance policies which we believe to be customary for similar companies in our industry.
We cannot assure you that these policies will be sufficient to cover all or substantially all losses that we experience.
We endeavor to maintain executive and organization
liability insurance in a form and with aggregate coverage limits that we believe are adequate for our business purposes.
Legal Proceedings
On September 2, 2021, Khalid Mentak, a former director
and CEO of the Company filed an arbitration claim against the Company for approximately $3.3 million plus attorneys' fees
and other costs with the American Arbitration Association in the State of California for unpaid wages and other claims. The Company
maintains that any such claim should be limited to $600,000 because the services provided by Mr. Mentak are pursuant to and governed
by a Consulting Agreement (the "KM Consulting Agreement") dated March 21, 2021 between the Company and Key Medical
Technologies, Inc. ("Key Medical"), a company which Mentak served as CEO. See "
Certain Relationships and Related
Party Transactions"
for further details about the KM Consulting Agreement. The arbitration proceeding was also initiated
pursuant to the arbitration provision in the KM Consulting Agreement. Accordingly, as of the date of the claim, the Company has
recorded a total of $600,000 in accrued expenses in its consolidated financial statements in respect of these services. An arbitrator
has been appointed and the Company anticipates that a preliminary hearing to set a schedule will take place within the next 30
days. While the Company is unable to provide any assurances as to the ultimate outcome of this matter, it believes the claim for
additional compensation is without merit and intends to vigorously defend against it. The Company is currently unable to estimate
the costs and timing of the arbitration, including any potential damages, if the other party were to prevail on its claim.
We may also from time to time be, party to
litigation and subject to claims incident to the ordinary course of business. As our growth continues, we may become party to an
increasing number of litigation matters and claims. The outcome of litigation and claims cannot be predicted with certainty, and
the resolution of these matters could materially affect our future results of operations, cash flow or financial position.
Employees
As of November 9, 2021, we have 8 employees,
5 senior consulting advisors of various specialty including product development, general administrative and accounting. As of November 9, 2021, our national distributor has a network composed of 750 independent sales representatives. None of our employees is subject
to a collective bargaining agreement, and we consider our relationship with our employees to be good.
Property
We lease and maintain our primary offices
at 104 Cooper Court, Los Gatos, CA 95032. We do not currently own any real estate.
Corporate Information
We were incorporated on June 6, 2012, in
Delaware. Our principal executive offices are located at 104 Cooper Court, Los Gatos, CA 95032 and our telephone number is (408)
649-5760. Our website address is www.tenonmed.com. The information on, or that can be accessed through, our website
is not part of this prospectus. We have included our website address as an inactive textual reference only.
MANAGEMENT
The following are our executive officers
and directors and their respective ages and positions as of November 9, 2021.
Name
Age
Position
Steven M. Foster
54
Chief Executive Officer and President, Director
Richard Ginn
56
Chief Technology Officer and Director
Steve Van Dick
66
EVP, Finance and Administration and Chief Financial Officer
Richard Ferrari
68
Executive Chairman of the Board
Frank Fischer
1
80
Director nominee
Ivan Howard
1
55
Director nominee
Robert K. Weigle
1
62
Director nominee
Stephen H. Hochschuler, M.D
1
78
Director nominee
1
Have been asked and have agreed
to serve on our Board of Directors effective on the date our common stock is first listed on Nasdaq.
84
Steven M. Foster
is our Chief Executive
Officer and President, and is also a director of the Company. Mr Foster has over 30 years of marketing, sales, operations and general
management experience. From 2015 to present Mr. Foster has been a principal with CTB Advisors, LLC in Brentwood, Tennessee. CTB
Advisors was founded as a single member limited liability company for the purpose of providing medical device organizations and
physicians with consultative assistance on commercialization focused projects. Projects included: CRM based surgeon engagement
program design, training and implementation for NuVasive (NUVA). Valuation assessment / business plan development of early-stage
spine technology including IP assessment and regulatory pathway definition. M&A (SafeOp Surgical) integration project, Alphatech
Spine (ATEC). Current Status: Exclusive to ATEC. From 2012 to 2014 Mr. Foster was Global Commercialization President of Safe Orthopaedics
SAS, Paris, FR (based in Michigan): There Mr Foster worked on early-stage commercialization of a novel single-use / sterile / traceable
surgical kit for lumbar spine fusion. His focus included pre-clinical design, surgeon advisor team development, early marketing,
web design, convention presence and P&L preparation and management. Technology reached 200 global surgeries in first 12 months
of commercialization. From 1992 to 2012 Mr. Foster was part of the Danek Group Inc., Sofamor Danek, Medtronic Spine organization
where he held a variety of marketing, sales administration and general management roles, including as VP / GM of Medtronic Spine's
Western Europe operations from 2007-2010. Mr. Foster received a Bachelor of Science, Business Administration with a concentration
in Marketing and Management from Central Michigan University in 1990.
Richard Ginn
is a founder, the Chief
Technology Officer and a director of the Company. Mr. Ginn's focus is primarily on intellectual property and product development,
he has travelled throughout the world to train physicians and participated in multiple FIH trials and is a named inventor on more
than 300 patents for medical devices. Over the course of his career he has helped raise more than $100 million in venture capital
and has provided an average 10x return to his investors. Mr. Ginn is the founder of TransAortic Medical, an embolic protection
device company, and is its President, CEO and a director from 2013 to present. At TransAortic, Mr. Ginn Managed all corporate operations,
raised capital to support company needs; managed acquisition of technology by strategic partner; managed all Intellectual Property;
and set up European distribution for CE Marked device. Mr. Ginn is the founder of Promed, a large hole femoral closure device company
and was the CEO, President and a director from 2012 to 2019. At Promed he managed all corporate operations; raised capital to support
company needs; and managed all intellectual property.
Steven Van Dick
is our Executive
Vice President, Finance and Administration and Chief Financial Officer. Mr. Van Dick has been the Chief Financial Officer for the
Company since June 1, 2021. Mr. Van Dick is a strategic financial and accounting executive with a record of transitioning early-stage
companies to commercialization through astute financial management. Respected in the medical device startup community, he develops
and leads comprehensive, world-class financial and accounting groups credited for propelling startup companies forward. Across
his career Steve has played a key role on the Executive Leadership Teams that successfully completed three separate Initial Public
Offering (IPOs) and three mergers/integrations. From 2016 to 2017 Mr. Van Dick was the Chief Financial Officer for Benvenue Medical
Inc., a minimally invasive spine company in Santa Clara, California. At Benvenue, Mr. Van Dick was responsible for all accounting,
finance and IT functions with his primary focus on developing a long-range financial model and reducing cash burn. From 2010 to
2016, Mr Van Dick was the Vice President, Finance Administration—Chief Financial Officer for Spiracur Inc., a disposable/portable
negative pressure wound therapy company in Sunnyvale California. At Spiracur, Mr. Van Dick was responsible for all accounting,
finance and IT functions. He managed growth of company from initial commercialization to $12 million annualized run rate, lead
the conversion to fully integrated ERP system and developed controls to become Hipaa compliant. Mr Van Dick received a Bachelor
of Science, Business Administration with a concentration in Accounting from San Jose University in 1977 and an MBA from Santa Clara
University in 1984.
Richard Ferrari
is a founder, a director
and Executive Chairman of the Company. Since 2000, Mr. Ferrari has been and currently is a Managing Director of Denovo Ventures
a $650Mill venture firm specializing in Medical Devices and Biotechnology.  From January 2019 until April 2021 Mr. Ferrari
was employed as CEO and Chairman of the Board of Directors of PQ Bypass which culminated is a successful acquisition by Endologix.
During the last five years Mr. Ferrari has been and currently is a board member (Executive Chairman) of Medlumics, S.L., a medical
device company founded in 2011; a board member (Vice Chairman) of ABS Interventional; a board member (Executive Chairman) of Heart
Beam Inc.; a board member of Biomodex Corporation; a board member of Retriever Medical Inc.; a board member of RMx Medical; a board
member of Hawthorne Effect, Inc.; a board member and co-founder of TransAortic acquired by Medtronic; Executive Chairman of Sentreheart
acquired by Atricure, a board member of Spinal Modualtion sold to St Jude and a board member of Hands of Hope. Mr. Ferrari has
raised over $1billion for the companies he has been involved with and been a key member of the various boards M&A teams achieving
over $2Bill in Acquisitions.  Mr. Ferrari continues to mentor and advise a number of CEO's and start-up companies on
strategy and building organizations dedicated to delivering excellence. Mr. Ferrari is the creator of Excellence by Choice a series
of lectures and presentations to help early-stage companies perform at the highest level of execution. Mr. Ferrari received a Bachelor's
Degree in Education from Ashland University and a MBA from University of South Florida.
Frank Fischer
has more than 40 years
of senior management experience in the medical device industry. He co-founded NeuroPace in December 1997, led the company as its
President and Chief Executive Officer from January 2000 through July 2019, served on its Board of Directors since inception and
is currently Chairman of the Board. Prior to joining NeuroPace, Mr. Fischer was President and Chief Executive Officer of Heartport,
Inc., a cardiac surgery company, from May 1998 until September 1999 and served on Heartport's Board of Directors. Previously,
Mr. Fischer was President and Chief Executive Officer and a director of Ventritex, Inc., a company that pioneered implantable cardiac
defibrillators, from July 1987 until the sale of the company to St. Jude Medical, Inc. in 1997. Before joining Ventritex, he held
various management positions at Cordis Corporation from 1977 to 1987 in the cardiac and neurosurgical device areas, serving most
recently as President of the Implantable Products Division. Currently he is a member of the Board of Directors of Nevro, Inc.,
the Board of Trustees of both Rensselaer Polytechnic Institute and Babson College as well as the Board of Directors of the Epilepsy
Foundation of America. Mr. Fischer holds B.S.M.E. and M.S. in Management degrees from Rensselaer Polytechnic Institute.
We believe that Mr. Fischer is well qualified
to serve as a Director on our Board with his experience in leading medical device companies both as a senior executive and as a
member of the board of directors.
Ivan Howard
has been since 2019 and
currently is a Vice President and Sr. Specialist in Alternative Investment Fiduciary Risk for Banco Santander, a multinational
financial services company. From 2020 Mr. Howard has been and currently serves as Director on the Collier County Farm Bureau board
of directors.  From 2016, Mr. Howard has been and currently serves as Chairman of the Hendry/Glades County Farm Service Agency.
From 2020 Mr. Howard has been and currently serves on the U.S. Department of Agriculture Advisory Committee on Minority Farmers.
From 2018 Mr. Howard has been and is currently a member of the University of Florida College of Biomedical Engineering External
Advisory board.
We believe that Mr. Howard is well qualified
to serve as a Director on our Board with his financial services and board membership experience.
Robert K. Weigle
currently is and
has been since October 2020, the CEO of Prime Genomics, a saliva-based diagnostics company utilizing Genomics. Mr Weigle is also
currently an executive in residence with DigitalDX, a venture capital firm. Mr. Weigle was CEO and a director of Benvenue Medical
from May 2009 until August 2020. Benvenue was a Silicon Valley based medical device company, which raised over $200 million in
funding. At Benvenue Mr. Weigle led growth from pre-clinical to successful clinical trials to commercial launch of first generation
devices in two distinct markets, one for the treatment of compression fractures in the spine and the second for the treatment of
degenerative disc disease, resulting in a first full-year run rate exceeding $1 million per month. Mr. Weigle oversaw all early
aspects of corporate strategy, including defining, communicating and executing the company's overall business model; and
represented Benvenue to the investment community. Mr. Weigle was also a senior executive at numerous healthcare/medical device
companies, including TherOx, Inc, Cardiac Pathways, Baxter Healthcare and Cardima Corporation. Mr. Weigle also has relevant experience
at Johnson & Johnson. Mr. Weigle holds a BA in Political Science from University of California, Berkeley.
We believe that Mr. Weigle is well qualified
to serve as a Director on our Board with his experience in leading medical device companies both as a senior executive and as a
member of the board of directors.
Stephen H. Hochschuler, M.D.
is a world
renowned orthopaedic spine surgeon. Dr. Hochschuler is the co-founder of the Texas Back Institute and founder of Back Systems,
Inc., and founding Chairman of Innovative Spinal Technologies, Dr. Hochschuler has severed on numerous boards of directors and
advisory boards for medical and scientific institutions. Dr. Hochschuler is a member of numerous national and international professional
organizations including the American Academy of Orthopedic Surgeons; the American Pain Society; North American Spine Society; and
the Southwest Chapter of the Society of International Business Fellows. Internationally, he is a member of the International Intradiscal
Therapy Society; the International Society for Minimal Intervention in Spinal Surgery; the International Society for the Study
of the Lumbar Spine; and is a founding board member of the Spinal Arthroplasty Society. He has also been a founding board member
of The American Board of Spine Surgery and The American College of Spine Surgery. He is published in a wide range of professional
journals, and has delivered numerous presentations worldwide. Dr. Hochschuler holds a BA from Columbia College and his medical
degree from Harvard Medical School.
We believe that Dr. Hochschuler is well qualified
to serve as a Director on our Board with his experience in as an orthopaedic spine surgeon and his service on boards of directors
and advisory boards of medical and scientific institutions as a member of the board of directors.
85
Board Composition
Our business and affairs are managed under
the direction of our board of directors. Our board of directors currently consists of three (3) members, none of whom qualify as
"independent" under the listing standards of Nasdaq.
Directors serve until the next annual meeting
and until their successors are elected and qualified. Officers are appointed to serve for one year until the meeting of the Board
following the annual meeting of shareholders and until their successors have been elected and qualified.
Director Independence
Prior to the closing of this initial public
offering, our board of directors will be composed of a majority of "independent directors" as defined under the rules
of Nasdaq. We use the definition of "
independence
" applied by Nasdaq to make this determination. Nasdaq Listing
Rule 5605(a)(2) provides that an "
independent director
" is a person other than an officer or employee of the
company or any other individual having a relationship which, in the opinion of the Company's Board, would interfere with
the exercise of independent judgment in carrying out the responsibilities of a director. The Nasdaq listing rules provide that
a director cannot be considered independent if:
•
the director is, or at any time during the past three (3) years was, an employee of the company;
•
the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any
period of twelve (12) consecutive months within the three (3) years preceding the independence determination (subject to certain
exemptions, including, among other things, compensation for board or board committee service);
•
the director or a family member of the director is a partner in, controlling shareholder of, or an executive officer of an
entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years
that exceed 5% of the recipient's consolidated gross revenue for that year or $200,000, whichever is greater (subject to
certain exemptions);
•
the director or a family member of the director is employed as an executive officer of an entity where, at any time during
the past three (3) years, any of the executive officers of the company served on the compensation committee of such other entity;
or
•
the director or a family member of the director is a current partner of the Company's outside auditor, or at any time
during the past three (3) years was a partner or employee of the Company's outside auditor, and who worked on the company's
audit.
Under such definitions, our Board has undertaken
a review of the independence of each director. Based on the information provided by each director concerning his or her background,
employment, and affiliations, our Board has determined that [●] are all independent directors of the Company.
However, our common stock is not currently quoted or listed on any national exchange or interdealer quotation system with a requirement
that a majority of our Board be independent and, therefore, the Company is not subject to any director independence requirements.
Board Committees
Upon the consummation of this Offering, the
Company's Board will establish three standing committees: Audit, Compensation, and Nominating and Corporate Governance. Each
of the committees will operate pursuant to its charter. The committee charters will be reviewed annually by the Nominating and
Corporate Governance Committee. If appropriate, and in consultation with the chairs of the other committees, the Nominating and
Corporate Governance Committee may propose revisions to the charters. The responsibilities of each committee are described in more
detail below.
Nasdaq permits a phase-in period of up
to one year for an issuer registering securities in an initial public offering to meet the Audit Committee, Compensation Committee
and Nominating and Corporate Governance Committee independence requirements. Under the initial public offering phase-in period,
only one member of each committee is required to satisfy the heightened independence requirements at the time our registration
statement becomes effective, a majority of the members of each committee must satisfy the heightened independence requirements
within 90 days following the effectiveness of our registration statement, and all members of each committee must satisfy
the heightened independence requirements within one year from the effectiveness of our registration statement.
86
Audit Committee
. Upon the closing of this
initial public offering, we will establish an audit committee consisting of at least three directors, all of which will be "independent"
as defined by Nasdaq and include an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under
the Securities Act of 1933, as amended, or the Securities Act. The audit committee's duties will be specified in a charter
and include, but not be limited to:
•
reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending
to the board whether the audited financial statements should be included in our annual disclosure report;
•
discussing with management and the independent auditor significant financial reporting issues and judgments made in connection
with the preparation of our financial statements;
•
discussing with management major risk assessment and risk management policies;
•
monitoring the independence of the independent auditor;
•
verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit
partner responsible for reviewing the audit as required by law;
•
reviewing and approving all related-party transactions;
•
inquiring and discussing with management our compliance with applicable laws and regulations;
•
pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the
fees and terms of the services to be performed;
•
appointing or replacing the independent auditor;
•
determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between
management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or
related work;
•
establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal
accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and
•
approving reimbursement of expenses incurred by our management team in identifying potential target businesses.
The audit committee will be composed
exclusively of "independent directors" who are "financially literate" as defined under the Nasdaq listing
standards. The Nasdaq listing standards define "financially literate" as being able to read and understand fundamental
financial statements, including a company's balance sheet, income statement and cash flow statement.
Compensation Committee
. Upon the closing of
this initial public offering, we will establish a compensation committee of the board of directors, which will consist of at least
three directors, all of which will be "independent" as defined by Nasdaq. The compensation committee's duties
will be specified in a charter and will include, but not be limited to:
•
reviews, approves and determines, or makes recommendations to our board of directors regarding, the compensation of our executive
officers;
87
•
administers our equity compensation plans;
•
reviews and approves, or makes recommendations to our board of directors, regarding incentive compensation and equity compensation
plans; and
•
establishes and reviews general policies relating to compensation and benefits of our employees.
Nominating and Corporate Governance Committee.
Upon the closing of this initial public offering, we will establish a nominating and corporate governance committee consisting of
at least two directors, all of which will be "independent" as defined by Nasdaq. The nominating and corporate governance
committee's duties will be specified in a charter and will include, but not be limited to:
•
identifying, reviewing and evaluating candidates to serve on our board of directors consistent with criteria approved by our
board of directors;
•
evaluating director performance on our board of directors and applicable committees of our board of directors and determining
whether continued service on our board of directors is appropriate
•
evaluating nominations by stockholders of candidates for election to our board of directors; and
•
corporate governance matters
Role of Board in Risk Oversight Process
Our board of directors has responsibility
for the oversight of our risk management processes and, either as a whole or through its committees, regularly discusses with management
our major risk exposures, their potential impact on our business and the steps we take to manage them. The risk oversight process
includes receiving regular reports from board committees and members of senior management to enable our board of directors to understand
our risk identification, risk management, and risk mitigation strategies with respect to areas of potential material risk, including
operations, finance, legal, regulatory, cybersecurity, strategic, and reputational risk.
Code of Ethics
Our Board plans to adopt a written code
of business conduct and ethics ("Code") that applies to our directors, officers and employees, including our principal
executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions.
We intend to post on our website a current copy of the Code and all disclosures that are required by law in regard to any amendments
to, or waivers from, any provision of the Code.
Family Relationships
There are no family relationships among
any of our executive officers or directors.
Involvement in Certain Legal Proceedings
To our knowledge, none of our current directors
or executive officers has, during the past ten (10) years:
•
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and
other minor offenses);
•
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation
or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or
within two (2) years prior to that time;
88
•
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his
involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities,
or to be associated with persons engaged in any such activity;
•
been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
•
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating
to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial
institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or
restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law
or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
•
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the
Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its
members or persons associated with a member.
EXECUTIVE COMPENSATION
Our executive officers did not receive
any compensation in fiscal years 2020 or 2019.
Employment Agreements
We have executed the following employment
agreements with our executive officers The material terms of each of those arrangements are summarized below. The summaries are
not complete description of all provisions of the employment arrangements and are qualified in their entirety by reference to the
written employment arrangements, each filed as an exhibit to the registration statement of which this prospectus is a part.
Foster Employment Agreement.
Steven
M. Foster, our Chief Executive Officer and President and a member of our Board of Directors, and the Company entered into an Employment
Agreement dated as of June 1, 2021 (the "Foster Employment Agreement"). The Foster Employment Agreement provides Mr.
Foster an annual base salary of $300,000, an annual bonus of up to $120,000 based upon achievement of mutually agreed upon milestones,
options to purchase shares of our common stock in an amount sufficient to maintain Mr. Foster's equity ownership at 4%, which
are to be granted at the closing of this initial public offering or upon a change of control of the Company if such change of control
occurs prior to the closing of this initial public offering and employee benefits that are generally given to our senior executives.
Under the Foster Employment Agreement,
in the event that Mr. Foster's employment is terminated by us without cause (as described in the Foster Employment Agreement)
or by Mr. Foster for good reason (as described in the Foster Employment Agreement), Mr. Foster would be entitled to (1) severance
equal to his base salary at termination, payable in instalments over the 12-month period following termination and (2) payments
in respect of continuing health care coverage for up to twelve months following termination. In addition, upon a change in control
of the Company, Mr. Foster would be entitled to (1) vesting of his options granted prior to the date of the Foster Employment Agreement
and (2) a lump sum cash payment of one year of his base salary and bonus opportunity then in effect.
89
If Mr. Foster is terminated for cause or
because of death or disability or resigns without good reason, then all vesting of Mr. Foster's equity awards and payments
of compensation will immediately terminate and any severance benefits will be paid in accordance with established policies, if
any, then in effect.
The Foster Employment Agreement contains
restrictive covenants and other obligations relating to non-solicitation of our employees, non-disclosure of
our proprietary information and assignment of inventions.
Ginn Employment Agreement
.
Richard Ginn, our founder, Chief Technology Officer and a director of the Company, and the Company entered into an Employment Agreement
dated as of June 1, 2021 (the "Ginn Employment Agreement"). The Ginn Employment Agreement provides Mr. Ginn an annual
base salary of $275,000, an annual bonus of up to 30% of base salary based upon achievement of mutually agreed upon milestones,
a second bonus of up to $200,000 based on certain milestones determined by our board of directors and employee benefits that are
generally given to our senior executives.
Under the Ginn Employment Agreement, in
the event that Mr. Ginn's employment is terminated by us without cause (as described in the Ginn Employment Agreement) or
by Mr. Ginn for good reason (as described in the Foster Employment Agreement), Mr. Ginn would be entitled to (1) severance
equal to his base salary at termination, payable in instalments over the 12-month period following termination and (2) payments
in respect of continuing health care coverage for up to twelve months following termination. In addition, upon a change in control
of the Company, Mr. Ginn would be entitled to (1) vesting of his options granted prior to the date of the Ginn Employment Agreement
and (2) a lump sum cash payment of one year of his base salary and bonus opportunity.
If Mr. Ginn is terminated for cause or
because of death or disability or resigns without good reason, then all vesting of Mr. Ginn's equity awards and payments
of compensation will immediately terminate and any severance benefits will be paid in accordance with established policies, if
any, then in effect.
The Ginn Employment Agreement contains
restrictive covenants and other obligations relating to non-solicitation of our employees, non-disclosure of
our proprietary information and assignment of inventions.
Van Dick Employment Agreement.
Steven
Van Dick, our Executive Vice President, Finance and Administration and Chief Financial Officer, and the Company entered into that
certain Employment Agreement dated as of June 1, 2021 (the "Van Dick Employment Agreement"). The Van Dick Employment
Agreement provides Mr. Van Dick an annual base salary of $275,000, an annual bonus of up to 30% of base salary based upon achievement
of mutually agreed upon milestones and employee benefits that are generally given to our senior executives.
Under the Van Dick Employment Agreement,
in the event that Mr. Van Dick's employment is terminated by us without cause (as described in the Van Dick Employment Agreement)
or by Mr. Van Dick for good reason (as described in the Van Dick Employment Agreement), Mr. Van Dick would be entitled to (1) severance
equal to his base salary at termination, payable in instalments over the 12-month period following termination and (2) payments
in respect of continuing health care coverage for up to twelve months following termination. In addition, upon a change in control
of the Company, Mr. Van Dick would be entitled to (1) vesting of his options granted prior to the date of the Van Dick Employment
Agreement and (2) a lump sum cash payment of one year of his base salary and bonus opportunity.
If Mr. Van Dick is terminated for cause
or because of death or disability or resigns without good reason, then all vesting of Mr. Van Dick's equity awards and payments
of compensation will immediately terminate and any severance benefits will be paid in accordance with established policies, if
any, then in effect.
The Van Dick Employment Agreement contains
restrictive covenants and other obligations relating to non-solicitation of our employees, non-disclosure of
our proprietary information and assignment of inventions.
The above summary description of the
named executives' employment agreement includes some of the general terms and provisions of those agreements. For a more
detailed description of those employment agreements, you should refer to such agreements, which are included as exhibits to the
registration statement of which this prospectus forms a part.
Stock Options
The Company granted Steven M. Foster an option
to purchase 225,000 shares of common stock at an exercise price of $2.60 per share with a grant date of May 1, 2021, subject to
monthly equal vesting over a three-year period and adjustment in certain circumstances as provided therein (31,250 shares of which
are vested). In addition, upon an initial public offering of the Company, the Company will provide a one-time option grant to maintain
Steven M. Foster's ownership position at 4% of the fully diluted outstanding equity.
The Company granted Richard Ginn (i) an option
to purchase 113,000 shares of common stock at an exercise price of $2.60 per share with a grant date of May 1, 2021, subject to
monthly equal vesting over a three-year period commencing April 1, 2021(18,833 shares of which are vested) and (ii) an option to
purchase 10,998 shares of common stock at an exercise price of $3.53 per share with a grant date of July 19, 2021, subject to monthly
equal vesting over a three-year period commencing July 19, 2021(917 shares of which are vested).
The Company granted Steven Van Dick (i) an
option to purchase 113,000 shares of common stock at an exercise of $2.60 per share with a grant date of May 1, 2021, subject to
monthly equal vesting over a three-year period that commenced on November 1, 2020 (34,528 shares of which are vested) and (ii)
an option to purchase 69,167 shares of common stock at an exercise price of $3.53 per share with a grant date of July 19, 2021,
subject to monthly equal vesting over a three-year period commencing July 19, 2021(5,764 shares of which are vested).
The Company granted Richard Ferrari an option
to purchase 225,000 shares of common stock at an exercise of $2.60 per share with a grant date of May 1, 2021, subject to monthly
equal vesting over a three-year period that commenced on January 1 2021 (56,250 shares of which are vested) and (ii) an option
to purchase 321,502 shares of common stock at an exercise price of $3.53 per share with a grant date of July 19, 2021, subject
to monthly equal vesting over a three-year period commencing July 19, 2021 (26,792 shares of which are vested).
The Company granted Stephen Hochschuler an
option to purchase 17,071 shares of common stock at an exercise price of $0.31 per share with a grant date of November 15, 2016, all of which are vested.
The Company granted Frank Fischer an option
to purchase 15,000 shares of common stock at an exercise price of $2.60 per share with a grant date of May 7, 2021, subject to
monthly equal vesting over a two-year period that commenced immediately (3,125 shares of which are vested).
90
Board Compensation
On May 7, 2021 the Company entered into
a Consulting Agreement (the "Ferrari Consulting Agreement") with Richard Ferrari, a founder of the Company and its
Executive Chairman, pursuant to which Mr. Ferrari was to assume the role of Executive Chairman of the Company in exchange for compensation
of $22,500 per month starting September 1, 2021 and $350,000 upon the closing of this initial public offering if the market capitalization
of the Company exceeds $50 million at the time of the initial public offering or anytime thereafter.
None of the other board members receive
compensation from the Company for their role as board members.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information,
as of November 9, 2021, with respect to the holdings of (1) each person who is the beneficial owner of more than 5% of a class
of Company voting stock, (2) each of our directors, (3) each executive officer, and (4) all of our current directors and executive
officers as a group.
Beneficial ownership of a class of voting stock
is determined in accordance with the rules of the SEC and includes any shares of such class of the Company's voting stock
over which a person exercises sole or shared voting or investment power, or of which a person has a right to acquire ownership
at any time within 60 days of November 9, 2021. Except as otherwise indicated, we believe that the persons named in this table
have sole voting and investment power with respect to all shares of voting stock held by them. Applicable percentage ownership
in the following table is based on 1,979,907 shares of common stock, 2,550,763 shares of Series A Preferred Stock and 491,222 shares
of Series B Preferred Stock, in each case, issued and outstanding on November 9, 2021 and [*] shares of common stock issued and
outstanding after the offering assuming a common stock offering of [*] shares (excluding [*] shares which may be sold upon
exercise of the underwriters' over-allotment option), plus, for each individual, any securities that individual has the right
to acquire within 60 days of November 9, 2021.
To the best of our knowledge, except as
otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of
our common stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge,
none of the shares listed below are held under a voting trust or similar agreement, except as noted. To our knowledge, there is
no arrangement, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date
result in a change in control of the Company.
91
Name and Address
of Beneficial Owner (1)
Title
Title of Class(2)
Beneficially
owned
Percent of Class
Before Offering
Percent of Class
After Offering
Officers and Directors
Steven M. Foster
Chief Executive Officer and President
Common Stock
43,750
(3)
2.2
%*
(3)
[*
]
(3)
Richard Ginn
Chief Technology Officer
Common Stock
1,109,499
(4)
55.3
%
(4)
[*
]
(4)
Steven Van Dick
EVP, Finance and Admin and Chief Financial Officer
Common Stock
50,412
(5)
2.5
%
(5)
[*
]%
(5)
Richard Ferrari
Chairman of the Board
Common Stock
272,576
(6)
12.9
%
(6)
[*
]
(6)
Frank Fischer
Director Nominee
Common Stock
4,375
(7)
*
*
Ivan Howard
Director Nominee
Common Stock
159,173
(8)
7.9
%
—
Robert K. Weigle
Director Nominee
Common Stock
—
—
—
Stephen H. Hochschuler, M.D
Director Nominee
Common Stock
75,815
(9)
3.78
%
(9)
[*
]%
(9)
Series B Preferred Stock
8,944
(10)
1.8
%
[*
]%
Officers and Directors as a Group (total of 4 persons)
Common Stock
1,615,600
70.3
%
[*
]%
Series B Preferred Stock
8,944
1.8
%
—
5% Stockholders of a Class of Voting Stock
Zuhlke Ventures AG
Common Stock
2,550,763
(11)
56.3
%
(11)
[*
]%
Series A Preferred Stock
2,550,763
100
%
[*
]%
Richard Ginn
Chief Technology Officer
Common Stock
1,109,499
(4)
55.3
%
(4)
[*
]%
(4)
TCTIG, LLC
(12)
Common Stock
636,693
(13)
30.5
%
(13)
[*
]%
(13)
SpineSource, Inc.
(14)
Common Stock
198,407
9.92
%
[*
]%
(15)
Theodore Franklin
Series B Preferred Stock
89,445
18.2
%
[*
]%
Khalid Mentak
Common Stock
230,729
(16)
11.1
%
(16)
[*
]%
(16)
Series B Preferred Stock
71,556
14.6
%
[*
]%
Marlin W. Hilliard Family Trust
(17)
Series B Preferred Stock
89,446
18.2
%
[*
]%
WS Investment Company, LLC
(18)
Series B Preferred Stock
26,883
5.5
%
[*
]%
K&A Investments Ltd.
(19)
Series B Preferred Stock
64,401
13.1
%
[*
]%
92
(1) Unless otherwise indicated, the principal
address of the named officers and directors and holders of 5% of a class of voting stock of the Company is c/o Tenon Medical, Inc.,
104 Cooper Court, Los Gatos, CA 95032.
(2) Each share of our Preferred Stock entitles
its holder to one vote per share in all matters submitted to the common stockholders for a vote.
(3) Consists of 43,750 shares of our common
stock underlying stock options which that have vested and are exercisable within 60 days of November 9, 2021 and [*] shares of
our common stock underlying a one-time option grant to maintain Steven M. Foster's ownership position at 4% of the fully
diluted outstanding equity.
(4) Includes 26,639 shares of our common stock
underlying stock options that have vested and are exercisable within 60 days of November 9, 2021.
(5) Consists of 50,412 shares of our common
stock underlying stock options that have vested and are exercisable within 60 days of November 9, 2021.
(6) Consists of 113,402 shares of our common
stock underlying stock options that have vested and are exercisable within 60 days of November 9, 2021 and 159,174 shares of our
common stock (27,339 shares of which are in the form of options) held by TCTIG, LLC and for which Richard Ferrari has voting control.
(7) Consists of 4,375 shares of our common
stock underlying stock options that have vested and are exercisable within 60 days of November 9, 2021.
(8) Consists of 159,174 shares of our common
stock (27,338 shares of which are in the form of options) held by TCTIG, LLC and for which Ivan Howard has voting control.
(9) Includes 17,071 shares of our common stock
underlying options that have vested and are exercisable within 60 days of October 8, 2021; 8,944 shares of our common stock underlying
8,944 shares of Series B Preferred Stock that are convertible within 60 days of November 9, 2021 and [*] shares of our common stock
underlying Notes that automatically convert at the closing of this initial public offering. The 8,944 shares of Series B Preferred
Stock and the Notes are held by SHKH LLC, an entity for which Stephen H. Hochschuler has a controlling interest.
(10) Held by SHKH LLC, an entity for which
Stephen H. Hochschuler has a controlling interest.
(11) Consists of 2,550,763 shares of our common
stock underlying 2,550,763 shares of Series A Preferred Stock that are convertible within 60 days of November 9, 2021.
(12) Richard Ferrari, Ivan Howard, Khalid Mentak
and Geoff Dillion are the members of TCTIG, LLC and each have a 25% equity interest therein and each have control over how TCTIG,
LLC will vote 25% of the shares of our common stock held by TCTIG, LLC.
(13) Includes 109,353 shares of our common
stock underlying an option that is exercisable within 60 days of October 8, 2021.
(14) Tom Mitchell is the CEO, President and
sole director of SpineSource and has control over the voting and disposition of the shares of our common stock held by SpineSource.
(15)
Includes [*] shares that will be issued to SpineSource at the closing of this initial public offering.
(16) Includes 27,338 shares of our common stock
underlying an option that is exercisable within 60 days of October 8, 2021; 71,556 shares of common stock that are underlying 71,556
shares of Series B Preferred Stock that are convertible within 60 days of November 9, 2021.
(17) Joe Marlin Hilliard III is the trustee
of Marlin W. Hilliard Family Trust and has control over the voting and disposition of the shares of our common stock held by Marlin
W. Hilliard Family Trust.
(18) James Terranova is the Managing Director
of WS Investment Company, LLC and has control over the voting and disposition of the shares of our common stock held by WS Investment
Company, LLC.
(19) Ken Smith and Andrea Smith are managers
of K&A Investment Ltd. and each have control over the voting and disposition of the shares of our common stock held by K&A
Investment Ltd.
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
On May 7, 2021 the Company entered into
the "Ferrari Consulting Agreement with Richard Ferrari, a founder of the Company and its Executive Chairman. See "Executive
Compensation—Board Compensation for a summary description of the terms of the Ferrari Consulting Agreement.
On March 21, 2021 the Company entered into
the KM Consulting Agreement, pursuant to which Key Medical was engaged to provide services in the areas of product development,
commercial launch of The CATAMARAN System, fund raising and other mutually agreed to services in exchange for compensation of $300,000
upon the closing of a financing of at least $5 million; $300,000 if the financing is for less than $5 million but we achieve annual
revenues of $3 million; or $600,000 if prior to a financing we were to be acquired. The KM Consulting Agreement terminated on June
1, 2021. Khalid Mentak, a former director of the Company (and Chief Executive Officer of the Company on the date of the KM Consulting
Agreement) is the CEO of Key Medical. Mr. Mentak has filed for arbitration against the Company for claims under the KM Consulting
Agreement. See
"Business—Legal Proceedings."
Khalid Mentak is also the holder of our
Amended and Restated 2019 Convertible Promissory Note having a principal amount of $70,000 that was issued on April 30, 2021 and
is due on April 30, 2022. The note bears interest at 8% per annum and is subject to automatic conversion upon the closing of this
initial public offering at a conversion price equal to 70% of the offering price in this initial public offering. Mr. Mentak is
also the holder of 71,556 shares of Series B Preferred Stock.
On May 17, 2021, Steven, our Chief Executive
Officer, purchased one of our convertible notes in the principal amount of $50,000.
On May 17, 2021, the Van Dick Family Trust
purchased one of our convertible notes in the principal amount of $80,000. Steve Van Dick our Chief Financial Officer is a
Trustee of this Trust.
On May 17, 2021, Richard Ginn, our Chief Technology
Officer, purchased one of our convertible notes in the principal amount of $100,000.
On May 17, 2021, Richard Ferrari, our Executive
Chairman of the Board, purchased one of our convertible notes in the principal amount of $300,000.
On May 17, 2021, Frank Fischer, one of our
director nominees, purchased one of our convertible notes in the principal amount of $600,000.
On May 17, 2021, Theodore D. Franklin, who
currently owns more than 5% of the company's Series B Preferred Stock, purchased one of our convertible notes in the principal
amount of $25,000.
On June 24, 2021, Steven H. Hochschuler
M.D., one of our director nominees, purchased one of our convertible notes in the principal amount of $50,000.
On June 24, 2021, WS Investment Company, LLC,
who currently owns more than 5% of the company's Series B Preferred Stock, purchased one of our convertible notes in the
principal amount of $125,000.
93
On October 31, 2020 the Company entered
into a Consulting Agreement (the "Van Dick Consulting Agreement") with Steven Van Dick, our Executive Vice President,
Finance and Administration and Chief Financial Officer, pursuant to which Mr. Van Dick was to provide finance and accounting services,
budget and financial services and any other mutually agreed upon services in exchange for compensation of $19,000 per month of
which $5,000 has been paid each month and the remainder paid in May 2021.
On May 20, 2021, the Company entered into
the SpineSource Sales Agreement, which became effective when the Company paid SpineSource $500,000 for prior services and
issued the SpineSource Shares. Pursuant to the SpineSource Sales Agreement, the Company appointed SpineSource as its
exclusive sales representative for marketing, sale, and support for The CATAMARAN
TM
System in the United States
and Puerto Rico in exchange for 60% of net sales invoiced by us from product sales that are completed in the United States
and Puerto Rico. The SpineSource Sales has a five-year term and automatically renews for five-year periods unless written
notice is provided by either party at least 180 days prior to the expiration of the term. Any extension beyond ten (10) years
requires a written agreement. The Agreement may also be terminated by the Company if certain minimum sales targets are not
achieved by SpineSource as set forth in the SpineSource Sales Agreement. Either party may terminate the SpineSource Sales
Agreement for a material breach by the other party, the liquidation, insolvency or bankruptcy of the other party or if the
other party ceases to actively engage in the business to which the SpineSource Sales Agreement relates. On June 24, 2021, the
Tom and Susan Mitchell Revocable Trust purchased one of our convertible notes in the principal amount of $50,000.  Tom
Mitchell, CEO of SpineSource, is a Trustee of this Trust. In connection with the issuance of the SpineSource Shares, the
Company entered into the SpineSource Stock Purchase Agreement, which provides SpineSource with anti-dilution protection that
maintains its ownership percentage of the Company, prior to the completion of this initial public offering, at no less than
3% on a fully diluted basis. As of November 9, 2021, the Company has issued 88,894 shares to SpineSource pursuant to the
anti-dilution protection contained in the SpineSource Stock Purchase Agreement.
On October 28, 2021, the Company entered into
an Agreement (the "Exchange Agreement") with Zuhlke Ventures AG ("ZV"), the minority shareholder of Tenon
Technology AG ("TTAG"), the Company's Swiss subsidiary. Pursuant to the Exchange Agreement, ZV agreed to exchange
574,033 shares of Series A Preferred Stock issued by TTAG, representing all of its ownership interest in TTAG for Tenon Series
A Preferred Stock , representing 24% ownership interest in the Company on a fully diluted basis, taking into account (i) all outstanding
shares of common stock of the Company; (ii) shares issuable upon conversion or exchange of all of the Company's securities
directly or indirectly convertible into or exchangeable for our common stock and the exercise of all outstanding options or warrants;
and (iii) the shares of our common stock that are reserved, but neither issued nor the subject of outstanding awards, under any
Company equity incentive or similar plan. Pursuant to the terms of the Exchange Agreement, the Company has issued ZV 2,550,763
shares of Tenon Series A Preferred Stock. ZV's shares of Tenon Series A Preferred Stock are subject to anti-dilution protection
that maintains ZVs 24% ownership interest in the Company, excluding any shares issued by the Company in an initial public offering
or a qualified equity offering of at least $5,000,000 at a per share price of at least $3.3737. The anti-dilution protection terminates
upon the earlier of (i) the closing of this initial public offering; (ii) the conversion of the Private Offering Notes; (iii) the
repayment of the Private Offering Notes in the case of a change in control of the Company; or (iv) the liquidation of the Company.
Also, pursuant to the terms of the Exchange Agreement, the Company repaid the convertible note between TTAG and ZV in full in the
amount of approximately $114,000, including accrued interest.
The above summary description of related
part transactions includes some of the general terms and provisions of the agreements related to such transactions. For a more
detailed description of those agreements, you should refer to such agreements which are included as exhibits to the registration
statement of which this prospectus forms a part
DESCRIPTION
OF SECURITIES
The following summary description sets
forth some of the general terms and provisions of our capital stock. Because this is a summary description, it does not contain
all of the information that may be important to you. For a more detailed description of our capital stock, you should refer to
the applicable provisions of the General Corporation Law of the State of Delaware (the "DGCL"), our charter and our
bylaws as currently in effect. Copies of our amended and restated certificate of incorporation, as amended, and our bylaws are
included as exhibits to the registration statement of which this prospectus forms a part.
General
The total number of shares of stock which the
Company is authorized to issue is 13,784,965 shares of capital stock, consisting of 10,487,904 shares of common stock, $0.001 par
value per share, and 3,297,061 shares of preferred stock, $0.001 par value per share.
Common Stock
The holders of our common stock are entitled
to the following rights:
Voting Rights
. Each share
of our common stock entitles its holder to one vote per share on all matters to be voted or consented upon by the stockholders.
Holders of our common stock are not entitled to cumulative voting rights with respect to the election of directors.
Election of Directors.
The
holders of our common stock, voting as a separate class, shall be entitled to elect one member of our Board of Directors
.
94
Dividend Rights
. Subject
to limitations under Delaware law and preferences that may apply to any shares of preferred stock that we may decide to issue in
the future, holders of our common stock are entitled to receive ratably such dividends or other distributions, if any, as may be
declared by our Board out of funds legally available therefor.
Liquidation Rights
. In the
event of the liquidation, dissolution or winding up of our business, the holders of our common stock are entitled to share ratably
in the assets available for distribution after the payment of all of our debts and other liabilities, subject to the prior rights
of the holders of our preferred stock.
Other Matters
. The holders
of our common stock have no subscription, redemption or conversion privileges. Our common stock does not entitle its holders to
preemptive rights. All of the outstanding shares of our common stock are fully paid and non-assessable. The rights, preferences
and privileges of the holders of our common stock are subject to the rights of the holders of shares of any series of preferred
stock which we may issue in the future.
Preferred Stock
As of November 9, 2021, we have designated
2,805,839 shares of our preferred stock as Series A Preferred Stock, of which 2,550,763 are outstanding and designated 491,222 shares
of our preferred stock as Series B Preferred Stock (together with the Series A Preferred Stock, the "Preferred Stock"),
of which 491,222 are issued and outstanding.
The holders of our Preferred Stock are
entitled to the following rights:
Voting Rights
. Each share
of our Preferred Stock entitles its holder to a number of votes equal to the number of shares of common stock into which one such
share is convertible into. Currently each share of Preferred Stock is entitled to one (1) vote per share. The holders of shares
of Preferred Stock are entitled to vote on all matters on which our common stock shall be entitled to vote.
Dividend Rights
.
The
holders of our Preferred Stock are entitled to receive dividends, as and if declared by our board of directors prior to the payment
of dividends on our common stock with equal priority with each other. Their right to receive dividends is not cumulative.
Liquidation Rights
.
Each share of Preferred Stock is entitled to a liquidation preference per share with equal priority equal to the sum of (i) the
applicable Liquidation Preference plus (ii) all declared but unpaid dividends (if any) on such share, or such lesser per share
amount as may be approved by the holders of the majority of the outstanding shares of Series A Preferred Stock or Series B Preferred
Stock, as applicable. If upon liquidation the assets of the Company legally available for distribution to the holders of the Preferred
Stock are insufficient to permit the payment to such holders of the full amounts, then the entire assets of the Company legally
available for distribution shall be distributed with equal priority and
pro rata
among the holders of the Preferred Stock
in proportion to the full amounts they would otherwise be entitled to receive with regard to liquidation rights.
Voluntary Conversion
. Each
share of Preferred Stock is any time at the option of the holder convertible into a number of shares of our common stock equal
the quotient obtained by dividing the Original Issue Price for the relevant series by the Conversion Price for the relevant series
and such quotient for a series is referred to as the "Conversion Rate" for such series.
The "Original Issue Price" is $3.3737
per share for the Series A Preferred Stock and $2.795 per share for the Series B Preferred Stock.
The "Conversion Price" is $3.3737
per share for the Series A Preferred Stock and $2.795 per share for the Series B Preferred Stock. The Conversion Price for each
series is subject to adjustment as described below
Automatic Conversion.
Each
share of Preferred Stock shall automatically be converted into a number of shares of our common stock equal to the applicable Conversion
Rate (i) immediately prior to the closing of this initial public offering; provided that the initial public offering is at a price
not less than $6.00 per share and the gross proceeds from the offering are not less than $25,000,000 or (ii) upon receipt by the
Company of a written request for such conversion from the holders of at least a majority of the Preferred Stock then outstanding.
95
Adjustments to Conversion Price.
Except for Exempt Additional Issuances, the Conversion Price for the Series A Preferred Stock or Series B Preferred Stock,
as applicable, shall be adjusted for any additional issuances of common stock below the current Conversion Price for such series
by multiplying the Conversion Price by a fraction, the numerator of which is shall be the number of shares of our common stock
outstanding immediately prior to such additional issuance plus the number of shares of common stock that could be purchased with
the aggregate consideration received by the Company for such additional share at the Conversion Price and the denominator is the
number of shares of common stock outstanding immediately after the issuance of such additional shares. The Conversion Price for
Preferred Stock is also adjusted for stock splits, combinations, stock dividends or reclassifications of either common stock or
Preferred Stock, as applicable.
Exempt Additional Issuances mean the following
issuances of:
(1) shares of our common stock issued upon
the conversion of our Preferred Stock
(2) up to 2,805,839 shares of Series A Preferred
Stock;
(3) shares of our common stock and options,
warrants or other rights to purchase our common stock issued or issuable to employees, officers or directors of, or consultants
or advisors to the Corporation or any subsidiary pursuant to stock grants, restricted stock purchase agreements, option plans,
purchase plans, incentive programs or similar arrangements, or such greater number as may be approved by the Board of Directors;
(4) shares of our common stock issued upon
the exercise or conversion of options or convertible securities outstanding as of October 1, 2012;
(5) shares of our common stock issued or
issuable as a dividend or distribution on preferred stock or pursuant to any event for which adjustment is made pursuant to our
amended and restated certificate of incorporation, as amended;
(6) shares of our common stock issued or
issuable in a registered public offering under the Securities Act pursuant to which all outstanding shares of Preferred Stock are
automatically converted into our common stock;
(7) shares of our common stock issued or
issuable pursuant to an acquisition of another corporation by merger, purchase of substantially all of the assets or other reorganization
or to a joint venture agreement,
provided,
that such issuances are approved by the Board of Directors;
(8) shares of our common Stock issued or
issuable to banks, equipment lessors or other financial institutions pursuant to a debt financing or commercial leasing transaction
approved by the Board of Directors;
(9) shares of our common stock issued or
issuable in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other similar
agreements or strategic partnerships approved by the Board of Directors; and
(10) any other shares of our common stock
issued or issuable, provided that holders of at least a majority of the then outstanding shares of Series A Preferred Stock and
Series B Preferred Stock voting together as a single class, expressly designate such issuance as being an Exempt Additional Issuance.
Election of Directors
. So
long as any of the of Series B Preferred Stock remains outstanding, the holders of Series B Preferred Stock, voting as a separate
class, shall be entitled to elect one member of our Board of Directors
.
So long as any of the of Series A Preferred
Stock remains outstanding, the holders of Series A Preferred Stock, voting together as a separate class, shall be entitled to elect
one member of our Board of Directors
.
96
Other Matters
. The holders
of our Preferred Stock have no subscription or redemption privileges and are not subject to redemption. Our Preferred Stock do
not entitle its holders to pre-emptive rights.
Additional Preferred Stock
.
Our charter authorizes our Board to provide for the issuance of shares of preferred stock in one or more series without further
authorization from stockholders. If at least 200,000 shares of preferred stock are issued and outstanding, an approval of at least
a majority of the outstanding shares of the preferred stock voting together as a single class is required in order to, among other
things as stated in the charter, issue any new class or series of equity security having rights, preferences or privileges senior
to or on a parity with the preferred stock.
While we do not currently have any plans
for the issuance of any additional preferred stock, the issuance of additional preferred stock could adversely affect the rights
of the holders of common stock and, therefore, reduce the value of the common stock. It is not possible to state the actual effect
of the issuance of any shares of preferred stock on the rights of holders of the common stock until the Board of Directors determines
the specific rights of the holders of the preferred stock; however, these effects may include:
●
Restricting dividends on the common stock;
●
Diluting the voting power of the common stock;
●
Impairing the liquidation rights of the common stock; or
●
Delaying or preventing a change in control of the Company without further action by the stockholders.
Notes
During 2021 we issued and amended a number of promissory notes
which are described below.
On January 27, 2021 we issued a Promissory
Note in the principal amount of $130,560.34 to Wilson Sonsini Goodrich & Rosati, Professional Corporation (the "WSGR
Note"). The WSGR Note bears interest at 3% per annum and is due on the earlier of (x) July 27, 2021, (y) the closing of a
debt or equity financing of at least $1,000,000 and (z) the closing of a change in control transaction. The interest rate on the
WSGR Note increases to 5% per annum if all principal and interest is not paid when due. The WSGR Note was paid in full in May 2021.
On April 30, 2021 we issued the following
convertible promissory notes: (i) $170,000 Convertible Promissory Note issued to Phoenix DeVentures Inc., which accrues interest
at 8% per annum from April 30, 2021 and is due on December 31, 2021 (the "Phoenix Note 1"); (ii) $117,530 Amended and
Restated 2015 Convertible Promissory Note issued to Phoenix DeVentures Inc. (the "Phoenix Note 2), which accrues interest
at 8% per annum from January 1, 2016 and is due on April 30, 2022; (iii) $40,000 Convertible Promissory Note issued to Phoenix
DeVentures Inc., which accrues interest at 8% per annum from April 30, 2021 and is due on December 31, 2021 (the "Phoenix
Note 3"); and (iv) $70,000 Amended and Restated 2019 Convertible Promissory Note issued to Khalid Mentak (the "Mentak
Note" and together with the Phoenix 1 Note, the Phoenix 2 Note and the Phoenix 3 Note, the "April 30 Notes"),
which accrues interest at 8% per annum from October 12, 2019 and is due on April 30, 2022. Principal and interest is due in full
at maturity on the April 30 Notes and are not prepayable.
On May 3, 2021 we issued the following
convertible promissory notes to Paul Orofino: (i) $200,000 Amended and Restated 2019 Convertible Promissory Note (the "Orofino
Note 1"), which accrues interest at 8% per annum from November 20, 2020 and is due on May 3, 2022; (ii) $50,000 Amended and
Restated Promissory Note (the "Orofino Note 2 and together with the Orofino Note 1, the "May 3 Notes"), which
accrues interest at 8% per annum from October 21, 2019 and is due on May 3, 2022. Principal and interest is due in full at maturity
on the May 3 Notes. The May 3 Notes are prepayable.
On May 7, 2021 we issued the $68,359 Amended
and Restated 2019 Convertible Promissory Note to Lince Consulting, LLC (the "Lince Note"), which accrues interest at
8% per annum from June 12, 2019 and is due on May 7, 2022. Principal and interest is due in full at maturity on the Lince Note.
The Lince Note is prepayable.
97
During the period from May 17, 2021 to
July 26, 2021, the Company issued an aggregate $12,177,328 of Convertible Promissory Notes to 125 investors (the "Private
Offering Notes" and together with the April 30 Notes, the May 3 Notes and the Lince Note, the "Notes"), which
accrues interest at 8% per annum from the date of issuance and are due one year from the date of issuance. Principal and interest
is due in full at maturity on the Private Offering Notes. The Private Offering Notes are not prepayable without the consent of
a majority of the holders.
Immediately prior to the closing of this
initial public offering, the Notes will automatically convert into of shares of our common stock as follows:
(i)
each April 30 Note (other than the Phoenix 2 Note) and May 3 Note will convert into [*] and
                                                                [*] shares of our common stock, respectively, in each case calculated by dividing the outstanding principal and accrued and
                                                                unpaid interest on such Note, by 70% of the per share initial public offering price;
(ii)
the Lince Note and the Phoenix 2 Note will convert into [*] and [*] shares of our common
                                                                 stock, respectively, in each case calculated by dividing the outstanding principal and accrued and unpaid interest on such Note by 80% of the per share initial public offering price;
(iii)
the Private Offering Notes will convert into [*] shares of our common stock calculated by dividing
(x) the outstanding principal and accrued and unpaid interest on the Private Offering Notes by (y) the lesser of (1) the quotient
obtained by dividing (A) $22,500,000 by (B) the fully diluted capitalization of the Company and (2) 70% of the per share initial
public offering price.
Warrants
On December 31, 2020, the Company issued
to Exchange Listing, LLC warrants to purchase 50,000 shares of our common stock at an exercise price $2.60 per share. The warrant
expires on the earlier of (i) December 31, 2025, (ii) the acquisition of the Company by another control group, or (iii) immediately
prior to the closing of this initial public offering. Upon the closing of this initial public offering, the warrant will automatically
be exercised on a cashless basis to the extent such net issue exercise would result in issuance of shares. Pursuant to the consulting
agreement between the Company and Exchange Listing, LLC, Exchange Listing, LLC has registration rights with respect to the shares
underlying the warrants.
Options
In
2012 our board of directors and shareholders approved our 2012 Equity Incentive Plan (the "Plan"). There are currently
1,598,531 shares reserved for issuance under the Plan. The following options were issued under the Plan:
On
June 19, 2014 we granted three separate non-statutory options to purchase a total of 121,870 shares of our common stock under the
Plan at an exercise price of $0.31 per share. The options are fully vested and expire on June 19, 2024.
On
November 15, 2016 we granted a non-statutory option to purchase 17,071 shares of our common stock under the Plan at an exercise
price of $0.31 per share. The option is fully vested and expires on November 15, 2026.
On
September 8, 2019 we granted a non-statutory option to purchase 43,038 shares of our common stock under the Plan at an exercise
price of $0.31 per share. The option vests monthly over a four-year period and expires on September 8, 2029.
On
May 1, 2021 we granted non-statutory options to 6 individuals to purchase in aggregate 749,000 shares of our common stock
under the Plan at an exercise price of $2.60 per share. All of the options are subject to three-year monthly vesting and expire
on May 1, 2031.
On May
7, 2021 we granted non-statutory options to two individuals to purchase in aggregate 25,000 shares of our common stock under the
Plan at an exercise price of $2.60 per share. One option for 10,000 shares is subject to three-year vesting and the other option
for 25,000 shares is subject to two-year vesting and both expire on May 7, 2031.
On
July 8, 2021 we granted a non-statutory option to purchase 25,000 shares of our common stock under the Plan at an exercise price
of $3.53 per share. The option vests monthly over a two-year period and expires on July 8, 2031.
98
On July
19, 2021 we granted non-statutory options to 2 individuals to purchase 339,044 shares of our common stock and we granted incentive
stock options to 2 individuals for 80,165 shares of our common stock under the Plan at an exercise price of $3.53 per share. The
options are subject to three-year monthly vesting and expire on July 19, 2031.
On August
10, 2021 we granted non-statutory options to 2 individuals to purchase 27,000 shares of our common stock and we granted incentive
stock options to 2 individuals for 15,000 shares of our common stock under the Plan at an exercise price of $3.53 per share. Three
of these options vest 33% on the first anniversary with the balance of the shares vesting monthly over the next two years and one
option is subject to two-year monthly vesting and all options expire on August 10, 2031. We also granted 123,500 of restricted
shares of common stock to 3 individuals under the Plan
, which vested immediately
.
On October
8, 2021 we granted non-statutory options to 3 individuals to purchase 24,000 shares of our common stock and we granted incentive
stock options to 3 individuals for 20,000 shares of our common stock under the Plan at an exercise price of $3.75 per share. Three
of these options vest 33% on the first anniversary with the balance of the shares vesting monthly over the next two years and the
remaining options are subject to two-year monthly vesting and all options expire on October 8, 2031.
Upon the closing of this initial public
offering, the Company will provide a one-time option grant to Steven M. Foster to maintain his ownership position at 4% of the
fully diluted equity
.
From
time to time, we expect to continue to issue options under the Plan to various consultants, employees, officers and directors of
the Company.
Exclusive Forum
Our Certificate of Incorporation, as amended
provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware
shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company, (b) any action
asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Company to the Company
or the Company's stockholders, (c) any action asserting a claim arising pursuant to any provision of the Delaware General
Corporation Law, the Company's Certificate of Incorporation or the Bylaws, or (d) any action asserting a claim governed by
the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable
parties named as defendants therein. This exclusive forum provision may limit the ability of our stockholders to bring a claim
in a judicial forum that such stockholders find favorable for disputes with us or our directors or officers, which may discourage
lawsuits against us or our directors or officers. Our Certificate of Incorporation also provides that this choice of forum provision
does not apply to claims arising under federal securities laws.
Section 203 of the Delaware General
Corporation Law
We are subject to the provisions of Section
203 of the DGCL regulating corporate takeovers. This statute prevents certain Delaware corporations, under certain circumstances,
from engaging in a "business combination" with:
●
a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an "interested stockholder");
●
an affiliate of an interested stockholder; or
●
an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.
A "business combination" includes
a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if:
●
our board of directors approves the transaction that made the stockholder an "interested stockholder," prior to the date of the transaction; or
●
after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock will be
VStock Transfer LLC.
99
Listing
We have applied to have our common stock
listed on the Nasdaq Capital Market under the symbol "_______" which listing is a condition to this offering.
SHARES
ELIGIBLE FOR FUTURE SALE
There is not currently an established U.S.
trading market for our common stock. We cannot predict the effect, if any, that market sales of shares of our common stock or the
availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time.
Sales of substantial amounts of our common stock in the public market after this offering, could adversely affect market prices
prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities.
Upon completion of the sale of [*] shares
of common stock pursuant to this offering, we will have [*] shares of common stock issued and outstanding. In the event the underwriters
exercise the over-allotment option in full, we will have [*] shares of common stock issued and outstanding. The common stock sold
in this offering will be freely tradable without restriction or further registration or qualification under the Securities Act.
All previously issued shares of common
stock that were not offered and sold in this offering, as well as shares subject to employee stock options, are or will be upon
issuance, "restricted securities," as that term is defined in Rule 144 under the Securities Act. These restricted securities
are eligible for public sale only if such public resale is registered under the Securities Act or if the resale qualifies for an
exemption from registration under Rule 144 under the Securities Act, which are summarized below.
In general, a person who has beneficially
owned restricted shares of our common stock for at least six months in the event we have been a reporting company under the Exchange
Act for at least ninety (90) days before the sale, would be entitled to sell such securities, provided that such person is not
deemed to be an affiliate of ours at the time of sale or to have been an affiliate of ours at any time during the ninety (90) days
preceding the sale. A person who is an affiliate of ours at such time would be subject to additional restrictions, by which such
person would be entitled to sell within any three-month period only a number of shares that does not exceed the greater of the
following:
1% of the number of shares of our common stock then outstanding;
or
1% of the average weekly trading volume
of our common stock during the four calendar weeks preceding the filing by such person of a notice on Form 144 with respect to
the sale;
provided that, in each case, we are subject to the periodic
reporting requirements of the Exchange Act for at least 90 days before the sale. Rule 144 trades must also comply with the manner
of sale, notice and other provisions of Rule 144, to the extent applicable.
Lock-Up Agreements
Our officers and directors have agreed,
subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise
dispose of any shares of our common stock or other securities convertible into or exercisable or exchangeable for shares of our
common stock for a period of 180 days after the effective date of the registration statement for this offering without the prior
written consent of the representative (as defined herein).
UNDERWRITING
Under the terms and subject to the conditions
in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom The Benchmark Company, LLC
is acting as the representative, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of
shares indicated below:
Underwriter
Number of
Shares
The Benchmark Company, LLC
[*]
Totals:
[*]
100
Under the terms of the underwriting agreement,
the underwriters are committed to purchase, severally and not jointly, all of the shares offered by this prospectus (other than
the shares subject to the underwriters' option to purchase additional shares), if the underwriters buy any of such shares.
The underwriters' obligation to purchase the shares is subject to satisfaction of certain conditions, including:
•
receipt and acceptance of our shares of common stock by the underwriters; and
•
the underwriters' right to reject orders in whole or in part.
We have been advised by the representative
that the underwriters intend to make a market in our shares of common stock but that they are not obligated to do so and may discontinue
making a market at any time without notice.
In connection with this offering, certain
of the underwriters or securities dealers may distribute prospectuses electronically.
Over-Allotment Option
We have granted to the underwriters an
option, exercisable for 30 days from the date of this prospectus, to purchase up to [*] additional shares of common stock at the
public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters
may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the
shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated,
subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed
next to the underwriter's name in the preceding table that bears to the total number of shares of common stock listed next
to the names of all underwriters in the preceding table.
Discounts and Commissions and Expenses
Shares sold by the underwriters to the
public will initially be offered at the initial offering price set forth on the cover of this prospectus. In addition, the underwriters
may offer some of the shares to other securities dealers at such price less a concession of up to $[*] per share. The underwriters
may offer the shares through one or more of their affiliates or selling agents. If all the shares are not sold at the public offering
price, the representative may change the offering price and the other selling terms. Upon execution of the underwriting agreement,
the underwriters will be obligated to purchase the shares at the prices and upon the terms stated therein.
The underwriting discount is equal to the
public offering price per share, less the amount paid by the underwriters to us per share. The underwriting discount was determined
through an arms' length negotiation between us and the underwriters. We have agreed to sell the shares of our common stock
to the underwriters at the offering price of $[●] per share, which represents the public offering price of our shares set
forth on the cover page of this prospectus less a 7.0% underwriting discount
The following table shows the public offering
price, underwriting discounts and proceeds, before expenses, to us. The information assumes either no exercise or full exercise
by the underwriters of their over-allotment option. The underwriting discounts are equal to the public offering price per share
less the amount per share the underwriters pay us for the shares.
101
Per
        Share of
Common
        Stock
Total
    without Over-allotment Option
Total
    with
Over-allotment Option
Public
    offering price
$
$
[*]
$
[*]
Underwriting discounts
$
$
[*]
$
[*]
Proceeds, before
    expenses, to us
$
$
[*]
$
[*]
We have agreed to pay the representative
a non-accountable expense allowance of 1.0% of the gross proceeds of the offering. We estimate that the total expenses, but excluding
underwriting discounts and commissions and the 1.0% non-accountable expense allowances, will be approximately $[*], all of which
are payable by us. This figure includes expense reimbursements we have agreed to pay the representative for reimbursement of its
expenses related to the offering up to a maximum aggregate expense allowance of $132,500, for which we have paid a $25,000 advance,
which will be returned to us to the extent not offset by actual expenses in accordance with FINRA Rule 5110(g)(4)(A).
Underwriters' Warrants
As additional compensation to the underwriters,
upon consummation of this offering, we will issue to the underwriters or their designees warrants to purchase an aggregate number
of shares of our common stock equal to 3% of the number of shares of common stock issued in this offering, at an exercise price
per share equal to 100% of the initial public offering price (the "Underwriters' Warrants"). The Underwriters'
Warrants and the underlying shares of common stock shall not be sold during the offering, or sold, transferred, assigned, pledged,
or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective
economic disposition of the securities by any person for a period of 180 days immediately following the commencement date of sales
in this offering in accordance with FINRA Rule 5110(e)(1). The Underwriters' Warrants will be exercisable, in whole or in
part, commencing 180 days from the commencement date of sales in this offering and will expire on the fifth anniversary of the
commencement date of sales in this offering in accordance with FINRA Rule 5110(g)(8)(A).
Tail Financing
If, during the
period that is six months following the closing of this initial public offering, we consummate a financing with investors with
whom we have had a conference call or a meeting arranged by the representative the period in which we engaged the representative,
we will pay the representative a fee equal 7% of the proceeds of such financing.
Right of First
Refusal
We have granted
to the representative the right to act as lead or joint-lead investment banker, lead or joint book-runner and/or lead or joint
placement agent, for any of our future public and private equity and debt offerings, including all equity linked financings, during
the six month period following the completion of this initial public offering.
Determination
of Offering Price
Before this offering,
there has been no public market for our common stock. Accordingly, the public offering price will be negotiated between us and
the Representative. Among the factors to be considered in these negotiations are:
●
the information set forth in this prospectus and otherwise available to the underwriters;
●
the prospects for our Company and the industry in which we operate;
●
An assessment of our management;
●
our past and present financial and operating performance;
●
our prospects for future earnings;
●
financial and operating information and market valuations of publicly traded companies engaged in activities similar to ours;
●
the prevailing conditions of United States securities markets at the time of this offering; and
●
other factors deemed relevant.
102
Neither we nor the underwriters can assure
investors that an active trading market will develop for shares of our common stock, or that the shares will trade in the public
market at or above the initial public offering price.
Lock-Up Agreements
Each of our officers, directors, affiliates
and holders of more than 5% of our voting stock have agreed, for a period of six months after the closing of this offering, subject
to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose
of any shares of our common stock or other securities convertible into or exercisable or exchangeable for shares of our common
stock without the prior written consent of the representative.
The representative may in its sole discretion
and at any time without notice release some or all of the shares subject to lock-up agreements prior to the expiration of the lock-up
period. When determining whether or not to release shares from the lock-up agreements, the representative will consider, among
other factors, the security holder's reasons for requesting the release, the number of shares for which the release is being
requested and market conditions at the time.
Pursuant to the underwriting agreement,
we have also agreed, for a period of six months from the closing date of the offering, that we will not, subject to specified exempt
issuances, offer, pledge, issue, sell, contract to sell, purchase, contract to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for common
stock; or file any registration statement with the SEC relating to the offering of any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock.
Indemnification
We have agreed to indemnify the underwriters
against specified liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may
be required to make in respect thereof.
Electronic
Offer, Sale and Distribution of Shares
A prospectus in
electronic format may be made available on a website maintained by the representative and may also be made available on a website
maintained by other underwriters. The underwriters may agree to allocate a number of shares to underwriters for sale to their online
brokerage account holders. Internet distributions will be allocated by the Representative to underwriters that may make Internet
distributions on the same basis as other allocations. In connection with the offering, the underwriters or syndicate members may
distribute prospectuses electronically. No forms of electronic prospectus other than prospectuses that are printable as Adobe®
PDF will be used in connection with this offering.
The underwriters
have informed us that they do not expect to confirm sales of shares offered by this prospectus to accounts over which they exercise
discretionary authority.
Other than the prospectus in electronic
format, the information on any underwriter's website and any information contained in any other website maintained by an
underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved
and/or endorsed by us or any underwriter in its capacity as underwriter and should not be relied upon by investors.
Price Stabilization, Short Positions
and Penalty Bids
In connection
with this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common
stock. Specifically, the underwriters may over-allot in connection with this offering by selling more shares than are set forth
on the cover page of this prospectus. This creates a short position in our common stock for its own account. The short position
may be either a covered short position or a naked short position. In a covered short position, the number of shares of common stock
over-allotted by the underwriters is not greater than the number of shares of common stock that they may purchase in the over-allotment
option. In a naked short position, the number of shares of common stock involved is greater than the number of shares of common
stock in the over-allotment option. To close out a short position, the underwriters may elect to exercise all or part of the over-allotment
option. The underwriters may also elect to stabilize the price of our common stock or reduce any short position by bidding for,
and purchasing, common stock in the open market.
103
The underwriters
may also impose a penalty bid. This occurs when a particular underwriter or dealer repays selling concessions allowed to it for
distributing a security in this offering because the underwriter repurchases that security in stabilizing or short covering transactions.
Finally, the underwriters
may bid for, and purchase, shares of our common stock in market making transactions, including "passive" market making
transactions as described below.
These activities
may stabilize or maintain the market price of our common stock at a price that is higher than the price that might otherwise exist
in the absence of these activities. The underwriters are not required to engage in these activities, and may discontinue any of
these activities at any time without notice. These transactions may be effected on the Nasdaq Capital Market, in the over-the-counter
market, or otherwise.
In connection
with this offering, the underwriters and selling group members, if any, or their affiliates may engage in passive market making
transactions in our common stock immediately prior to the commencement of sales in this offering, in accordance with Rule 103 of
Regulation M under the Exchange Act. Rule 103 generally provides that:
a passive market maker may not effect transactions
or display bids for our common stock in excess of the highest independent bid price by persons who are not passive market makers:
●
net purchases by a passive market maker on each day are generally limited to 30% of the passive market maker's average daily trading volume in our common stock during a specified two-month prior period or 200 shares, whichever is greater, and must be discontinued when that limit is reached; and
●
passive market making bids must be identified as such.
Certain Relationships
Certain of the
underwriters and their affiliates have provided and may in the future provide various investment banking, commercial banking and
other financial services for us and our affiliates for which they have or may in the future receive customary fees, however, except
for the right of first refusal and the tail financing disclosed in this prospectus, we have no present arrangements with any of
the underwriters for any further services.
Offer Restrictions
Outside the United States
Other than in the United States, no action
has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any
jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly
or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of
any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance
with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised
to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This
prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus
in any jurisdiction in which such an offer or a solicitation is unlawful.
Listing
We have applied for approval of our common
stock for listing on The Nasdaq Capital Market under the symbol "________." Trading of our common stock on Nasdaq is
expected to begin following this prospectus being declared effective by the SEC.
104
EXPERTS
Armanino LLP, an independent registered
public accounting firm, audited our consolidated financial statements for the years ended December 31, 2020 and 2019. We have included
our consolidated financial statements with their report in this prospectus and elsewhere in the registration statement in reliance
on the report of Armanino LLP, given on their authority as experts in accounting and auditing.
LEGAL
MATTERS
Certain legal matters with respect to the
validity of the securities being offered by this prospectus will be passed upon by Carmel, Milazzo & Feil LLP, New York, New
York. Schiff Hardin LLP, Washington, DC, is acting as counsel for the representative of the underwriters with respect to the offering.
WHERE
YOU CAN FIND MORE INFORMATION
We have filed
with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock offered
by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information
set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the
rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration
statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning
the contents of any contract or any other document is not necessarily complete. If a contract or document has been filed as an
exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this
prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. You may obtain
copies of this information by mail from the Public Reference Section of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C.
20549, at prescribed rates. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, like us,
that file electronically with the SEC. The address of that website is
www.sec.gov
.
We are subject
to the information and reporting requirements of the Exchange Act and, in accordance with this law, are required to file periodic
reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information are
available for inspection and copying at the SEC's public reference facilities and the website of the SEC referred to above.
We also maintain a website at
www.tenonmed.com
. You may access these materials free of charge as soon as reasonably practicable
after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this
prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.
105
Tenon Medical, Inc.
Contents
Page
Consolidated Financial
    Statements for the Years Ended December 31, 2020 and 2019:
Report
    of Independent Registered Public Accounting Firm
F-2
Consolidated Financial
    Statements
Consolidated
    Balance Sheets
F-3
Consolidated
    Statements of Operations and Comprehensive Loss
F-4
Consolidated
    Statements of Convertible Preferred Stock and Stockholder's Deficit
F-5
Consolidated
    Statements of Cash Flows
F-6
Notes
    to Consolidated Financial Statements
F-7 - F-21
Condensed
                                         Consolidated Financial Statements for the Nine Months Ended September 30, 2021 and
                                         2020 (Unaudited):
Condensed
    Consolidated Balance Sheets
F-22
Condensed
    Consolidated Statements of Operations and Comprehensive Loss
F-23
Condensed
    Consolidated Statements of Convertible Preferred Stock and Stockholders' Deficit
F-24
Condensed
    Consolidated Statements of Cash Flows
F-25
Notes
    to Unaudited Condensed Consolidated Financial Statements
F-26 to F-42
F-
1
Report
of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Tenon Medical Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated
balance sheets of Tenon Medical Inc. and Subsidiary (collectively the "Company") as of December 31, 2020 and 2019 and
the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders' deficit,
and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements).
In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019 and
the related results of its operations and cash flows for the years then ended in conformity with U.S. generally accepted accounting
principles.
Basis for Opinion
The Company's management is responsible
for these consolidated financial statements. Our responsibility is to express an opinion on the Company's consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are
required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures
to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe
that our audit provides a reasonable basis for our opinion.
Emphasis of Matter
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements,
the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going
concern. Management's plans regarding these matters are also described in Note 2. The consolidated financial statements do
not include any adjustments that might result from the outcome of this uncertainty.
/s/ Armanino
LLP
San Jose, California
August 30, 2021
We have served as the Company's auditor
since 2021.
F-
2
Tenon Medical, Inc.
Consolidated Balance Sheets
December 31,
2020
2019
Assets
Current Assets
Cash and cash equivalents
$
245,635
$
151,968
Accounts receivable
14,474
53,768
Inventory
43,288
61,545
Prepaid expenses
—
1,172
Total current assets
303,397
268,453
Deferred offering costs
87,504
—
TOTAL ASSETS
$
390,901
$
268,453
Liabilities, Convertible Preferred Stock, and Stockholders' Deficit
Current Liabilities
Accounts payable
$
589,191
$
447,520
Accrued expenses
663,657
507,194
Convertible notes payable and accrued interest - current
241,397
734,413
Total current liabilities
1,494,245
1,689,127
Convertible notes payable and accrued interest - net of current portion
256,751
122,164
Convertible notes payable and accrued interest due to related parties
76,827
71,227
Total Liabilities
1,827,823
1,882,518
Commitments and Contingencies (Notes 6 and 10)
Convertible Preferred Stock
Series A convertible preferred stock, $0.001 par value; 1,437,628 shares authorized, 0 shares issued and outstanding
—
—
Series B convertible preferred stock, $0.001 par value; 661,897 shares authorized; 491,222 shares issued and outstanding; liquidation preference of $1,372,953
1,271,715
1,271,715
Stockholders' Deficit
Common stock, $0.001 par value; 3,937,550 shares authorized; 1,660,000 shares issued and outstanding
1,660
1,660
Additional paid-in capital
125,437
51,284
Accumulated deficit
(4,486,171
)
(3,900,993
)
Accumulated other comprehensive income (loss)
(56,571
)
(32,409
)
Total Tenon Medical, Inc. stockholders' deficit
(4,415,645
)
(3,880,458
)
Total non-controlling interest
1,707,008
994,678
Total stockholders' deficit
(2,708,637
)
(2,885,780
)
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' DEFICIT
$
390,901
$
268,453
The accompanying notes are an integral
part of these consolidated financial statements.
F-
3
Tenon Medical, Inc.
Consolidated Statements of Operations
and Comprehensive Loss
Year Ended December 31,
2020
2019
Revenue
$
43,820
$
53,640
Cost of sales
18,257
18,257
Gross Profit
25,563
35,383
Operating Expenses
Research and development expenses
220,884
371,545
Sales and marketing expenses
29,301
25,618
General and administrative expenses
311,667
171,662
Total Operating Expenses
561,852
568,825
Loss from Operations
(536,289
)
(533,442
)
Other Income (Expense)
Interest expense
(167,846
)
(52,358
)
Other expense
(1,230
)
(28
)
Total Other Expense
(169,076
)
(52,386
)
Net Loss
(705,365
)
(585,828
)
Loss attributable to non-controlling interest
(120,187
)
(76,248
)
Net Loss Attributable to Tenon Medical, Inc.
$
(585,178
)
$
(509,580
)
Net Loss Attributable to Tenon Medical, Inc. Per Share of Common Stock
Basic and diluted
$
(0.35
)
$
(0.31
)
Weighted-Average Shares of Common Stock Outstanding
Basic and diluted
1,660,000
1,660,000
Consolidated Statements of Comprehensive Loss:
Net loss
$
(705,365
)
$
(585,828
)
Change in foreign currency translation adjustment
(42,958
)
(10,300
)
Total Comprehensive Loss
(748,323
)
(596,128
)
Comprehensive loss attributable to non-controlling interest
(138,983
)
(80,286
)
Total comprehensive loss attributable to Tenon Medical, Inc.
$
(609,340
)
$
(515,842
)
The accompanying notes are an integral
part of these consolidated financial statements.
F-
4
Tenon Medical, Inc.
Consolidated Statements of Convertible
Preferred Stock and Stockholders' Deficit
Series B Convertible Preferred Stock
Common Stock
Additional
Paid-In
Accumulated
Accumulated
Other
Comprehensive
Non-Controlling
Shares
Amount
Shares
Amount
Capital
Deficit
Income
Interest
Total
Balance at January 1, 2019
491,222
$
1,271,715
1,660,000
$
1,660
$
20,714
$
(3,391,413
)
$
(26,147
)
$
1,074,964
$
(2,320,222
)
Stock-based compensation expense
—
—
—
—
30,570
—
—
—
30,570
Other comprehensive income (loss)
—
—
—
—
—
—
(6,262
)
(4,038
)
(10,300
)
Net loss
—
—
—
—
—
(509,580
)
—
(76,248
)
(585,828
)
Balance at December 31, 2019
491,222
$
1,271,715
1,660,000
$
1,660
$
51,284
$
(3,900,993
)
$
(32,409
)
$
994,678
$
(2,885,780
)
Conversion of notes payable to Series A preferred stock of subsidiary, net of issuance costs of $21,820
—
—
—
—
—
—
—
763,075
763,075
Beneficial conversion feature on conversion of notes payable to Series A preferred stock of subsidiary
—
—
—
—
—
—
—
88,238
88,238
Warrants issued in connection with consulting agreement
—
—
—
—
57,504
—
—
—
57,504
Stock-based compensation expense
—
—
—
—
16,649
—
—
—
16,649
Other comprehensive income (loss)
—
—
—
—
—
—
(24,162
)
(18,796
)
(42,958
)
Net loss
—
—
—
—
—
(585,178
)
—
(120,187
)
(705,365
)
Balance at December 31, 2020
491,222
$
1,271,715
1,660,000
$
1,660
$
125,437
$
(4,486,171
)
$
(56,571
)
$
1,707,008
$
(2,708,637
)
The accompanying notes are an integral
part of these consolidated financial statements.
F-
5
Tenon Medical, Inc.
Consolidated Statements of Cash Flows
Year Ended December 31,
2020
2019
Cash Flows From Operating Activities
Net loss
$
(705,365
)
$
(585,828
)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash interest expense
167,780
51,491
Stock-based compensation expense
16,649
30,570
Increase (decrease) in cash resulting from changes in:
Accounts receivable
39,358
(53,387
)
Inventories
18,257
(61,545
)
Prepaid expenses
1,209
(771
)
Accounts payable
141,285
271,344
Accrued expenses
153,464
124,162
Due to related party
—
(11,239
)
Net cash used in operating activities
(167,363
)
(235,203
)
Cash Flows From Financing Activities
Proceeds from issuance of convertible notes payable
306,620
251,309
Proceeds from issuance of convertible notes payable due to related parties
—
70,000
Deferred offering costs
(30,000
)
—
Stock issuance costs on conversion of notes payable to subsidiary preferred stock
(21,820
)
—
Net cash provided by financing activities
254,800
321,309
Effect of foreign currency translation on cash flow
6,230
1,373
Net Increase in Cash and Cash Equivalents
93,667
87,479
Cash and Cash Equivalents at Beginning of Period
151,968
64,489
Cash and Cash Equivalents at End of Period
$
245,635
$
151,968
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:
Interest
$
66
$
867
Income taxes
$
2,033
$
1,695
Non-cash investment and financing activities:
Subsidiary preferred stock issued upon conversion of convertible notes and accrued interest
$
784,895
$
—
Beneficial conversion feature on conversion of notes payable to subsidiary preferred stock
$
88,238
$
—
Warrants issued for deferred offering costs
$
57,504
$
—
Conversion of accrued interest to convertible note payable
$
—
$
14,912
The accompanying notes are an integral
part of these consolidated financial statements.
F-
6
1.  Organization and Business
Nature of operations
Tenon Medical, Inc.
("the
Company"), was incorporated in the state of Delaware on June 19, 2012 and was headquartered in San Ramon, California until
June 2021 when it relocated to Los Gatos, California. The Company is a medical device company that has developed a novel posterior
approach to sacroiliac joint fusion for treatment of the most common types of sacroiliac joint disorders that cause lower back
pain. The Company received FDA clearance in 2018 for its primary product, The CATAMARAN
TM
System. The Company is in
the early stages of its commercial launch with its primary focus being on the US market.
Basis of consolidation
The consolidated financial statements of
the Company include the accounts of the Company and its majority-owned subsidiary, Tenon Technology AG ("TTAG"), a
Swiss company. All intercompany balances and transactions have been eliminated in consolidation. The subsidiary is consolidated
from the date of formation (October 3, 2012), being the date on which the Company has power to govern the financial and operating
policies of TTAG so as to obtain benefits from its activities, and will continue to be consolidated until the date such control
ceases. The financial statements of the subsidiary are prepared for the same reporting period as the parent, using consistent accounting
policies in all material respects. Ownership interests in TTAG held by parties other than the Company are presented separately
from the Company's stockholders' deficit on the Consolidated Balance Sheets. The amount of consolidated net loss attributable
to the Company and the non-controlling interests are both presented on the face of the Consolidated Statements of Operations.
2.  Summary of Significant Accounting Principles
Basis of presentation
The accompanying consolidated financial
statements have been prepared on the accrual basis in accordance with generally accepted accounting principles ("GAAP")
as promulgated in the United States of America.
Going concern uncertainty and liquidity requirements
The accompanying consolidated financial
statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of business. There is substantial doubt about the Company's
ability to continue as a going concern for one year after the date that these consolidated financial statements are issued. These
consolidated financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty.
Since inception, the Company has incurred
losses and negative cash flows from operations. Management expects to incur additional operating losses and negative cash flows
from operations in the foreseeable future as the Company continues its product development programs and starts the commercial launch
of The CATAMARAN System. Based on the Company's current level of expenditures and the proceeds from the issuance of convertible
debt during May through July 2021, the Company believes that its existing cash and cash equivalents as of December 31, 2020 will
not provide sufficient funds to enable it to meet its obligations through
June 2022
.
F-
7
The Company plans to raise additional capital
by selling shares of capital stock or other equity or debt securities. However, except for the completed convertible promissory
note offering described in Note 10, there are no commitments or arrangements for future financings in place at this time, and the
Company can give no assurance that such capital will be available on favorable terms or at all. The Company may need additional
financing thereafter until it can achieve profitability. Although the Company is actively pursuing an initial public offering ("IPO")
and other possible financing opportunities, it may not be able to raise cash on terms acceptable to the Company or at all. There
can be no assurance that the Company will be successful in obtaining additional funding. Financings, if available, may be on terms
that are dilutive to shareholders, and the prices at which new investors would be willing to purchase the Company's securities
may be lower than the current price of ordinary shares. The holders of new securities may also receive rights, preferences or privileges
that are senior to those of existing holders of ordinary shares. If additional financing is not available or is not available on
acceptable terms, the Company
could be forced to delay, reduce, or eliminate its future commercialization
efforts and product development programs, which could adversely affect its future business prospects and its ability to continue
as a going concern.
Use of estimates
The preparation of the consolidated financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates. Significant estimates made by management include, but
are not limited to, , realization of deferred tax assets, accrued liabilities, obsolescence of inventory, stock-based compensation
and the fair value of the Company's common stock and preferred stock.
Impact of COVID-19
In March 2020, the World Health Organization
declared the COVID-19 outbreak to be a pandemic. During the year ended December 31, 2020, the Company's financial results
were not significantly affected by the COVID-19 outbreak. The Company has considered all information available as of the date of
issuance of these consolidated financial statements and the Company is not aware of any specific events or circumstances that would
require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. These estimates
may change as new events occur and additional information becomes available. The extent to which the COVID-19 outbreak affects
the Company's future financial results and operations will depend on future developments which are highly uncertain and cannot
be predicted, including new information which may emerge concerning the severity of the outbreak, and current or future domestic
and international actions to contain and treat it.
Segments
The Company operates in one business
segment. Although the Company's Swiss subsidiary is located in a different geographical area, management uses one measurement
of profitability and does not segregate its business for internal reporting.
Cash and cash equivalents
The Company considers all highly liquid
investments with original maturities of 90 days or less at the date of purchase to be cash equivalents.
Accounts receivable and allowance for
doubtful accounts
Accounts receivable are derived from products
delivered to customers and are stated at their net realizable value. The Company records an allowance for estimated uncollectible
accounts in an amount approximating anticipated losses. Individual uncollectible accounts are written off against the allowance
when collection of the individual accounts appears doubtful. In determining the amount of the allowance, the Company considers
its historical level of credit losses. The Company also makes judgments about the creditworthiness of significant customers based
on ongoing credit evaluations, and the Company assesses current economic trends that might impact the level of credit losses in
the future. The Company's allowances have generally been adequate to cover its actual credit losses. However, since the Company
cannot reliably predict future changes in the financial stability of its customers, it cannot guarantee that its allowances will
continue to be adequate. If actual credit losses are significantly greater than the allowance, the Company would increase its general
and administrative expenses and increase its reported net losses. Conversely, if actual credit losses are significantly less than
the Company's reserve, this would eventually decrease the Company's general and administrative expenses and decrease its
reported net losses. Allowances are recorded primarily on a specific identification basis. As of December 31, 2020 and 2019, the
Company's allowance for doubtful accounts was $0.
F-
8
Inventory
Inventory is stated at lower of cost or
net realizable value. The Company establishes the inventory basis by determining the cost based on standard costs approximating
the purchase costs on a first-in, first-out basis. The excess and obsolete inventory is estimated based on future
demand and market conditions. Inventory write-downs are charged to cost of goods sold.
As of December 31, 2020 and 2019, inventory
consisted entirely of finished goods.
Deferred offering costs
Deferred offering costs, which consist
of direct incremental legal, consulting, banking and accounting fees relating to the Company's planned IPO, are capitalized,
and will be offset against proceeds from the IPO upon the effectiveness of the offering. In the event an anticipated offering is
terminated, deferred offering costs will be expensed.
Property and equipment
Property and equipment are stated at cost
less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets. Equipment, computers, software, and furniture and fixtures are depreciated over periods ranging from three
to seven years, and leasehold improvements over the shorter period of the lease or the life of the asset. The cost of maintenance
and repairs is charged to expense as incurred; significant renewals and betterments are capitalized. Deductions are made for retirements
resulting from renewals or betterments. The balance of property and equipment was $0 at both December 31, 2020 and 2019.
Long-lived assets
The Company regularly reviews the carrying
value and estimated lives of all of its long-lived assets, including property and equipment, to determine whether indicators of
impairment may exist that warrant adjustments to carrying values or estimated useful lives. The determinants used for this evaluation
include management's estimate of the asset's ability to generate positive income from operations and positive cash
flow in future periods as well as the strategic significance of the assets to the Company's business objectives.
Fair value measurements
In accordance with Accounting Standards
Codification ("ASC") 820, Fair Value Measurement, fair value is the price that would be received from selling
an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement
date. ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs
and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.
Observable inputs are those that market
participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.
Unobservable inputs reflect the Company's assumptions about the inputs that market participants would use in pricing the
asset or liability based on the best information available in the circumstances.
F-
9
The fair value hierarchy is categorized
into three levels based on the inputs as follows:
Level 1 – Quoted prices are
available in active markets for identical assets or liabilities as of the reported date.
Level 2 – Pricing inputs are
other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature
of these financial instruments include cash instruments for which quoted prices are available but are traded less frequently, derivative
instruments whose fair values have been derived using a model where inputs to the model are directly observable in the market and
instruments that are fair valued using other financial instruments, the parameters of which can be directly observed.
Level 3 – Instruments that have
little to no pricing observability as of the measurement date. These financial instruments are measured using management's
best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
The degree of judgment exercised by the
Company in determining fair value is greatest for assets categorized in Level 3. In certain cases, the inputs used to measure fair
value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair
value hierarchy within which the fair value measurement falls in its entirety is determined by the lowest level input that is significant
to the fair value measurement.
Convertible preferred stock
The Company records convertible preferred
stock at fair value on the dates of issuance, net of issuance costs. Convertible preferred stock is recorded as temporary stockholders'
equity.
Income taxes
For the years ended December 31, 2020 and
2019 income taxes are recorded in accordance with Financial Accounting Standards Board ("FASB") ASC Topic 740, Income
Taxes ("ASC 740"), which provides for deferred taxes using an asset and liability approach. Under this method, the
Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the
financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect
when the differences are expected to reverse. Valuation allowances are provided when necessary to reduce net deferred tax assets
to the amount that is more likely than not to be realized. Based on the available evidence, the Company is unable, at this time,
to support the determination that it is more likely than not that its deferred tax assets will be utilized in the future. Accordingly,
the Company recorded a full valuation allowance as of December 31, 2020 and 2019. The Company intends to maintain valuation allowances
until sufficient evidence exists to support its reversal.
Current income taxes are based upon the
year's income taxable for federal, state and foreign tax reporting purposes. Deferred income taxes are provided for certain income
and expenses, which are recognized in different periods for tax and financial reporting purposes.
The Company's policy is not to record deferred
income taxes on the undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations.
Revenue recognition
The Company's revenue is derived
from the sale of its products to medical groups and hospitals through its independent sales representative and national distributor
in Florida and Texas.
In accordance with Accounting Standards
Codification 606,
Revenue from Contracts with Customers
("ASC 606"), which the Company adopted effective January 1,
2019, revenue is recognized when control is transferred to the customer, in an amount that reflects the consideration the Company
expects to be entitled to in exchange for the goods or services. The Company had no contracts with customers prior to the date
of adoption. Under ASC 606, the Company applies the following five step approach: (1) identify the contract with a customer, (2)
identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to
the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.
F-
10
The Company generates its revenue
from the sale of products through an independent sales representative and national distributor to certain hospital or medical
facilities where the products are delivered in advance of a procedure. The performance obligation is the delivery of the
products along with the completion of the surgery and therefore, revenue is recognized upon delivery to the customers and
completion of the surgery, net of rebates and price discounts. The Company accounts for rebates and price discounts as a
reduction to revenue, calculated based on the terms agreed to with the customer. Historically, there has been no significant
rebates or price discounts. Sales prices are specified in either the customer contract, agreed price list, or purchase order,
which is executed prior to the transfer of control to the customer. As of April 2020, the Company has an agreement in place
with a national distributor, which includes standard terms that do not allow for payment contingent on resale of the product,
obtaining financing, or other terms that could impact the distributor's payment obligation. From April 2020 through May
20, 2021, the distributor billed and collected from the enduser customer, was required to pay the Company on the
5
th
day of the calendar month after the customer paid the distributor, and the Company recognized revenue based on
the net amount received from the distributor. Prior to April 2020 and subsequent to May 20, 2021, the Company billed and
collected directly from the enduser customers and recognized revenue based on the gross sales price. For direct sales to
enduser customers, the Company's standard payment terms are generally net 30 days.
The Company offers its standard warranty
to all customers. The Company does not sell any warranties on a standalone basis. The Company's warranty provides that its
products are free of material defects and conform to specifications, and includes an offer to replace or refund the purchase price
of defective products. This assurance does not constitute a service and is not considered a separate performance obligation. The
Company estimates warranty liabilities at the time of revenue recognition and records it as a charge to cost of goods sold.
Contract modifications generally do not
occur during the performance of the Company's contracts.
Payments received prior to satisfying the
revenue recognition criteria are recorded as deferred revenue on the consolidated balance sheets. As of December 31, 2020 and 2019,
there were no remaining performance obligations that would give rise to deferred revenue.
Costs associated with product sales include
commissions and are recorded in sales and marketing expenses during the same period as the corresponding revenues.
Research and development
The Company engages in improving existing
products and new product development efforts. Research and development expenses relating to these efforts are expensed as incurred.
Leases
The Company had no lease agreements during
the years ended December 31, 2020 and 2019. See Note 10.
Stock-based compensation
The Company accounts for its stock-based
compensation in accordance with ASC 718,
Compensation - Stock Compensation
. The Company accounts for all stock-based
compensation awards using a fair-value method on the grant date and recognizes the fair value of each award as an expense over
the requisite service period.
In June 2018, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-07,
Improvements to Non-employee
Share-Based Payment Accounting
. ASU 2018-07 expands the scope of ASC 718 to include share-based payments issued to non-employees
for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially
aligned. ASU 2018-07 supersedes Subtopic 505-50,
Equity-Based Payments to Non-Employees
. The Company
adopted this standard effective for the year ended December 31, 2019, and the adoption did not have any material impact on the
Company's consolidated financial statements.
F-
11
Foreign currency translation and other
comprehensive income
The functional currency of Tenon Technology
AG is the Swiss franc. Accordingly, TTAG's assets and liabilities are translated from their respective functional currency
into U.S. Dollars at period-end rates, and TTAG's revenue and expenses are translated at the weighted-average exchange rate
for the period. Adjustments resulting from this translation process are classified as other comprehensive income or loss and shown
as a separate component of equity.
When intercompany foreign currency transactions
between entities included in the consolidated financial statements are of a long-term investment nature (i.e., those for which
settlement is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those
transactions are included in stockholders' equity (deficit) as accumulated other comprehensive loss or income. When intercompany
transactions are deemed to be of a short-term nature, translation adjustments are required to be included in the consolidated statements
of operations. The Company has determined that settlement of TTAG's intercompany balances are not anticipated in the foreseeable
future, and therefore such translation adjustments are included in stockholders' deficit as accumulated other comprehensive
income.
Net loss per share
Basic net loss per share is based upon
the weighted-average number of common shares outstanding. Diluted net loss per share is based on the assumption that all potential
common stock equivalents (convertible preferred stock, stock options, and warrants) are converted or exercised. The calculation
of diluted net loss per share excludes potential common stock equivalents if the effect is anti-dilutive. The Company's weighted-average
common shares outstanding for basic and diluted are the same because the effect of the potential common stock equivalents is anti-dilutive.
The Company had the following dilutive
common stock equivalents as of December 31, 2020 and 2019 which were excluded from the calculation because their effect was
anti-dilutive.
Year Ended December 31,
2020
2019
Common shares convertible from preferred stock
491,222
491,222
Common shares convertible from minority interest
1,798,905
1,493,764
Common shares convertible from notes payable
245,148
144,615
Outstanding warrants
50,000
—
Outstanding stock options
181,979
181,979
Total
2,767,254
2,311,580
Recent accounting standards not yet
adopted
In February 2016, the FASB issued ASC 842,
"
Leases
". This standard requires lessees to present right-of-use assets and lease liabilities on the balance
sheet. The new guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative periods
in the financial statements and is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted.
The Company early adopted ASC 842 on January 1, 2021.
In August 2020, the FASB issued ASU 2020-6,
Debt—Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity
("ASU 2020-6"),
which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash
conversion feature and (2) convertible instruments with a beneficial conversion feature. Upon adoption, a convertible debt instrument
will be accounted for as a single liability at amortized cost unless (a) the convertible instrument contains features that require
bifurcation as a derivative under ASC 815,
Derivatives and Hedging
, or (b) the convertible debt instrument was issued
at a substantial premium. These changes will reduce reported interest expense and increase reported net income for entities that
have issued a convertible instrument that was bifurcated according to previously existing rules. ASU 2020-6 also requires the application
of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available.
The new guidance is effective for public entities excluding smaller reporting companies in fiscal years beginning after December
15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. For public business entities
that meet the definition of a smaller reporting company, the amendments in ASU 2020-6 are effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2023. ASU 2020-6 is effective for the Company in the first quarter
of fiscal 2024. The Company is currently evaluating the impact of adoption of ASU 2020-6 on its consolidated financial statements.
F-
12
3.
Accrued Expenses
Accrued expenses consisted of the following:
December 31,
2020
2019
Accrued compensation
$
582,906
$
478,505
Accrued commissions
32,328
21,456
Other accrued expenses
48,423
7,233
Total accrued expenses
$
663,657
$
507,194
4.  Debt
Convertible notes payable – parent company
During 2015, the Company issued a $53,447
convertible promissory note to a consultant that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. In June 2019, the note and its accrued interest to date was replaced by a $68,359 convertible
promissory note that, along with accrued interest at an annual rate of 8.0%, was automatically convertible upon a preferred stock
financing of at least $1,000,000, at a conversion price equal to 90% of the price per share paid by the other cash purchasers in
the future financing. The note had a maturity date of June 12, 2021. In May 2021, the note was again replaced by a $68,359 convertible
promissory note with a maturity date of May 7, 2022 that, along with accrued interest at an annual rate of 8.0%, is automatically
convertible upon an Initial Public Offering ("IPO") or a capital stock financing of at least $5,000,000. The conversion
price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000. Since
the conversion is contingent upon an event outside the Company's control, the beneficial conversion feature will be recorded
once the contingency is met. Accrued interest at December 31, 2020 and 2019 totaled approximately $8,000 and $3,000, respectively.
During 2016, the Company issued a $117,530
convertible promissory note to a vendor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of January 1, 2019 and remained unpaid during 2019 and 2020.
In April 2021, the note was replaced by a $117,530 convertible promissory note with a maturity date of April 30, 2022 that, along
with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least
$5,000,000. The conversion price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing
of at least $5,000,000. Since the conversion is contingent upon an event outside the Company's control, the beneficial conversion
feature will be recorded once the contingency is met. Accrued interest at December 31, 2020 and 2019 totaled approximately $47,000
and $38,000, respectively.
In October 2019, the Company issued a $70,000
convertible promissory note to the Company's Chief Executive Officer that, along with accrued interest at an annual rate
of 8.0%, was automatically convertible upon a preferred stock financing of at least $500,000, at a conversion price equal to 80%
of the price per share paid by the other cash purchasers in the future financing. The note had a maturity date of October 12, 2022.
In April 2021, the note was replaced by a $70,000 convertible promissory note with a maturity date of April 30, 2022 that, along
with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least
$5,000,000. The conversion price is equal to 70% of the IPO price or $1.9565 per share in the event of a capital stock financing
of at least $5,000,000. Since the conversion is contingent upon an event outside the Company's control, the beneficial conversion
feature will be recorded once the contingency is met. Accrued interest at December 31, 2020 and 2019 totaled approximately $7,000
and $1,000, respectively.
F-
13
In October 2019, the Company issued a $50,000
convertible promissory note to an investor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 80% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of October 21, 2022. In May 2021, the note was replaced by
a $50,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest at an annual rate of
8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion price is equal
to 70% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000. Since the conversion
is contingent upon an event outside the Company's control, the beneficial conversion feature will be recorded once the contingency
is met. Accrued interest at December 31, 2020 and 2019 totaled approximately $5,000 and $1,000, respectively.
In November 2020, the Company issued a
$200,000 convertible promissory note to the same investor that, along with accrued interest at an annual rate of 8.0%, was automatically
convertible upon a preferred stock financing of at least $2,000,000, at a conversion price equal to 80% of the price per share
paid by the other cash purchasers in the future financing. The note had a maturity date of November 16, 2022. In May 2021, the
note was replaced by a $200,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest
at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion
price is equal to 70% of the IPO price or 70% of the price per share paid by the other cash purchasers in the future financing.
Since the conversion is contingent upon an event outside the Company's control, the beneficial conversion feature will be
recorded once the contingency is met. Accrued interest at December 31, 2020 totaled approximately $2,000.
Principal payments on the convertible notes
payable are due as follows:
2021
$
185,889
2022
320,000
Total principal
505,889
Accrued interest
69,086
Total principal and interest
$
574,975
Convertible notes payable – subsidiary
During 2018, the Company's subsidiary
issued two convertible promissory notes for an aggregate of $305,084 to TTAG's minority shareholder. In September 2019 and
June 2020, the Company's subsidiary issued additional convertible promissory notes to the same minority shareholder for $201,309
and $106,620, respectively. These notes, along with accrued interest at an annual rate of 10.0%, could be applied to future TTAG
capital increases. Accrued interest on these notes totaled approximately $63,000 at December 31, 2019. In November 2020, notes
payable and accrued interest totaling $784,895 were converted into TTAG Series A preferred stock shares, which increased the minority
shareholder's ownership percentage from 39.2% to 43.8%. In connection with the conversion of the notes, the Company recorded
a beneficial conversion feature of $88,238.
5.  Stockholders' Equity
The Amended and Restated Certificate of
Incorporation dated February 18, 2014, authorizes the issuance of 3,937,550 shares of common stock and 2,099,525 shares of preferred
stock, with a par value of $0.001 per share. The Company increased the number of authorized shares in April 2021 (Note 10).
Preferred Stock
Shares of the Company's Series A
Convertible Preferred Stock have been set aside for the potential conversion of TTAG Series A shares owned by its minority shareholder.
F-
14
In a series of closings from 2012 through
2015, the Company issued an aggregate of 491,222 shares of Series B Convertible Preferred Stock at $2.795 per share for proceeds
of $1,271,715, net of stock issuance costs.
The Company classifies the convertible
preferred stock outside of total stockholders' deficit because, in the event of certain deemed liquidation events that are
not solely within the control of the Company, the shares would become redeemable at the option of the holders. The Company did
not adjust the carrying values of the convertible preferred stock to the deemed liquidation values of such shares since a liquidation
event was not probable of occurring at December 31, 2020. Subsequent adjustments to increase or decrease the carrying values
to the ultimate liquidation values will be made only if, and when, it becomes probable that such a liquidation event will occur.
Conversion
At the option of the holder, shares of
Series A and Series B Preferred Stock are convertible into Common Stock at a conversion rate of one-to-one, subject to adjustments
for stock dividends, splits, combinations and similar events. Automatic conversion will occur in the event of a firmly underwritten
public offering of Common Stock of the Company at a price of at least $6.00 per share, subject to appropriate adjustments for stock
dividends, splits, combination and similar events, and with total gross proceeds to the Company of at least $25,000,000, before
deduction of underwriters' commissions and expenses.
Redemption
The shares of the Series A and Series B
Preferred Stock are redeemable only upon acquisition or liquidation of the Company.
Liquidation preference
With respect to any distributions in connection
with a liquidation, dissolution or winding up of the Company, or in connection with the sale of voting control of all or substantially
all of the assets of the Company, by way of merger, acquisition, consolidation or similar transaction, prior to any distribution
to Common Stockholders, the holders of Series A and Series B Preferred Stock are entitled to receive $0.853 and $2.795 per share,
respectively, plus any declared but unpaid dividends, adjusted to reflect any dividends previously paid. If, upon the occurrence
of such event, the assets and funds distributed among the holders of Series A and Series B Preferred Stock shall be insufficient
to permit the payment to such holders of the full liquidation preference amounts, the entire assets and funds of the Company legally
available shall be distributed ratably among the preferred stockholders in proportion to the preferential amount to which each
holder is entitled.
After payment of the liquidation preferences,
the holders of Common Stock are entitled to receive the remaining assets of the Company available for distribution to its stockholders
pro rata based on the number of shares of Common Stock held by each holder.
Voting rights
The holders of vested shares of Common
Stock shall be entitled to vote on any matter submitted to a vote of the stockholders and each such holder shall be entitled to
one vote per share of Common Stock held. The holders of Series A and Series B Preferred Stock shall be entitled to vote together
with the Common Stock as a single class on any matter submitted to a vote of the stockholders. Holders of Series A and Series B
Preferred Stock shall be entitled to the number of votes equal to the number of Common Stock issuable upon conversion of their
respective Series A and Series B Preferred Stock at the time such shares are voted. The holders of a majority of the preferred
Stock have additional voting rights as specified in the Company's Amended and Restated Certificate of Incorporation.
Common stock
The Company has reserved shares of common
stock for the following potential future issuances.
Year Ended December 31,
2020
2019
Shares convertible from preferred stock
491,222
491,222
Shares convertible from minority interest
1,798,905
1,493,764
Outstanding warrants
50,000
—
Outstanding stock options
181,979
181,979
Shares available for future equity award grants
191,731
191,731
Total
2,713,837
2,358,696
F-
15
Equity awards
In 2012, the Board of Directors of the
Company approved the Tenon Medical, Inc. 2012 Equity Incentive Plan (the "Plan"). The Plan provides for the issuance
of Common Stock options, appreciation rights, and other awards to employees, directors, and consultants. The number of shares that
may be issued under the Plan may not exceed 373,710 shares. Options issued under the Plan generally vest over a four-year period
with cliff vesting for the first year and have a 10-year expiration date. In April, July, and August 2021, the Company increased
the number of shares reserved for issuance under the Plan (Note 10).
The Company adopted the fair value recognition
provisions in accordance with authoritative guidance related to equity-based payments. Compensation expense in 2020 and 2019 includes
the portion of awards vested in the periods for all equity-based awards granted, based on the grant date fair value estimated using
a Black-Scholes option valuation model, consistent with authoritative guidance, using the weighted-average assumptions in the table
below:
Years Ended December 31,
2020
2019
Expected volatility
N/A
49.39
%
Dividend yield
N/A
0
%
Risk-free interest rate
N/A
1.70
%
Expected terms in years
N/A
5.77
Expected Volatility
- The expected
volatility is based on a peer group in the industry in which the Company does business.
Dividend Yield
- The Company has
not, and does not, intend to pay dividends.
Risk-free Interest Rate
- The Company
applies the risk-free interest rate based on the U.S. Treasury yield in effect at the time of the grant consistent with the expected
term of the award.
Expected Term in Years
- The Company
calculated the expected term using the Simplified Method. This method uses the average of the contractual term of the option and
the weighted-average vesting period in accordance with authoritative guidance.
Forfeitures
– The Company
accounts for forfeitures as they occur.
Estimates of fair value are not intended
to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events
are not indicative of the reasonableness of the original estimates of fair value made by the Company in accordance with authoritative
guidance.
A summary of the Company's
share option activity is as follows:
Number of Shares
Weighted Average Exercise Price
Intrinsic Value
Options outstanding at December 31, 2018
142,070
$
0.31
Granted
60,109
$
0.31
Forfeited
(20,200
)
$
0.31
Options outstanding at December 31, 2019
181,979
$
0.31
Options outstanding at December 31, 2020
181,979
$
0.31
$
416,732
Options vested and exercisable at December 31, 2020
152,390
$
0.31
$
348,974
F-
16
Additional information regarding
options outstanding as of December 31, 2020 is as follows:
Exercise Price
Number
Outstanding
Weighted-Average
Remaining
Contractual Life in
Years
Number
Exercisable
Weighted-Average
Remaining
Contractual Life in
Years
$
0.31
181,979
4.93
152,390
4.20
181,979
4.93
152,390
4.20
The intrinsic value for options exercised
represents the difference between the estimate of fair value based on the valuation of the shares on the date of exercise and the
exercise price of the share option.
The following table sets forth stock-based
compensation expense recognized for the years ended December 31, 2020 and 2019:
December 31,
2020
2019
Research and development
$
—
$
26,408
Selling, general, and administrative
16,649
4,162
Total stock-based compensation expense
$
16,649
$
30,570
As of December 31, 2020, there was approximately
$46,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements granted under the
Plan. The cost is expected to be recognized over a weighted-average period of 2.68 years.
The weighted-average fair value of grant
date awards granted in 2019 was $1.55 per share. There were 191,731 stock option shares available to be issued at December 31,
2020.
Warrants
During 2020, the Company issued warrants
to purchase 50,000 shares of common stock to a consultant. The warrants are immediately exercisable at an exercise price of $2.60
per share. The fair value of the warrants on the grant date was $1.15 per warrant, which was calculated based on the following
weighted-average assumptions, using a Black-Scholes option valuation model: expected term of 5.00 years; expected volatility of
51.88%; dividend yield of 0%, and risk-free interest rate of 0.30%. The Company recorded deferred offering costs of approximately
$58,000 associated with these warrants during 2020.
6.  Commitments and Contingencies
Sales Representative Agreement
In April 2020 the Company entered into
an Exclusive Sales Representative Agreement, under which the counterparty to the agreement (the "Representative") received
exclusive rights to market, promote, and distribute The CATAMARAN
TM
Systemin the United States and Puerto Rico. The
agreement is for an initial period of five years, and automatically renews for an additional five years unless written notice is
given by either party prior to April 27, 2023. The agreement provides for a bonus to be paid to the Representative upon an acquisition
or IPO. In May 2021 the Company entered into an Amended and Restated Exclusive Sales Representative Agreement. In June 2021 the
Company issued a $50,000 convertible note payable to the CEO of the Representative. See Note 10.
Litigation
In the normal course of business, the Company
may possibly be named as a defendant in various lawsuits; there are no such lawsuits currently pending nor is management aware
of any such potential lawsuits.
F-
17
7.  Concentrations
Credit risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.
The Company maintains cash balances at
financial institutions located in California and Switzerland. Accounts at the U.S. financial institutions are secured by the Federal
Deposit Insurance Corporation. At times, balances may exceed federally insured limits. The Company has not experienced any losses
in such accounts. Management believes that the Company is not exposed to any significant credit risk with respect to its cash and
cash equivalents.
The Company grants unsecured credit to
its customers based on an evaluation of the customer's financial condition and a cash deposit is generally not required.
Management believes its credit policies do not result in significant adverse risk and historically has not experienced significant
credit-related losses.
Currency risk
The Company's subsidiary, Tenon Technology
AG, realizes a portion of its expenses in Swiss francs. Consequently, certain assets and liabilities are exposed to foreign currency
fluctuations. At December 31, 2020 and 2019, approximately $64,000 and $61,000, respectively, of the Company's net monetary assets
were denominated in Swiss francs. The Company has not entered into any hedging transactions to reduce the exposure to currency
risk.
8.  Income Taxes
Coronavirus Aid, Relief and Economic
Security Act
On March 27, 2020, the Coronavirus Aid,
Relief, and Economic Security Act (the "CARES Act") was enacted and signed into law in response to the market volatility
and instability resulting from the COVID-19 pandemic. It includes a significant number of tax provisions and lifts certain deduction
limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the "2017 Act"). The changes are mainly related
to: (1) the business interest expense disallowance rules for 2019 and 2020; (2) net operating loss rules; (3) charitable contribution
limitations; (4) employee retention credit; and (5) the realization of corporate alternative minimum tax credits. The Company does
not anticipate the application of the CARES Act provisions to materially impact the overall consolidated financial statements.
The components of loss before income taxes
are as follows:
Years Ended December 31,
2020
2019
United States
$
(429,882
)
$
(390,517
)
Foreign
(273,450
)
(193,616
)
Loss before income taxes
$
(703,332
)
$
(584,133
)
The components of current income tax expense
are as follows:
Years Ended December 31,
2020
2019
Federal
$
—
$
—
State
800
800
Foreign
1,233
895
Total income tax expense
$
2,033
$
1,695
F-
18
Significant components of the Company's
net deferred tax asset at December 31, 2020 and 2019 are as follows:
December 31,
2020
2019
Deferred tax assets
Net operating loss
$
996,990
$
918,304
Intangibles
260,219
291,145
Accruals and reserves
183,654
146,737
Total gross deferred tax asset
1,440,863
1,356,186
Valuation allowance
(1,440,863
)
(1,356,186
)
Net deferred tax assets
$
—
$
—
In assessing the realizability of deferred
tax assets at December 31, 2020, management considered whether it is more likely than not that some portion or all of the deferred
tax assets will be realized, and determined that a valuation allowance was required for those deferred tax assets that are not
expected to provide future tax benefits. The ultimate realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become deductible.
A reconciliation of the expected tax computed
at the U.S. statutory federal income tax rate to the total provision for income taxes for the year ended December 31, 2020 and
2019 follows:
2020
2019
Expected tax at 21%
(21.00
%)
(21.00
%)
State taxes, net of federal benefit
(6.01
%)
(6.55
%)
Foreign taxes
0.18
%
0.15
%
Non-deductible expenses
15.08
%
1.01
%
Change in valuation allowance
12.04
%
26.68
%
Provision for income taxes
0.29
%
0.29
%
At December 31, 2020, the Company has available
net operating loss carryforwards of approximately $1,653,000 for federal income tax purposes, of which approximately $1,431,000
were generated after 2017 and can be carried forward indefinitely under the Tax Cuts and Jobs Act. The remaining federal net operating
loss of approximately $222,000, which was generated prior to 2018, will start to expire in 2034 if not utilized.
At December 31, 2020, the net operating
losses for state purposes are approximately $4,338,000 and will begin to expire in 2032 if not utilized. In addition, the Company
had foreign net operating losses of approximately $1,652,000 at December 31, 2020 that will start to expire in 2021 if not utilized.
The Company has not completed a study to
determine whether any ownership change per the provisions of Section 382 of the Internal Revenue Code of 1986, as amended, as well
as similar state provisions, has occurred. Utilization of the Company's net operating loss and income tax credit carryforwards
may be subject to a substantial annual limitation due to ownership changes that may have occurred or that could occur in the future.
These ownership changes may limit the amount of the net operating loss and income tax credit carryover that can be utilized annually
to offset future taxable income. In general, an "ownership change" as defined by Section 382 of the Code results from
a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points
of the outstanding stock of a company by certain stockholders.
Uncertain tax positions
In accordance with authoritative guidance,
the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely
than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if
it has less than a 50% likelihood of being sustained. The Company has no material uncertain tax positions as of December 31, 2020.
F-
19
The Company recognizes interest and penalties
related to unrecognized tax positions within the income tax expense line in the accompanying consolidated statements of operations.
There were no accrued interest and penalties associated with uncertain tax positions as of December 31, 2020 or 2019.
The Company is subject to U.S. federal
and state income tax, and in the normal course of business, its income tax returns are subject to examination by the relevant taxing
authorities. As of December 31, 2020, the 2017 through 2020 tax years remain subject to examination in the U.S. federal tax and
various state tax jurisdictions. However, to the extent allowed by law, the taxing authorities may have the right to examine the
period from 2013 through 2020 where net operating losses and income tax credits were generated and carried forward and make adjustments
to the amount of the net operating loss and income tax credit carryforward amount. The Company is not currently under examination
by federal or state jurisdictions.
9.  Related Party Transactions
During 2019 the Company issued a convertible
note payable to the Chief Executive Officer of the Company. See Note 4.
During 2018 through 2020, the Company's
subsidiary issued convertible promissory notes to TTAG's minority shareholder. In November 2020, these notes payable and
accrued interest were converted into TTAG shares. See Note 4.
The Company has a consulting agreement
with a company owned by the former Chief Executive Officer of the Company. Under this consulting agreement, the Chief Executive
was to provide services from 2015 through June 1, 2021. Total payments under the consulting agreement of $600,000 are to be paid
as follows: (a) $300,000 paid upon closing of financing round of at least $5,000,000, followed by twelve monthly payment of $25,000
per month; (b) $300,000 paid upon achieving at least $3,000,000 of annual revenue and a financing round of less than $5,000,000;
or (c) the entire $600,000 payable immediately upon an acquisition of the Company. During the years ended December 31, 2020 and
2019, the Company recorded consulting expense of approximately $100,000 and $100,000, respectively. As of December 31, 2020 and
2019, approximately $558,000 and $458,000 owed to this party was included in accrued expenses in respect of these services.
10.  Subsequent Events
The Company has evaluated subsequent events
through August 30, 2021, the date which the consolidated financial statements were available to be issued.
In January 2021, the Company issued a promissory
note of $130,560 to a law firm. The note bore interest at 3.0% per annum and had a maturity date of the earlier of July 27, 2021,
the closing of a debt or equity financing, or the closing of a change in control transaction. The interest rate was to increase
to 5.0% if all principal and interest had not been paid by the maturity date. The Company repaid this loan and accrued interest
in May 2021.
During April and May 2021, the Company
replaced convertible promissory notes with aggregate face amounts of $505,889. See Note 4.
In April 2021, the Company issued two convertible
promissory notes of $40,000 and $170,000 to the vendor described in Note 4 that, along with accrued interest at an annual rate
of 8.0%, are automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion price is
equal to 70% of the IPO price or 70% of the price per share paid by the other cash purchasers in the future financing.
In April 2021, the Company's Board
of Directors increased the number of authorized shares of the Company to 9,460,802, consisting of 7,000,000 shares of common stock
and 2,460,802 shares of preferred stock; increased the number of authorized shares of Series A preferred stock to 1,798,905; and
increased the number of shares of common stock reserved for issuance under the 2012 Equity Incentive Plan to 1,325,031. In July
2021, the Company's Board of Directors increased the number of shares of common stock reserved for issuance under the 2012
Equity Incentive Plan to 1,475,031. In August 2021, the Company's Board of Directors increased the number of shares of common
stock reserved for issuance under the 2012 Equity Incentive Plan from 1,475,031 shares to 1,598,531 shares, and approved the form
of a 2021 Equity Incentive Plan. The 2021 Equity Incentive Plan will be adopted and effective as of the business day immediately
prior to the registration date of the S-1 and in connection with the Company's IPO.
F-
20
In May 2021, the Company entered into an Amended
and Restated Exclusive Sales Representative Agreement, which revised certain terms and conditions in the Exclusive Sales Representative
Agreement described in Note 6. In connection with the amendment agreement, the Company paid $500,000 cash and issued 107,513 shares
of common stock to the Representative. In addition, the Representative received anti-dilution protections to maintain ownership
of 3.0% of the fully diluted equity of the Company through the date of an initial public offering. The amended agreement restructured
the calculation of the bonus paid to the Representative upon an acquisition, removed the bonus payable upon an IPO, and allows
the Company to terminate the amended agreement as long as the bonus paid to the Representative is at least $6,000,000.
In June 2021, the Company issued a convertible
promissory note for an aggregate of $108,086 to TTAG's minority shareholder. The note is due upon the earlier of a capital
increase or December 31, 2021. This note, along with accrued interest at an annual rate of 8.0%, can be applied to future TTAG
capital increases.
In June 2021, the Company entered into a facility
lease agreement for its company headquarters in Los Gatos, California with escalating base rent payments of approximately $23,000
to $26,000 per month from June 2021 until the lease termination in June 2026. The total lease commitment over the lease term is
approximately $1,461,000.
From May through July 2021, the Company issued
convertible promissory notes to multiple investors for aggregate proceeds of $12,177,328, with maturity dates twelve months from
the issuance dates. Of this amount, $620,000 of notes were issued to related officers, directors, and their family members, and
a $50,000 note was issued to the CEO of the Representative described in Note 6. The notes, along with accrued interest at an annual
rate of 8.0%, are automatically convertible upon an IPO, a capital stock financing of at least $5,000,000, or a change of control
transaction. The conversion price upon an IPO or a capital stock financing is equal to the lesser of 70% of the price per share
paid by the other cash purchasers, or the price per share at a Company valuation of $22,500,000. Upon a change of control, noteholders
will receive the greater of a 100% premium on the outstanding principal, plus accrued interest, or the conversion of the principal
and accrued interest into common stock at a Company valuation of $22,500,000.
During August 2021,
the Company issued an aggregate of 123,500 shares of restricted common stock to several individuals under the 2012 Equity Incentive
Plan. The shares are 100% vested.
F-
21
Tenon Medical, Inc.
Condensed Consolidated Balance Sheets
September 30,
2021
December 31,
2020
(Unaudited)
Assets
Current Assets
Cash and cash equivalents
$
1,409,137
$
245,635
Investments
7,862,236
—
Accounts receivable
70,100
14,474
Inventory
22,429
43,288
Prepaid expenses
102,115
—
Total current assets
9,466,017
303,397
Fixed assets - net
17,170
—
Deposits
26,250
—
Operating lease right-of-use asset
1,133,756
—
Deferred offering costs
309,893
87,504
TOTAL ASSETS
$
10,953,086
$
390,901
Liabilities, Convertible Preferred Stock, and Stockholders' Deficit
Current Liabilities
Accounts payable
$
274,766
$
589,191
Accrued expenses
830,225
663,657
Current portion of operating lease liability
213,741
—
Convertible notes payable and accrued interest - current, net of debt discount of $50,104 and $0 at September 30, 2021 and December 31, 2020, respectively
13,257,184
241,397
Convertible notes payable and accrued interest due to related parties
81,027
—
Total current liabilities
14,656,943
1,494,245
Operating lease liability - net of current portion
946,939
—
Convertible notes payable and accrued interest - net of current portion
—
256,751
Convertible notes payable and accrued interest due to related parties
—
76,827
Total Liabilities
15,603,882
1,827,823
Commitments and Contingencies (Note 8)
Convertible Preferred Stock
Series A convertible preferred stock, $0.001 par value; 1,798,905 and 1,437,628 shares authorized at September 30, 2021 and December 31, 2020, respectively; 0 shares issued and outstanding
—
—
Series B convertible preferred stock, $0.001 par value; 661,897 shares authorized; 491,222 shares issued and outstanding; liquidation preference of $1,372,953
1,271,715
1,271,715
Stockholders' Deficit
Common stock, $0.001 par value; 7,000,000 and 3,937,550 shares authorized at September 30, 2021 and December 31, 2020, respectively; 1,891,013 and 1,660,000 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
1,891
1,660
Additional paid-in capital
1,149,157
125,437
Accumulated deficit
(8,692,057
)
(4,486,171
)
Accumulated other comprehensive income (loss)
(55,627
)
(56,571
)
Total Tenon Medical, Inc. stockholders' deficit
(7,596,636
)
(4,415,645
)
Total non-controlling interest
1,674,125
1,707,008
Total stockholders' deficit
(5,922,511
)
(2,708,637
)
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' DEFICIT
$
10,953,086
$
390,901
The accompanying notes are an integral
part of these consolidated financial statements.
F-
22
Tenon Medical, Inc.
Condensed Consolidated Statements of
Operations and Comprehensive Loss
(Unaudited)
Nine Months Ended
September 30,
2021
2020
Revenue
$
107,400
$
30,380
Cost of sales
38,797
9,129
Gross Profit
68,603
21,251
Operating Expenses
Research and development expenses
925,076
166,192
Sales and marketing expenses
1,473,227
25,139
General and administrative expenses
1,569,239
167,888
Total Operating Expenses
3,967,542
359,219
Loss from Operations
(3,898,939
)
(337,968
)
Other Income (Expense)
Gain on investments
1,379
—
Interest expense
(340,944
)
(61,376
)
Other expense
(880
)
(1,193
)
Total Other Expense
(340,445
)
(62,569
)
Net Loss
(4,239,384
)
(400,537
)
Loss attributable to non-controlling interest
(33,498
)
(56,610
)
Net Loss Attributable to Tenon Medical, Inc.
$
(4,205,886
)
$
(343,927
)
Net Loss Attributable to Tenon Medical, Inc. Per Share of Common Stock
Basic and diluted
$
(2.43
)
$
(0.21
)
Weighted-Average Shares of Common Stock Outstanding
Basic and diluted
1,733,581
1,660,000
Consolidated Statements of Comprehensive Loss:
Net loss
$
(4,239,384
)
$
(400,537
)
Unrealized gain on investments
155
—
Change in foreign currency translation adjustment
1,559
(32,965
)
Total Comprehensive Loss
(4,237,670
)
(433,502
)
Comprehensive loss attributable to non-controlling interest
(32,883
)
(69,532
)
Total comprehensive loss attributable to Tenon Medical, Inc.
$
(4,204,787
)
$
(363,970
)
The accompanying notes are an integral
part of these consolidated financial statements.
F-
23
Tenon Medical, Inc.
Condensed Consolidated Statements of
Convertible Preferred Stock and Stockholders' Deficit
(Unaudited)
Series B
Convertible
Preferred
    Stock
Common Stock
Additional
Paid-In
Accumulated
Accumulated
Other
Comprehensive
Non-
Controlling
Shares
Amount
Shares
Amount
Capital
Deficit
Income
Interest
Total
Balance at December 31, 2020
491,222
$
1,271,715
1,660,000
$
1,660
$
125,437
$
(4,486,171
)
$
(56,571
)
$
1,707,008
$
(2,708,637
)
Stock-based compensation expense
—
—
—
—
208,475
—
—
—
208,475
Common stock issued for services
—
—
231,013
231
815,245
—
—
—
815,476
Other comprehensive income (loss)
—
—
—
—
—
—
944
615
1,559
Net loss
—
—
—
—
—
(4,205,886
)
—
(33,498
)
(4,239,384
)
Balance at September 30, 2021
491,222
$
1,271,715
1,891,013
$
1,891
$
1,149,157
$
(8,692,057
)
$
(55,627
)
$
1,674,125
$
(5,922,511
)
Series B
Convertible
Preferred Stock
Common Stock
Additional
Paid-In
Accumulated
Accumulated
Other
Comprehensive
Non-
Controlling
Shares
Amount
Shares
Amount
Capital
Deficit
Income
Interest
Total
Balance at December 31, 2019
491,222
$
1,271,715
1,660,000
$
1,660
$
51,284
$
(3,900,993
)
$
(32,409
)
$
994,678
$
(2,885,780
)
Stock-based compensation expense
—
—
—
—
12,487
—
—
—
12,487
Other comprehensive income (loss)
—
—
—
—
—
—
(20,043
)
(12,922
)
(32,965
)
Net loss
—
—
—
—
—
(343,927
)
—
(56,610
)
(400,537
)
Balance at September 30, 2020
491,222
$
1,271,715
1,660,000
$
1,660
$
63,771
$
(4,244,920
)
$
(52,452
)
$
925,146
$
(3,306,795
)
The accompanying notes are an integral
part of these consolidated financial statements.
F-
24
Tenon Medical, Inc.
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2021
2020
Cash Flows From Operating Activities
Net loss
$
(4,239,384
)
$
(400,537
)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on investments
(1,379
)
—
Non-cash interest expense
339,699
61,327
Stock-based compensation expense
208,475
12,487
Common stock issued for services
815,476
—
Depreciation and amortization
543
—
Amortization of operating lease right-to-use asset
61,633
—
Increase (decrease) in cash resulting from changes in:
Accounts receivable
(55,657
)
50,571
Inventories
20,859
9,129
Prepaid expenses and other assets
(128,406
)
646
Accounts payable
241,854
48,550
Accrued expenses
168,670
82,904
Operating lease liability
(34,709
)
—
Net cash used in operating activities
(2,602,326
)
(134,923
)
Cash Flows From Investing Activities
Purchases of investments
(7,860,702
)
—
Purchases of fixed assets
(17,713
)
—
Net cash used in investing activities
(7,878,415
)
—
Cash Flows From Financing Activities
Proceeds from issuance of convertible notes payable
12,072,055
105,273
Repayment of notes payable
(130,560
)
—
Debt issuance costs
(70,797
)
—
Deferred offering costs
(222,389
)
—
Net cash provided by financing activities
11,648,309
105,273
Effect of foreign currency translation on cash flow
(4,066
)
3,244
Net Increase (Decrease) in Cash and Cash Equivalents
1,163,502
(26,406
)
Cash and Cash Equivalents at Beginning of Period
245,635
151,968
Cash and Cash Equivalents at End of Period
$
1,409,137
$
125,562
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:
Interest
$
1,245
$
49
Income taxes
$
802
$
1,134
Non-cash investment and financing activities:
Right-of-use assets obtained in exchange for lease liabilities
$
1,195,389
$
—
Conversion of accounts payable to convertible notes payable
$
555,560
$
—
The accompanying notes are an integral
part of these consolidated financial statements.
F-
25
Tenon Medical, Inc.
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
1. Organization and Business
Nature of operations
Tenon Medical, Inc.
("the
Company"), was incorporated in the state of Delaware on June 19, 2012 and was headquartered in San Ramon, California until
June 2021 when it relocated to Los Gatos, California. The Company is a medical device company that has developed a novel posterior
approach to sacroiliac joint fusion for treatment of the most common types of sacroiliac joint disorders that cause lower back
pain. The Company received FDA clearance in 2018 for its primary product, The CATAMARAN System. The Company is in the early stages
of its commercial launch with its primary focus being on the US market.
Basis of consolidation
The consolidated financial statements of
the Company include the accounts of the Company and its majority-owned subsidiary, Tenon Technology AG ("TTAG"), a
Swiss company. All intercompany balances and transactions have been eliminated in consolidation. The subsidiary is consolidated
from the date of formation (October 3, 2012), being the date on which the Company has power to govern the financial and operating
policies of TTAG so as to obtain benefits from its activities, and will continue to be consolidated until the date such control
ceases. The financial statements of the subsidiary are prepared for the same reporting period as the parent, using consistent accounting
policies in all material respects. Ownership interests in TTAG held by parties other than the Company are presented separately
from the Company's stockholders' deficit on the Consolidated Balance Sheets. The amount of consolidated net loss attributable
to the Company and the non-controlling interests are both presented on the face of the Consolidated Statements of Operations.
2. Summary of Significant Accounting Principles
Basis of presentation
The accompanying consolidated financial
statements have been prepared on the accrual basis in accordance with generally accepted accounting principles ("GAAP")
as promulgated in the United States of America.
Unaudited Consolidated Financial Statements
The consolidated balance sheet as of September 30,
2021, and the consolidated statements of operations, convertible preferred stock and stockholders' deficit, and cash flows
for the nine months ended September 30, 2021 and 2020 are unaudited. The unaudited consolidated financial statements have
been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all
adjustments of a normal and recurring nature that are necessary for the fair statement of the Company's financial position
as of September 30, 2021 and the results of operations and cash flows for the nine months ended September 30, 2021 and
2020. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP
have been condensed or omitted. The financial data and the other financial information disclosed in these notes to the consolidated
financial statements related to the nine months ended September 30, 2021 and 2020 are also unaudited. The consolidated results
of operations for the nine months ended September 30, 2021 are not necessarily indicative of results to be expected for the
year ending December 31, 2021 or for any other future annual or interim period. The consolidated balance sheet as of December 31,
2020 included herein was derived from the audited consolidated financial statements as of that date.
F-
26
These interim consolidated financial statements
should be read in conjunction with the Company's audited consolidated financial statements.
Going concern uncertainty and liquidity requirements
These unaudited interim condensed consolidated
financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course of business. There is substantial doubt about
the Company's ability to continue as a going concern for one year after the date that these consolidated financial statements
are issued. These unaudited interim condensed consolidated financial statements do not include any adjustments that might be necessary
from the outcome of this uncertainty.
Since inception, the Company has incurred
losses and negative cash flows from operations. Management expects to incur additional operating losses and negative cash flows
from operations in the foreseeable future as the Company starts the commercial launch of The CATAMARAN System and continues product
development programs. Based on the Company's current level of expenditures and the proceeds from the issuance of convertible
debt during May through July 2021, the Company believes that its existing cash and cash equivalents as of September 30, 2021 will
not provide sufficient funds to enable it to meet its obligations through June 2022.
The Company plans to raise additional capital
by selling shares of capital stock or other equity or debt securities. However, there are no commitments or arrangements for future
financings in place at this time, and the Company can give no assurance that such capital will be available on favorable terms
or at all. The Company may need additional financing thereafter until it can achieve profitability. Although the Company is actively
pursuing an initial public offering ("IPO") and other possible financing opportunities, it may not be able to raise
cash on terms acceptable to the Company or at all. There can be no assurance that the Company will be successful in obtaining additional
funding. Financings, if available, may be on terms that are dilutive to shareholders, and the prices at which new investors would
be willing to purchase the Company's securities may be lower than the current price of ordinary shares. The holders of new
securities may also receive rights, preferences or privileges that are senior to those of existing holders of ordinary shares.
If additional financing is not available or is not available on acceptable terms, the Company
could
be forced to delay, reduce, or eliminate its future commercialization efforts and product development programs, which could adversely
affect its future business prospects and its ability to continue as a going concern.
Use of estimates
The preparation of the consolidated financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates. Significant estimates made by management include, but
are not limited to, realization of deferred tax assets, accrued liabilities, obsolescence of inventory, stock-based compensation
and the fair value of the Company's common stock and preferred stock.
Impact of COVID-19
In March 2020, the World Health Organization
declared the COVID-19 outbreak to be a pandemic. During the nine months ended September 30, 2021 and 2020, the Company's
financial results were not significantly affected by the COVID-19 outbreak. The Company has considered all information available
as of the date of issuance of these consolidated financial statements and the Company is not aware of any specific events or circumstances
that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. These
estimates may change as new events occur and additional information becomes available. The extent to which the COVID-19 outbreak
affects the Company's future financial results and operations will depend on future developments which are highly uncertain
and cannot be predicted, including new information which may emerge concerning the severity of the outbreak, and current or future
domestic and international actions to contain and treat it.
F-
27
Segments
The Company operates in one business
segment. Although the Company's Swiss subsidiary is located in a different geographical area, management uses one measurement
of profitability and does not segregate its business for internal reporting.
Cash and cash equivalents
The Company considers all highly liquid
investments with original maturities of 90 days or less at the date of purchase to be cash equivalents.
Investments
The Company classifies its investments
in marketable debt securities as available-for-sale and records them at fair value in its consolidated balance sheets. The net
unrealized gains and losses are recorded as a separate component of stockholders' equity. Realized gains and losses are recorded
in the consolidated statements of operations and comprehensive loss. Margin loans for which a right of setoff exists are classified
in the consolidated balance sheets as reductions to the investment value. The Company determines any realized gains or losses on
the sale of marketable debt securities on a specific identification method, and records such gains and losses as a component of
other income (expense), net.
Accounts receivable and allowance for
doubtful accounts
Accounts receivable are derived from products
delivered to customers and are stated at their net realizable value. The Company records an allowance for estimated uncollectible
accounts in an amount approximating anticipated losses. Individual uncollectible accounts are written off against the allowance
when collection of the individual accounts appears doubtful. In determining the amount of the allowance, the Company considers
its historical level of credit losses. The Company also makes judgments about the creditworthiness of significant customers based
on ongoing credit evaluations, and the Company assesses current economic trends that might impact the level of credit losses in
the future. The Company's allowances have generally been adequate to cover its actual credit losses. However, since the Company
cannot reliably predict future changes in the financial stability of its customers, it cannot guarantee that its allowances will
continue to be adequate. If actual credit losses are significantly greater than the allowance, the Company would increase its general
and administrative expenses and increase its reported net losses. Conversely, if actual credit losses are significantly less than
the Company's reserve, this would eventually decrease the Company's general and administrative expenses and decrease its
reported net losses. Allowances are recorded primarily on a specific identification basis. As of September 30, 2021 and December
31, 2020, the Company's allowance for doubtful accounts was $0.
Inventory
Inventory is stated at lower of cost or
net realizable value. The Company establishes the inventory basis by determining the cost based on standard costs approximating
the purchase costs on a first-in, first-out basis. The excess and obsolete inventory is estimated based on future
demand and market conditions. Inventory write-downs are charged to cost of goods sold.
As of September 30, 2021 and December 31,
2020, inventory consisted entirely of finished goods.
Deferred offering costs
Deferred offering costs, which consist
of direct incremental legal, consulting, banking and accounting fees relating to the Company's planned IPO, are capitalized,
and will be offset against proceeds from the IPO upon the effectiveness of the offering. In the event an anticipated offering is
terminated, deferred offering costs will be expensed.
Property and equipment
Property and equipment are stated at cost
less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets. Equipment, computers, software, and furniture and fixtures are depreciated over periods ranging from three
to seven years, and leasehold improvements over the shorter period of the lease or the life of the asset. The cost of maintenance
and repairs is charged to expense as incurred; significant renewals and betterments are capitalized. Deductions are made for retirements
resulting from renewals or betterments.
F-
28
Long-lived assets
The Company regularly reviews the carrying
value and estimated lives of all of its long-lived assets, including property and equipment, to determine whether indicators of
impairment may exist that warrant adjustments to carrying values or estimated useful lives. The determinants used for this evaluation
include management's estimate of the asset's ability to generate positive income from operations and positive cash
flow in future periods as well as the strategic significance of the assets to the Company's business objectives.
Fair value measurements
In accordance with Accounting Standards
Codification ("ASC") 820, Fair Value Measurement, fair value is the price that would be received from selling
an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement
date. ASC 820 establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs
and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.
Observable inputs are those that market
participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.
Unobservable inputs reflect the Company's assumptions about the inputs that market participants would use in pricing the
asset or liability based on the best information available in the circumstances.
The fair value hierarchy is categorized
into three levels based on the inputs as follows:
Level 1 – Quoted prices are
available in active markets for identical assets or liabilities as of the reported date.
Level 2 – Pricing inputs are
other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature
of these financial instruments include cash instruments for which quoted prices are available but are traded less frequently, derivative
instruments whose fair values have been derived using a model where inputs to the model are directly observable in the market and
instruments that are fair valued using other financial instruments, the parameters of which can be directly observed.
Level 3 – Instruments that have
little to no pricing observability as of the measurement date. These financial instruments are measured using management's
best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
The degree of judgment exercised by the
Company in determining fair value is greatest for assets categorized in Level 3. In certain cases, the inputs used to measure fair
value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair
value hierarchy within which the fair value measurement falls in its entirety is determined by the lowest level input that is significant
to the fair value measurement.
Convertible preferred stock
The Company records convertible preferred
stock at fair value on the dates of issuance, net of issuance costs. Convertible preferred stock is recorded as temporary stockholders'
equity.
F-
29
Income taxes
For the nine months ended September 30,
2021 and 2020 income taxes are recorded in accordance with Financial Accounting Standards Board ("FASB") ASC Topic
740, Income Taxes ("ASC 740"), which provides for deferred taxes using an asset and liability approach. Under this
method, the Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences
between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to
be in effect when the differences are expected to reverse. Valuation allowances are provided when necessary to reduce net deferred
tax assets to the amount that is more likely than not to be realized. Based on the available evidence, the Company is unable, at
this time, to support the determination that it is more likely than not that its deferred tax assets will be utilized in the future.
Accordingly, the Company recorded a full valuation allowance as of September 30, 2021 and December 31, 2020. The Company intends
to maintain valuation allowances until sufficient evidence exists to support its reversal.
Current income taxes are based upon the
year's income taxable for federal, state and foreign tax reporting purposes. Deferred income taxes are provided for certain income
and expenses, which are recognized in different periods for tax and financial reporting purposes.
The Company's policy is not to record deferred
income taxes on the undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations.
Revenue recognition
The Company's revenue is derived
from the sale of its products to medical groups and hospitals through its independent sales representative and national distributor
in Florida and Texas.
In accordance with Accounting Standards
Codification 606,
Revenue from Contracts with Customers
("ASC 606"), which the Company adopted effective January 1,
2019, revenue is recognized when control is transferred to the customer, in an amount that reflects the consideration the Company
expects to be entitled to in exchange for the goods or services. The Company had no contracts with customers prior to the date
of adoption. Under ASC 606, the Company applies the following five step approach: (1) identify the contract with a customer, (2)
identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to
the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.
The Company generates its revenue from
the sale of products through an independent sales representative and national distributor to certain hospital or medical facilities
where the products are delivered in advance of a procedure. The performance obligation is the delivery of the products along with
the completion of the surgery by the surgeon and therefore, revenue is recognized upon delivery to the customers and completion
of the surgery, net of rebates and price discounts. The Company accounts for rebates and price discounts as a reduction to revenue,
calculated based on the terms agreed to with the customer. Historically, there has been no significant rebates or price discounts.
Sales prices are specified in either the customer contract, agreed price list, or purchase order, which is executed prior to the
transfer of control to the customer. As of April 2020, the Company had an agreement in place with a national distributor, which
includes standard terms that do not allow for payment contingent on resale of the product, obtaining financing, or other terms
that could impact the distributor's payment obligation. From April 2020 through May 20, 2021, the distributor billed and
collected from the enduser customer, was required to pay the Company on the 5
th
day of the calendar month after the
customer paid the distributor, and the Company recognized revenue based on the net amount received from the distributor. Prior
to April 2020 and subsequent to May 20, 2021, the Company billed and collected directly from the enduser customers and recognized
revenue based on the gross sales price. For direct sales to enduser customers, the Company's standard payment terms are generally
net 30 days.
The Company offers its standard warranty
to all customers. The Company does not sell any warranties on a standalone basis. The Company's warranty provides that its
products are free of material defects and conform to specifications, and includes an offer to replace or refund the purchase price
of defective products. This assurance does not constitute a service and is not considered a separate performance obligation. The
Company estimates warranty liabilities at the time of revenue recognition and records it as a charge to cost of goods sold.
Contract modifications generally do not
occur during the performance of the Company's contracts. Payments received prior to satisfying the revenue recognition criteria
are recorded as deferred revenue on the consolidated balance sheets. As of September 30, 2021 and December 31, 2020, there were
no remaining performance obligations that would give rise to deferred revenue.
F-
30
Costs associated with product sales include
commissions and are recorded in sales and marketing expenses during the same period as the corresponding revenues.
Research and development
The Company engages in improving existing
products and new product development efforts. Research and development expenses relating to these efforts are expensed as incurred.
Leases
In February 2016, the FASB issued ASC 842,
"
Leases
". This standard requires lessees to present right-of-use ("ROU") assets and lease liabilities
on the balance sheet. The new guidance is to be applied using a modified retrospective approach at the beginning of the earliest
comparative periods in the financial statements and is effective for fiscal years beginning after December 15, 2021 and early adoption
is permitted. The Company early adopted ASC 842 on January 1, 2021 and implemented this guidance upon the inception of its new
Los Gatos facility lease in June 2021.
The Company had no lease agreements during
the nine months ended September 30, 2020.
Stock-based compensation
The Company accounts for its stock-based
compensation in accordance with ASC 718,
Compensation - Stock Compensation
. The Company accounts for all stock-based
compensation awards using a fair-value method on the grant date and recognizes the fair value of each award as an expense over
the requisite service period.
In June 2018, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-07,
Improvements to Non-employee
Share-Based Payment Accounting
. ASU 2018-07 expands the scope of ASC 718 to include share-based payments issued to non-employees
for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially
aligned. ASU 2018-07 supersedes Subtopic 505-50,
Equity-Based Payments to Non-Employees
. The Company
adopted this standard effective for the year ended December 31, 2019, and the adoption did not have any material impact on the
Company's consolidated financial statements.
Foreign currency translation and other
comprehensive income
The functional currency of Tenon Technology
AG is the Swiss franc. Accordingly, TTAG's assets and liabilities are translated from their respective functional currency
into U.S. Dollars at period-end rates, and TTAG's revenue and expenses are translated at the weighted-average exchange rate
for the period. Adjustments resulting from this translation process are classified as other comprehensive income or loss and shown
as a separate component of equity.
When intercompany foreign currency transactions
between entities included in the consolidated financial statements are of a long-term investment nature (i.e., those for which
settlement is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those
transactions are included in stockholders' equity (deficit) as accumulated other comprehensive loss or income. When intercompany
transactions are deemed to be of a short-term nature, translation adjustments are required to be included in the consolidated statements
of operations. The Company has determined that settlement of TTAG's intercompany balances are not anticipated in the foreseeable
future, and therefore such translation adjustments are included in stockholders' deficit as accumulated other comprehensive
income.
Net loss per share
Basic net loss per share is based upon
the weighted-average number of common shares outstanding. Diluted net loss per share is based on the assumption that all potential
common stock equivalents (convertible preferred stock, stock options, and warrants) are converted or exercised. The calculation
of diluted net loss per share excludes potential common stock equivalents if the effect is anti-dilutive. The Company's weighted-average
common shares outstanding for basic and diluted are the same because the effect of the potential common stock equivalents is anti-dilutive.
F-
31
The Company had the following dilutive
common stock equivalents as of September 30, 2021 and 2020 which were excluded from the calculation because their effect was
anti-dilutive.
September 30,
September 30,
2021
2020
Common shares convertible from preferred stock
491,222
491,222
Common shares convertible from minority interest
1,798,905
1,493,764
Common shares convertible from notes payable
5,046,502
152,269
Outstanding warrants
50,000
—
Outstanding stock options
1,415,783
181,979
Total
8,802,412
2,319,234
Recent accounting standards not yet
adopted
In August 2020, the FASB issued ASU 2020-6,
Debt—Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity
("ASU 2020-6"),
which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash
conversion feature and (2) convertible instruments with a beneficial conversion feature. Upon adoption, a convertible debt instrument
will be accounted for as a single liability at amortized cost unless (a) the convertible instrument contains features that require
bifurcation as a derivative under ASC 815,
Derivatives and Hedging
, or (b) the convertible debt instrument was issued
at a substantial premium. These changes will reduce reported interest expense and increase reported net income for entities that
have issued a convertible instrument that was bifurcated according to previously existing rules. ASU 2020-6 also requires the application
of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available.
The new guidance is effective for public entities excluding smaller reporting companies in fiscal years beginning after December
15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. For public business entities
that meet the definition of a smaller reporting company, the amendments in ASU 2020-6 are effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2023. ASU 2020-6 is effective for the Company in the first quarter
of fiscal 2024. The Company is currently evaluating the impact of adoption of ASU 2020-6 on its consolidated financial statements.
3. Investments
The following table sets forth by level,
within the fair value hierarchy, the Company's investments at fair value as of September 30, 2021:
Level 1
Corporate debt securities
$
7,862,236
Cost and fair value of available-for-sale
investments as of September 30, 2021 are as follows:
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Corporate debt securities
$
7,862,081
307
(152
)
$
7,862,236
The following table presents fair values
and gross unrealized losses recorded to accumulated other comprehensive income as of September 30, 2021, aggregated by investment
category and the length of time that individual securities have been in a continuous loss position:
Less Than
12 Months
Unrealized
Losses
Corporate debt securities
$
1,506,180
$
(152
)
During the nine months ended September
30, 2021, the Company did not recognize any significant other-than-temporary impairment losses because the Company does not intend
to sell the investments before recovery of their amortized cost bases.
During the nine months ended September
30, 2021, there was a net gain of approximately $1,000 included in the Company's net loss. Accrued interest as of September
30, 2021 was approximately $4,000 and is included in prepaid expenses in the Company's consolidated balance sheet.
Bonds mature from October 2021 to March
2022 and earn interest between 0.11% and 0.17% per annum.
F-
32
4. Accrued Expenses
Accrued expenses consisted of the following:
September 30,
December 31,
2021
2020
Accrued compensation
$
649,808
$
582,906
Accrued professional fees
159,057
—
Accrued commissions
21,360
32,328
Other accrued expenses
—
48,423
Total accrued expenses
$
830,225
$
663,657
5. Debt
During 2015, the Company issued a $53,447
convertible promissory note to a consultant that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. In June 2019, the note and its accrued interest to date was replaced by a $68,359 convertible
promissory note that, along with accrued interest at an annual rate of 8.0%, was automatically convertible upon a preferred stock
financing of at least $1,000,000, at a conversion price equal to 90% of the price per share paid by the other cash purchasers in
the future financing. The note had a maturity date of June 12, 2021. In May 2021, the note was again replaced by a $68,359 convertible
promissory note with a maturity date of May 7, 2022 that, along with accrued interest at an annual rate of 8.0%, is automatically
convertible upon an Initial Public Offering ("IPO") or a capital stock financing of at least $5,000,000. The conversion
price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000. Since
the conversion is contingent upon an event outside the Company's control, the beneficial conversion feature will be recorded
once the contingency is met. Accrued interest at September 30, 2021 and December 31, 2020 totaled approximately $13,000 and $8,000,
respectively.
F-
33
During 2016, the Company issued a $117,530
convertible promissory note to a vendor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 90% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of January 1, 2019 and remained unpaid during 2019 and 2020.
In April 2021, the note was replaced by a $117,530 convertible promissory note with a maturity date of April 30, 2022 that, along
with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least
$5,000,000. The conversion price is equal to 80% of the IPO price or $1.9565 per share in the event of a capital stock financing
of at least $5,000,000. Since the conversion is contingent upon an event outside the Company's control, the beneficial conversion
feature will be recorded once the contingency is met. Accrued interest at September 30, 2021 and December 31, 2020 totaled approximately
$54,000 and $47,000, respectively.
In April 2021, the Company issued two convertible
promissory notes of $40,000 and $170,000 to the same vendor, along with accrued interest at an annual rate of 8.0%, are automatically
convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion price is equal to 70% of the IPO price
or 70% of the price per share paid by the other cash purchasers in the future financing. Since the conversion is contingent upon
an event outside the Company's control, the beneficial conversion feature will be recorded once the contingency is met. Accrued
interest for these two notes at September 30, 2021 totaled approximately $7,000.
In October 2019, the Company issued a $70,000
convertible promissory note to the Company's then Chief Executive Officer that, along with accrued interest at an annual
rate of 8.0%, was automatically convertible upon a preferred stock financing of at least $500,000, at a conversion price equal
to 80% of the price per share paid by the other cash purchasers in the future financing. The note had a maturity date of October
12, 2022. In April 2021, the note was replaced by a $70,000 convertible promissory note with a maturity date of April 30, 2022
that, along with accrued interest at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing
of at least $5,000,000. The conversion price is equal to 70% of the IPO price or $1.9565 per share in the event of a capital stock
financing of at least $5,000,000. Since the conversion is contingent upon an event outside the Company's control, the beneficial
conversion feature will be recorded once the contingency is met. Accrued interest at September 30, 2021 and December 31, 2020 totaled
approximately $11,000 and $7,000, respectively.
In October 2019, the Company issued a $50,000
convertible promissory note to an investor that, along with accrued interest at an annual rate of 8.0%, was automatically convertible
upon a preferred stock financing of at least $500,000, at a conversion price equal to 80% of the price per share paid by the other
cash purchasers in the future financing. The note had a maturity date of October 21, 2022. In May 2021, the note was replaced by
a $50,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest at an annual rate of
8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion price is equal
to 70% of the IPO price or $1.9565 per share in the event of a capital stock financing of at least $5,000,000. Since the conversion
is contingent upon an event outside the Company's control, the beneficial conversion feature will be recorded once the contingency
is met. Accrued interest at September 30, 2021 and December 31, 2020 totaled approximately $8,000 and $5,000, respectively.
In November 2020, the Company issued a
$200,000 convertible promissory note to the same investor that, along with accrued interest at an annual rate of 8.0%, was automatically
convertible upon a preferred stock financing of at least $2,000,000, at a conversion price equal to 80% of the price per share
paid by the other cash purchasers in the future financing. The note had a maturity date of November 16, 2022. In May 2021, the
note was replaced by a $200,000 convertible promissory note with a maturity date of May 3, 2022 that, along with accrued interest
at an annual rate of 8.0%, is automatically convertible upon an IPO or a capital stock financing of at least $5,000,000. The conversion
price is equal to 70% of the IPO price or 70% of the price per share paid by the other cash purchasers in the future financing.
Since the conversion is contingent upon an event outside the Company's control, the beneficial conversion feature will be
recorded once the contingency is met. Accrued interest at September 30, 2021 and December 31, 2020 totaled approximately $14,000
and $2,000, respectively.
F-
34
In January 2021, the Company issued a promissory
note of $130,560 to a law firm. The note bore interest at 3.0% per annum and had a maturity date of the earlier of July 27, 2021,
the closing of a debt or equity financing, or the closing of a change in control transaction. The interest rate was to increase
to 5.0% if all principal and interest had not been paid by the maturity date. The Company repaid this note and accrued interest
in May 2021.
During 2018, the Company's subsidiary
issued two convertible promissory notes for an aggregate of $305,084 to TTAG's minority shareholder. In September 2019 and
June 2020, the Company's subsidiary issued additional convertible promissory notes to the same minority shareholder for $201,309
and $106,620, respectively. These notes, along with accrued interest at an annual rate of 10.0%, could be applied to future TTAG
capital increases. Accrued interest on these notes totaled approximately $63,000 at December 31, 2019. In November 2020, notes
payable and accrued interest totaling $784,895 were converted into TTAG Series A preferred stock shares, which increased the minority
shareholder's ownership percentage from 39.2% to 43.8%. In connection with the conversion of the notes, the Company recorded
a beneficial conversion feature of $88,238.
In June 2021, the Company's subsidiary
issued a convertible promissory note for approximately $107,000 to TTAG's minority shareholder. The note is due upon the
earlier of a capital increase or December 31, 2021. This note, along with accrued interest at an annual rate of 8.0%, can be applied
to future TTAG capital increases. Accrued interest at September 30, 2021 totaled approximately $3,000. The Company repaid this
note and accrued interest in October 2021 (Note 12).
From May through July 2021, in multiple
rounds of closings the Company issued convertible promissory notes to multiple investors for aggregate proceeds of approximately
$12,177,000, with maturity dates twelve months from the issuance dates. Of this amount, $620,000 of notes were issued to related
officers, directors, and their family members, and a $50,000 note was issued to the CEO of the Representative described in Note
8. The notes, along with accrued interest at an annual rate of 8.0%, are automatically convertible upon an IPO, a capital stock
financing of at least $5,000,000, or a change of control transaction. The conversion price upon an IPO or a capital stock financing
is equal to the lesser of 70% of the price per share paid by the other cash purchasers, or the price per share at a Company valuation
of $22,500,000. Upon a change of control, noteholders will receive the greater of a 100% premium on the outstanding principal,
plus accrued interest, or the conversion of the principal and accrued interest into common stock at a Company valuation of $22,500,000.
Since the conversion is contingent upon an event outside the Company's control, the beneficial conversion feature will be
recorded once the contingency is met. The Company recorded debt issuance costs of approximately $71,000 as a discount on the convertible
notes payable balance. As of September 30, 2021, there was a remaining unamortized discount of approximately $50,000. Accrued interest
at September 30, 2021 totaled approximately $279,000.
6. Leases
In June 2021, the Company entered into
a facility lease agreement for its company headquarters in Los Gatos, California. This non-cancelable operating lease expires
in June 2026. The Company includes options that are reasonably certain to be exercised as part of the determination of lease terms.
The Company may negotiate termination clauses in anticipation of any changes in market conditions, but generally these termination
options are not exercised. Residual value guarantees are generally not included within operating leases. In addition to base rent
payments, leases may require the Company to pay directly for taxes and other non-lease components, such as insurance,
maintenance and other operating expenses, which may be dependent on usage or vary month-to-month.  Non lease components
were considered and determined not to be material. The Company determined if an arrangement is a lease at inception of the contract
in accordance with guidance detailed in the new standard and performed the lease classification test as of the lease commencement
date. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent
the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the
lease's commencement date based on the present value of lease payments over the lease term. When a lease did not provide
an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at the commencement
date in determining the present value of future payments.
F-
35
Operating lease costs for the facility
lease during the nine months ended September 30, 2021 were approximately $85,000, and were included in general and administrative
expenses in the consolidated statements of operations and comprehensive loss.
Supplemental balance sheet information
related to leases was as follows:
September 30,
December 31,
2021
2020
Operating lease right-of-use assets
$
1,133,756
$
—
Operating lease liability, current
$
(213,741
)
$
—
Operating lease liability, noncurrent
(946,939
)
—
Total operating lease liabilities
$
(1,160,680
)
$
—
Future maturities of operating lease liabilities
as of September 30, 2021 were as follows:
Three months ending December 31, 2021
$
69,969
2022
284,076
2023
292,596
2024
301,368
2025
310,410
2026
144,375
Total lease payments
1,402,794
Less: imputed interest
(242,114
)
Present value of operating lease liabilities
$
1,160,680
Other information:
Cash paid for amounts included in the measurement of lease liabilities for the nine months ended September 30, 2021
$
58,308
Remaining lease term - operating leases (in years)
4.71
Average discount rate - operating leases
8.0
%
7. Stockholders' Equity
The Amended and Restated Certificate of Incorporation
dated April 30, 2021, authorizes the issuance of 7,000,000 shares of common stock and 2,460,802 shares of preferred stock, with
a par value of $0.001 per share. The Company increased the number of authorized shares in October 2021 (Note 12).
Preferred Stock
Shares of the Company's Series A
Convertible Preferred Stock have been set aside for the potential conversion of TTAG Series A shares owned by its minority shareholder.
See Note 12 for a description of this conversion.
In a series of closings from 2012 through
2015, the Company issued an aggregate of 491,222 shares of Series B Convertible Preferred Stock at $2.795 per share for proceeds
of $1,271,715, net of stock issuance costs.
The Company classifies the convertible
preferred stock outside of total stockholders' deficit because, in the event of certain deemed liquidation events that are
not solely within the control of the Company, the shares would become redeemable at the option of the holders. The Company did
not adjust the carrying values of the convertible preferred stock to the deemed liquidation values of such shares since a liquidation
event was not probable of occurring at December 31, 2020. Subsequent adjustments to increase or decrease the carrying values
to the ultimate liquidation values will be made only if, and when, it becomes probable that such a liquidation event will occur.
F-
36
Conversion
At the option of the holder, shares of
Series A and Series B Preferred Stock are convertible into Common Stock at a conversion rate of one-to-one, subject to adjustments
for stock dividends, splits, combinations and similar events. Automatic conversion will occur in the event of a firmly underwritten
public offering of Common Stock of the Company at a price of at least $6.00 per share, subject to appropriate adjustments for stock
dividends, splits, combination and similar events, and with total gross proceeds to the Company of at least $25,000,000, before
deduction of underwriters' commissions and expenses.
Redemption
The shares of the Series A and Series B
Preferred Stock are redeemable only upon acquisition or liquidation of the Company.
Liquidation preference
With respect to any distributions in connection
with a liquidation, dissolution or winding up of the Company, or in connection with the sale of voting control of all or substantially
all of the assets of the Company, by way of merger, acquisition, consolidation or similar transaction, prior to any distribution
to Common Stockholders, the holders of Series A and Series B Preferred Stock are entitled to receive $0.853 and $2.795 per share,
respectively, plus any declared but unpaid dividends, adjusted to reflect any dividends previously paid. If, upon the occurrence
of such event, the assets and funds distributed among the holders of Series A and Series B Preferred Stock shall be insufficient
to permit the payment to such holders of the full liquidation preference amounts, the entire assets and funds of the Company legally
available shall be distributed ratably among the preferred stockholders in proportion to the preferential amount to which each
holder is entitled.
After payment of the liquidation preferences,
the holders of Common Stock are entitled to receive the remaining assets of the Company available for distribution to its stockholders
pro rata based on the number of shares of Common Stock held by each holder.
Voting rights
The holders of vested shares of Common
Stock shall be entitled to vote on any matter submitted to a vote of the stockholders and each such holder shall be entitled to
one vote per share of Common Stock held. The holders of Series A and Series B Preferred Stock shall be entitled to vote together
with the Common Stock as a single class on any matter submitted to a vote of the stockholders. Holders of Series A and Series B
Preferred Stock shall be entitled to the number of votes equal to the number of Common Stock issuable upon conversion of their
respective Series A and Series B Preferred Stock at the time such shares are voted. The holders of a majority of the preferred
Stock have additional voting rights as specified in the Company's Amended and Restated Certificate of Incorporation.
Common stock
The Company has reserved shares of common
stock for the following potential future issuances.
September 30,
December 31,
2021
2020
Common shares convertible from preferred stock
491,222
491,222
Common shares convertible from minority interest
1,798,905
1,798,905
Outstanding warrants
50,000
50,000
Outstanding stock options
1,415,783
181,979
Shares available for future equity award grants
59,248
191,731
Total
3,815,158
2,713,837
F-
37
Equity awards
In 2012, the Board of Directors of the
Company approved the Tenon Medical, Inc. 2012 Equity Incentive Plan (the "Plan"). The Plan, as amended in August 2021,
provides for the issuance of Common Stock options, appreciation rights, and other awards to employees, directors, and consultants.
The number of shares that may be issued under the Plan may not exceed 1,598,531 shares. Options issued under the Plan generally
vest over a four-year period with cliff vesting for the first year and have a 10-year expiration date.
In August 2021, the Company's Board
of Directors approved the form of the 2021 Equity Incentive Plan. The 2021 Equity Incentive Plan will be adopted and become effective
as of the business day immediately prior to the registration date of the S-1 and in connection with the Company's IPO.
The Company adopted the fair value recognition
provisions in accordance with authoritative guidance related to equity-based payments. Compensation expense during the nine month
periods ended September 30, 2021 and 2020 includes the portion of awards vested in the periods for all equity-based awards granted,
based on the grant date fair value estimated using a Black-Scholes option valuation model, consistent with authoritative guidance,
using the weighted-average assumptions in the table below:
Nine months ended
September 30,
2021
2020
Expected volatility
52.36
%
N/A
Dividend yield
0
%
N/A
Risk-free interest rate
0.99
%
N/A
Expected term in years
5.75
N/A
Expected
Volatility
- The expected volatility is based on a peer group in the industry in which the
Company does business.
Dividend
Yield
- The Company has not, and does not, intend to pay dividends.
Risk-free
Interest Rate
- The Company applies the risk-free interest rate based on the U.S. Treasury
yield in effect at the time of the grant consistent with the expected term of the award.
Expected
Term in Years
- The Company calculated the expected term using the Simplified Method. This
method uses the average of the contractual term of the option and the weighted-average vesting period in accordance with authoritative
guidance.
Forfeitures
– The Company accounts for forfeitures as they occur.
Estimates
of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity
awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company
in accordance with authoritative guidance.
A
summary of the Company's share option activity for the nine months ended September 30, 2021 is as follows:
Number
of Shares
Weighted Average
Exercise Price
Intrinsic Value
Options outstanding at December 31, 2020
181,979
$
0.31
Granted
1,273,804
$
2.95
Forfeited
(40,000
)
$
2.60
Options outstanding at September 30, 2021
1,415,783
$
2.63
$
1,592,732
Options vested and exercisable at September 30, 2021
324,501
$
1.55
$
715,341
F-
38
Additional information
regarding options outstanding as of September 30, 2021 is as follows:
Exercise Price
Number
Outstanding
Weighted-Average
Remaining
Contractual Life in
Years
Number
Exercisable
Weighted-Average
Remaining
Contractual Life in
Years
$
0.31
181,979
4.18
160,460
3.67
$
2.60
747,595
9.58
136,849
9.58
$
3.53
486,209
9.80
27,192
9.80
1,415,783
8.96
324,501
6.68
The intrinsic value for options exercised
represents the difference between the estimate of fair value based on the valuation of the shares on the date of exercise and the
exercise price of the share option.
The following table sets forth stock-based
compensation expense recognized for the nine months ended September 30, 2021 and 2020:
Nine months ended
September 30,
2021
2020
Research and development
$
35,671
$
—
Sales and marketing
18,425
12,487
General and administrative
154,379
—
Total stock-based compensation expense
$
208,475
$
12,487
As of September 30, 2021, there was approximately
$1,620,000 of total unrecognized compensation expense related to unvested share-based compensation arrangements granted under the
Plan. The cost is expected to be recognized over a weighted-average period of 2.67 years.
The weighted-average fair value of grant
date awards granted during the nine months ended September 30, 2021 was $1.43 per share. There were 59,248 stock option shares
available to be issued at September 30, 2021.
Common stock issued for
services
During May 2021, the
Company issued 107,513 shares of common stock to the Representative described in Note 8, for which the Company recorded sales and
marketing expense of approximately $379,000.
During August
2021, the Company issued an aggregate of 123,500 shares of restricted common stock to several individuals under the 2012 Equity
Incentive Plan. The shares were 100% vested at the grant date. In connection with the issuance of these restricted common stock
shares, the Company recorded sales and marketing expense totaling approximately $436,000 during the nine months ended September
30, 2021.
Warrants
During 2020, the Company issued warrants
to purchase 50,000 shares of common stock to a consultant. The warrants are immediately exercisable at an exercise price of $2.60
per share. The fair value of the warrants on the grant date was $1.15 per warrant, which was calculated based on the following
weighted-average assumptions, using a Black-Scholes option valuation model: expected term of 5.00 years; expected volatility of
51.88%; dividend yield of 0%, and risk-free interest rate of 0.30%. The Company recorded deferred offering costs of approximately
$58,000 associated with these warrants during 2020.
8. Commitments and Contingencies
Sales Representative Agreement
F-
39
In April 2020 the Company entered into
an Exclusive Sales Representative Agreement, under which the counterparty to the agreement (the "Representative") received
exclusive rights to market, promote, and distribute The CATAMARAN System in the United States and Puerto Rico. The agreement is
for an initial period of five years, and automatically renews for an additional five years unless written notice is given by either
party prior to April 27, 2023. The agreement provided for a bonus to be paid to the Representative upon an acquisition or IPO.
In May 2021, the Company entered into an
Amended and Restated Exclusive Sales Representative Agreement, which revised certain terms and conditions in the Exclusive Sales
Representative Agreement. In connection with the amendment agreement, the Company paid $500,000 cash and issued 107,513 shares
of common stock to the Representative, for which the Company recorded a combined total of approximately $880,000 as sales and marketing
expense during the nine months ended September 30, 2021. In addition, the Representative received anti-dilution protections to
maintain ownership of 3.0% of the fully diluted equity of the Company through the date of an initial public offering. The amended
agreement restructured the calculation of the bonus paid to the Representative upon an acquisition, removed the bonus payable upon
an IPO, and allows the Company to terminate the amended agreement as long as the bonus paid to the Representative is at least $6,000,000.
F-
40
In June 2021 the Company issued a $50,000
convertible note payable to the CEO of the Representative, as part of the convertible debt offering described in Note 5.
Litigation
In the normal course of business, the Company
may possibly be named as a defendant in various lawsuits. As described in Note 11, in September 2021 the former Chief Executive
Officer of the Company filed an arbitration claim against the Company.
9. Concentrations
Credit risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.
The Company maintains cash balances at
financial institutions located in California and Switzerland. Accounts at the U.S. financial institutions are secured by the Federal
Deposit Insurance Corporation. At times, balances may exceed federally insured limits. The Company has not experienced any losses
in such accounts. Management believes that the Company is not exposed to any significant credit risk with respect to its cash and
cash equivalents.
The Company grants unsecured credit to
its customers based on an evaluation of the customer's financial condition and a cash deposit is generally not required.
Management believes its credit policies do not result in significant adverse risk and historically has not experienced significant
credit-related losses.
Currency risk
The Company's subsidiary, Tenon Technology
AG, realizes a portion of its expenses in Swiss francs. Consequently, certain assets and liabilities are exposed to foreign currency
fluctuations. At September 30, 2021 and December 31, 2020, approximately $90,000 and $64,000, respectively, of the Company's net
monetary assets were denominated in Swiss francs. The Company has not entered into any hedging transactions to reduce the exposure
to currency risk.
10. Income Taxes
The Company has operations in both
the United States and Switzerland, as such it is subject to tax in both countries. The income tax expense for the
nine months ended September 30, 2021 and 2020 was approximately $1,000 and $1,000 respectively. As of
September 30, 2021, the Company had no material uncertain tax positions.
The Company files income tax returns in
the US federal, certain state, and Switzerland with varying statutes of limitations. The Company is not currently subject to tax
examinations by any taxing jurisdiction. However, in the event of any such examination of its tax years 2021 and 2020, there
may or may not be an impact on the Company's net operating loss carryforwards and credits. The Company does not anticipate
that any potential tax adjustments resulting from such examinations will have a significant impact on its financial position or
results of operations.
On March 27, 2020, the Coronavirus Aid,
Relief, and Economic Security Act (the "CARES Act") was enacted and signed into law in response to the market volatility
and instability resulting from the COVID-19 pandemic. It includes a significant number of tax provisions and lifts certain deduction
limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the "2017 Act"). The changes are mainly related
to: (1) the business interest expense disallowance rules for 2019 and 2020; (2) net operating loss rules; (3) charitable contribution
limitations; (4) employee retention credit; and (5) the realization of corporate alternative minimum tax credits. The Company does
not anticipate the application of the CARES Act provisions to materially impact the overall consolidated financial statements.
F-
41
11. Related Party Transactions
During 2019 the Company issued a convertible
note payable to the then Chief Executive Officer of the Company. See Note 5.
During 2018 through 2020, the Company's
subsidiary issued convertible promissory notes to TTAG's minority shareholder. In November 2020, all of the outstanding notes
payable and accrued interest were converted into TTAG shares. In June 2021, the Company's subsidiary issued an additional
convertible promissory note to the same minority shareholder. See Note 5.
The Company had a consulting agreement
with a company owned by the former Chief Executive Officer of the Company. Under this consulting agreement, the Chief Executive
was to provide services from 2015 through June 1, 2021. Total payments under the consulting agreement of $600,000 are to be paid
as follows: (a) $300,000 paid upon closing of financing round of at least $5,000,000, followed by twelve monthly payments of $25,000
per month; (b) $300,000 paid upon achieving at least $3,000,000 of annual revenue and a financing round of less than $5,000,000;
or (c) the entire $600,000 payable immediately upon an acquisition of the Company. During the nine months ended September 30, 2021
and 2020 the Company recorded consulting expense of approximately $42,000 and $75,000, respectively. As of September 30, 2021 and
December 31, 2020, approximately $600,000 and $558,000 owed to this party was included in accrued expenses in respect of these
services. The consulting agreement expired on June 1, 2021 at which time the consultant resigned as Chief Executive Officer. In
September 2021, the former Chief Executive Officer of the Company filed an arbitration claim against the Company for approximately
$3,346,000 plus attorneys' fees and other costs with the American Arbitration Association in the State of California for
unpaid wages and other claims.  An arbitrator has been appointed and the Company anticipates that
a preliminary hearing to set a schedule will take place within the next 30 days. While the Company is unable to provide any assurances as to the ultimate outcome of this matter, it believes the claim for
additional compensation is without merit, and intends to vigorously defend against it. The Company is currently unable to estimate
the costs and timing of the arbitration, including any potential damages if the other party were to prevail on its claim. No additional
amounts relating to this matter have been recorded in the consolidated financial statements as of the date these financial statements
were made available for issuance.
During May and June 2021, $620,000 of the
convertible notes described in Note 5 were issued to related officers, directors, and their family members.
12. Subsequent Events
The Company has evaluated subsequent events
through November 9, 2021, the date which the consolidated financial statements were available to be issued.
In October 2021, the Company's Board
of Directors increased the number of authorized shares of the Company to 13,784,965, consisting of 10,487,904 shares of common
stock and 3,297,061 shares of preferred stock; increased the number of designated shares of Series A preferred
stock to 2,805,839; and decreased the number of designated shares of Series B preferred stock to 491,222.
On October 28, 2021, the Company entered into
an Agreement (the "Exchange Agreement") with TTAG's minority shareholder. Pursuant to the Exchange Agreement,
TTAG's minority shareholder agreed to exchange 574,033 shares of Series A Preferred Stock issued by TTAG, representing all
of its ownership interest in TTAG for Tenon Series A Preferred Stock, representing 24% ownership interest in the Company on a fully
diluted basis. Pursuant to the terms of the Exchange Agreement, the Company has issued TTAG's minority shareholder 2,550,763
shares of Tenon Series A Preferred Stock. These shares are subject to anti-dilution protection that maintains TTAG's minority
shareholder's 24% ownership interest in the Company, excluding any shares issued by the Company in an initial public offering
or a qualified offering of at least $5,000,000 at a per share price of at least $3.3737. The anti-dilution protection terminates
upon the earlier of (i) the closing of an initial public offering; (ii) the conversion of the $12,177,000 convertible promissory
notes described in Note 5; (iii) the repayment of the $12,177,000 convertible promissory notes described in Note 5, in the case
of a change in control of the Company; or (iv) the liquidation of the Company.
During October 2021 and pursuant to the terms
of the Exchange Agreement, the Company repaid the convertible promissory note issued by TTAG and due to TTAG's minority shareholder
described in Note 5 in full in the amount of $114,000, including accrued interest.
During October 2021, the Company issued 88,894
shares of common stock to the Representative described in Note 8 pursuant to the Representative's anti-dilution protections.
F-
42
Through
and including, [*], 2021, (the 25th day after the date of this prospectus), all dealers effecting transactions in the Common Stock,
whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition
to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or
subscription.
[*] Shares
PROSPECTUS
The Benchmark Company
Part II
INFORMATION NOT
REQUIRED IN PROSPECTUS
Item 13. Other
Expenses of Issuance and Distribution.
The
following table indicates the expenses to be incurred in connection with the offering described in this registration statement,
other than underwriting discounts and commissions, all of which will be paid by us. All amounts are estimated except the Securities
and Exchange Commission registration fee and the Financial Industry Regulatory Authority, Inc., or FINRA filing.
Amount
Securities and Exchange Commission registration fee
$
[*]
FINRA filing fee
[*]
NASDAQ listing fee
[*]
Accountants' fees and expenses
[*]
Legal fees and expenses
[*]
Printing and engraving expenses
[*]
Miscellaneous
[*]
Total expenses
$
[*]
Item 14. Indemnification
of Directors and Officers.
Section
102 of the General Company Law of the State of Delaware ("DGCL") permits a Company to eliminate the personal liability
of directors of a Company to the Company or its stockholders for monetary damages for a breach of fiduciary duty as a director,
except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly
violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained
an improper personal benefit. Our charter, as amended provides that no director of the Company shall be personally liable to it
or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing
such liability, except to the extent that the DGCL prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty.
Section
145 of the DGCL provides that a Company has the power to indemnify a director, officer, employee, or agent of the Company, or a
person serving at the request of the Company for another Company, partnership, joint venture, trust or other enterprise in related
capacities against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with an action, suit or proceeding to which he was or is a party or is threatened to be made
a party to any threatened, ending or completed action, suit or proceeding by reason of such position, if such person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, in any criminal
action or proceeding, had no reasonable cause to believe his conduct was unlawful, except that, in the case of actions brought
by or in the right of the Company, no indemnification shall be made with respect to any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery or other adjudicating
court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
Our charter, as amended
provides that we will indemnify to the fullest extent permitted from time to time by the DGCL or any other applicable laws as presently
or hereafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative, including, without limitation, an action
by or in the right of the Company, by reason of his acting as a director or officer of the Company or any of its subsidiaries (and
the Company, in the discretion of the Board of Directors, may so indemnify a person by reason of the fact that he is or was an
employee or agent of the Company or any of its subsidiaries or is or was serving at the request of the Company in any other capacity
for or on behalf of the Company) against any liability or expense actually and reasonably incurred by such person in respect thereof;
provided
,
however
, the Company shall be required to indemnify an officer
or director in connection with an action, suit or proceeding (or part thereof) initiated by such person only if (i) such action,
suit or proceeding (or part thereof) was authorized by the Board of Directors and (ii) the indemnification does not relate to any
liability arising under Section 16(b) of the Exchange Act, as amended, or any rules or regulations promulgated thereunder. Such
indemnification is not exclusive of any other right to indemnification provided by law or otherwise.
II-
1
If a claim is not paid
in full by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where any undertaking required by the By-laws of the Company has been tendered
to the Company) that the claimant has not met the standards of conduct which make it permissible under the DGCL for the Company
to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Company. Neither the failure
of the Company (including its Board of Directors, legal counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the DGCL, nor an actual determination by the Company (including its Board of Directors, legal
counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action
or create a presumption that the claimant has not met the applicable standard of conduct. Indemnification shall include payment
by the Company of expenses in defending an action or proceeding in advance of the final disposition of such action or proceeding
upon receipt of an undertaking by the person indemnified to repay such payment if it is ultimately determined that such person
is not entitled to indemnification.
In
any underwriting agreement we enter into in connection with the sale of common stock being registered hereby, the underwriters
will agree to indemnify, under certain conditions, us, our directors, our officers and persons who control us within the meaning
of the Securities Act of 1933, as amended, or the Securities Act, against certain liabilities.
Item 15. Recent
Sales of Unregistered Securities.
Set forth below is information regarding shares of capital stock
issued by us within the last three years which was not registered under the Securities Act of 1933, as amended.
(a)
Issuance of Capital Stock.
Common Stock
On
May 19, 2021, the Company issued 107,513 shares of common stock to an accredited investor.
On
August 10, 2021, the Company issued an aggregate of 123,500 shares of restricted common stock to several individuals under its
2012 Equity Incentive Plan.
During October 2021, the
Company issued 88,894 shares of common stock to SpineSource, Inc. pursuant to an anti-dilution provision.
The issuance of the capital
stock listed above was deemed exempt from registration under Section 4(a)(2) of the Securities Act or Regulation D promulgated
thereunder in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipient
of such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for
sale in connection with any distribution thereof.
II-
2
(b)
Option Grants.
On
September 8, 2019, the Company issued 43,038 options to an individual at an exercise price of $0.31 per share. The options are
subject to 25% vesting after the first year, and then equal monthly vesting over a three-year period.
On May 1, 2021, the Company
issued a total of 749,000 options to various individuals at an exercise price of $2.60 per share. The options are subject to equal
monthly vesting over a three-year period.
On May 7, 2021, the Company
issued a total of 68,595 options to various individuals at an exercise price of $2.60 per share. The options are subject to either
(i) equal monthly vesting over a two-year period or (ii) equal monthly vesting over a three-year period.
On July 8, 2021,
the Company issued a total of 25,000 options to an individual at an exercise price of $3.53 per share. The options are subject
to equal monthly vesting over a two-year period.
On July 19, 2021, the Company
issued a total of 419,209 options to various individuals at an exercise price of $3.53 per share. The options are subject to equal
monthly vesting over a three-year period.
On August 10, 2021 the
Company issued a total of 42,000 options to various individuals at an exercise price of $3.53 per share. The options are subject
to equal monthly vesting over a two or three-year period.
On October 8, 2021 the
Company issued a total of 44,000 options to various individuals at an exercise price of $3.75 per share. The options are subject
to equal monthly vesting over a two or three-year period.
The options described above
were deemed exempt from registration in reliance on Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder
in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipients of
such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for
sale in connection with any distribution thereof.
(c) Warrants.
On December 31, 2020, the
Company issued to Exchange Listing, LLC warrants to purchase a total of 50,000 shares of Company common stock at the exercise price
$2.60 per share. This note was paid in fully in May 2021.
The warrant described above
were deemed exempt from registration in reliance on Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder
in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipients of
such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for
sale in connection with any distribution thereof.
(d) Issuance of Notes.
On January 27, 2021, the
Company issued a promissory note in the amount of $130,560.34 to Wilson Sonsini Goodrich & Rosati.
On April 30, 2021 the Company
issued the Amended and Restated 2015 Convertible Promissory Note with a principal amount of $117,530 and a per annum interest rate
of 8%. The original note was issued on January 1, 2016 in the same principal amount. Upon the occurrence of an initial public offering
of the Company, the balance of such note will convert immediately prior to the initial public offering at a price equal to 80%
of the price per share of the common stock sold in the initial public offering.
On April 30, 2021 the Company
issued the Amended and Restated 2019 Convertible Promissory Note with a principal amount of $70,000 and a per annum interest rate
of 8%. The original note was issued on October 12, 2019 in the same principal amount. Upon the occurrence of an initial public
offering of the Company, the balance of such note will convert immediately prior to the initial public offering at a price equal
to 70% of the price per share of the common stock sold in the initial public offering.
II-
3
On April 30, 2021 the Company
issued the Convertible Promissory Note with a principal amount of $40,000 and a per annum interest rate of 8%. Upon the occurrence
of an initial public offering of the Company, the balance of such note will convert immediately prior to the initial public offering
at a price equal to 70% of the price per share of the common stock sold in the initial public offering.
On April 30, 2021 the Company
issued the Convertible Promissory Note with a principal amount of $170,000 and a per annum interest rate of 8%. Upon the occurrence
of an initial public offering of the Company, the balance of such note will convert immediately prior to the initial public offering
at a price equal to 70% of the price per share of the common stock sold in the initial public offering.
On May 3, 2021 the Company
issued the Amended and Restated 2019 Convertible Promissory Note with a principal amount of $200,000 and a per annum interest rate
of 8%. The original note was issued on November 20, 2020 in the same principal amount. Upon the occurrence of an initial public
offering of the Company, the balance of such note will convert immediately prior to the initial public offering at a price equal
to 70% of the price per share of the common stock sold in the initial public offering.
On May 3, 2021 the Company
issued the Amended and Restated 2019 Convertible Promissory Note with a principal amount of $50,000 and a per annum interest rate
of 8%. The original note was issued on October 21, 2019 in the same principal amount. Upon the occurrence of an initial public
offering of the Company, the balance of such note will convert immediately prior to the initial public offering at a price equal
to 70% of the price per share of the common stock sold in the initial public offering.
During the period from
May 17, 2021 to July 26, 2021, the Company issued an aggregate $12,177,328 of Convertible Promissory Notes to 125 investors, which
accrues interest at 8% per annum from the date of issuance and are due one year from the date of issuance. Principal and interest
is due in full at maturity on the notes. The notes are not prepayable without the consent of a majority of the holders. Upon an initial public offering of the Company, the balance
of such notes will convert immediately prior to the initial public offering at a price equal to the lesser of (i) the quotient
obtained by dividing (x) $22,500,000 by (y) the fully diluted capitalization of the Company and (ii) 70% of the price per share
of the common stock sold in the initial public offering.
The notes described above
were deemed exempt from registration in reliance on Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder
in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipients of
such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for
sale in connection with any distribution thereof.
Item 16. Exhibits
and Financial Statement Schedules.
(a)
Exhibits
:
Reference is made to the Exhibit Index following the signature pages hereto, which Exhibit Index is hereby incorporated into this
Item.
(b)
Financial Statement
Schedules
: All schedules are omitted because the required information is inapplicable or the information is presented in
the financial statements and the related notes.
II-
4
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
The undersigned registrant
hereby undertakes:
(1) To file, during any
period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus
required by section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the
prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
(iii) To include any material
information with respect to the plan of distribution not previously disclosed in the registration statement or any material change
to such information in the registration statement; provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii) above do not
apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed
with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus
filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose
of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose
of determining liability under the Securities Act to any purchaser:
(A) Each prospectus filed
by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration statement; and
(B) Each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying
on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5) That for the purpose
of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of securities,
the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser:
II-
5
(i) Any preliminary prospectus
or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus
relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any
other free writing prospectus relating to the offering containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant
pursuant to any charter provision, by law or otherwise, the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes
that:
(1) For purposes of determining
any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of
determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-
6
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of New York, State of New York, on November 9, 2021.
TENON MEDICAL, INC.
By:
/s/Steven M. Foster
Steven M. Foster
Chief Executive Officer and President
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE
PRESENTS, that each person whose signature appears below constitutes and appoints Steven M. Foster and Steven Van Dick his true
and lawful attorney-in-fact, with full power of substitution and re-substitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments including pre- and post-effective amendments to this registration statement,
any subsequent registration statement for the same offering which may be filed pursuant to Rule 462(b) under the Securities
Act of 1933, as amended, and pre- or post-effective amendments thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact
or his substitute, each acting alone, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the
dates indicated.
Name
Position
Date
/s/Steven M. Foster
Chief Executive Officer and President, Director
November 9, 2021
Steven M. Foster
(Principal Executive Officer and Principal Financial and Accounting Officer)
/s/Richard Ginn
Chief Technology Officer and Director
November 9, 2021
Richard Ginn
/s/Steven Van Dick
Chief Financial Officer
November 9, 2021
Steven Van Dick
(Principal Financial and Accounting Officer)
/s/Richard Ferrari
Director
November 9, 2021
Richard Ferrari
II-
7
EXHIBIT INDEX
Exhibit No.
Description
1.1*
Form of Underwriting Agreement.
3.1
Amended and Restated Certificate of Incorporation of the Registrant.
3.2
Bylaws of The Registrant.
3.3
Amendment to Certificate of Incorporation of the Registrant
3.4
Amendment to Certificate of Incorporation of the Registrant
3.5
Amendment to Certificate of Incorporation of the Registrant
3.6
Amendment to Certificate of Incorporation of the Registrant
4.1*
Form of Underwriter Warrant.
5.1*
Opinion of Counsel to Registrant.
10.1
Promissory Note, dated January 27, 2021 having a principal amount of $130,560.34 and issued to Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.2
Convertible Promissory Note dated April 30, 2021 having a principal of $170,000 and issued to Phoenix DeVentures Inc..
10.3
Amended and Restated 2015 Convertible Promissory Note dated April 30, 2021 having a principal amount $117,530 and issued to Phoenix DeVentures Inc.
10.4
Convertible Promissory Note dated April 30, 2021 having a principal amount of $40,000 issued to Phoenix DeVentures Inc.
10.5
Amended and Restated 2019 Convertible Promissory Note dated April 30, 2021 having a principal amount $70,000 and issued to Khalid Mentako
10.6
Amended and Restated Convertible Promissory Note dated May 3, 2021 having a principal amount $200,000 and issued to Paul Orofino
10.7
Amended and Restated Convertible Promissory Note dated May 3, 2021 having a principal amount $50,000 and issued to Paul Orofino
10.8
Amended and Restated 2019 Convertible Promissory Note dated May 7, 2021 having a principal amount $68,359 and issued to Lince Consulting
10.9
Convertible Promissory Note dated June 24, 2021 having a principal amount of $50,000 and issued to Thomas J. Mitchell, II and Susan L. Mitchell, Revocable Living Trust dated June 12, 2000, as amended and restated
10.10
Warrant to Purchase Shares of Common Stock dated December 31, 2020 issued to Exchange Listing, LLC
10.11
Tenon Medical, Inc 2012 Equity Incentive Plan
10.12
Amended and Restated Exclusive Sales Representative Agreement dated May 20, 2021 between SpineSource, Inc. and the Registrant
10.13
The Common Stock Purchase Agreement between SpineSource, Inc. and the Registrant
10.14
Convertible Promissory Note dated May 18, 2021 having a principal amount of $100,000 and issued to Richard Ginn
10.15
Employment Agreement dated June 1, 2021 between Steven M. Foster and the Registrant
10.16
Employment Agreement dated June 1, 2021 between Richard Ginn and the Registrant
10.17
Consulting Agreement dated May 7, 2021 by and between Richard Ferrari and the Registrant
10.18
Employment Agreement dated June 1, 2021 between Steven Van Dick and the Registrant
10.19
Agreement and Consent of Director Nominee dated October 8, 2021 from Frank Fischer
10.20
Agreement and Consent of Director Nominee dated October 8, 2021 from Ivan Howard
10.21
Agreement and Consent of Director Nominee dated October 8, 2021 from Stephen H. Hochschuler
10.22
Agreement and Consent of Director Nominee dated October 8, 2021 from Robert Weigle
10.23
Exchange Agreement dated as of October 27, 2021 among Zuhlke
Ventures AG, Tenon Technology AG and the Registrant
10.24
Convertible Promissory Note dated May 18, 2021 having a principal amount of $100,000 and issued to Richard Ginn
10.25
Convertible Promissory Note dated May 17, 2021 having a principal amount of $250,000 and issued to Theo Franklin
10.26
Convertible Promissory Note dated June 17, 2021 having a principal amount of $125,000 and issued to WS Investment Company, LLC (21A)
10.27
Convertible Promissory Note dated May 18, 2021 having a principal amount of $300,000 and issued to the Ferrari Family Trust
10.28
Convertible Promissory Note dated May 17, 2021 having a principal amount of $600,000 and issued to Frank M. Fischer
10.29
Convertible Promissory Note dated May 17, 2021 having a principal amount of $50,000 and issued to Steven M. Foster
21.1
List of Subsidiaries of the Registrant.
23.1
Consent of Armanino, LLP, dated November 9, 2021
23.2*
Consent of Counsel to Registrant (included in Exhibit 5.1).
24.1
Power of Attorney.
* To be filed by Amendment.
II-
8